Annual Report and Accounts 2019/20 We are sounding a call to improve affordable housing across the UK Clarion Housing Group Annual Report 2019 – 20 Contents 3 Contents Introduction Audit Report Who we are and what we do 4 Independent Auditor’s Report to Clarion Housing Statement from the Group Chief Executive 6 Group Limited 76 Statement from the Chair 8 Board, Executive Directors and Advisers 10 External Environment 11 Financial Statements Strategic and Group Statement of Comprehensive Income 78 Parent Statement of Comprehensive Income 79 Director’s Report Group Statement of Financial Position 80 Parent Statement of Financial Position 81 Statements of Changes in Capital and Reserves 82 Our strategy: a roadmap to deliver 12 Group Statement of Cash Flows 83 The Clarion difference 14 Notes to the Financial Statements 85 We’re working to build thriving communities 22 We’re a partner to deliver a range of housing schemes 24 We deliver a social return on investment 28 Underpinning our future 31 We’re empowering and enabling our people to make a genuine difference 32 Giving guidance and opportunities 36 We’re speaking up in government to shape policy 40 Financial review of 2019/20 44 Treasury Management Report 48 Value for Money 50 Principal risks and uncertainties 56 Clarion Housing Group Board 60 Group Executive Team 64 Governance structure 68 Corporate governance 69 Report of the Remuneration and Nomination Committee 70 Report of the Audit and Risk Committee 71 Report of the Treasury Committee 72 Report of the Investment Committee 73 Board statement on the effectiveness of the system of internal control for the period ending 31 March 2020 74 Statement of Board’s responsibilities in respect of the Strategic Report, the Report of the Board and the financial statements 75 Annual Report 2019/20 Clarion Housing Group 4 Introduction Who we are and what we do There is a housing crisis in our country. There simply aren’t enough affordable and suitable places charitable foundation) we provide opportunities for for people to live. You might have experienced this our residents to thrive – supporting people into work, yourself, or have friends and family who have. improving neighbourhoods and doing it all sustainably. We believe having a home to call your own is fundamental We use our scale, experience and talent to to being able to access the right opportunities in life. influence change. Clarion will lead the call for That is why our mission is to provide good quality, affordable housing and we’ll lead by example. affordable homes and neighbourhoods to people failed by the market. We’re all driven by a shared purpose at Clarion. We want to ensure that everyone has the opportunity to build a better future and we’re relentless in pursuing it. As the country’s largest housing association with We have 125,000 125,000 properties nationwide, we provide a home to 350,000 people. We build more than two thousand new homes a year and through Clarion Futures (our homes and work across over 150 local authorities Clarion Housing Group Annual Report 2019/20 Who we are and what we do 5 Introduction Strategic and Director’s Report For residents For investors We’re a landlord you can We’re a safe pair of hands speak to when you really with low risks delivering need to social returns Audit Report Financial Statements Financial For employees For government We invest in our We’re a thought leader, colleagues and help helping to shape policy them make a difference on affordable housing For the private sector For local authorities We’re a partner to deliver We’re here to respond and affordable housing build cohesive communities Annual Report 2019/20 Clarion Housing Group 6 Statement from the Group Chief Executive Statement from the Group Chief Executive In my first update to you as Group Chief Executive last year, I talked with pride about our achievements and the importance of having a strong financial foundation. Clare Miller The world has changed since then, but I am pleased Group Chief to report that our commitment to long-term financial Executive planning has left us in a strong position to do what matters most, to support our staff and residents through this pandemic and beyond. However long the public health crisis lasts, Clarion will stand by our staff, provide extra support to our residents in greatest need and continue to build desperately needed affordable housing. This commitment is underpinned by an excellent group performance in 2019/20, which is of “As a social landlord course the focus of this report. we provide housing Our results, against a backdrop of Brexit, political uncertainty and latterly Covid-19, clearly demonstrate our that simply wouldn’t progress, our resilience and our capacity to deliver upon our ambitions. We have increased our turnover by 3% be affordable at and our operating surplus for the year by 4%. As a charity, all of these gains are retained by the business to invest in improving services and delivering more new homes. An market prices.” example of this is our investment of £631 million in new build homes during in the year - this is four times our surplus for the year and only achievable through retaining the confidence of our banks and investors who continue to help fund our growth. As the largest social landlord in the country, we have more than 350,000 people who count on us to provide a high quality service. I am pleased to say that our performance was vindicated by residents and the regulator alike over the last 12 months. Customer satisfaction was above our target of 80% and our regulatory G1, V1 rating was reaffirmed, the highest level that can be awarded. I would like extend my gratitude to every single one of my colleagues; it is thanks to your determination, skill and commitment that we have reached these goals. I am unapologetic about my ambition for our organisation. I know my colleagues share my determination to do even more to provide and maintain housing for those failed by the market. This year we completed 2,101 new homes, of which 86% were for affordable tenures. This represents an increase of 69% over the last 12 months and shows how quickly we are scaling up as a developer, whilst remaining focused on building homes that meet the needs of people on low and middle incomes. The pandemic will have an impact on the construction sector, but the majority of our sites are up and running and our team will continue to deliver sustainable growth in the number of new homes. Clarion Housing Group Annual Report 2019/20 Statement from the Group Chief Executive 7 Introduction Strategic and Director’s Report Our organisation has more than 100 years of history and While many of Clarion Futures’ programmes have an our charitable mission is as integral to us today as it was immediate and life changing impact, we are equally to our founder, William Sutton. As a social landlord we committed to the long-term improvement of our provide housing that simply wouldn’t be affordable at communities. All Clarion residents deserve to live in market prices. Every week we save our residents in excess sustainable homes and in order to make sure that is the of £8 million by charging subsidised and affordable rents. case we need a vision fit for the next generation. Our Over the course of a year, this adds up to an economic Clarion 2040 programme will drive our asset strategy contribution of £430 million. for the next twenty years, as we upgrade and invest in homes at scale. Clarion Futures has continued to make interventions that transform lives, supporting nearly 4,000 people into work, We are all living through uncertain times, but our role in helping thousands to access advice on how to manage society has never been more important. Clarion will lead Audit Report their finances and expanding our youth engagement the call for affordable housing and we will lead projects all over the country. by example. Building new homes, supporting those in greatest need and investing in communities across the country. Financial Statements Financial 2,101 new homes 69% increase from last year Annual Report 2019/20 Clarion Housing Group 8 Statement from the Chair Statement from the Chair I would like to begin by thanking the Group Board for their hard work and dedication over the last 12 months and to express my gratitude and appreciation for their David Avery support during my first year as Chair. Most importantly, Group Chair their collective knowledge and experience has been a great benefit to the whole organisation as we work together to protect residents and staff during these unprecedented times. The board has a new look to it this year, as we said goodbye to some longstanding colleagues and welcomed four new members to our ranks. I am grateful for all the work of Brian Stewart, Tania Brisby and particularly to Neil Goulden, my predecessor as Chair. They have made “Clarion will be an important contribution to Clarion’s history for which playing its part in we will always be thankful. I am delighted we have been joined around the board supporting residents, table by: Amanda Metcalfe, Gavin Barwell, Graham Farrant and Tom Smyth. They bring a broad range of protecting staff and professional experience to Clarion, united by a shared passion of putting our social purpose at the heart of continuing to provide everything we do. We could not have predicted the devastating impact that quality housing for Covid-19 has had on our society.