Caseware UK (AP4) 2023.0.135 2023.0.135 2024-03-312024-03-31falsetrue2023-04-01falseThe trading activity of Strata Residential Finance PLC (the ‘company’) is the provision of funding to developers with experience and demonstrable track record who are carrying out residential property developments with planning permission in the South of England.44falsefalse 09329385 2023-04-01 2024-03-31 09329385 2022-04-01 2023-03-31 09329385 2024-03-31 09329385 2023-03-31 09329385 2022-04-01 09329385 1 2023-04-01 2024-03-31 09329385 1 2022-04-01 2023-03-31 09329385 2 2023-04-01 2024-03-31 09329385 2 2022-04-01 2023-03-31 09329385 5 2023-04-01 2024-03-31 09329385 5 2022-04-01 2023-03-31 09329385 d:CompanySecretary1 2023-04-01 2024-03-31 09329385 d:Director1 2023-04-01 2024-03-31 09329385 d:Director2 2023-04-01 2024-03-31 09329385 d:Director3 2023-04-01 2024-03-31 09329385 d:Director4 2023-04-01 2024-03-31 09329385 d:RegisteredOffice 2023-04-01 2024-03-31 09329385 e:CurrentFinancialInstruments 2024-03-31 09329385 e:CurrentFinancialInstruments 2023-03-31 09329385 e:Non-currentFinancialInstruments 2024-03-31 09329385 e:Non-currentFinancialInstruments 2023-03-31 09329385 e:CurrentFinancialInstruments e:WithinOneYear 2024-03-31 09329385 e:CurrentFinancialInstruments e:WithinOneYear 2023-03-31 09329385 e:ReportableOperatingSegment1 2023-04-01 2024-03-31 09329385 e:ReportableOperatingSegment1 2022-04-01 2023-03-31 09329385 e:ReportableOperatingSegment2 2023-04-01 2024-03-31 09329385 e:ReportableOperatingSegment2 2022-04-01 2023-03-31 09329385 e:UKTax 2023-04-01 2024-03-31 09329385 e:UKTax 2022-04-01 2023-03-31 09329385 e:ShareCapital 2023-04-01 2024-03-31 09329385 e:ShareCapital 2024-03-31 09329385 e:ShareCapital 2022-04-01 2023-03-31 09329385 e:ShareCapital 2023-03-31 09329385 e:ShareCapital 2022-04-01 09329385 e:SharePremium 2023-04-01 2024-03-31 09329385 e:SharePremium 2024-03-31 09329385 e:SharePremium 2 2023-04-01 2024-03-31 09329385 e:SharePremium 2022-04-01 2023-03-31 09329385 e:SharePremium 2023-03-31 09329385 e:SharePremium 2022-04-01 09329385 e:SharePremium 2 2022-04-01 2023-03-31 09329385 e:RetainedEarningsAccumulatedLosses 2023-04-01 2024-03-31 09329385 e:RetainedEarningsAccumulatedLosses 2024-03-31 09329385 e:RetainedEarningsAccumulatedLosses 2 2023-04-01 2024-03-31 09329385 e:RetainedEarningsAccumulatedLosses 2022-04-01 2023-03-31 09329385 e:RetainedEarningsAccumulatedLosses 2023-03-31 09329385 e:RetainedEarningsAccumulatedLosses 2022-04-01 09329385 e:RetainedEarningsAccumulatedLosses 2 2022-04-01 2023-03-31 09329385 e:TaxLossesCarry-forwardsDeferredTax 2024-03-31 09329385 e:TaxLossesCarry-forwardsDeferredTax 2023-03-31 09329385 d:OrdinaryShareClass1 2023-04-01 2024-03-31 09329385 d:OrdinaryShareClass1 2024-03-31 09329385 d:OrdinaryShareClass1 2023-03-31 09329385 d:OrdinaryShareClass2 2023-04-01 2024-03-31 09329385 d:OrdinaryShareClass2 2024-03-31 09329385 d:OrdinaryShareClass2 2023-03-31 09329385 d:FRS102 2023-04-01 2024-03-31 09329385 d:Audited 2023-04-01 2024-03-31 09329385 d:FullAccounts 2023-04-01 2024-03-31 09329385 d:PrivateLimitedCompanyLtd 2023-04-01 2024-03-31 09329385 e:EntityControlledByKeyManagementPersonnel1 2023-04-01 2024-03-31 09329385 e:EntityControlledByKeyManagementPersonnel1 2022-04-01 2023-03-31 09329385 e:EntityControlledByKeyManagementPersonnel2 2023-04-01 2024-03-31 09329385 e:EntityControlledByKeyManagementPersonnel2 2022-04-01 2023-03-31 09329385 2 2023-04-01 2024-03-31 09329385 f:PoundSterling 2023-04-01 2024-03-31 xbrli:shares iso4217:GBP xbrli:pure


