PREFERRED HOMES LIMITED

Company Registration Number:
10403857 (England and Wales)

Unaudited statutory accounts for the year ended 31 December 2023

Period of accounts

Start date: 1 January 2023

End date: 31 December 2023

PREFERRED HOMES LIMITED

Contents of the Financial Statements

for the Period Ended 31 December 2023

Directors report
Profit and loss
Balance sheet
Additional notes
Balance sheet notes

PREFERRED HOMES LIMITED

Directors' report period ended 31 December 2023

The directors present their report with the financial statements of the company for the period ended 31 December 2023

Principal activities of the company

The company was approved and registered as a provider of Social Housing on 2 April 2020. The principal activity of the company is to source, develop, own and manage Affordable Rented Extra Care apartment schemes. In February 2022 an agreement with Preferred Housing Living Limited, a joint venture between Ashbourne Capital Partners Limited and TGA European RE Holdings I LLC was signed resulting in the company being funded to carry on its principal activity for the foreseeable future. The company is an Investment Partner of Homes England and has drawn down funding from the Affordable Homes Programme 2021 - 2026.

Additional information

RESULTS AND DIVIDENDS The loss for the year amounted to £442,102. The directors do not recommend a dividend for the period. POSSIBLE FUTURE DEVELOPMENTS The Company has received financial support from Preferred Housing Living Limited that will allow it to purchase, by way of Forward Sale Agreements (“FSA”), at least 8 Extra Care schemes across England. At the year-end two schemes had been purchased using FSA’s, one expected to be delivered prior to 31st December 2024 and the other to be delivered in the first quarter of 2025. A further one had been purchased by the signing date of this report with that expected to be delivered by the end of the first quarter of 2026. It is expected that a further five schemes will be purchased by way of FSA’s before the 31st December 2024 to be delivered prior to the 4th quarter of 2026. POST BALANCE SHEET EVENTS On 31st May 2024 the Company entered a Forward Sale Agreement with PHL Nottingham Limited for the acquisition of a completed 73 unit Extra Care scheme at Watnall Road, Hucknall, Nottinghamshire. The scheme is expected to be delivered prior to 31st March 2026. No further events occurred after the statement of financial position date that have a material impact on the financial statements. The Directors have not received any further information as at the approval date which has not been reflected in the financial statements presented. GOING CONCERN The Company’s business activities, its current financial position and factors likely to affect its future development are set out within the strategic report of the Board. The Company has a long-term business plan which shows that it can fund its development programme and its day to day operations. This business plan includes a debt facility from Preferred Housing Living Limited, which provides adequate resources to finance its day to day operation and a commitment from Preferred Housing Living Limited funding its committed development programmes. The Board is satisfied that its business plan demonstrates sufficient financial strength to conclude that the Company is a going concern. In reaching this decision, the Board has noted that the business plan meets the key rules for effective financial management. On this basis, the Board has a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12 months after the date on which the report and financial statements are signed. For this reason, it continues to adopt the going concern basis in the financial statements. RISK MANAGEMENT Management considers financial risk management at a Company level. Management consider that the Company has the following risks: Liquidity risk Market risk Credit risk Geopolitical instability and inflation risk Liquidity Risk The Company is exposed to liquidity risk which is the risk that the Company will have insufficient cash resources to meet its obligations as they fall due. Management manage liquidity risk by performing cash flow forecasting in the operating entities of the Company. Forecasts of liquidity requirements are monitored to ensure the Company has sufficient cash to meet its operational needs. Given the ultimate support from Preferred Housing Living Limited and its parent structure the liquidity risk is seen as minimal for the Company. Market Risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company's market risks arise from (a) a significant reduction in income and valuation to a financial asset or liability and (b) a significant reduction in the market value of the properties. Credit Risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Given the ultimate support from Preferred Housing Living Limited and its parent structure the credit risk is seen as minimal for the Company. No financial assets are deemed to be impaired or past due at period end. Geopolitical instability and inflation risk When Russia invaded Ukraine, the worldwide impact on inflation and rates expectations resulted in a challenging period for assets globally and this risk continues. This geopolitical instability has caused commodity prices to increase rapidly with an impact on the development costs. It also caused inflation to rise and the end to the period of historically low interest rates for the global economy with a direct impact on the access and the cost of borrowing. This outlook will impact investor sentiment regarding investments, but the full impact is still to be seen. Whilst not expected to be material, the Company continues to monitor the impact on its business, results of its operations, investments, and cash flows. FINANCIAL INSTRUMENTS The Company’s Treasury Management policy has rules to effectively manage credit risk, liquidity risk and cash flow risk and has been complied with. The Company has one financial instrument in the form of loan facility from Preferred Housing Living Limited. Since the year end the Company has not entered any new financial instruments. EXTERNAL AUDITOR PricewaterhouseCoopers LLP were appointed as auditors during the year. Pursuant to Section 485 of the Companies Act 2006, PricewaterhouseCoopers LLP will be deemed to be reappointed and will continue in office. DISCLOSURE OF INFORMATION TO THE AUDITORS All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company’s auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware. STRATEGIC REPORT A strategic report has not been included in these audited financial statements as the Company qualifies for exemption under Section 414B of the Companies Act 2006 relating to small entities.



