St Mungo Community Housing Association Annual Report and Financial Statements for the year ended 31 March 2018

Transcription

1 Annual Report and Financial Statements for (A company limited by guarantee)

2 ST MUNGO COMMUNITY HOUSING ASSOCIATION REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH CONTENTS PAGE Trustees and Advisors 1 Chair's Statement 2 Strategic Report 3-17 Trustees'Report Statement of Trustees' responsibilities for the annual report and the financial statements 27 Independent Auditor's report Consolidated Statement of Comprehensive Income 30 Association Statement of Comprehensive Income 31 Consolidated and Association Statement of Financial Position 32 Consolidated and Association Statement of Changes in Reserves 33 Consolidated Statement of Cash flows 34 Notes to the Financial Statements 35-56

3 TRUSTEES AND ADVISORS Board of Trustees: The Board of Trustees is the governing body of St Mungo Community Housing Association (St Mungo's). The Trustees are also the directors of the Association for the purpose of Company Law. Trustees Robert Napier (Chair) Sir Leigh Lewis (Vice Chair) TracyAllison (appointed 19 September ) Rolande Andersen YvonneArrowsmith (resigned 16 May ) Alexandra Beidas Daniel Carry Tim Gadd Ashwin Kumar (resigned 19 September ) John Maxted Jeffrey Shear (resigned 19 September ) Otto Thoresen (resigned 31 October ) Helen Walters John Watts (appointed 25 July ) Company Secretary Louise Wykes Executive Officers Howard Sinclair - Chief Executive Sonia Smith - Executive Director of Finance David Fisher - Executive Director of Services Helen Giles - Executive Director of People and Governance Rebecca Sycamore - Executive Director of Development Dominic Williamson - Executive Director, Strategy and Policy Registered Office 5th Floor 3 Thomas More Square London E1W1YW Auditors RSM UK Audit LLP Marlborough House Victoria Road South Chelmsford Essex CM1 1LN Solicitors Russell-Cooke 2 Putney Hill London SW15 SAB Bankers HSBC 123 Chancery Lane London WC2A1QH Company No Charity No Homes England Registration No. LH0279 1

4 St Nlungo Community Housing Association CHAIR'S STATEMENT Two years or more into our five year strategy we have accomplished a significant amount. St Mungo's now helps more people through more services in more areas than ever. For example, on any night in the past year St Mungo's provided accommodation and support to over 2,800 people. Our outreach teams across the south of England worked with over 6,000 people last year and we worked with over 9,000 people in the criminal Justice system. As was our plan, this year we have made significant strides forward in ensuring our internal systems enable us to deliver safe, effective services. We have transformed our communication systems, including ourwebsite and intranet, and tackled underperformance in some key areas. Our focus in the coming years will be on developing more housing and interconnecting resources, assets, and support as we seek to offer more opportunities for people to have a place to call home and be able to fulfil their hopes and ambitions. We've also strengthened our work around client involvement and diversity. We welcomed a new Trustee member with lived experience of homelessness, as well as new members to our Client Advisory Board. Our Apprenticeship scheme for people with lived experience continues to win awards and our first Gender Pay Gap report showed there is no gender pay gap at St Mungo's. We continue to innovate to provide better outcomes for people experiencing homelessness. We are now delivering three programmes for long term rough sleepers (in London, Bristol and Brighton) which are funded by social investment bonds. This method of funding enables us to provide in depth and individualised support to people who have complex needs and to be creative in our responses to those needs in pursuit of the goal of helping people leave the streets and rebuild their lives. Nationally, we have contributed to some important changes in policy including the Homelessness Reduction Act and the Government's commitment to develop a strategy to reduce and then end rough sleeping in the next decade. We have a voice to speak on behalf of our clients, and our staff, on the Government's Rough Sleeping Advisory Panel, which means we can push for urgent action in key areas to prevent and alleviate homelessness and enable people to sustain their homes. We begin the -19 financial year in a stronger financial position than we were two years ago: Our financial performance for -18 has resulted in a surplus of 4,111k, with a turnover of 89.6 million. This is partly through considered use of our resources and partly through the generous donations of our supporters, who continue to underpin our innovative services, beyond those we are contracted to deliver. St Mungo's will be 50 in We continue to face challenges. We face them as a strong organisation, sure in our purpose and direction. Our priorities are to grow our services and housing to transform the lives of more people, to further strengthen our organisational culture and infrastructure and to evidence more our impact and influence change. On behalf of the Board I would like to thank the 1,300 staff and our 900 volunteers over the last year for their dedication, and our supporters for their backing and continued belief in us. Without them, we wouldn't be able to offer so many people the chance to leave homelessness behind them and rebuild their lives. Robert Napier Chair 24 July 2

5 STRATEGIC REPORT The Trustees present the annual report and the audited financial statements for the year ended 31 March. The financial position and results for the year are set out on pages of these statements. THE CONTEXT IN WHICH WE OPERATE On 25 January, the Ministry of Housing, Communities and Local Government released the autumn figures for rough sleeping. A total of 4,751 people were counted or estimated by local authorities to be sleeping rough in England on any one night in autumn, representing a 15% increase from the 2016 figure of 4,134. On any one night during -18 St Mungo Community hlousing Association (St Mungo's) provided housing and support to over 2,800 people. The people we help are experiencing homelessness or are at risk of homelessness. Our work encompasses providing routes out of rough sleeping, providing a safe place to stay but also supporting our clients to enjoy good health, to progress to becoming economically active and feeling confident and hopeful about their futures. We also actively work to prevent homelessness. Our outreach teams in, Bournemouth & Poole, Brighton, Bristol, London, Oxford, Reading, and South Essex worked with 6,364 people last year and in London we found accommodation for 665 people. An important part of reducing rough sleeping is preventing it and making sure those who have moved away from the streets never need to return. Being in prison can cause the loss of a home, possessions, job and relationship with family and friends. Last year we worked with 9,335 (: 7,860) prisoners and ex-offenders, helping them to make real and positive change in their lives. Our Offender Services Team has been providing support in prisons for around two decades. We currently work in 12 prisons in London and one in Hertfordshire. Our housing sen/ices are in many ways our bedrock, whilst our support services are based on renewable contracts and our community businesses on market forces. We provide services that very few other organisations are able to match, in respect of quality, range and reach. Many of St Mungo's clients have complex and multiple needs, including severe and enduring difficulties with physical and mental health and substance use. Through our outreach work and hostels, we have become experts at working with, and supportively housing, people with very complex problems - for example, people with severe mental health problems, a lifelong alcohol addiction, very challenging behaviour, or a combination of these and other issues. We work with a wide range of clients but at the heart of all of our services is our commitment to empowering the individual, to support people in their recovery journey and to preventing homelessness in the future. Our recovery service ethos is a commitment to all our clients that we will; Listen to, understand and value their unique individual experience Ensure they have a safe place to live Focus on their strengths, explore their real options and take practical steps towards achieving their goals Enable them to build and enjoy positive, supportive relationships Create opportunities that empower them to learn, thrive and contribute to the community. Across St Mungo's we build relationships that lead to an increased understanding about homelessness and empathy for the people who experience it. The diverse voices of our clients and the evidence we gain from providing services gives us knowledge about what works and we use this perspective to advocate for policy change. Our vision is that everyone should have a place to call home and be able to fulfil their hopes and ambitions. 3

6 PRINCIPAL ACTIVITIES Since 1969 St Mungo's has been committed to addressing homelessness and helping people recover their lives. We are both a housing association and a homelessness charity. Our clients and their access to safe and effective accommodation and support are at the heart of our vision, mission and values. St Mungo's has freehold of 66 properties ranging from modern hostels to supported housing and care homes. We also lease and manage many other buildings in order to deliver services for our clients. People may live with us for a few days, or a few years. What is crucial is that the accommodation they move into provides the right environment for them in their time of need and supports them to move on and away from homelessness. During -18 we managed 130 contracts many of which cover multiple services. The majority of the services were commissioned by local authorities. Much of the income for these support and care activities comes from contracts awarded by central or local Government, which we compete for. Some, but not all, of these support services are linked to residential projects such as our hostels and supported housing. However, within our support services, particularly in our skills, employment and health activities there are programmes which are wholly or in part funded by donations and charitable grants. To be successful in achieving funding for all of the services we run we have to demonstrate quality, impact and cost effectiveness. Our priorities are to grow our services and housing to transform the lives of more people, to further strengthen our organisational culture and infrastructure and to evidence more our impact and influence change. For example, during we successfully bid for the contract to deliver outreach services to people sleeping rough in Westminster City Council. We also established a new project: Keeping In Touch, an advice service supporting clients to sustain their tenancies once they are living independently and signposting to opportunities in their local areas. The aim of the service is to prevent clients from returning to rough sleeping. The service has now gone live receiving its first calls in May. We also won Social Impact Bond contracts to provide high level of support to entrenched rough sleepers in London, Brighton and Bristol through special purpose vehicles. These new initiatives exemplify our commitment to providing innovative ways of working and funding our activities alongside tried and tested services which we've been providing for some time KEY MISSION AND PUBLIC BENEFIT Two years ago, we launched our new organisational strategy, "Ending hlomelessness, Rebuilding Lives". This outlined our ambition which is, by 2021, to reverse the increase in rough sleeping in England. In the areas where we work, we aim to halve the number of people sleeping rough by We recognise, however, that supporting people off the streets is only part of the challenge. We need to empower people to then sustain their lives away from the streets through a recovery journey that encompasses building good relationships, improving the person's health and enabling them to look for work. We also need to look after our housing assets and ensure we have enough income left over each year to maintain our buildings in good condition for the future. To support the strategy we set five aims, which we called our 5 'I's. Together they are a framework to guide and explain our activities as we seek to achieve our ambition. Between 2016 and 2021 we aim to: 1. Improve our services, our housing (and the systems they rely on) so they are safer and more effective in changing the lives of our clients 2. Interconnect to resources, assets and support in the areas where we work 3. Innovate and test new evidence-based sen/ices and tackle rough sleeping 4. Influence national and local government to implement new rough sleeping strategies 5. Involve our clients in all aspects of our work. St Mungo's is a registered charity. In setting out our aims and planning our activities we have given careful consideration to the Charity Commission's general guidance on public benefit. 4

7 The Trustees ensure that the activities of the charity are consistent with its charitable objects and aims. In agreeing our annual plans, the Trustees take into account public benefit as set out in the Charity Commission's general guidance on public benefit in relation to the prevention and relief of poverty, the advancement of education and health and the relief of those in need. The Trustees believe there is clear public benefit derived from the activities of the charity. BUSINESS REVIEW AND PERFORMANCE Improve our services, our housing (and the systems they rely on) so they are safer and more effective in changing the lives of our clients. We are committed to delivering safe and effective housing and services that transform lives. Maintaining safe and secure properties is core to our recovery service ethos, which says that "as a client of St Mungo's, we will work with you to ensure you have a safe place to live". Over the course of -18 we have further developed our approach to maintaining our properties. Last year, we spent 1.7 million as part of our works to existing properties. We also improved the external fabric of our buildings through new double glazed windows and roof covering replacement at key properties. In May we opened City Lodge, near the Barbican in London. It is now home to 17 people aged over 40, each with a significant history of long term rough sleeping in the capital. City Lodge is different because it provides 'hotel style accommodation' to guests, who have their own self-contained studio apartments but with use of shared communal spaces including a large reception area and a kitchen. It is the second such pioneering project managed by St Mungo's to provide this kind of accommodation for older people who are street homeless after the success of the original project, The Lodge. City Lodge was developed by St Mungo's in partnership with the Greater London Authority which contributed 800,000 and the City of London Corporation which contributed 400,000. In addition, St Mungo's raised 350,000 towards the project from generous donors. At Mare Street hostel in hlackney, we completed a comprehensive refurbishment of the under-used lower ground floor to provide a fit for purpose No Second Night Out North (NSNO) assessment Centre for people newly rough sleeping across north London. This hub will ideally bring people in and look to find alternative accommodation, reconnection or other options for them within72 hours so they don't have to spend any more time on the streets. This refurbishment was funded through support from St Mungo's donors as well as support from the Greater London Authority. At Spring Gardens in Lewisham, we secured planning, funding and a contractor partner to begin works to deliver a new 28 bed hostel and a No Second Night Out South assessment hub and associated 26 bed staging post a place where people can be offered slightly longer term accommodation depending on the complexity of their situation. This work will commence during -19, the planned expenditure being included in our capital commitments. In we launched a new initiative to drive up compliance across the organisation called Solid Foundations. This involved the promotion of a set of key 'non-negotiables' focused on client safety, property health and safety, DBS checks, staff management and training and budget management. This was accompanied by the provision of Solid Foundations monitoring reports to all managers. We are continuing to expand and develop this project in -19. We are also reviewing a number of properties to ensure we are maximising the use and driving efficiencies. By 2020, St Mungo's will invest over 7.4 million improving buildings that accommodate residents over the next 5 years. We also have plans for further acquisition/development of new properties. In -18 we appointed Mazars LLP as our independent internal auditors, who have just completed their first year of audit review. We have also undertaken a fundamental review of payroll function and have decided to outsource. Interconnect to resources, assets and support in the areas where we work Over the next three years we will be working to ensure that our clients can access the specialist services they need for their recovery. We are building and strengthening partnerships with local organisations and other charities, and drawing on local support for our work. 5