Registered number: 09329385












STRATA RESIDENTIAL FINANCE PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

 

STRATA RESIDENTIAL FINANCE PLC

CONTENTS



Page
Company information
 
1
Strategic report
 
2 - 6
Directors' report
 
7
Directors' responsibilities statement
 
8
Independent auditor's report
 
9 - 11
Profit and loss account
 
12
Balance sheet
 
13
Statement of changes in equity
 
14
Statement of cash flows
 
15
Notes to the financial statements
 
16 - 25


 

STRATA RESIDENTIAL FINANCE PLC
 
COMPANY INFORMATION


Directors
Hugh Colville 
Simon Hawley 
Christopher Hector 
David Norman 




Company secretary
Simon Hawley



Registered number
09329385



Registered office
Terminal Buildings
Blackbushe Airport

Blackwater

Camberley

GU17 9LQ




Trading Address
Terminal Buildings
Blackbushe Airport

Blackwater

Camberley

GU17 9LQ






Independent auditor
Blick Rothenberg Audit LLP
Chartered Accountants & Statutory Auditor

16 Great Queen Street

Covent Garden

London

WC2B 5AH




Page 1

 

STRATA RESIDENTIAL FINANCE PLC
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024

Introduction
 
The directors present the strategic report and financial statements for the year ended 31 March 2024.
The trading activity of Strata Residential Finance PLC (the ‘Company’) is the provision of funding to developers with experience and demonstrable track record who are carrying out residential property developments with planning permission in the South of England.

Business review
 
The Company reduced in size during the year with 23,337,764 shares in issue (2023: 23,684,331), and 3,060,816 of those shares held in Treasury. The target maximum shares in issue remains at 35,000,000. The reduction is due to share withdrawals during the year (with reasons including some deaths, a significant shareholder emigrating to Australia, plus rising interest rates and the Company performance suffering in Q4 2023 with a large loan write down).
The loss before taxation of £977,763 (2023: Profit £1,359,159) is only the second time in 17 years that the Strata business has suffered a loss, and the first time the Company has done so.
The end of 2023 and start of 2024 saw a notable change in sentiment in the UK residential market. Expectations that interest rates had peaked and competition between lenders led to mortgage approvals rising for three consecutive months to 50,500 in December 2023 (c40% more than December 2022) (Bank of England). Correspondingly, the Company’s loan book saw several new sales agreed, notably during January 2024. These included units in Woking, Bermondsey and Barnstaple.
Forecasts for 2023 to see 10+% falls in residential values proved overly pessimistic, if not as inaccurate as predictions for greater falls during Covid; when values rose to peak in mid- 2022. Nationwide reported a 3.8% fall in UK house prices in 2023, sensationalised in the press but insignificant for most owners. A similar fall was forecasted for 2024 - Nationwide: 0 - 2%; Capital Economics: -1.5%; Savills: -3%; Knight Frank: -4% - although this collection of predictions were made before reported increases for early 2024.
Whilst any increase or fall in value is important for the Company, loans are normally redeemed when end units are sold. Transaction levels are therefore fundamental, and these are mostly driven by sentiment. In this regard, 2023 saw the lowest level of UK house sales in over 10 years, falling c21% to c1m (Zoopla). The Bank of England base interest rate rose from 0.1% in November 2021 to 3.5% by the end of 2022 and has remained 5.25% since August 2023.
It was therefore not a surprise that the Company had just 4 loans redeemed in 2023 (2 of which were re-financings and none in the last 6 months of 2023), compared to 15 in 2021. There were 5 loans redeemed in 2022, impacted by Ukraine and rising interest rates. Two more loans were redeemed in early 2024.
2024 started with improved sentiment. There remains an overall lack of supply compared to demand. The surge in buyer interest has been greatest in London (Zoopla), however, activity reports across the portfolio are mixed.
Whilst the mortgage market represents c36% of UK homeowners, mortgage free owners are c28% of the market. This is important in the context of the significant weight of equity that remains on deposit and available for house purchases. £800m of mortgage debt was repaid in December 2023 (Bank of England).
Renewed activity in the UK housing market can only be assisted by the fall in inflation to 2% and the hope of a further fall in interest rates later in 2024. 
It is now two years since the war in Ukraine started in February 2022. Back then the Company had very significant cash reserves, following c£16.5m of ‘covid housing boom’ loan redemptions in 2021. This was a reassuring position for the Company and shareholders when there was so much uncertainty, even though it led to a reduced profit and dividend in March 2023.
 