Directors

The directors shown below have held office during the whole of the period from
1 January 2023 to 31 December 2023

Alan Ferguson
Richard Frank
Findlay MacAlpine
David Newsome
Stephen Sorrell
Jean Bray
Ian Brown
Judith Watson


The director shown below has held office during the period of
1 January 2023 to 19 January 2023

William Bateman


The director shown below has held office during the period of
19 January 2023 to 31 December 2023

Michael Keogh


Secretary Alan Ferguson

The above report has been prepared in accordance with the special provisions in part 15 of the Companies Act 2006

This report was approved by the board of directors on
10 June 2024

And signed on behalf of the board by:
Name: Findlay MacAlpine
Status: Director

PREFERRED HOMES LIMITED

Profit And Loss Account

for the Period Ended 31 December 2023

2023 2022


£

£
Turnover: 0 0
Cost of sales: 0 0
Gross profit(or loss): 0 0
Distribution costs: 0 0
Administrative expenses: ( 526,115 ) ( 487,168 )
Operating profit(or loss): (526,115) (487,168)
Interest receivable and similar income: 109,136 17
Interest payable and similar charges: ( 25,123 ) ( 8,715 )
Profit(or loss) before tax: (442,102) (495,866)
Tax: 0 0
Profit(or loss) for the financial year: (442,102) (495,866)

PREFERRED HOMES LIMITED

Balance sheet

As at 31 December 2023

Notes 2023 2022


£

£
Called up share capital not paid: 0 0
Fixed assets
Intangible assets:   0 0
Tangible assets: 3 1,427 0
Investments:   0 0
Total fixed assets: 1,427 0
Current assets
Stocks:   0 0
Debtors: 4 6,398,750 541
Cash at bank and in hand: 1,931,476 51,227
Investments:   0 0
Total current assets: 8,330,226 51,768
Prepayments and accrued income: 0 0
Creditors: amounts falling due within one year: 5 ( 1,141,377 ) ( 547,234 )
Net current assets (liabilities): 7,188,849 (495,466)
Total assets less current liabilities: 7,190,276 ( 495,466)
Creditors: amounts falling due after more than one year: 6 ( 8,127,844 ) 0
Provision for liabilities: 0 0
Accruals and deferred income: 0 0
Total net assets (liabilities): (937,568) (495,466)
Capital and reserves
Called up share capital: 400 400
Share premium account: 0 0
Other reserves: 0 0
Profit and loss account: (937,968 ) (495,866 )
Total Shareholders' funds: ( 937,568 ) (495,466)

The notes form part of these financial statements

PREFERRED HOMES LIMITED

Balance sheet statements

For the year ending 31 December 2023 the company was entitled to exemption under section 477 of the Companies Act 2006 relating to small companies.

The members have not required the company to obtain an audit in accordance with section 476 of the Companies Act 2006.

The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.