8 For example, in Bristol, we provide an innovative service for those in mental distress called The Sanctuary. This is a safe, welcoming space which is open from 6pm to 12.30am from Friday to Monday evenings inclusive. In February the NHS funded a three month pilot to extend the service during weekday evenings with a specific focus on redirecting people in distress to the Sanctuary who might otherwise present in Bristol Royal Infirmary A&E. One additionally funded worker based in the Bristol Royal Infirmary engaged with 62 people over the three months, 12 of whom went on to use the Sanctuary either that night or within a few days. St Mungo's has continued its work to provide quality and affordable privately rented accommodation to vulnerably housed people, through its social lettings agency Real Lettings and the Real Lettings Property Funds. This year 162 properties were handed over to Real Lettings. The Real Lettings Property Funds (RLPF) 1 and 2 in London, and the National Homelessness Fund have now grown to more than 155m and provided 600+ homes nationwide, housing over 1,500 people who are homeless or vulnerable to homelessness. The Greater London Authority invested 15m into the Real Lettings Property Fund 2 in February. RLPF and National Homelessness Funds are separate to St Mungo's funds. Once our tenants have settled into the properties acquired through the fund, we work with them to manage their tenancies. Through referrals and signposting to relevant services we also encourage tenants to develop their skills so that they can improve their housing options, progress towards work or education and increase their resilience against future homelessness. This is to help tenants to positively move on into alternative accommodation in the future. Workwise is a partnership between St Mungo's and Lambeth Housing Services. It is an employment, training and advice project that supports Lambeth tenants who are affected by the impact of welfare reform and are therefore at risk of losing their tenancies and becoming homeless. A total of 552 one-to-one sessions were attended by 147 tenants over the year. These were sessions held by one of the dedicated Work Coordinators, who help clients to move towards their work and learning aims. The discussions centered on both long term goals (dream jobs) and short term (work to help with their current financial situation). Workwise referrals resulted in 68 tenants securing full-time work, 22 securing part-time work, 90 households improving their income, with other people gaining work placements (13), going on education or training courses (53), achieving qualifications (30) and gaining volunteer positions (13). All, 100%, of those who engaged with the Workwise team sustained their tenancy. Innovate and test new evidence-based services and tackle rough sleeping One of our priorities during -19 is to evidence further our impact and influence change. St Mungo's has been at the forefront of designing, implementing and running hlousing First projects in the UK. We're the largest provider of hlousing First services in England, currently supporting over 100 clients in nine different locations. Our services are in Bournemouth, Brighton, Camden, Ealing, Essex, Haringey, Hammersmith and Fulham, Reading and Westminster. The hlousing First model helps people who are living on the streets, or who are caught up in a cycle of hostels, sofa surfing, prison or hospital, into their own permanent accommodation. People are supported with personal budgets and help around reducing drug and alcohol use and tackling mental health problems. It is a model that is attracting a lot of attention but evidence about impact and effectiveness is less available so we commissioned independent research from the University of York's Centre for hlousing Policy. This concluded that "Housing First is highly effective in ending homelessness among people with high and complex needs, but it does not constitute a solution to single homelessness, or rough sleeping, in itself and that "international evidence shows that hlousing First services need to be a part of an integrated homelessness strategy to be truly effective." In order to achieve our ambition to reverse the rise in rough sleeping we aim to pilot employment, accommodation and reconnection service models for people who cannot claim benefits and are sleeping rough due to their migration status or other problems. Influence national and local government to implement new rough sleeping strategies St Mungo's organisational strategy recognises the importance of influencing national and local government in order to achieve our ambition. Through our policy, public affairs, campaigning and research work, we aim to shape policy and legislation 6

9 which has the biggest impact on our clients - people who are already experiencing, or are at serious risk of homelessness and rough sleeping. Our Influencing Strategy sets out our theory of change and priorities over this period. Results achieved in -18 have included: Productive discussions with the Prime Minister and Department of Communities and Local Government officials around a new strategy to end rough sleeping. The introduction of the Homelessness Reduction Act, which places a new duty on local authorities to help prevent homelessness for everyone eligible for local authority assistance, regardless of priority need. The deferral of the proposed cap on housing benefit entitlement for supported housing residents until , while the government consults on the future funding system for supported housing. By working together with other homelessness charities we persuaded both the Labour and Conservative parties to commit to end rough sleeping in their election manifestos. In November, the Government announced the establishment of a hlomelessness Reduction Taskforce to develop a cross-government strategy to end rough sleeping. Our Chief Executive, Howard Sinclair, was invited to sit on a panel advising ministers on the new strategy. In April the Homelessness Reduction Act came into force. This places new duties on local authorities to prevent homelessness. St Mungo's was part of the team which won a best campaign coalition award for 'No One Turned Away', which led to the hlomelessness Reduction Act. More than 12,000 campaigners signed our Save Hostels petition for secure funding for supported housing. Our Save Hostels campaign and influencing work with a number of partners persuaded the Government to drop plans to cap housing benefit for tenants in supported housing. The then Secretary of State for Communities and Local Government, Sajid Javed, was among 57 MPs and Peers who attended our annual Parliamentary Reception in to show their support for our work. Clients are actively involved in our research, influencing and campaigning activity. Our clients were also instrumental in persuading MPs to support the new hlomelessness Reduction Act, attending Parliament to meet their representatives as part of a mass lobby with sector partners, and taking part in our Parliamentary reception. This year we have set up a Peer Research Group with clients about what helps people to sustain accommodation and best ways to support those recovering from homelessness. This research was launched in summer. We also worked with clients on research around women and homelessness, again to be launched this summer. St Mungo's clients played a key role in direct influencing this year. Many attended St Mungo's events in Parliament and were instrumental in persuading MPs to support the new Homelessness Reduction Act. Throughout the year, Outside In members have shaped our policy and influencing work by taking part in monthly Social Policy Forum meetings. Involve our clients in all aspects of our work This is a cross-cutting organisational objective and is intended to further embed our efforts to involve our clients throughout St Mungo's. Our Client Advisory Board provides input at governance level, while Outside In, our client representative body, supports involvement across the organisation at a service and operational level. The Client Involvement Team (CIT) is made up of Client Involvement Coordinators and Outside In volunteers and members. This year we welcomed a Trustee with lived experience of homelessness. Our Client Involvement Strategy was signed off in August. It states that our vision is that client involvement will be embedded in every team and services will be delivered in equal partnership with our clients. It emphasises that involvement is not an add-on but how we are and what we do every day, in every interaction 7

10 with our clients. Below are the main strategy aims, examples of progress made since the strategy was signed off and what we are focusing on next. Aim 1: There is a shared understanding of client involvement with clear standards and expectations and means of monitoring and measuring compliance. We ensured client involvement was embedded in the new St Mungo's Excellence Standards, the new standards have been developed around our values and recovery ethos to help measure and feedback on performance and new audit process. We have reviewed our Client Involvement training and induction package and policy and the Client Involvement Team has visited numerous team meetings to promote understanding of client involvement. During -19 we are focusing on improving what is recorded on our systems around client involvement and implementing a new Client Involvement Toolkit. Aim 2: The work of the Client Involvement Team, including staff and volunteers, is structured in a way that best facilitates meaningful involvement in all regions and services. We have restructured the team so that there is a dedicated coordinator for each region who can provide all staff with support and advice on improving involvement. We have reviewed all of the role profiles and the induction/training process for client volunteers and started to implement these across services. During - 19 we will be focusing on further embedding the new regional structure, for example developing other branches of our Outside In group and improving how we support the Rough Sleeper, Offender and Migrant Services Directorate around Client Involvement. Aim 3: There is a menu of options for clients to be meaningfully involved and a clear pathway for client progression. This year we have developed three routes for client volunteers to suit different levels of recovery and readiness. We have mapped out a pathway for clients from entry level volunteering to more structured opportunities. We reviewed our peer facilitation offer for clients to enable more clients to facilitate workshops for their peers in services. Our clients organised a very successful client festival this year which was attended by 400 staff and clients. In -19 we will be focusing on ensuring more options are available locally in services. Aim 4: Effective methods and lines of communication are in place to ensure all clients are informed about opportunities, rights and responsibilities. We have co-produced with clients new feedback tools, being rolled out in all services, and a new Welcome Pack for new clients so that they are informed about their rights, responsibilities and opportunities for involvement from the start of their journey with us. During -19 we will focus on developing our communication with Client Involvement Lead Workers, for example through organising quarterly forums and improving how we demonstrate to clients that we are listening and responding to their feedback. FINANCIAL PERFORMANCE The financial performance of St Mungo's shows a significant improvement over the previous year with the Group achieving a surplus of 4.1 million (: 1.9 million surplus). The key areas of improvement are the increase in net fundraising income of 1.4 million and growth in contract income renegotiation and savings realised 1.5 million, these have been partially offset by increase in repairs costs ( 0.6 million). a) Fundraised income is 10.5 million (: 9.0 million) which is higher than the target for the year and includes the receipt of legacy income. b) Annual service contract income (including supporting people contract income and support services) is 33.9 million (: 34.4 million). Successful bids for new, existing services during -18 had a total additional revenue value of 16.9 million (for the fixed term of the contracts). This equates to an average contract value per annum of 4.9 million (of this new business represented 1.5 million, existing business re-modelled and retained 3.4 million). These figures do not include any rental income linked to any of the services. During -18 we stopped running six services representing a value of million, three of these services ( 717k) came to the natural end of their life cycle. We were unsuccessful in bidding for a re-modelled housing related support service in Brent and withdrew from two re-tender exercises as the new requirements were deemed unsustainable We have had good performance on rent collection in -18 but further improvements is required on void and 8

11 bad debts. As in previous years the average costs per unit for social housing is higher than other registered landlords due to our client groups (please refer to VFM section for further details) Central overheads are 14% (: 15%) of turnover and there are plans to reduce this through efficiencies and growth to 12%. At 31 March St Mungo's had resen/es of 17.7 million (: 13.6 million) and cash and bank balances totalling 23 million (: 17.8 million). Growth objectives have been agreed for /19 going forward that will utilise the balance sheet resources to support further client services and increase the housing supply. VALUE FOR MONEY This Value for Money ("VFM") section is an assessment of our performance in delivering VFM plans during -18 and shows how we have managed our resources economically, efficiently and effectively in order to deliver our vision, organisational objectives and our commitments to our clients. Our vision is that everyone should have a place that they can call home and be able to fulfil their hopes and ambitions. We deliver our objectives as a housing association and as a homelessness charity by operating a business model that combines the landlord function, with the delivery of commissioned sen/ice contracts and fundraising income to add value to our clients' services. Through optimising our VFM we reach more people who need our help and ensure they receive safe and effective services which enable them to rebuild their lives and hence contribute to the realisation of our vision. During the year performance has been measured against St Mungo's VFM targets as well as the new VFM metrics required by the Regulator of Social Housing, and how that performance compares to peers. The VFM metrics introduced by the Regulator of Social Housing demonstrate that St Mungo's has higher than average cost per units due to the specialist nature of the clients and has little debt compared to other housing associations. Overall, in -18 we have achieved 1.8 million (87%) of the VFM cash savings targets set by the Board. During the year we demonstrated our effectiveness in providing client services and increasing housing supply and have achieved economies through renegotiation of underperforming contracts and wining new business. Our efficiency on using our resources is a mixed picture. This is described in more detail below. Approach to VFM St Mungo's has a clear framework for achieving value for money, incorporating the following: Strategic objectives including improving the economic and social return of our assets Our resources are aligned to achieve the objectives of our strategy, which also contributes to achieving our overall vision. Our business plan sets out the steps we will take to grow and develop so we can deliver the ambitions of our strategy. The Board has approved the Business Plan, Growth Strategy, Strategic Asset Management Strategy, Fundraising Strategy, Financial Plan and Risk Appetite for the Group and oversees their implementation through relevant Board committees and Executive team. These strategies inform our objectives and priorities for the year and ensure we remain focused on the delivery of our overall organisational objectives. We know that we won't be able to deliver our overall ambition of tackling rough sleeping without offering appropriate housing so that our clients are able to rebuild their lives. St Mungo's Strategic Asset Management Plan aligns our business and property strategies. The objective is to ensure the optimisation of our portfolio, protecting the assets and the clients housed within. The plan sets out how we will manage our existing stock of approximately 3,000 bed spaces and increase to 5,000 over the next four years. During the year the Board approved the sale of a property on the basis that it did not meet client or business needs. The Board also approved a budget for transitional projects to support growth objectives. 9