Page 2

 

STRATA RESIDENTIAL FINANCE PLC

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024

Business review (continued)
The Company was performing well until late in 2023 when it put in place a significant provision for the Tunbridge Wells 2 debt. This followed the appointment of an administrator for the borrower. The provision of c£2.44m caused the Company to suffer the loss during the year. The guarantor for the loan did agree to repay the Company £500,000 over time and has paid c£66,000 to date. However, the Company does not expect to recover any further sums for this debt.
As a consequence the Company could only declare and distribute a 2% dividend in March 2024, using distributable reserves.
The loan book at 31 March 2024 included 19 loans with £13,968,142 advanced to developers. 
The senior debt for the scheme in Norwich is being carefully managed with a LPA Receiver appointed in July 2024 (after the financial year end) to achieve a completed scheme and full recovery of all debt.
The senior debt at Middle Barton remains in place following eight successful house sales. The Farmhouse was sold for £875,000 after the year end in July 2024. The barn (the final unit) remains on the market and it continues to provide income to the Company through short term lettings.
The Company declared and then distributed a 2% dividend per £1.00 A share in March 2024. This was significantly below the target 7.25% and it reflected the loss made during the financial year.
The contracts for the Asset Manager (evolve) and the Funding Adviser (Davon) will be renewed in March 2025 and these matters will be reported to the Annual General Meeting later in 2024.
The Company maintains a cautious approach to trading. It now holds significantly less cash than a year ago, with reduced ability to lend on new schemes but a large, diverse loan book that should assist in generating improved performance in the months ahead.
The company maintains a constant analysis of the financial status of all schemes and expects the robust quality of the portfolio to perform. There is pressure on the Norwich loan to perform, but the Company remains confident in the quality of the location and scheme. There has been some increased competition in what is a competitive environment for the company as it continues to trade within a specialised market niche. However, the company continues to receive increasing numbers of business referrals from reputable senior lenders. 
At the discretion of the shareholders and in compliance with the terms of the Strategic Business Plan (‘SBP’), if, from time to time there is cash in the company and sufficient profit has been generated, then dividends will be paid to A shareholders in proportion to the shares held by them. The SBP for the company envisages the payment of dividends for A shareholders with a target of 7.25% per annum per £1.00 A share. The board has the authority to incrementally increase this target dividend.

Principal risks and uncertainties
 
The financial instruments used by the Company arise wholly and directly from its activities. The financial instruments comprise debtors (borrowers), cash at bank and trade creditors. The Company has no borrowings.
The Company has put in place the following measures in order to manage the financial risks arising from these financial instruments.

Financial key performance indicators
 
The key performance indicators used by the Company are detailed in the SBP and the current Information Memorandum prepared by the Company. The Company targets a pre-tax profit of 7.25% per annum.
The Company has greatly enhanced governance and the reporting of key performance indicators to ensure optimal business performance, including monthly reporting of key metrics to the board.

Page 3

 

STRATA RESIDENTIAL FINANCE PLC

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024

Other key performance indicators
 
The non financial key performance indicators for the Company include:
The Company considers communication with the shareholders to be of significant importance and seeks to deliver a Trading Statement twice a year in addition to the delivery of formal accounts. The directors of the Company make their contact details freely available to all shareholders to enable personal communication on an ongoing basis.
The directors of the Company actively seek to build relationships with senior lenders as a recognised and valuable source of business introduction. In addition, the Company seeks a balance in the source of introductions to ensure that over reliance on one source does not take place. The Company actively seeks to maintain a high level of repeat business with borrowers. Repeat business is a clear indicator of trading success.
The Company is rigorous in selecting suitable projects and borrowers for new loans and seeks to trade within a range of 5 to 10% of new enquiries to actual loans without forsaking the fundamental need to only advance loans on the very best situations. The Company targets a conversion rate of heads of terms issued to drawdown of loan of near 90% and strives to achieve a greater than 75% target in this area.
Key performance indicators are maintained across all parts of the business to ensure we are constantly monitoring and challenging our results.