These accounts have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

This report was approved by the board of directors on 10 June 2024
and signed on behalf of the board by:

Name: Findlay MacAlpine
Status: Director

The notes form part of these financial statements

PREFERRED HOMES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2023

  • 1. Accounting policies

    Basis of measurement and preparation

    These financial statements have been prepared in accordance with the provisions of Section 1A (Small Entities) of Financial Reporting Standard 102

    Turnover policy

    Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

    Tangible fixed assets depreciation policy

    Plant, Property and Equipment is capitalised at cost and includes expenditure that is directly attributable to the acquisition of the items. They are carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on a straight-line basis to write off the cost of plant, property and equipment over their estimated useful life to their estimated residual value. Estimated residual value and estimated useful life are reassessed at each balance sheet date. Depreciation is calculated on a daily basis from the date of acquisition. The principal useful lives for this purpose are: Property – not depreciated Office equipment and IT – three years Fixtures and fittings – three years Plant and Equipment is reviewed for indication of impairment each year at the balance sheet date. Where there is an indication of impairment an asset’s carrying amount is written down to its recoverable amount if the asset’s carrying amount exceeds the higher of an asset’s fair value less costs to sell or value in use. Property comprises the acquisition cost of the freehold of the properties leased to PHL Leeds Limited, PHL Telford Limited and PHL Nottingham Limited on 125 year leases.

    Other accounting policies

    Basis of preparing the financial statements These financial statements have been prepared in accordance with the provisions of Section 1A "Small Entities" of Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. Basis of measurement: The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. Exemptions under FRS 102: In preparing the financial statements of the Company, management has taken advantage of the following exemptions: From preparing a statement of cash flows, on the basis that it is a qualifying entity. From disclosing the company key management personnel compensation, as required by FRS 102 paragraph 33.7. Cash and cash equivalents Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities. Going concern The Company had net liabilities of £937,568 at 31 December 2023 (£495,466 at 31st December 2022) and incurred a loss of £442,102 for the year ended 31 December 2023 (£495,866 for year ended 31st December 2022). The financial statements have been prepared on a going concern basis, on the assumption of the continuing availability of financial support from Preferred Housing Living Limited. The financial statements do not include any adjustments that would arise from a failure to obtain this financial support. Taxation Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. Current or deferred taxation assets and liabilities are not discounted. Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the timing difference. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Hire purchase and leasing commitments There are no hire purchase or leasing commitments. Debtors receivable within one year Debtors with no stated interest rate and receivable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses. Creditors payable within one year Creditors with no stated interest rate and payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses. Financial instruments The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments and Section 12 ‘Other Financial Instruments Issues’ of FRS102 to all of its financial instruments. Financial instruments are recognised in the company’s balance sheet when the company becomes party to the contractual provisions of the instrument. Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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. Basic financial assets Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised. Classification of financial liabilities 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. Basic financial liabilities Basic financial liabilities, including trade and other payables and a loan from related parties (see related party note). Financial liabilities classified as payable within one year are not amortised. The loan shown in note 8 refers to drawdowns made under a loan agreement signed in February 2022, each of which have a 10 year term but are repayable on demand from the lender. Accordingly these loans are carried in the financial statements at initial cost plus interest accrued as an amount falling due within one year. Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. Equity instruments Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company. Foreign exchange Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss. Off-balance sheet arrangements A Forward Sale Agreement (FSA) is in place between Preferred Homes Limited (PHL) and PHL Leeds Limited, and between PHL and PHL Telford Limited. Subject to the conditions of this agreement being met, including the practical completion of the development works being satisfied, PHL agrees to buy and both PHL Leeds Limited and PHL Telford Limited agree to sell the property under development on their respective sites. PHL may make an advance payment under this agreement. Any such advance payment will form part of the overall purchase price per the FSA and is accounted for in these financial statements as Payments on Account – See Notes 7 and 9. Related parties transactions The shareholders of the Company are the same as the shareholders of Ashbourne Capital Partners Limited (“ACP”). ACP recharges costs incurred by the Company, paid by ACP. The total recharged for the year ended 31 December 2023 was £66,406 (2022: £46,372). ACP is in a joint venture with TGA European RE Holdings LLC (“TGAEREH”), a 100% subsidiary of Teachers Insurance and Annuity Association of America (“TIAA”), and together ACP and TGAEREH own 100% of the issued share capital of Preferred Housing Living Limited (“PHLL”). PHLL is the 100% parent of PHLL Holdco Limited (“Holdco”) which in turn is the sole shareholder in the following companies: PHL Leeds Limited (“Leeds”) PHL Telford Limited (“Telford”) PHL Nottingham Limited (Nottingham”) The shareholders of the Company have entered into a Share Option Agreement with TGAEREH, which, if exercised, allows TGAEREH to acquire 30% of the Company. PHLL has entered a Loan Facility for £2,000,000 with the Company and the amount drawn down by the Company at the year-end is £1,061,670 – See Note 8. The Company has entered a Forward Sale Agreement (“FSA”) for the provision of an Extra Care Apartment Scheme with Leeds and Telford at the year-end and has since signed an FSA with Nottingham for an Extra Care Apartment Scheme. ACP supplies development management services to, and recharges costs incurred by, Leeds, Telford and Nottingham. Nuveen Investment Management International Limited, a subsidiary of TIAA, provides investment advisory services to Leeds, Telford and Nottingham. David Newsome and Alan Ferguson are shareholders in the Company, shareholders and directors of ACP and directors of PHLL, Holdco, Leeds, Telford and Nottingham. Findlay MacAlpine, Stephen Sorrell and Richard Frank are shareholders in the Company and shareholders and directors of ACP. Michael Keogh is an employee of a subsidiary of TIAA. Government grants Grant received in relation to newly acquired or developed housing properties is accounted for using the accrual model set out in FRS 102 and the Housing SORP 2018. Grant is carried as deferred income within Creditors amounts falling due within one year in the Statement of Financial Position and released to the Income Statement on a systematic basis over the useful economic lives of the asset for which it was received. In accordance with Housing SORP 2018, the useful economic life of the housing property structure has been selected (100 years). Employee benefits & retirement benefits The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets. The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received. Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits. Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