12 Decisions about how we use our resources to deliver objectives To further support and inform decisions about our resources the Board consider impact on clients and achieving the business plan objectives, alternative options, the risks involved and the financial impact including VFM considerations. All Board reports for decision include a VFM and risk assessment. The Standing Orders outline the procurement processes and tenders required for significant investment decisions and the delegated authority approve business cases. Understanding and monitoring our business model and the risks and opportunities associated with it We run more than 300 services. Some, but not all, of the support services we operate are linked to our owned or leased residential projects such as hostels and supported housing. It is important that the operating surplus from the social housing and the client services are sufficient to cover the corporate overheads on an ongoing basis in order to have a viable business. The operating surplus from social housing lettings is affected by the 1% annual reduction in supported housing rents introduced on 1 April. Each business stream is modelled over a five year period in the financial plan to ensure that there is sufficient operating surplus and fundraised income contributions to achieve planned growth. The annual budget provides a detailed summary of the income and expenditure expected for business stream and is approved by the board alongside the 5 year financial plan. The Board have approved a Reserves and Liquidity policy and an Investment Policy to ensure that new opportunities are properly evaluated and modelled in the financial plan using cash and reserves responsibly whilst ensuring that sufficient balances are retained to offset any adverse risks materialising. Consideration of potential VFM gains Each year the Board approve an annual budget which includes targets for VFM gains. The performance against these VFM targets is monitored by the Board and the Finance and Development Committee at least quarterly. The Board approved target VFM gains for /18 of 2.1 million and received a final outturn confirming the achievement of 87% of this target. The Board consider the cost and benefit of alternative commercial, organisational and delivery structures including VFM impact. During the year the Board considered the merits of setting up new subsidiaries to oversee the Social Impact Bonds for London, Brighton and an Associate for Bristol. These structures enabled new sources of funds to be secured for entrenched rough sleepers who would otherwise continue to be homeless and greatly enhanced the number of clients being helped. As part of the Growth Strategy approved in May the Board has considered the optimal organisational and delivery structures to deliver the Business Plan objectives. This includes consideration of establishing new services supported by fundraising income to address unmet need in new areas and increasing the supply of accommodation through entering arrangements with property funds or joint ventures. Benchmarking our performance We recognise the importance of comparing our performance with others and our activities are benchmarked in several different ways. St Mungo's is an active member of a benchmarking group with other homelessness organisations who provide social housing. The last time we benchmarked housing management data was in , with seven of these agencies. This showed that: We performed well on all repairs completed to deadline (98% against an average of 88.8% and median of 94.1%). We were also above average on rent collection - rent collected as a proportion of gross rental income (96.4% against an average of 94.7%) and current tenant arrears as a percentage of gross rental income (6.5% against an average of 6.6%) hlowever, we were below average on amount written off as bad debt, as a percentage of gross rental income (5.3% against an average of 3.65%) We were slightly above average for void loss as a percentage of the annual rent due (6.6% against an average of 6.8% and median of 6.6%) and slightly below average for clients moving to a known destination (79.2% against an average of 80.8% and median of 79.9%). 10

13 Improving our performance on bad debts remains a key area for St Mungo's and the Board agreed a VFM target to reduce it below 5%. During 2016, we carried out a client satisfaction survey which was benchmarked with other homelessness organisations who provide social housing. St Mungo's performed strongly in comparison to other participating organisations. Out of the 1 3 questions that were benchmarked St Mungo's achieved a level of satisfaction that was at least second highest for 11 out of the 13 questions. l/f/w targets and monitoring performance St Mungo's performance management framework starts at Board level and is cascaded from Executive Team throughout the Group to individual staff members. This is supported by comprehensive reporting drawn from our client monitoring and housing management systems which show a range of key performance indicators including health and safety, voids, complaints and value for money targets alongside the delivery of contracted outcomes. Performance is reviewed quarterly and is reported to relevant Committees and the Board. Our Value for Money performance is measured by the Board against targets set under the key elements of: Economy - maximising the level of resources available to deliver our objectives Efficiency - maximising how well we use our resources Effectiveness - maximising the outcomes we achieve with our resources. These targets include the VFM gains approved with the annual budget and cover both landlord, services and fundraising activities. The targets also reflect the direction of our organisational strategy and business plan so that it is clear how achieving value for money contributes towards achieving our vision. Value for Money performance in -18 Economy - growing the resources available to us The table below shows the areas we have agreed to focus on to increase the resources available to the organisation. Increasing resources available to us Target -18 Actual -18 Actual Actual Actual Turnover EOOO's 87,185 89,632 86,446 82,794 73,534 Client services New business growth (total contract value per annum) EOOO's Net contribution business EOOO's Renegotiate under performing contracts EOOO's Social Investment secured for social impact bonds Housing Supported spaces) from new Housing (bed Supported Housing cost per unit1 Supported Housing cost per unit excluding support services ,466 by ,900 2,015 3,800 1, ,425 2,374 2, Headline social housing cost per unit as defined in the Value for Money Metrics published by the Regulator of Social Housing in April 2 Average cost per unit for housing associations with over 50% homelessness supported housing per the Regulator of Social Housing Global Accounts plus 2%. 11

14 Increasing resources available to us and leased charges Target -18 Actual -18 Actual Actual Actual Real Lettings bed spaces 1,651 by Real Letting Turnover EOOO's 7,380 6,334 (19.3%) 5,311 (6.1%) 4,600 (5.6%) 2,088 (2.8%) Efficient use of Asset Management and Development resource EOOO's Fundraising Fundraising income EOOO's 8,245 10,548 9,010 7,020 7,544 Optimise Gift Aid claims with HMRC (included above) 250 Note: The Regulator of Social Housing has introduced new value for money metrics and these are shown in the pink shaded cells. Turnover - our turnover increased to 89.7 million this year. This figure is made up of rent and service charge income, income from our support and care business and fundraising income. Contract income - We set a target to renegotiate and increase existing contractual income in the year by 479,000 and actually achieved 581,000. Net business growth - in -18 we won bids for new, existing or remodeled existing services with a total additional revenue value of 15 million. This equates to an average per annum contract value of 5.9 million which is broken down as 1.9 million per annum in new business and 4.0 million per annum of existing business or contracts retained. The net contribution towards overheads from new business was 181,000. Fundraising - our overall income from fundraising was at 10.5 million, significantly above the target we set for the year. Housing more people - we have 3,031 (2,878 in ) bed spaces which we use to accommodate people who either have been or who are at risk of homelessness. As well as reviewing our assets and improving our properties we are increasingly interconnecting to resources that allow us to house more people in a cost effective and appropriate way. This includes the development of City Lodge providing 17 more bed spaces and further utilisation of social investment to procure significant numbers of leased properties in London, Oxford, Milton Keynes and Bristol regions through the Real Lettings Property Funds. We have successfully won 3 contracts to participate in social impact bonds (SIB) following the success of Street Impact -the first rough sleeping SIB which we were one of two delivery agents for. The SIBs mean we are delivering support and securing accommodation for entrenched rough sleepers in London, Brighton and Bristol with the support of 250,000 working capital from social investors. The Regulator of Social hlousing published Global Accounts for which included average cost per unit (CPU) of 3.67 for registered providers (RPs) with over 1,000 homes. Along with other organisations who provide supported housing St Mungo's had, under this analysis, very high unit costs of CPU (compared to for similar organisations). St Mungo's Cost Per Unit (CPU) includes all support costs, which is staff time spent on providing support to our clients as specified by commissioned services, costs many RPs do not have. In order to understand how we can be more efficient we separated out the cost associated with support to make comparison with other RPs easier. St Mungo's CPU excluding support costs and leased charges is Even this figure will have higher than average 'management costs', difficult to strip out for comparison purposes. We require a higher than average level of management due to the amount of support our clients require and the higher than average re-lets due to the temporary nature of our hostel accommodation. Other similar housing associations have CPU excluding support and leased charges of Even with the adjustments and other factors the overall picture suggests that St Mungo's is still relatively expensive compared to other RPs on a cost per unit basis. However, the costs are in line with similar homelessness organisations. Further value for money initiatives and better classification of costs has reduced 12

15 this figure for. Economy plans for -19 We have set targets for optimising our income to increase our resources by 712,000 to deliver more activity that helps our clients. These targets are aspirational targets and the achievement of some is uncertain. Where we have identified contracts that, in a few cases, do not fully cover their direct costs or do not recover all costs (including overheads) we have approached the commissioners to explore renegotiation of the contract. We have set targets to acquire/lease more bed spaces so that by 2024 we will have over 5,000 bed spaces (including 1,651 move on accommodation for former rough sleepers). Efficiency - using our resources well There are several significant areas where we have been focusing on improving our efficiency. The table below shows our key results from -18: Efficient use of resource Target (if set) Housing Voids loss 5.4% 7.7% 6.4% 8.3% 11% Bad debts <5% 7.8% 8.4% Rent Collection 95% 97% 96% 95% 98% Former tenant arrears % gross rental income Annual maintenance cost per void/unit 2.62% 1.7% 5.8% Repairs completed to timescale 95% 93% 98% 95% Reinvestment % Operating margin on supported housing lettings Staffing Social Housing Global Accounts 5% Social Housing Global Accounts 34% 3.1% 2.9% 1.1% 4.6% Lost time rate due to staff sickness 3.5% 5.6% 5.2% 4.9% Data not available Staff vacancy saving 1.6% Not achieved 1.6% Overall Procurement savings ( 000) ^wwei^^i^ -mi Efficient use of buildings () Other VFM savings ()

16 Efficient use of resource Target (if set) Overheads as a % of turnover 12% by 19/20 14% 15% 15% 14% Operating margin overall % Return on capital employed % Social Housing Global Accounts 30% Social Housing Global Accounts 4.3% 4.5% 2.5% 4.3% 2.1% Gearing% Social Housing Global Accounts 46% N/A Net cash N/A Net cash EBITDA MR! interest cover %3 Social Housing Global Accounts 181% 4208% 1630% Note: The Regulator of Social Housing has introduced new value for money metrics and these are shown in the pink shaded cells. a) Housing Management Voids - our performance in managing voids dipped during the year. Our rent voids levels (lost rent whilst bed spaces are empty) on our social housing increased from 6.4% in to 7.7% in /18. The Services Committee of the Board has been reviewing void performance and remedial actions and a target of 5.4% void loss has been agreed for /19. Rent collection - we performed slightly above target with 97% of rent from current tenants collected. Bad debt - we improved performance on the write off of bad debts from 8.4% in to 7.8% in -18. Additional resources have been allocated to reduce bad debt losses further in -19. Maintenance costs - in we committed to reviewing the costs of our maintenance. We wanted greater transparency about what the costs covered and where they were charged from. As a result for -18 we set our budgets based on a far greater understanding of our costs, this is a starting point for achieving greater efficiency. However, during -18 we have had a greater focus on health and safety and as a result have incurred exceptional maintenance costs leading to an increase in the average CPU to 985 in -18 compared to 737 in Repairs - maintaining safe and secure properties is core to our recovery service ethos, which says that "as a client of St Mungo's, we will work with you to ensure you have a safe place to live". This is why we have focused on ensuring repairs are completed to timescale. We performed very well on this in comparison to the benchmarking group we are part of, with 98% against an average of 89% (for ) and 97% this year. Reinvestment in new homes - we have increased the reinvestment in new homes from 2.9% in to 3.4% in -18, which is slightly below the average performance of housing associations per the Regulator of Social Housing Global Accounts of 5%. The Business Plan includes growth objectives to invest in more properties and the budget for -19 includes 2 million investment in stock improvements. Operating margin - we have very low operating margins when compared to other housing associations which is largely due to the higher running costs for our specialist client base. Gearing and EBITDA MRI ratios - The Regulator of Social hlousing has introduced new VFM metrics for gearing and interest cover (EBITDA MRI). We currently have little debt and have 23 million cash balances. 3 EBITDA MRI interest cover - Earnings before interest and taxation adjusted for depreciation and deductions for major repairs divided by interest payable. 14

17 The Board has approved a Reserves and Liquidity policy and an investment policy to support the ambitious growth objectives was approved by the board on 23 May as part of the Business Plan and Growth Strategy. These include using the balance sheet resources to fund an expansion in client services and increasing the supply of housing. b) Staffing Managing sickness - Our lost time rate due to staff sickness for the year was 5.6% or 13 days per person, compared to 5.2% (12 days per person) the previous year, which is 1.6% above the target we set for this year. This is higher than the national (2.8%) and sector (3.0% non-profit, 3.4% hlousing associations) averages published in the CIPD's Annual Absence Management Surrey To address this we have identified levels of absence which are above the norm for our staff and which prompt line management meetings within the terms of our attendance procedures. The purpose is early intervention to identify any underlying problems and enable the line manager to take necessary action to support improved health and safety at work and a return to normal levels of attendance. We are also developing a process of self-referrals to Occupational Health Advisors. Although the sickness rate has not gone down yet, we are confident that this is a more accurate figure this year than previous years. We can see that sickness is being addressed earlier and that managers are using the procedure to provide a fair, consistent and supportive framework for dealing with staff members affected by ill health. Temporary staff costs - During the year we experienced some overspends on temporary staff costs. We have reviewed the use of agency and locums with a view to optimising the cost of temporary staff cover whilst maintaining safe well run services. Procurement savings - During the year 122,000 savings have been achieved on tendering contracts for mobile phones, internal audit and gas and energy. The procurement savings target for repairs and improvement contracts have not been realised. Efficient use of buildings - During the year 214,000 of savings have been achieved through the renegotiation of leases and renting out unused space at Rushworth Street offices. This exceed the approved VFM target of 85,000. Further rationalisation of office space will reduce future accommodation costs. Overheads - central overheads are 14% of turnover and this includes costs for office accommodation that is no longer required as functions have been centralised. The central overheads will be fundamentally reviewed and options will be considered to make efficiencies. This together with the planned growth in operations will achieve the target of 12% of turnover. Efficiency plans for -19 We intend to focus on a series of value for money projects alongside continuing to work to improve our efficiency on key areas in housing management such as voids, arrears and overheads and in staffing such as staff sickness. Our procurement team will be seeking to make savings for the following contracted services: taxi services, catering, pest control and printing. The target savings for /19 is 166,000. In addition we have identified the following areas where we believe we can make efficiency savings: FY19 vacancy saving of 0.8% on Operations and 1% on centre (Savings approx. 425k) The bad debts target has been reduced from 5% to 4.5% (Additional net income approx. 132k) Outsourcing of payroll function 78k Effectiveness - the impact we create with our resources Ensuring that we create a positive impact is of crucial importance to us. We exist to provide the housing and support that enables people to rebuild their lives and we need to be sure that we are using our resources effectively in support of this goal. 15