Page 4

 

STRATA RESIDENTIAL FINANCE PLC

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024

Statement by the directors on performance of their statutory duties in accordance with S172 (1) Companies Act 2006
 
The board of directors of Strata Residential Finance PLC consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole in decisions taken during the year ended 31 March 2024 and in full compliance with the SBP. In particular:
 
Our SBP was designed to have a long term beneficial impact on the Company and to contribute to its success in delivering an efficient and well regarded business capable of paying regular dividends of in excess of 7% per annum per £1.00 A share to shareholders and to maintain similar attractive performance to C shareholders.
 
Our employees are fundamental to the delivery of our plan. The only Company employees are the directors. We aim to be a responsible employer in our approach to the pay and benefits our employees receive. The health, safety and well being of our employees is one of our primary considerations in the way we conduct business.
 
Our customers are the borrowers that approach the Company seeking the financial assistance of the Company to advance their projects to mutual benefit. The Company strives to maintain a consistent and  fair image in its marketplace and to treat borrowers fairly to achieve business results that develop the reputation of the Company further.
 
We work with our professional advisers to help drive change in our organisation through promoting new ideas and ways of working, whilst working with our borrowers to ensure that they reflect the same values and behaviours that we expect from our own people. The board has sight of all the construction processes in place and receives regular updates on any matters of significance.
 
As well as borrowers and advisers, we seek to build strong relationships with other key stakeholders in the areas in which we operate, such as financial advisers and wealth managers. Our directors take an active interest in these connections and participate where possible in building such relationships and are  proactive in developing investor interest in the Company to assist in maintaining share liquidity. The Company has not failed to meet a share Withdrawal request to date.
 
Our SBP took into account the impact of the Company's operations on the community and environment and our wider societal responsibilities. All schemes subject to Company loans have already been through an exhaustive planning process that takes account of many areas of concern at all levels. The Company does not take on board planning risk and it does not seek to be involved in contentious schemes.
Page 5

 

STRATA RESIDENTIAL FINANCE PLC

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024

Statement by the directors on performance of their statutory duties in accordance with S172 (1) Companies Act 2006 (continued) 
 
As the board of directors, our intention is to behave responsibly and ensure that the board operates the business in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as ours and in doing so, will contribute to the delivery of the SBP. The intention is to nurture our reputation, through both the construction and delivery of our plan, that reflects our responsible behaviour.
 
As the board of directors, our intention is to behave responsibly toward our shareholders and treat them fairly and equally, so they too may benefit from the successful delivery of the SBP.


This report was approved by the board and signed on its behalf.



Simon Hawley
Director

Date: 20 August 2024

Page 6

 

STRATA RESIDENTIAL FINANCE PLC

DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024

The directors present their report and the financial statements for the year ended 31 March 2024.

Results and dividends

The loss for the year, after taxation, amounted to £736,349 (2023 - profit £1,089,905).

An interim ordinary dividend was paid for A shares amounting to £253,515 (2023: £749,301). The directors continue to follow the Strategic Business Plan and do not recommend the payment of a final dividend.

Directors

The directors who served during the year were:

Hugh Colville 
Simon Hawley 
Christopher Hector 
David Norman 

Future developments

The company continues to follow the Strategic Business Plan.

Matters covered in the Strategic report

As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information, required to be in the directors' report by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.

Disclosure of information to auditor

Each of the persons who are directors at the time when this directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditor is aware of that information.

This report was approved by the board and signed on its behalf.
 