PREFERRED HOMES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2023

  • 2. Employees

    2023 2022
    Average number of employees during the period 10 9

PREFERRED HOMES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2023

3. Tangible assets

Land & buildings Plant & machinery Fixtures & fittings Office equipment Motor vehicles Total
Cost £ £ £ £ £ £
At 1 January 2023 0 0 0 0 0 0
Additions 2 0 1,175 594 0 1,771
Disposals 0 0 0 0 0 0
Revaluations 0 0 0 0 0 0
Transfers 0 0 0 0 0 0
At 31 December 2023 2 0 1,175 594 0 1,771
Depreciation
At 1 January 2023 0 0 0 0 0 0
Charge for year 0 0 228 116 0 344
On disposals 0 0 0 0 0 0
Other adjustments 0 0 0 0 0 0
At 31 December 2023 0 0 228 116 0 344
Net book value
At 31 December 2023 2 0 947 478 0 1,427
At 31 December 2022 0 0 0 0 0 0

PREFERRED HOMES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2023

4. Debtors

2023 2022
£ £
Trade debtors 0 0
Prepayments and accrued income 6,398,750 141
Other debtors 0 400
Total 6,398,750 541
Debtors due after more than one year: 0

PREFERRED HOMES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2023

5. Creditors: amounts falling due within one year note

2023 2022
£ £
Bank loans and overdrafts 0 0
Amounts due under finance leases and hire purchase contracts 0 0
Trade creditors 2 0
Taxation and social security 32,697 16,405
Accruals and deferred income 47,008 10,515
Other creditors 1,061,670 520,314
Total 1,141,377 547,234

PREFERRED HOMES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2023

6. Creditors: amounts falling due after more than one year note

2023 2022
£ £
Bank loans and overdrafts 0 0
Amounts due under finance leases and hire purchase contracts 0 0
Other creditors 8,127,844 0
Total 8,127,844 0

PREFERRED HOMES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2023

7. Financial Commitments

At the year end the Company had committed through two Forward Sale Agreements to purchase a 63 unit Extra Care scheme in Leeds from PHL Leeds Limited and a 72 unit Extra Care scheme in Telford from PHL Telford Limited. Not later than one year £13,682,250 Later than one year, not later than 5 years £13,734,720

PREFERRED HOMES LIMITED

Notes to the Financial Statements

for the Period Ended 31 December 2023

8. Off balance sheet arrangements

A Forward Sale Agreement (FSA) is in place between Preferred Homes Limited (PHL) and PHL Leeds Limited, and between PHL and PHL Telford Limited. Subject to the conditions of this agreement being met, including the practical completion of the development works being satisfied, PHL agrees to buy and both PHL Leeds Limited and PHL Telford Limited agree to sell the property under development on their respective sites. PHL may make an advance payment under this agreement. Any such advance payment will form part of the overall purchase price per the FSA and is accounted for in these financial statements as Payments on Account – See debtors and creditors notes.