18 a) Client Satisfaction and Sen/ice Quality Client satisfaction - every two years St Mungo's carries out a survey on satisfaction across our services. The most recent survey was conducted in autumn Responses were received from 980 clients, 748 from clients in hostels and supported housing and 232 from clients of other services. Overall, 93% of our clients are satisfied with the service we provide. In addition, 90% of our clients agree that our services are helping them make positive changes in their life. Client Involvement - St Mungo's clients have often felt that they have had very little power to affect their own life, and little say over the services that they rely on. We see client involvement as an absolutely vital element in empowering our clients and improving the services we offer. Last year 724 of our clients were involved in the Association for example by participating in recruitment of staff, representing the Association at external meetings, activities within their own services and contributing to the development of our policy and influencing work. Client Outcomes - we have identified access to health services such as GPs, making positive, planned moves and involvement in activities to improve skills as key indicators that our services are effective. Client outcomes Clients registered with GPs 85% 73% 69% 63% Clients participating in skills, training and activities that help them prepare for work. 2,646 2,816 3,082 2,700 Clients making planned moves to alternative housing 70% 71% 79% 82% The number of our clients living in our hostels and supported housing who are registered with a GP has continued to increase this year. According to the client needs survey we carried out in 2016, 44% of our clients have a significant physical health condition and 63% have a mental health diagnosis or mental disorder. Access to a GP is therefore fundamental to ensuring that our clients receive the health care they need and are entitled to. We supported 258 clients in developing their skills and progressing towards employment in -18. We would like to help more clients make planned moves to alternative accommodation. The business plan and growth strategy include objectives to increase the supply of move on accommodation to address this need. b) Housing supply The Regulator of Social Housing has introduced new VFM metrics for the new supply of housing. We have increased the supply of supported housing units by 1.5% in -18 which is greater than (0.9%) and in line with the performance of other housing associations per the Global Accounts. We lease move on accommodation via property funds managed by our Real Lettings team. Our new supply of leased move on accommodation units is 27% in -18 (compared to 16% in 2016/17) and is significantly greater than the 3% new supply of owned (rather than leased) non-social housing of other housing associations per the Global Accounts. Effectiveness plans for -19 We will continue to develop our Performance, Compliance and Outcomes Monitoring Framework, building on the success of this year's 'Solid Foundations' compliance programme which drove a culture of compliance at St Mungo's. In the coming year we will also be embedding the newly developed Service Excellence Standards across the organisation which we will be testing via self-assessments and audits. This will be supplemented by Individual Excellence Standards for staff which will be tested at appraisal. We will also be implementing the second year of our new Client Involvement Strategy which seeks to involve 16

19 clients in the way the organisation is developed and managed. We already have a Client Advisory Board, our Outside In client group, clients consulted on policies, involved in campaigns and sitting on recruitment panels. Over the next year we plan to develop Outside In groups in all of our three regions to have a more localised impact and ensure every one of our clients can get involved at a level and in a way which suits them. FUTURE PLANS We will continue to focus on the objectives of our strategy, our business plan and our work to strengthen our internal controls. Our priorities for are: 1. Grow our services and housing to reach more people We will invest in capacity for growth in existing and new areas where there is unmet need, raise the profile of the brand for delivering effective and innovative services across the country, including outreach and the recovery college. We will align our growth, asset management and fundraising strategies and carefully manage the costs and risks of expanding into new areas and work with partners to reach more people. 2. Strengthen our organisational culture and infrastructure We will continue to build a positive, engaged culture by embedding Solid Foundations across our services We will invest in our systems including delivering our plan to improve integration across our information systems. 3. Evidence our impact and influence change We will develop our capacity to create, analyse and communicate evidence about the outcomes our services achieve with our clients and to inform the development of national policy and local approaches to tackling rough sleeping including through engaging public concerns about the issue. We draw on the experience and voice of our clients to improve our services and influence change. May saw the introduction of new data security legislation, the General Data Protection Regulation (GDPR). We prepared robustly for this and will also be vigilant in monitoring, reviewing and continuously improving our systems and processes in how we hold and manage information. PRINCIPAL RISKS AND UNCERTAINTIES Like all organisations in our sector, we are facing unprecedented challenges and great uncertainty in our operating environment. The impact of austerity is continuing and a number of policy proposals, notably around welfare reform, announced by the government would have a significant impact on us. hlowever as one of the largest homelessness charities in Britain, and a specialist housing association, we look forward from a position of relative strength. We have agreed a five year strategy setting out a clear ambition and strategic direction which will make the most of our potential for growth to meet the changing needs of our clients. Further analysis of the strategic risks and mitigations is available in our risk section, starting on page 23. This report was approved by the Board of Trustees on the 24 July and signed on its behalf by: Robert Napier Chair 24 July 17

20 the year ended 31 hflarch TRUSTEES' REPORT The Trustees present the annual report and audited financial statements of St Mungo's for the year ended 31 March. The financial position and results for the year are set out on pages of these statements. OBJECTIVES AND ACTIVITIES The Trustees have reported St Mungo's strategic objectives and outlined our activities within the Strategic Report on pages STRUCTURE, GOVERNANCE AND MANAGEMENT St Mungo Community Housing Association ("the Group"), a registered housing association and charity, is made up of a lead Association and six subsidiaries. Five of the subsidiaries are directly and wholly owned; the sixth is a subsidiary of one of the wholly owned subsidiaries. Street Impact London Limited and Street Impact Brighton Limited, both wholly owned subsidiaries (companies limited by shares) provide housing and support to rough sleepers. Broadway Homelessness and Support (a registered charity and company limited by guarantee), held an interest in a lease on behalf of St Mungo's, its parent. Broadway Real Enterprises Limited (a company limited by guarantee) is a trading subsidiary whose activity is the delivery of consultancy support, mainly HR advice but also database development, to small and medium sized enterprises including those working in the field of homelessness. Street Impact Limited and Street Impact Bristol Limited (companies limited by shares) are both dormant and the intention is to close these entities in the next twelve months. During the year St Mungo's has acquired a 33% share in Social Impact Bristol Limited (company limited by shares), a consortium of three charity partners set up to provide housing and support to rough sleepers. These are the financial statements of the Group. Any activity relating to the Association will be specified. All references to comparable figures are to those of the Group, unless otherwise specified. The Board of St Mungo's is responsible for ensuring that a sound system of governance exists across the Group and that it is financially viable and properly managed. The Board works alongside the Executive Team, which is responsible for the day to day management of the Group. The Board comprises up to 12 Trustees, who for purposes of company law are non-executive directors, who bring a broad range of skills, knowledge and experience to their roles from fields including finance, legal and government policy. During the year the Board met on eight occasions. The Board has a formal schedule of matters reserved for its decision, which includes overall strategy and future development, allocation of financial resources, acquisitions and disposals, annual budgets, annual results, senior executive appointments, treasury policy and risk management. Responsibility for the Group's day to day operations is delegated to the Chief Executive. Board members are elected for a three year term at the Annual General Meeting. The Board reviews its effectiveness and appraises its members annually. It identifies the skills it requires in order to fulfil its function and recruits new members as required. The Board has established a maximum term of office for its members of nine years. The Board is covered by Trustees' indemnity insurance policy. No claims have been made during the year. During the year the Board has been supported by five committees: Audit and Risk Committee reviews the integrity of financial reporting and ensures that a sound system of internal control and risk management exists. It also manages the relationship with the internal and external auditors. Finance and Development Committee supports the Board in its responsibilities in relation to financial planning, financial management and the scrutiny of financial performance. The Committee ensures that St Mungo's makes best use of its property assets and reviews plans for the development of our housing stock. Fundraising Committee oversees all aspects of St Mungo's fundraising activity to ensure that the targets set out in the fundraising strategy and business plan are achieved, that the Association is 18

21 complying with all of its legal and regulatory obligations in respect of its fundraising activity, and the Association is responsive to and respectful of its donors. Services Committee has oversight of housing management and care and support services. The Committee reviews policies and plans to ensure services are responsive to client's needs and scrutinises performance in key areas such as repairs, rent collection and health and safety. People and Governance Committee has oversight of all aspects of the employment and remuneration of staff. It also oversees Board recruitment, review and processes to ensure that the Board and individual Trustees are accountable in the performance of their governance responsibilities. St Mungo's is committed to involving clients in all aspects of our work, including in its decision-making structures. The Client Advisory Board, made up of ten current or former clients of St Mungo's, reviews Board papers and provides input for discussion at Board meetings. Compliance with the National Housing Federation Code of Governance St Mungo's has adopted a Code of Governance which is designed to ensure that the Association operates to the highest possible standards. An underlying principle of this is that we will comply with the National Housing Federation (NHF) Code of Governance or explain any areas where we do not comply. The Board has reviewed and confirmed compliance with all areas of the NHF Code. Compliance with RSH Governance and Financial Viability Standard Registered providers are required by their regulator, the Regulator of Social Housing, to certify their compliance with the Governance and Financial Viability Standard. The Board has reviewed compliance with the standard and confirms that it complies in all material respects. STAKEHOLDERS, TRANSPARENCY, EQUALITY AND DIVERSITY We recognise that our success in supporting the recovery of our clients against the backdrop of the challenges we face depends fundamentally on the skill, commitment and engagement of our supporters, staff and volunteers. Ourfundraising activity St Mungo's is registered with the Fundraising Regulator and is a member of the Institute of Fundraising, as the regulatory environment has continued to change over the last year we have adapted and challenged the way we work to ensure we operate to a high standard. Our donors and clients are at the heart of everything we do, and our practices aim to be more than just about compliance: we want to ensure that our supporters are treated with the care and attention they deserve. In terms of regulation, Sections 13 and 14 of the Charities (Protection and Social Investment) Act 2016 came into force in November 2016, which contained a range of provisions aimed at raising standards in fundraising. In light of this, we have reviewed and updated our Agreements with our Commercial Participators and with the five Professional Fundraising Organisations (PFOs) working on our behalf, which are: Home Fundraising The Payroll Giving team Payroll Giving in Action STC Payroll Giving Hands on Payroll Giving. We monitor compliance through attendance at the training sessions run by the PFOs we work with, creating and providing materials for their use as well as holding review meetings about their performance. We have also attended new fundraiser assessment days and have a programme of shadowing and regular progress meetings with our biggest PFO, hlome Fundraising, which runs door fundraising on our behalf. We follow up on all feedback we receive from members of the public to ensure compliance with the Fundraising Regulator's Rule Books for Door to Door Fundraising and ensure there is no unreasonable intrusion on a person's privacy. In addition, we continue to run our own in-house street fundraising team. For this, we have a regular programme of training and refresher training covering all aspects of the regulations that apply to this form of fundraising as well as our own policies and procedures. Our training gives specific guidance on the protection of vulnerable people, based on the Institute of Fundraising's "Treating Donors Fairly Guidance". As such, we guide fundraisers to be upfront and tell the member of the public why we are communicating with them and 19

22 check they are happy to continue; to ask if the person would prefer to be contacted in a different way ( , letter) or at a different time; and to check the person's understanding at relevant parts of the interaction and ask if there is anything that needs further explanation. We monitor the quality and practices of our team through our programme of mystery shopping, conducted on our behalf by an independent organisation. In -18 we commissioned 21 mystery shops, with good reports overall. Where any issues were highlighted, we addressed them with the specific fundraisers and ran refresher training. Across the year and across all our fundraising activity, which in total attracted over 300,000 donations, we received 89 complaints about our fundraising. We regularly record, report and share positive unprompted feedback about our work and our fundraising from the public along with many messages of support we receive directly from our donors. We have a formal process for resolving individual complaints. We also have a formal complaints review process: we report and discuss complaints on a quarterly basis at the Fundraising Committee and annually at our Audit and Risk Committee, both of which comprise members of our Board of Trustees. This, along with the training, shadowing and mystery shopping enables us to monitor and review our fundraising practices relating to the protection of vulnerable people and ensure that there is no unreasonable intrusion on a person's privacy. Every donation we receive is greatly appreciated. We wish to say a thank you to all our supporters who made donations of their time and energy or gave financial support to St Mungo's during -18, including those who left us a special gift in their Will. Amongst the most significant donations received during 29th May 1961 Charitable Trust Andrew and Jane Haslewood Barratt Developments PLC Big Lottery Fund Grant (partnership project led by Crisis) Big Lottery Fund Grant (Our Environment Our Future) Big Lottery Fund Grants Breadsticks Foundation Bristol Energy Bristol Old Vie Theatre & Shakespeare Globe Theatre Cabot Circus Chestertons Chris and Liz S City Bridge Trust Cyril and Eve Jumbo Charitable Trust Dan and Krystyna Houser David Lyon Don Hanson Charitable Trust DWF Elizabeth Desmond Essex Trust Freshfield Foundation Give It Away Ltd Inner London Magistrates' Court's Poor Box Charity James Cochrane Jo Malone Limited John Lewis Partnership Julian and Susie Knott Kestrelman Trust KMF Maxwell Stuart Charitable Trust Liberty Specialty Markets Linklaters LLP the year were: Lisa McNulty London Bullion Market Association London Councils London Housing Foundation Lowe Guardians Michael and Ruth West Milton Damerel Trust Mrs Gwen Dennard National Friendly Network Homes Nisbet Trust Oak Foundation (partnership project led by Pathway) Ofenheim Charitable Trust Osborne Clarke Quartet Community Foundation Rob Collinge Robert Barr Charitable Trust Rolls-Royce Pic Sam and Caroline Davis Sheepdrove Trust S-RM Story of Christmas Appeal TaylorWimpey Pic The Elise Pilkington Charitable Trust The Ingram Trust The Late Reverend and Mrs W Sharland The Swire Charitable Trust The Wigoder Family Foundation The Zochonis Charitable Trust Tokio Marine HCC Westminster Foundation 20