Simon Hawley
Director

Date: 20 August 2024

Page 7

 

STRATA RESIDENTIAL FINANCE PLC
 
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024

The directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

 In preparing these financial statements, the directors are required to:

select suitable accounting policies for the company's financial statements and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Page 8

 

STRATA RESIDENTIAL FINANCE PLC

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STRATA RESIDENTIAL FINANCE PLC
 FOR THE YEAR ENDED 31 MARCH 2024

Opinion


We have audited the financial statements of Strata Residential Finance Plc (the 'company') for the year ended 31 March 2024, which comprise the profit and loss account, the balance sheet, the statement of changes in equity, the statement of cash flows and the notes to the financial statements, including significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the company's affairs as at 31 March 2024 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


Page 9

 

STRATA RESIDENTIAL FINANCE PLC

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STRATA RESIDENTIAL FINANCE PLC (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024

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 directors are responsible for the other information contained within the annual reportOur 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. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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.


Opinion 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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' 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, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the directors' responsibilities statement set out on page 8, the directors 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 directors 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 directors are responsible for assessing the 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 directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.


Page 10

 

STRATA RESIDENTIAL FINANCE PLC

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STRATA RESIDENTIAL FINANCE PLC (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024

Auditor's responsibilities for the audit of the financial statements
 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.


Use of our report
 

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our 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.





Heather Powell FCA (senior statutory auditor)
  
for and on behalf of
Blick Rothenberg Audit LLP
 
Chartered Accountants
Statutory Auditor
  
16 Great Queen Street
Covent Garden
London
WC2B 5AH

 
Date: 
20 August 2024
Page 11

 

STRATA RESIDENTIAL FINANCE PLC
 
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2024

2024
2023
Note
£
£

  

Turnover
 4 
2,828,350
2,281,873

Gross profit
  
2,828,350
2,281,873

Administrative expenses
  
(3,962,220)
(957,250)

Operating (loss)/profit
  
(1,133,870)
1,324,623

Interest receivable and similar income
 8 
156,107
34,536

(Loss)/profit before taxation
  
(977,763)
1,359,159

Tax on (loss)/profit
 9 
241,414
(269,254)

(Loss)/profit for the financial year
  
(736,349)
1,089,905

There are no items of other comprehensive income for either the year or the prior year other than the loss for the year and profit for the prior year. Accordingly, no statement of other comprehensive income has been presented.

Page 12


 
REGISTERED NUMBER:09329385
STRATA RESIDENTIAL FINANCE PLC

BALANCE SHEET
AS AT 31 MARCH 2024

2024
2023
Note
£
£

  

Current assets
  

Debtors: amounts falling due after more than one year
 11 
1,891,490
5,447,934

Debtors: amounts falling due within one year
 11 
25,212,447
13,634,413

Cash at bank and in hand
 12 
1,545,930
10,252,294

  
28,649,867
29,334,641

Creditors: amounts falling due within one year
 13 
(1,072,102)
(411,611)

Net current assets
  
 
 
27,577,765
 
 
28,923,030

Total assets less current liabilities
  
27,577,765
28,923,030

  

Net assets
  
27,577,765
28,923,030


Capital and reserves
  

Called up share capital 
 15 
23,337,764
23,684,331

Share premium account
16
211,408
107,103

Profit and loss account
17
4,028,593
5,131,596

Total equity
  
27,577,765
28,923,030


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 20 August 2024.




Simon Hawley
Director

The notes on pages 16 to 25 form part of these financial statements.

Page 13

 

STRATA RESIDENTIAL FINANCE PLC

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024


Called up share capital
Share premium account
Profit and loss account
Total equity

£
£
£
£


At 1 April 2022
23,526,564
2,855,283
1,856,720
28,238,567



Profit for the financial year
-
-
1,089,905
1,089,905

Dividends: Equity capital
-
-
(749,301)
(749,301)

Shares issued during the year
157,767
331,659
-
489,426

Cancellation of share premium
-
(2,453,558)
2,453,558
-

Other distributions
-
(626,281)
480,714
(145,567)


Total transactions with owners
157,767
(2,748,180)
2,184,971
(405,442)



At 1 April 2023
23,684,331
107,103
5,131,596
28,923,030



Loss for the financial year
-
-
(736,349)
(736,349)

Dividends: Equity capital
-
-
(253,515)
(253,515)

Shares issued during the year
208,565
104,305
-
312,870

Shares withdrawn during the year
(555,132)
-
-
(555,132)

Other distributions
-
-
(113,139)
(113,139)


At 31 March 2024
23,337,764
211,408
4,028,593
27,577,765


The notes on pages 16 to 25 form part of these financial statements.