23 Our People We want St Mungo's to be the number one employer of choice in the homelessness and supported housing sector. In October we ran our detailed biennial staff survey to measure employee opinion and this demonstrated significant improvements from two years ago when it was last run. Following this we have undertaken a robust action planning process at both a team and organisational level which will be reviewed quarterly. From feedback in the survey new initiatives are planned for next year including a Leadership Service Insight Programme which will see members of the Leadership Team undertaking structured activities within services with our service delivery staff and managers, and a staff volunteering scheme to encourage all central office staff to get involved with our services. Our opportunities for staff to be involved in planning and decision-making at St Mungo's this year have been further embedded through the Staff Advisory Group and Meet the Management sessions and the staff survey action planning process. The Staff Advisory Group was established in late 2016 to obtain staff perspective on key strategic and planning issues. This was refreshed this year after a year of running to gain new members and is a standing focus group with members participating for a year to give ideas on specific opportunities or problems and discussing high level proposals on matters such as the staff survey, strategy, budgets, new initiatives and projects. We are continuing with our 'Meet the Management' sessions where every few months we invite staff to meet with two members of the leadership team. These informal sessions aim to promote inter-team communication and understanding, and offer the opportunity for follow-up networking. They promote senior management accessibility and listening to staff as well as enabling the leadership team to gauge the temperature on things that are important to staff on an ongoing basis so they can respond quickly. This year we have focused on continuing communication about our objectives and values and communicating our key organisational project, "Solid Foundations" with to provide better clarity to all staff and managers about ensuring that St Mungo's is a well-managed organisation. As part of our commitment to improving key systems we have developed a new organisational intranet which is far more user friendly and has been a well-received conduit for our other communications methods, such as our Executive Blog, while our Managers Digest and Staff Bulletin both help increase staff information about what is happening across St Mungo's. We are continuing our practice of Executive Directors attending team meetings throughout the year and have broadened this initiative out to include other members of the Leadership Team as well. We use these visits as a chance to talk about specific issues which are relevant at the time, for example the staff survey action planning and to share information about new initiatives and get feedback from teams about what is working well and how they thought St Mungo's could be more effective and efficient. Volunteer involvement Volunteering at St Mungo's has developed to become an integral and valued part of our work. Volunteers play a vital role in supporting our clients and make a huge difference to the range of services we can offer homeless people. During the year, 800 volunteers undertook a variety of activities working in over 100 services. They support us to embed a model where people donate their time, skills and experience but that also help us to engage with the community and to help the community understand their role in helping people recover from homelessness. This year has seen us significantly change the way in which volunteers are involved in our street outreach services. Volunteer involvement and community engagement are a key part of our success and we have rolled out our Innovative Volunteer First Response model in Tower hlamlets, Westminster and City and Islington. This will enable Outreach teams to dedicate more resource to the areas and the people that need it. This will help us work towards our aim of halving rough sleeping. 21

24 Our Apprenticeship scheme for people with lived experience of homelessness has now had over 200 Apprentices on the scheme. We are proud to have won the Best Apprenticeship scheme award at Inside Housing and the Learning awards and been shortlisted for the HR excellence awards. We have developed client progression pathways which map the ways in which clients can use their time meaningfully in the organisation. This coming year we will be rolling this approach out across all services. Our student placement team works with over 250 students a year from universities across the UK and Europe. We provide placements of social work, nursing and paramedic students in order to influence future professionals and help shape their practice. Our work with London South Bank University was awarded the partnership of the year award at the Nursing times, helping to raise the profile of the scheme and the organisation. Diversity and Inclusion Inclusion is one of our core values and valuing the backgrounds, experiences and strengths of our staff and clients is integral to our work. St Mungo's is seen as a leader around Diversity and Inclusion within our sector and our commitment has been recognised through winning the Inclusive Workplace Culture Award at Business in the Community's Race Equality Awards, consistently achieving a place in the Stonewall Workplace Equality Index as one of the most LGBT-friendly employers in the UK and appearing in BITC's Top 100 Employers for Race Equality. We are also a Disability Confident Employer (registered with the Disability Confident scheme) and are fully committed to supporting people with disabilities to work with us. This includes providing equal employment, training, and promotion of staff with disabilities. We have made great progress against our From Equality to Inclusion strategy and will be building on this and developing a new three year strategy this year. Our strategy sets out a vision where staff, clients and volunteers from all backgrounds can be their best selves, bringing together experiences, commitment and expertise to deliver a personalised recovery approach. We plan to drive forward diversity initiatives and continuously improve our performance. We have seven Diversity Networks which meet regularly and work together to help shape the strategic direction of our inclusion practices. They are: Black, Asian and Minority Ethnic Network Disability Awareness Network EEA Migrants Network Irish Network Lesbian, Gay, Bisexual and Transgender Network Staff with Lived Experience (of using services) Network Women's Action Network. We also have 118 Diversity and Inclusion Allies across the organisation who champion D&l within their teams, help to plan awareness raising events, challenge any non-inclusive practices and come together quarterly to network, share best practice and learn. We have set ourselves a target to have at least one trustee member from Black, Asian and Minority Ethnic background on the main Board by MODERN SLAVERY ACT Information about St Mungo's compliance with the Modern Slavery Act, which seeks to curb slavery and human trafficking, is available on our website This was last updated in May and is reviewed annually to ensure we continually improve our practice in this area. HEALTH AND SAFETY Ultimate responsibility for health and safety lies with the Board who must ensure that the Chief Executive has robust arrangements in place for managing the risks and monitoring compliance. The Board has agreed an overarching Health and Safety policy which sets out our approach to meeting our legal obligations and ensuring the safety of our clients and staff. Health and safety is a top priority for the Board and an update on health and safety matters is reviewed at every meeting. 22

25 The Services Committee and People and Governance Committee are responsible for monitoring health and safety activity related to properties and our staff, respectively. At an operational level the Health and Safety Steering Group oversees any changes to our safety management system and is chaired by the Executive Director of People and Governance and the Executive Director of Services is also a member. Our Health and Safety Committee meets quarterly to provide a forum for staff to raise health and safety issues and input into the implementation of policies and procedures. Health and Safety is identified as a key strategic risk for the Group (see page 24). As a result, throughout - 18 we have continued to improve our monitoring processes and review and update our policies and practice in this area. A key priority during the year has been reviewing our approach to fire risk management and ensuring robust systems and processes for the follow up of remedial actions. RESERVES POLICY Reserves are that part of the Group's funds that are freely available to spend on any of the Group's purposes. This definition excludes restricted reserves which arise from specific restrictions being imposed on the reserves by the donor. Free reserves also exclude tangible fixed assets (Property, net of Capital Grants, and other assets less the pension provision). As a Group which has no complex financial arrangements, the Group and Association's reserves are made up of the liquid working capital offset by provisions for long-term liabilities associated with property and pension commitments. The minimum range of Cash and Free Reserves as define in the Reserves and Liquidity Policy have been recalculated using the stress testing of the latest version of the Financial Plan. The buffer required to avoid depleting Cash or Free Reserves measured on a monthly basis over 18 months under the stress testing scenarios are as follows: Free reserves million Cash (or cash equivalents) million Total reserves at 31 March were 17.7 million (: 13.6 million). We held restricted reserves of 1.3 million (: 0.8 million) and unrestricted reserves of 16.4 million (: 12.8 million). Free reserves were 14.3 million.the year-end cash balance was 23 million (2016: 17.8 million). The Trustees have reviewed the reserves of the Association and Group taking into consideration future activity, uncertainties and risks and have concluded the level of reserves shown at 31 March is appropriate to maintaining the continuation of the Association and Group. INTERNAL CONTROL AND RISK MANAGEMENT The Board acknowledges its overall responsibility for establishing and overseeing a system of internal control and for reviewing its effectiveness. The Audit and Risk Committee provides oversight on behalf of the Board regarding the system of risk management and internal control and regularly reviews its effectiveness. The system of internal control exists to give reasonable assurance about the reliability of financial and operational information within St Mungo's and the safeguarding of the organisation's assets and interests. No system of internal control can provide absolute assurance against material misstatement or loss. The system of internal control is designed to manage risk and to provide reasonable assurance that key business objectives and expected outcomes will be achieved. The process followed to identify, evaluate and manage significant risks faced by the organisation is ongoing, has been in place during the past financial year and is reported regularly to the Board. The risk management and control processes are not a separate annual exercise but are a continuous function. Risk management approach The Board has overall responsibility for the oversight of risk management at St Mungo's and has agreed an Organisational Risk policy which sets out how risks are identified, assessed and managed across the 23

26 organisation. During the year the Board reviewed its risk appetite and agreed risk tolerance levels which are used to guide our day to day activities. The Executive Team regularly identifies and reviews the risks facing the organisation. The risk register is reviewed on a quarterly basis by the Audit and Risk Committee to ensure the effectiveness of existing controls and mitigating actions. An update on major risks is provided to the Board quarterly. Risk Appetite As a homelessness charity, we choose to reach out to people who are often the most excluded by society and other services because of their multiple and complex needs. We have a high risk appetite for those people to whom we provide our services and for the range of services that we provide to them Our clients have complex and changing needs and this brings inherent risk in relation to our reputation, we mitigate this by having a low risk appetite in terms of compliance with legal and regulatory requirements and our internal policies and processes. We work in a rapidly changing environments where funding streams can be uncertain and changes in policy and public opinion can have a profound impact on our work. We mitigate this by having a low risk appetite in terms of our financial sustainability. We expect to take risks, within the context of our risk appetite and our financial sustainability, in order to grow our services and deliver our mission to reduce homelessness and rebuild lives. Key strategic risks During the year the Board and the Audit and Risk Committee have reviewed the risk register on at least a quarterly basis and the following are the current key strategic risks: Risk Control and mitigation Reputational damage caused by negative Service incident reports are monitored by our Communications publicity following an incident to do with our Team. We have communication plans in place to respond to operational activities. incidents and / or negative publicity. Failure to protect clients from harm caused by staff or corporate negligence. We have safeguarding policies and procedures in place to protect our clients from harm, including DBS screening and robust recruitment and referencing practices. All our client facing staff receive mandatory safeguarding training. Accounting treatment for pensions will change resulting in a larger pension provision. We have modelled various scenarios through our financial plan and made an estimated provision in the budget. That we commit to growth projects which are unaffordable in the long term. Failure to effectively implement and improve information systems. The Board has agreed a Growth Strategy and an Investment Policy. Our Reserves and Liquidity Policy includes minimum cash and reserves requirements and has been independently reviewed. All investments are modelled through the Financial Plan and agreed by the Board. We have appointed a specialist agency to assist us with designing, procuring and implementing new information management systems. A programme steering group has been established to oversee the project. Internal assurance A framework of key performance indicators and regular reporting to the Executive Team, subcommittees and ultimately the Board aims to ensure that any control issues are identified and that corrective action is taken. St Mungo's runs a quality audit programme for its client facing services to identify areas of good practice and highlight any improvements that are needed. The Audit & Risk Committee reviews the outcome of these reviews on a quarterly basis. 24

27 Internal audit St Mungo's internal audit function is used to provide objective assurance on our control framework and management of risks. Internal audit is not responsible for the design and construction of control systems but undertakes a role to assess their effectiveness. During the year the Audit and Risk Committee has overseen the implementation of a more robust approach to internal audit. As of April, our internal audit function has been delivered by Mazars LLP and a programme of internal audits has been undertaken in order to gain assurance on significant areas of risk and also to check compliance with key controls. Mazar's work across the year has highlighted a number of significant and fundamental priority actions to improve compliance with controls, the implementation of which is being tracked through St Mungo's follow up processes. All fundamental weaknesses have been addressed and other areas have been or are in the process of being addressed. In their annual audit opinion, Mazars LLP confirm that in respect of the areas of activity that they have reviewed, and subject to the weaknesses identified and reported in their internal audit reports, they take the view that St Mungo's has an adequate, effective and reliable framework of internal control and effective risk management and governance processes which provides reasonable assurance regarding the effective and efficient achievement of the organisation's objectives. External assurance The Board has reviewed assurance from a number of external regulatory sources during the year including the Regulator of Social Housing and the Care Quality Commission. An In-depth Assessment of our governance arrangements was undertaken by the Regulator of Social Housing in June This confirmed St Mungo's G2 rating, demonstrating that the Association meets the regulator's governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance. During the year we have maintained our V2 financial viability rating demonstrating that we have the financial capacity to deal with a reasonable range of adverse scenarios but need to manage material risks to ensure continued compliance. St Mungo's has two care homes, both of which were inspected by the Care Quality Commission during /18. Our Chichester Road care home achieved a rating of 'Good' in all 5 inspection areas, hlilldrop Road achieved an overall grading of 'requires improvement' with 3 of the 5 inspection areas graded as good. External audit assurance The work of our external auditors provides further independent assurance on the control environment. Any weaknesses in internal control identified by our external auditors are considered by the Audit & Risk Committee and the Board along with an action plan to address any issues. Fraud & Whistleblowing A Fraud Register has been maintained during the year and reviewed regularly by the Audit & Risk Committee. During the period there were several minor frauds relating to petty cash and one more significant fraud relating to falsified timesheets. St Mungo's has a Whistleblowing Policy that encourages employees and others to express any serious concerns regarding suspected misconduct or malpractice with the organisation. There were no significant cases reported to the Audit and Risk Committee during /18. Conclusion The Board has considered the effectiveness of the risk management and internal control system in place across the organisation for the year ended 31 March and has concluded that a satisfactory control 25

28 framework is in place. Where serious control weaknesses were identified during the year, they have been addressed. Further improvements to strengthen the risk management and internal control framework have been agreed for implementation in /19. Auditor Pursuant to section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and RSM UK Audit LLP will therefore continue in office. Disclosure of Information to the Auditor The Board who held office at the date of the approval of this Trustees' Report confirm that in so far as the Board is aware: there is no relevant audit information of which the Association's auditor is unaware the Board has taken all the steps it ought to have taken to make itself aware of any relevant audit information and to establish that the auditor is aware of that information. Certain information as required by Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) regulations has been included within the Strategic Report. As permitted by section 414C (11) details of future developments, analysis of the development and performance of the business, commentary of key performance indicators and financial review are included in the Strategic Report. This report was approved by the Board in their capacity as company directors. Robert Napier Chair 24 July 26

29 STATEMENT OF TRUSTEES' RESPONSIBILITIES FOR THE ANNUAL REPORT AND FINANCIAL STATEMENTS The Board is responsible for preparing the Strategic Report, the Trustees' Report and the financial statements, in accordance with applicable law and regulations. Board members (who are also directors of the Association for the purpose of company law) are required by Company law and registered social housing legislation to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and Association and of the Group's income and expenditure for that period. In preparing each of the Group and Association financial statements, the Board is required to: select suitable accounting policies and then apply them consistently make judgements and estimates that are reasonable and prudent state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements, and prepare the financial statements on a going concern basis, unless it is inappropriate to presume that the Group and the Association will continue their activities. The Board is responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and Association's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Association and enable them to ensure that its financial statements comply with the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction of Private Registered Providers of Social Housing The Board has general responsibility for taking such steps as are reasonably open to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. The Board is responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. This report was approved by the Board of Trustees on the 24 July and signed on its behalf by: By order of the Board Robert Napier Chair 24 July 27

30 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST MUNGO COMMUNITY HOUSING ASSOCIATION We have audited the financial statements of St Mungo Community hlousing (the 'parent company') and its subsidiaries (the 'group') for which comprise consolidated and association statement of comprehensive income, consolidated and association statement of financial position, consolidated and association statement of changes in reserves, consolidated statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: give a true and fair view of the state of the group's and the parent company's affairs as at 31 March and of the group's income and expenditure for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; have been properly prepared in accordance with the requirements of the Companies Act 2006, the hlousing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: the Trustees' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or the Trustees have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The Trustees are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: the information given in the Strategic Report and the Trustees' Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Strategic Report and the Trustees' Annual Report has been prepared in accordance with applicable legal requirements. 28

31 Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Trustees' Annual Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of Trustees' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Respective responsibilities of Trustees As explained more fully in the Trustees' Responsibilities Statement set out on page 27, the Trustees (who are also the directors of the company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Trustees are responsible for assessing the group's and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements We have been appointed auditors under the Companies Act 2006 and section 151 of the Charities Act 2011 and report in accordance with those Acts. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: This description forms part of our auditor's report. Use of our report This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. ^^CV -U^L A,^c^-;- Andrew Monteith (Senior Statutory Auditor) For and on behalf of RSM UK Audit LLP, Statutory Auditor Chartered Accountants Marlborough hlouse Victoria Road South Chelmsford, CM1 1 LN Date <0^ S^.-^i^oe e-^m'oa-r A=VS 29

32 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For Unrestricted Restricted Note Total Total TURNOVER Operating expenditure ,209 2,423 89,632 86,446 (83,612) (1,942) (85,554) (84,299) OPERATING SURPLUS / (DEFICIT) 8 3, ,078 2,147 Gain / (loss) on disposal of freehold property Interest receivable Interest payable and similar charges (Loss) from associate SURPLUS BEFORE TAX Taxation SURPLUS FOR THE YEAR TOTAL COMPREHENSIVE INCOME FOR THE YEAR (124) 90 (113) (113) (187) ^27}_ (27) 3, ,111 1,926 3, ,111 1,926 3, ,111 1,926 The consolidated results relate wholly to continuing activities. The accompanying notes form part of these financial statements. 30

33 ASSOCIATION STATEMENT OF COMPREHENSIVE INCOME For Note TURNOVER 3 Unrestricted Restricted 86,797 2,423 Total 89,220 Total 86,181 Operating expenditure 3 (83,061) (1,942) (85,003) (83,861) OPERATING SURPLUS 8 3, ,217 2,320 Gain / (loss) on disposal of property 9 Interest receivable 6 Interest payable and similar charges (109) (109) (124) 90 (187) SURPLUS BEFORE TAX Taxation 11 SURPLUS FOR THE YEAR TOTAL COMPREHENSIVE INCOME FOR THE YEAR 3, ,281 2,099 3, ,281 2,099 3, ,281 2,099 The Association's results relate wholly to continuing activities. The accompanying notes form part of these financial statements. 31

34 CONSOLIDATED AND ASSOCIATION STATEMENT OF FINANCIAL POSITION For Group Note FIXED ASSETS Housing properties 12a Other fixed assets 12b Investment in subsidiaries 13 CURRENT ASSETS Trade and other debtors 14 Cash and cash equivalents 21 81, ,218 10,135 22,997 81, ,319 11,407 17,838 Association 81, ,541 10,008 22,455 81, ,512 11,311 17,838 CURRENT LIABILITIES 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 for liabilities Pension provision 19 Other provisions 19 Minority interest TOTAL NET ASSETS 33,131 29,245 32,463 29,149 (17,486) (16,818) (20,895) (20,580) 15,644 97,863 (71,080) (7,661) (1,388) (11) 12,427 11,568 94,746 (71,076) (9,012) (1,046) 94,110 (70,833) (7,661) (1,388) 8,569 91,081 (71,076) (9,012) (1,046) 17,722 13,612 14,228 9,947 RESERVES Restricted reserve Income and expenditure reserve TOTAL RESERVES 20 1,309 16,413 17, ,784 13,612 1,309 12,919 14, ,119 9,947 The accompanying notes form part of these financial statements. The financial statements on pages were approved by the board and authorised for issue 24 July and are signed on its behalf by: h' Robert Napier Sir Leigh Lewis Trustee 32

35 CONSOLIDATED STATEMENT OF CHANGES IN RESERVES Balance ati April 2016 Unrestricted Restricted reserve reserve 11, Total reserves 11,686 Surplus / (deficit) for the year 1, ,926 Balance as at 31 March 12, ,612 Surplus for the year 3, ,111 Balance at 31 March 16,414 1,309 17,723 ASSOCIATION STATEMENT OF CHANGES IN RESERVES Unrestricted reserve Restricted reserve Total reserves -000 Balance ati April , ,848 Surplus / (deficit) for the year 1, ,099 Balance as at 31 March 9, ,947 Surplus for the year 3, ,281 Balance at 31 March 12,919 1,309 14,228 33

36 CONSOLIDATED STATEMENT OF CASH FLOWS Notes OPERATING ACTIVITIES Net cash generated from operations Interest received NET CASH GENERATED FROM OPERATING ACTIVITIES 21 6, ,108 1, ,828/ CASH FLOW FROM INVESTING ACTIVITIES Purchase of tangible fixed assets Proceeds on disposal of tangible fixed assets Purchase of Investments Grants received NET CASH (USED IN)/FROM INVESTING ACTIVITIES (2,028) (3,157) 363 (16) 600 1,623 (1,082) (1,534) CASH FLOW FROM FINANCING ACTIVITIES Interest paid Loan finance NET CASH USED IN FINANCING ACTIVITIES (113) (187) (187) NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR 5, ,838 17, ,997 17,838 34

37 NOTES TO THE FINANCIAL STATEMENTS For 1. LEGAL STATUS St Mungo Community Housing Association ("the Association") is a company limited by guarantee, a public benefit entity and is an English registered social housing provider. The address of the Association's registered office and principal place of business is St Mungo's, 5th Floor, 3 Thomas More Square, London E1W 1YW. 2. ACCOUNTING POLICIES BASIS OF ACCOUNTING These financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS 102"), the Housing SORP 2014 "Statement of Recommended Practice for Registered Housing Providers" and the Accounting Direction for Private Registered Providers of Social Housing The financial statements have been prepared under the historical cost convention and on a going concern basis. The Association is both a registered charity and a registered provider of social housing, and sees both of these areas represented significantly in its activities. In particular, it receives a large amount of charitable income and incurs related expenditure to do this. The Board considers that the financial statements should be prepared to reflect the Association's aims and to satisfy the different needs of users. Therefore the Statement of Comprehensive Income differentiates between restricted and unrestricted funds. Monetary amounts in these financial statements are rounded to the nearest whole 1,000, except where otherwise indicated. BASIS OF CONSOLIDATION Under the Companies Act 2006 the Group has prepared consolidated financial statements. The consolidated financial statements incorporate those of the Association and all of its subsidiaries (i.e. entities that the Group controls through its power to govern the financial and operating policies so as to obtain economic benefits). All financial statements are made up to 31 March. All intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. Where the Group does not control the financial and operating policies of an entity but is able to exert significant influence over them then that entity is accounted for as an Associate. The Group includes its share of the entities result and financial position in it's consolidated financial statements. REDUCED DISCLOSURES In accordance with FRS 102, the Association has taken advantage of the exemption from the following disclosure requirement in the individual financial statements of the Association under Section 7 'Statement of Cash Flows' - Presentation of a Statement of Cash Flows and related notes and disclosures. TURNOVER AND REVENUE RECOGNITION Turnover comprises rental and service charge income receivable in the period net of rent and service charge loss from voids, fees and revenue grants receivable from Local Authorities, the Homes England, other Government departments and charitable bodies, amortisation of deferred capital grants, donations and income from fundraising activities and other services provided in the year (excluding VAT). 35

38 NOTES TO THE FINANCIAL STATEMENTS For Rental income is recognised from the point when properties under development reach practical completion or otherwise become available for letting, net of any voids. Revenue grants are receivable when the conditions for receipt of agreed grant funding have been met. Donations and income from fundraising activities are recognised when the Group has entitlement to these and receipt is probable. Charges for support services funded under Supporting People are recognised as they fall due under the contractual arrangements with Administering Authorities. OTHER INCOME Interest income Interest income is accrued effective interest rate. TANGIBLE FIXED ASSETS - HOUSING PROPERTIES on a time-apportioned basis, by reference to the principal outstanding at the hlousing properties are properties for the provision of social housing and are principally properties available for rent. Completed housing properties are stated at cost less accumulated depreciation and impairment losses. Cost includes the cost of acquiring land and buildings, and expenditure incurred during the development period. Works to existing properties which replace a component that has been treated separately for depreciation purposes, along with those works that enhance the economic benefits of the assets, are capitalised as improvements. Such enhancements can occur if improvements result in: An increase in rental income; A material reduction in future maintenance costs; A significant extension to the life of the property; DONATED LAND AND OTHER ASSETS Land or other assets which have been donated by a government source is added to the cost of assets at the fair value of the land at the time of the donation. The difference between the fair value of the asset donated and the consideration paid is treated as a non- monetary government grant and included within the Statement of Financial Position as a liability. The terms of the donation are considered to be performance related conditions. Where the donation is not from a public source, the value of the donations less the consideration is included in income. GOVERNMENT GRANTS Government grants include grants receivable from Homes England, local authorities and other government bodies. Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. Government grants received for housing properties are recognised as income over the useful economic life of the structure of the asset and, where applicable, the individual components of the structure (excluding land) under the accruals model. Government grants relating to revenue are recognised as income over the periods when the related costs are incurred once reasonable assurance has been gained that the Association will corn ply with the conditions and the funds will be received. 36