Page 14

 

STRATA RESIDENTIAL FINANCE PLC

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024

2024
2023
£
£

Cash flows from operating activities

(Loss)/profit for the financial year
(736,349)
1,089,905

Adjustments for:

Interest received
(156,107)
(34,536)

Taxation (credit)/charge
(241,414)
269,254

Increase in debtors
(7,780,177)
(5,353,357)

Increase in creditors
823,594
49,760

Corporation tax (paid)
(163,103)
(258,490)

Net cash generated from operating activities

(8,253,556)
(4,237,464)


Cash flows from investing activities

Interest received
156,107
34,536

Net cash from investing activities

156,107
34,536

Cash flows from financing activities

Issue of ordinary shares
312,871
1,625,983

Withdrawal of ordinary shares
(555,132)
(1,136,557)

Dividends paid
(253,515)
(749,301)

Other distributions
(113,139)
(145,567)

Net cash used in financing activities
(608,915)
(405,442)

Net (decrease) in cash and cash equivalents
(8,706,364)
(4,608,370)

Cash and cash equivalents at beginning of year
10,252,294
14,860,664

Cash and cash equivalents at the end of year
1,545,930
10,252,294


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
1,545,930
10,252,294

1,545,930
10,252,294


The notes on pages 16 to 25 form part of these financial statements.

Page 15

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

1.


General information

Strata Residential Finance PLC is a public company limited by shares incorporated in England and Wales. The registered office is Terminal Buildings, Blackbushe Airport.
The financial statements are presented in Sterling (£), which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Going concern

After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date these financial statements were approved. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 
2.3

Revenue

Revenue represents amounts received and receivable for interest and associated income from the relevant trade debtors to the company.
Revenue is recognised and measured as the fair value of the consideration receivable when it falls due. 

 
2.4

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.5

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the company's cash management.

Page 16

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

2.Accounting policies (continued)


2.6

Financial instruments

The company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.

Financial assets and financial liabilities are recognised when the company becomes party to the contractual provisions of the instrument. 

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. 
 
The company’s policies for its major classes of financial assets and financial liabilities are set out below. 

Financial assets
Basic financial assets, including trade and other debtors, cash and bank balances are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.

Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment.

Financial liabilities

Basic financial liabilities, including trade and other creditors, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Page 17

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

2.Accounting policies (continued)





Financial instruments (continued)

Impairment of financial assets
Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account. 

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date. 

For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets and financial liabilities
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. 
 
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.

Offsetting of financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

 
2.7

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Page 18

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

2.Accounting policies (continued)

 
2.8

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. The tax expense for the year comprises current tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
Current tax is the amount of income tax payable in respect of taxable profit for the year or prior years.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.


3.


Judgements in applying accounting policies and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgments (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Key accounting estimates and assumptions
Recoverability of receivables
The company establishes a provision for loans receivable from developers (trade debtors) that are estimated not to be recoverable. When assessing recoverability the directors consider factors such as the ageing of the receivables, past experience of recoverability and the credit profile of the developer.

Page 19

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

4.


Turnover

An analysis of turnover by class of business is as follows:


2024
2023
£
£

Interest received/receivables from trade debtors
2,769,610
2,252,123

Loan arrangement fees receivable
58,740
29,750

2,828,350
2,281,873


All turnover arose within the United Kingdom.


5.


Auditor's remuneration

2024
2023
£
£

Fees payable to the company's auditor and its associates for the audit of the company's financial statements
13,100
15,000

Fees payable to the company's auditor and its associates in respect of:

Taxation compliance services
2,800
3,000

6.


Employees

Staff costs, including directors' remuneration, were as follows:


2024
2023
£
£

Wages and salaries
220,000
210,000

Social security costs
20,337
20,224

240,337
230,224


The average monthly number of employees, including the directors, during the year was as follows:


        2024
        2023
            No.
            No.







Management
4
4

Page 20

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

7.


Directors' remuneration

2024
2023
£
£

Directors' emoluments
220,000
210,000


The highest paid director received remuneration of £55,000 (2023 - £52,500).


8.


Interest receivable

2024
2023
£
£


Bank interest receivable
156,107
34,536


9.