39 NOTES TO THE FINANCIAL STATEMENTS For OTHER GRANTS Grants received from non-government sources are recognised using the performance model. Grants are recognised as income when the associated performance conditions are met. DEPRECIATION OF HOUSING PROPERTIES Freehold land or assets under construction are not depreciated. The Group separately identifies the major components of its housing properties and charges depreciation so as to write-down the cost of each component to its estimated residual value, on a straight line basis over the shorter of the length of the lease or the following years: Structure Land Kitchens Bathrooms Pitch roof Flat roof Windows Electrical works Boilers 60 years Nil 10 years 15 years 60 years 20 years 25 years 15 years 10 years IMPAIRMENTS OF FIXED ASSETS An assessment is made at each reporting date of whether indications exist that an Asset or Cash Generating Unit (CGU) may be impaired, or that an impairment loss previously recognised has fully or partially reversed. If such indications exist, the Group estimates the recoverable amount of the asset. Service potential of an asset and cash flow generation are considered in our assessment. Where there is an indication that an asset or CGU may be impaired, the recoverable amount of any affected asset or CGU is estimated and compared with its carrying amount. The recoverable amount is the higher of fair value less costs to sell and value in use for social housing (VIU-SH). The fair value less cost to sell is estimated using the market value of the property less cost to sell where a market exists, or the existing use value calculation for social housing (EUV-SH). Impairment losses are recognised through expenditure. Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Reversals of impairment losses are recognised through expenditure. On reversal of an impairment loss, the depreciation or amortisation is adjusted to allocate the asset's revised carrying amount (less any residual value) over its remaining useful life. OTHER TANGIBLE FIXED ASSETS Tangible fixed assets are initially measured at cost, net of depreciation and any impairment losses. Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculated to write off the cost of each asset to its estimated residual value on a straight line basis over its expected useful life, as follows:- Motor vehicles Office equipment, fixtures and fittings Computer equipment Leasehold improvements over 4 years over 4 years over 4 years up to the break clause in the lease Residual value is calculated on prices prevailing at the reporting date, after estimated costs of disposal, for the asset as if it were at the age and in the condition expected at the end of its useful life. 37

40 NOTES TO THE FINANCIAL STATEMENTS For TAXATION St Mungo Community Housing Association has charitable status and is registered with the Charity Commission and is therefore exempt from paying Corporation Tax on charitable activities. Irrecoverable VAT is not separately analysed and is charged to expenditure when incurred. It is allocated as part of the expenditure to which it relates. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is not discounted. Deferred tax liabilities are recognised in respect of all timing differences that exist at the reporting date. Deferred tax assets are recognised only to the extent that it is probable that they will be recovered by the reversal of deferred tax liabilities or other future taxable surpluses. Deferred tax is recognised on income or expenses from subsidiaries that will be assessed to or allow for tax in a future period except where the Group is able to control the reversal of the timing difference and it is probable that the timing difference will not reverse in the foreseeable future. Current and deferred tax is charged or credited as income or expenditure, except when it relates to items charged or credited to other comprehensive income or equity, when the tax follows the transaction or event it relates to and is also charged or credited to other comprehensive income, or equity. LEASES Operating Leases The Group enters into operating leases for which the annual rentals are charged to expenditure on a straight line basis over the lease term. Rent free periods or other incentives received for entering into an operating lease are accounted for as a reduction to the expense and are recognised, on a straight-line basis over the lease term. EMPLOYEE BENEFITS The costs of short-term employee benefits are recognised as a liability and an expense. Employees are entitled to carry forward up to five days of any unused holiday entitlement at the reporting date. The cost of any unused entitlement is recognised in the period in which the employee's services are received. The best estimate of the expenditure required to settle an obligation for termination benefits is recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits. RETIREMENT BENEFITS Defined contribution plans For defined contribution schemes the amount charged is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments. Defined benefit plans The group participates in two funded multi-employer defined benefit schemes, the Social Housing Pension Scheme (SHPS) and Pension Trust's Growth Plan (GP). Both schemes are closed to new employees. For the SHPS and GP, contributions are recognized in the period to which they relate as there is insufficient information available to use defined benefit accounting. A liability is recognised for contributions arising from an agreement with the multi-employer plan that determines how the Group will fund a deficit. Contributions are discounted when they are not expected to be settled wholly within 12 months of the period end. 38

41 NOTES TO THE FINANCIAL STATEMENTS For FINANCIAL INSTRUMENTS The Group has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 Other Financial Instruments Issues' of FRS 102, in full, to all of its financial instruments. Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument, and are offset only when the Group currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Financial assets Debtors Debtors which are receivable within one year and which do not constitute a financing transaction are initially measured at the transaction price. Debtors are subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses. A provision for impairment of debtors is established when there is objective evidence that the amounts due will not be collected according to the original terms of the contract. Impairment losses are recognised in income for the excess of the carrying value of the debtor over the present value of the future cash flows discounted using the original effective interest rate. Subsequent reversals of an impairment loss that objectively relate to an event occurring after the impairment loss was recognised, are recognised immediately in income. Financial liabilities Creditors Creditors payable within one year that do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled. Borrowings Borrowings are initially recognised at the transaction price, including transaction costs, and subsequently measured at amortised cost using the effective interest method. Interest expense is recognised on the basis of the effective interest method and is included in interest payable and other similar charges. De-recognition of financial assets and liabilities A financial asset is de-recognised only when the contractual rights to cash flows expire or are settled, or substantially all the risks and rewards of ownership are transferred to another party, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party. A financial liability (or part thereof) is derecognised when the obligation specified in the contract is discharged, cancelled or expires. PROVISIONS Provisions are recognised when the Group has an obligation at the reporting date as a result of a past event which it is probable will result in the transfer of economic benefits and that obligation can be estimated reliably. Provisions are measured at the best estimate of the amounts required to settle the obligation. Where the effect of the time value of money is material, the provision is based on the present value of those amounts, discounted at the pre-tax discount rate that reflects the risks specific to the liability. The unwinding of the discount is recognised within interest payable and similar charges. RESERVES The Group establishes restricted funds for specific purposes where their use is subject to restrictions imposed by third parties. 39

42 NOTES TO THE FINANCIAL STATEMENTS For 3. TURNOVER, COST OF SALES, OPERATING COSTS AND OPERATING SURPLUS Continuing activities - Group SOCIAL HOUSING ACTIVITIES Income and expenditure from social housing lettings (note 4) OTHER SOCIAL HOUSING ACTIVITIES Supporting people contract income NON SOCIAL HOUSING ACTIVITIES Criminal Justice Group Support Sen/ices Skills and Employment Fundraising Central Activities Central Services Real Lettings Turnover Operating Operating expenditure surplus/(deficit) 35,544 24,257 1,479 9, , ,334 35,161 23,011 1,527 10,215 2,083 3,574 1,197 2,574 6, ,246 (48) (609) (1,317) 6,973 (638) (2,034) ,632 85,554 4,078 SOCIAL HOUSING ACTIVITIES Income and expenditure from social housing lettings (note 4) OTHER SOCIAL HOUSING ACTIVITIES Supporting people contract income NON SOCIAL HOUSING ACTIVITIES Criminal Justice Group Support Services Skills and Employment Fund raising Central Activities Central Services Real Lettings Turnover Operating Operating expenditure surplus/(deficit) 34,562 25,857 1,619 8, , ,311 32,975 25,177 1,636 9,567 1,731 3, ,941 4,917 1, (17) (1,049) (830) 5,564 (571) (3,611) ,446 84,299 2,147 40

43 St IWungo Community Housing Association NOTES TO THE FINANCIAL STATEMENTS For 3. TURNOVER, COST OF SALES, OPERATING COSTS AND OPERATING SURPLUS CONTINUED Continuing activities - Association SOCIAL HOUSING ACTIVITIES Income and expenditure from social housing lettings(note4) OTHER SOCIAL HOUSING ACTIVITIES Supporting people contract income NON SOCIAL HOUSING ACTIVITIES Criminal Justice Group Support Services Skills and Employment Fundraising Central Activities Central Services Real Lettings Tum "r 35,544 24,257 1,479 9, , ,334 35,161 23,011 1,527 10,033 1,845 3,574 1,066 2,574 6,212 Operating surplus/(deficit ) 383 1,246 (48) (470) (1,317) 6,973 (638) (2,034) ,220 85,003 4,217 SOCIAL HOUSING ACTIVITIES Income and expenditure from social housing lettings (note 4) OTHER SOCIAL HOUSING ACTIVITIES Supporting people contract income NON SOCIAL HOUSING ACTIVITIES Criminal Justice Group Support Services Skills and Employment Fundraising Central Activities Central Services Real Lettings Turnover Operating expenditure 34,562 25,621 1,619 8, , ,311 32,975 24,899 1,636 9,306 1,731 3, ,042 4,917 Operating surplus/(deficit ) 1, (17) (1,070) (830) 5,564 (572) (3,458) ,181 83,861 2,320 41

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45 NOTES TO THE FINANCIAL STATEMENTS For 5. ACCOMMODATION IN MANAGEMENT AND DEVELOPMENT Association and Group Supported Housing Supported housing Care homes Short stay housing Total number of Supported Housing managed units Units/Bed spaces 2, ,253 Units/Bed spaces 2, ,202 Other Units Real Lettings Owned but managed by another organisation ,031 2, INTEREST RECEIVABLE AND SIMILAR INCOME Group Interest on bank deposits Association Interest on bank deposits INTEREST PAYABLE AND SIMILAR CHARGES Group Interest arising on; Other loans Unwinding of discount factor on pension deficit provision Association Interest arising on: Other loans Unwinding of discount factor on pension deficit provision

46 NOTES TO THE FINANCIAL STATEMENTS For 8. OPERATING SURPLUS Operating surplus is stated after charging/(crediting): Depreciation of housing properties Depreciation of other tangible fixed assets Operating lease rentals Note 12A 12B 23 Group 3, ,214 Association 3, ,591 3, ,214 3, ,591 Fees payable to RSM UK Audit LLP and its associates in respect of both audit and non- audit services are as follows; Group Association Audit services - statutory audit of the group Other services: - Taxation compliance services LOSS)/GAIN ON DISPOSAL OF PROPERTY Group Disposal proceeds Fair value of leasehold interest disposed Carrying value of Fixed assets Gain/(loss) on disposal 363 (272) 90 1,120 (1,244) (124) Association Disposal proceeds Fair value of leasehold interest disposed Carrying value of Fixed assets Gain/(loss) on disposal 2, (272) 90 2,017 1,120 (1,244) (124) During the year the Association disposed of a property at All Hallows Road that did not meet current operational requirements. The property disposal yielded a surplus of 267,000.There were also disposals of partially depreciated assets (mainly boilers), resulting in a loss of 177,000. The net surplus will be recycled into new property development activities furthering the Associations aims and objectives. 10. EMPLOYEES The average monthly number of persons (including directors) employed by the Association and Group during the year was: Full time Part time (full time equivalent 161) (:139) Locums (full time equivalent 151) (:148) Group and Association No. 1, ,475 Group and Association No. 1, ,520 44

47 NOTES TO THE FINANCIAL STATEMENTS For 10. EMPLOYEES CONTINUED Staff costs for the above persons: Wages and salaries Social security costs Defined contribution pension cost (note 24) Other pension costs and current service cost (note 24) Group and Association 44,286 3, Group and Association 43,279 3, ,004 48,177 The full time equivalent number of staff who received remuneration (excluding directors): 60,001-70,000 70, ,000 80, ,000 90, , , , , , , ,000 EXECUTIVE DIRECTORS Emoluments for all Executive Directors employed by the Association for, including pension contributions, are detailed below: Position Chief Executive Development Director Finance Director Services Director People and Governance Director Strategy Director Name Howard Sinclair Rebecca Sycamore Sonia Smith David Fisher Helen Giles Dominic Williamson Actual Full time gross salary annual and salary emoluments 146, ,739 92,000 96, , , , ,355 96, ,688 80,000 76, , ,070 The Chief Executive is an ordinary member of the Association's Scottish Widows defined contribution pension scheme and no enhancement or special terms apply. The Association does not make any further contributions to an individual pension arrangement for the Chief Executive. Remuneration and fees Association contributions to money purchase pension schemes Compensation for loss of office 638,485 19, ,584 27,698 97, , ,282 None of the Trustees received any emoluments in the year. Trustees claimed 32 in expenses during the year (: 136). Remuneration paid to key management personnel includes amounts paid to Executive Directors (inclusive of National Insurance) and Trustees. During the period this amounted to 775,610 (: 784,798). 45

48 NOTES TO THE FINANCIAL STATEMENTS For 11. TAXATION Factors affecting the tax charge for the year. The tax assessed for the year is lower than the standard rate of corporation tax in the UK (19%). The differences are explained below: Group Association Surplus on ordinary activities before tax Surplus on ordinary activities multiplied by the standard rate of corporation tax in the UK of 19% (: 20%) Effects of: Exempt charitable activities 4, (781) 1, (385) 4, (813) 2, (420) Tax expense 12A. TANGIBLE FIXED ASSETS - HOUSING PROPERTIES Group and Association Social housing properties held for letting Cost At 1 April Properties acquired Works to existing properties Schemes completed Disposals At 31 March Properties Completed under properties construction Total 105,466 1,074 3,608 (720) 1,861 1, (3,608) 107,327 1,748 1,710 0 (720) 109, ,064 Depreciation and impairments Ati April Depreciation charged in year Released on disposal 25,896 3,201 (448) 25,896 3,201 (448) At 31 March 28,649 28,649 Net Book Value At 31 March At 31 March 80,779 80, ,288 81,416 81,431 At each reporting date an assessment must be made of whether any indicators of impairment exist. A review has been undertaken and no impairment indicators have been identified. Cumulative impairments on housing properties amounted to 856,000 at 31 March (: 856,000). Development and works to existing properties include capitalised administration costs of 86,818 (: 41,791). Properi:ies acquired amount of 1,748,000 reflects grossing up of historical grant transferred for Middle Street 1,461,000 to St Mungo's. The lease transfer to St Mungo's was initially included only at net cost value awaiting the decision by GLA. 46