Taxation


2024
2023
£
£

Corporation tax


Current tax on profits for the year
-
269,254


Total current tax
-
269,254

Deferred tax


Origination and reversal of timing differences
(241,414)
-

Total deferred tax
(241,414)
-


Tax on (loss)/profit
(241,414)
269,254
Page 21

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
 
9.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is higher than (2023 - higher than) the standard rate of corporation tax in the UK of 25% (2023 - 19%). The differences are explained below:

2024
2023
£
£


(Loss)/profit on ordinary activities before tax
(977,763)
1,359,159


(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 19%)
(244,441)
259,015

Effects of:


Expenses not deductible for tax purposes
3,027
10,239

Total tax charge for the year
(241,414)
269,254


Factors that may affect future tax charges

There were no factors that may affect future tax charges.


10.


Dividends



Interim paid
253,515
749,301

Other distributions
113,139
145,567

366,654
894,868


Other distributions represent profit shares paid to outgoing investors.


11.


Debtors

2024
2023
£
£

Due after more than one year

Trade debtors
1,891,490
5,447,934


2024
2023
£
£

Due within one year

Trade debtors
19,910,163
13,079,852

Other debtors
5,060,810
554,193
Page 22

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

11.Debtors (continued)


Prepayments and accrued income
60
368

Deferred taxation
241,414
-

25,212,447
13,634,413



12.


Cash and cash equivalents

2024
2023
£
£

Cash at bank and in hand
1,545,930
10,252,294



13.


Creditors: Amounts falling due within one year

2024
2023
£
£

Corporation tax
-
163,103

Other creditors
11,573
18,640

Accruals and deferred income
1,060,529
229,868

1,072,102
411,611



14.


Deferred taxation




2024


£






At beginning of year
-


Charged to profit or loss
241,414



At end of year
241,414

The deferred tax asset is made up as follows:

2024
2023
£
£


Tax losses carried forward
241,414
-


15.


Share capital

2024
2023
Page 23

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

15.Share capital (continued)

£
£
Allotted, called up and fully paid



14,946,630 (2023 - 15,343,158) redeemable ordinary A shares of £1.00 each
14,946,630
15,343,158
8,391,134 (2023 - 8,341,173) redeemable ordinary C shares of £1.00 each
8,391,134
8,341,173

23,337,764

23,684,331

The holders of the redeemable A and C ordinary shares have the right to receive notice of, to attend and to vote at all general meetings of the PLC. The A shareholders are also entitled to a dividend, subject to the discretion of the board and in accordance with the provisions of the articles.
The C shareholders are not entitled to a dividend or other distributions.


Reconciliation of movements during the year

Redeemable A shares
Redeemable C shares
        £
At 1 April 2023

15,343,158

8,341,173

Issue of fully paid shares

-

208,565

Redemption of shares

(396,528)

(158,604)

At 31 March 2024

14,946,630

8,391,134



16.


Share premium account

2024
2023
£
£



At the beginning of the year
107,103
2,855,283

Issue of new shares
104,305
331,659

Other distributions
-
(626,281)

Cancellation of share premium
-
(2,453,558)

At the end of the year
211,408
107,103

The share premium reserve includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.

Page 24

 

STRATA RESIDENTIAL FINANCE PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024

17.


Profit and loss reserves

2024
2023
£
£



At the beginning of the year
5,131,596
1,856,720

(Loss)/profit for the year
(734,964)
1,089,905

Dividends
(253,515)
(749,301)

Other distributions
(113,139)
480,714

Cancellation of share premium
-
2,453,558

At the end of the year
4,029,978
5,131,596

The profit and loss account includes all current and prior period retained profits and losses.


18.


Related party transactions

evolve Fund Services Limited ('evolve') was paid £463,062 (2023: £285,474) for the asset management of the business on behalf of the PLC and Davon Limited ('Davon') was also paid £463,062 (2023: £285,572) for funding advisory services. The directors of the PLC have a controlling interest in both companies.
The fees paid to evolve and Davon cover all company rent, rates, insurance and service charge. Additionally, the fees cover IT, telecommunication, postage, travel, meetings, office running costs, repairs and maintenance as well as staff costs other than the four directors.
Total remuneration in respect of the key management personnel relates solely to the directors' remuneration which is set out in note 7.


19.


Controlling party

There is no single overall controlling party.

 
Page 25