49 NOTES TO THE FINANCIAL STATEMENTS For 12A.TANGIBLE FIXED ASSETS - HOUSING PROPERTIES CONTINUED EXPENDITURE ON WORKS TO EXISTING PROPERTIES Group and Association Total capitalised costs in respect of existing properties and replacement components Amounts charged to income and expenditure 1,710 1,710 3,157 3,157 HOUSING PROPERTIES BY TENURE Group and Association Freehold land and buildings Long leasehold land and buildings Short leasehold land and buildings 70,915 7,476 3,024 81,415 72,748 7,110 1,573 81,431 12B. TANGIBLE FIXED ASSETS-OTHER Group and Association Cost 1 April Additions Disposals 31 March Depreciation and impairment: 1 April Depreciation charged in year 31 March Carrying amount: 31 March 31 March Computers Equipment Furniture and Equipment Leasehold improvements Motor vehicles Total 1, , INVESTMENT IN SUBSIDIARIES AND ASSOCIATES Association Cost: 1 April Investment In Street Impact London Investment In Street Impact Brighton Investment in Social Impact Bristol 31 March Impairment: 1 April and 31 March Carrying amount: 31 March 31 March (44)

50 NOTES TO THE FINANCIAL STATEMENTS For 13. INVESTMENT IN SUBSIDIARIES AND ASSOCIATES CONTINUED The St Mungo Community Housing Association subsidiary undertakings are: Name of undertaking Class of Country of Proportion of nominal Nature of Business shareholding incorporation value held directly Broadway Homelessness and Ordinary England 100% Dormant Support Broadway Real Enterprises Limited Ordinary England 100% Provision of HR consultancy and database development Street Impact Limited Ordinary England 100% Housing and supporting rough sleepers Street Impact London Ordinary Limited England 100% Housing and supporting rough sleepers. Street Impact Brighton Ordinary Limited England 100% Housing and supporting rough sleepers. Additionally St Mungo Community Housing Association owns 33% of Social Impact Bristol Limited. 14. DEBTORS Amounts falling due within one year: Rent and services receivable Less: provision for bad and doubtful debts Social Housing Grant receivable Trade debtors Other debtors Prepayments and accrued income Group 3,255 (1,066) 2,189 6, ,759 2,196 (690) 1, , Association 3,255 (1,066) 2,189 6, ,722 2,196 (690) 1, , ,135 11,407 10,008 11, CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Rent and service charges received in advance Deferred capital grants (note 17) Trade creditors Amounts owed to subsidiary undertakings Other taxation and social security costs Other creditors Accruals and deferred income Group 2,378 2,492 1,574 1, ,230 1, ,176 1, ,055 Association 2,378 1, ,599 1, ,041 2,492 1,444 1,230 3,820 1, ,017 17,486 16,818 20,894 20,580 48

51 NOTES TO THE FINANCIAL STATEMENTS For 16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Long-term loan Deferred capital grants (note 17) ,833 Group 71,077 Association 70,833 71,077 71,080 71,077 70,833 71,077 The loan amount reflects the 250,000 drawn down net off the arrangement fee to provide working capital for Street Impact London Limited. 17. DEFERRED CAPITAL GRANT Association and Group As at 1 April Grant receivable not received (1) Grant received in the year (2) Capital grant released As at 31 March 72,520 72, , (1,574) (1,444) 72,407 72,520 In full the Association has received Social Housing Grants of 95,718,000 from Government Bodies (: 94,263,000). 1) The 600,000 grant receivable in was received in -18 2) Grant received in year of 1,461,000 is the historical grant transferred to St Mungo with lease for Middle Street 18. FINANCIAL INSTRUMENTS Financial assets: Debt instruments measured at amortised cost Financial liabilities: Measured at amortised cost Group 8,634 10,911 10,405 9,994 Association 8,507 14,342 10,310 13, PROVISIONS FOR LIABILITIES Group and Association 1 April Utilised in the year Additional provision in year Unwinding of discount factor (interest expense) Deficit contribution paid Re-measurement - impact of any change in assumptions 31 March SHPS Pension 8, (1,357) (100) GP Pension 30 (3) Pension Total 9, (1,360) (100) Dilapidations 1,046 (6) 348 Total 19,070 (6) (1,360) (100) 7, ,661 1,388 18,060 Pension: The SHPS/GP provision represents the net present value of the commitment to the multi-employer pension scheme in respect of past deficits Dilapidation: This represents the anticipated cost of making good properties at the end of their lease terms. 49

52 NOTES TO THE FINANCIAL STATEMENTS For 20. MEMBERS AND RESERVES The Association is limited by guarantee and consequently has no share capital. Each of the Association's members agrees to contribute 1 in the event of the Association winding up. Number of members 1 April Number 12 Number 11 Joined during the year Left during year 31 March 2 (4) 10 3 (2) 12 RESTRICTED RESERVES Westminster Outreach Westminster Painting & Decorating Bricks and Mortar Basic Skills Putting Down Roots Psychology Intervention Team - Lifeworks Recovery College Palliative Care Service Reading Outreach Wellbeing Day Feltham Custody Housing First Reading Putting Down Roots - Jo Malone Bristol Putting Down Roots - Jo Malone London SOS Bristol Bristol Shelter No Second Night Out - North Hub Street Legal Metro Project Roll on Monday Big Lottery (see note 27) Real Confidence Putting Down Roots For Young People Clapham & South west recovery college Horn of Africa SELHP Project Recovery College MOT West Oxford Young People Building Better Opportunities Development- Mare Street Work and Learning Auckland Hill Other Total Balance at 1 April Income Expenditure (19) (44) (26) (30) (187) (158) (28) (20) (2) (25) (39) (20) (91) (104) (72) (17) (18) (50) (38) (96) (120) (87) (92) (1) (56) (6) (470) 2,423 (1,942) Balance at 31 March (4) (18) (47) 93 (9) (16) ,309 Restricted reserves The reserves represent the value of donations and grants which are expendable in furtherance of some particular aspect of the objects of the Association. Further detail around funds receivable through the Big Lottery Fund are included in note

53 NOTES TO THE FINANCIAL STATEMENTS For 21. RECONCILIATION OF PROFIT AFTER TAX TO NET CASH GENERATED FROM /(USED IN) OPERATIONS Surplus/(deficit) for the year 4,111 1,926 Reconciliations to operating surplus (Gain)/Loss on disposal of tangible fixed assets Loss from Associate Interest receivable Interest payable Operating Surplus Adjustments for non-cash items: Amortisation of capital grant Depreciation of tangible fixed assets Accelerated depreciation on tangible fixed assets Impairment of tangible fixed assets Defined Benefit Pension Scheme payment toward deficit lncrease/(decrease) in provisions Defined Benefit Pension Scheme actuarial gain/(loss) Operating cash flows before movements in working capital Decrease/(increase) in trade and other debtors lncrease/(decrease) in trade and other creditors Cash generated from/(used in) operations (90) 27 (83) 113 4,078 (1,574) 3,319 (1,251) 342 (100) 4, , (90) 187 2,147 (1,444) 3, (985) (250) 241 3,297 (3,471) 1,912 1,738 CASH AND CASH EQUIVALENTS Group Cash and cash equivalents represent:- Cash at bank Short-term deposits 1,509 21,488 1,500 16,338 22,997 17,838 Group and Association Capital expenditure contracted for but not provided in the financial statements Expenditure authorised by the board, but not contracted Future capital expenditure commitments are supported by confirmed capital grant 467 6,207 6,

54 NOTES TO THE FINANCIAL STATEMENTS For 23. COMMITMENTS UNDER OPERATING LEASES Group and Association The total future minimum lease payments are payable: Within one year Between one and five years After five years 2,086 7,199 4,673 2,466 7,966 5,760 13,958 16, RETIREMENT BENEFITS The Group participates in four defined contribution pension schemes for all qualifying employees. The assets of the schemes are held separately from those of the Group in independently administered funds. The contributions payable by the Group charged to expenditure, and contributions payable to the fund at the year end are included in creditors as follows: Administrator Contributions payable charged to Statement of Comprehensive Income Contributions payable to the fund included in creditors Scottish Widows Pensions Trust NEST AEGON Other (117) (10) (144) (2) 7 3 (45) (162) (156) SOCIAL HOUSING PENSION SCHEME The Group participates in the scheme, a multi-employer scheme which provides benefits to some 500 non-associated employers. The scheme is a defined benefit scheme in the UK. It is not possible for the Group to obtain sufficient information to enable it to account for the scheme as a defined benefit scheme. Therefore it accounts for the scheme as a defined contribution scheme. The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December This, together with documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK. The scheme is classified as a 'last-man standing arrangement'. Therefore the Group is potentially liable for other participating employers' obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the scheme. Participating employers are legally required to meet their share of the scheme deficit on an annuity purchase basis on withdrawal from the scheme. A full actuarial valuation for the scheme was carried out with an effective date of 30 September This actuarial valuation was certified on 23 November 2015 and showed assets of 3,123 million, liabilities of 4,446 million and a deficit of 1,323 million. To eliminate this funding shortfall, the Trustees and the participating employers have agreed that additional contributions will be paid, in combination from all employers, to the scheme as follows: Deficit contributions Tier 1 from 1 April 2016 to 30 September 2020: each year on 1st April) 40.6 million per annum (payable monthly and increasing by 4.7% 52

55 NOTES TO THE FINANCIAL STATEMENTS For 24. RETIREMENT BENEFIT CONTINUED Tier 2 from 1 April 2016 to 30 September 2023: each year on 1st April) Tier 3 from 1 April 2016 to 30 September 2026: each year on 1st April) Tier 4 from 1 April 2016 to 30 September 2026: each year on 1st April) 28.6 million per annum (payable monthly and increasing by 4.7% 32.7 million per annum (payable monthly and increasing by 3.0% 31.7 million per annum (payable monthly and increasing by 3.0% Note that the scheme's previous valuation was carried out with an effective date of 30 September 2011; this valuation was certified on 17 December 2012 and showed assets of 2,062 million, liabilities of 3,097 million and a deficit of 1,035 million. To eliminate this funding shortfall, payments consisted of the Tier 1, 2 & 3 deficit contributions. Where the scheme is in deficit and where the Group has agreed to a deficit funding arrangement, the Group recognises a liability for this obligation. The amount recognised is the net present value of the deficit reduction contributions payable under the agreement that relates to the deficit. The present value is calculated using the discount rate detailed in these disclosures. The unwinding of the discount rate is recognised as a finance cost. PRESENT VALUE OF PROVISION Present value of provision 7,634 8, ,724 RECONCILIATION OF OPENING AND CLOSING PROVISIONS Provision at start of period Unwinding of the discount factor (interest expense) Deficit contribution paid Re-measurements - impact of any change in assumptions 8, (1,357) (100) 9, (1,169) , (965) (57) Re-measurements - amendments to the contribution schedule 2,522 Provision at end of period 7,634 8,982 9,724 INCOME AND EXPENDITURE IMPACT Interest expense Re-measurements - impact of any change in assumptions Re-measurements - amendments to the contribution schedule Rate of discount (100) % per annum (57) 2, % per % per annum annum The discount rates shown above are the equivalent single discount rates which, when used to discount the future recovery plan contributions due, would give the same results as using a full AA corporate bond yield curve to discount the same recovery plan contributions. 53

56 NOTES TO THE FINANCIAL STATEMENTS For 24. RETIREMENT BENEFIT CONTINUED PENSION TRUST - GROWTH PLAN The Group participates in the scheme, a multi-employer scheme which provides benefits to some 1,300 non-associated participating employers. The scheme is a defined benefit scheme in the UK. It is not possible for the Group to obtain sufficient information to enable it to account for the scheme as a defined benefit scheme. Therefore it accounts for the scheme as a defined contribution scheme. The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December This, together with documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK. The scheme is classified as a'last-man standing arrangement'. Therefore the Group is potentially liable for other participating employers' obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the scheme. Participating employers are legally required to meet their share of the scheme deficit on an annuity purchase basis on withdrawal from the scheme. A full actuarial valuation for the scheme was carried out at 30 September This valuation showed assets of 780 million, liabilities of 928 million and a deficit of 148 million. To eliminate this funding shortfall, the Trustee has asked the participating employers to pay additional contributions to the scheme as follows: Deficit contributions: From 1 April 2013 to 31 March 2023: 13.9 million per annum (payable monthly and increasing by 3% each on 1st April) A full actuarial valuation for the scheme was carried out at 30 September This valuation showed assets of 793 million, liabilities of 970 million and a deficit of 177 million. To eliminate this funding shortfall, the Trustee has asked the participating employers to pay additional contributions to the scheme as follows: Deficit contributions From 1 April 2016 to 30 September 2025: 12.9 million per annum (payable monthly and increasing by 3% each on 1st April). From 1 April 2016 to 30 September 2028: 54,560 per annum (payable monthly and increasing by 3% each on 1st April). The recovery plan contributions are allocated to each participating employer in line with their estimated share of the Series 1 and Series 2 scheme liabilities. Where the scheme is in deficit and where the Group has agreed to a deficit funding arrangement the Group recognises a liability for this obligation. The amount recognised is the net present value of the deficit reduction contributions payable under the agreement that relates to the deficit. The present value is calculated using the discount rate detailed in these disclosures. The unwinding of the discount rate is recognised as a finance cost. Present value of provision RECONCILIATION OF OPENING AND CLOSING PROVISIONS 2016 Provision at start of period Unwinding of the discount factor (interest expense) Deficit contribution paid Re-measurements - impact of any change in assumptions 30 (3) 32 1 (3) 1 ' (4) Re-measurements - amendments to the contribution schedule 9 Provision at end of period