The Directors present the strategic report for the year ended 31 January 2024.
Affordable Housing and Healthcare Group Limited (AHH) is a developer, constructor and operator of affordable shared ownership housing. AHH's mission is to address the UK's affordable housing crisis by offering innovative solutions that meet the needs of homeowners and institutional investors. Our model is built around two core objectives:
Increasing the supply of high-quality, affordable shared ownership homes for the elderly, fostering vibrant, sustainable communities.
Delivering secure, inflation-linked income assets for institutional investors, including pension funds, to support their liability-matching portfolios.
We believe that solving the housing crisis requires the delivery of shared ownership at scale across the country.
Through our wholly owned Registered Provider of Social Housing, we partner with local authorities to fulfil their affordable housing mandates. Our Platinum Skies brand offers affordable, high-quality retirement living, complete with lifestyle support, providing superior homes for the elderly.
By making quality homes and healthy communities more accessible, AHH is helping to reduce the growing demand for state-funded health and social care.
Business review
The directors report a consolidated EBITDA of (£2,519,574) and statutory net assets of £3,539,904 for the financial year ended 31 January 2024.
Several factors contributed to the company’s performance falling short of previous forecasts. Two key challenges were:
A significant increase in interest rates during the period, which impacted the group's financing costs.
Market volatility, which delayed and reduced the value of refinancing transactions essential to supporting the company’s growth.
In response, the group took decisive action. In July 2024, AHH sold 99% of its subsidiary, Platinum Skies Holdings Ltd, for £44.8 million to Pasture Housing Limited, a joint venture with Meadow Partners. This sale allowed the group to fully repay its outstanding bank debt, strengthening its financial position.
Additionally, AHH used the 2024 financial year, and continues into 2025, to streamline its operations and enhance management capacity. As part of this process, the decision to outsource key operational services took effect in January 2024. This strategic move has provided both the group and its homeowners with access to economies of scale and enhanced industry expertise. The restructuring, alongside other management actions, also resulted in a significant reduction of internal headcount, from 148 employees to 40 by September 2024.
Market Opportunity
AHH is actively addressing the UK’s housing crisis by tackling the undersupply of new, high-quality homes and offering affordable ownership options that align with both public aspirations and government goals. At the same time, AHH’s developments meet investor demand for secure, inflation-linked income derived from social infrastructure.
In the near term, in partnership with Meadow Partners, AHH has secured a pipeline to deliver an additional 400 shared ownership homes. Over the next five years, the group plans to increase its delivery rate to approximately 500 new shared ownership homes annually, supporting its mission to provide affordable, sustainable housing at scale.
In addition to the adjusted net asset measure referred to above, the directors also use the following key performance indicators:
Level of gearing - including external and related party debt
Operating profit margin
Yield on rental income streams
Progress of build to plan
Percentage of contract variation claims to planned build work
Weighted average unlet units
The directors remain satisfied with the business performance against these metrics.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 January 2024.
The results for the year are set out on page 10.
No ordinary dividends were paid in the year (2023: £nil). The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In addition to the risks identified in the Strategic report, the group's activities expose it to a number of financial risks including liquidity and credit risks. Details of these and how the group mitigates these risks are set out below.
Liquidity risk arises from the group's management of working capital and the finance charges on its debt instruments. It is the risk that the company will encounter difficulty in meeting its financial obligations when they fall due. The board receives regular cash flow projections as well as information regarding cash balances. The group sold 99% of Platinum Skies Holdings Limited to Pasture Housing Limited for £44.8 million which enabled the full repayment of all debt owed to Oak North Bank plc.
The group is dependent on a relatively small number of customers as transactions primarily relate to property sales. As such there is concentration of credit risk which could materially and adversely affect the group's financial results. The credit worthiness of the customers is continually monitored by management.
Information on the future developments in the business of the Group has been included in the Strategic Report.
In accordance with the company's articles, a resolution proposing that Saffery LLP be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Affordable Housing and Healthcare Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2024 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group 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).
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 and parent company 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
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 group's and parent 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.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. 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.
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.
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 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.
In the light of the knowledge and understanding of the group and the parent company and their 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 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 directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, 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 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 directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and by updating our understanding of the sector in which the group and parent company operate.
Laws and regulations of direct significance in the context of the company include The Companies Act 2006, the Housing and Regeneration Act 2008 and UK Tax legislation. Additional frameworks applicable include the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers and Accounting Direction for Private Registered Providers of Social Housing.
Audit response to risks identified:
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available 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 parent company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company's members those matters we are required to state to them in an auditors 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £12,939,029 (2023 - £19,236,077 loss).
Affordable Housing and Healthcare Group Limited (“the company”) is a private company limited by shares incorporated in England and Wales. The registered office is Third Floor, Tringham House, Deansleigh Road, Bournemouth, England, BH7 7DT.
The group consists of Affordable Housing and Healthcare Group Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties at fair value.
The company has taken advantage of the exemption allowed under section 408 of the Companies act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The consolidated financial statements of the group are consolidated in the financial statements of Quantum Group Holdings Limited, the ultimate parent company. These consolidated financial statements are available from its registered office: Third Floor, Tringham House, Deansleigh Road, Bournemouth, BH7 7DT.
The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Affordable Housing and Healthcare Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 January 2024. 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.
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.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
On 11th July 2024 99% of Platinum Skies Holdings Limited was sold to Pasture Housing Limited for £44,779,910. Part of this consideration was used to repay OakNorth bank loan facilities in full. In addition, AHH has entered a Joint Venture arrangement for future developments.
Taking the above into consideration, the directors believe the company has enough funds available to continue as a going concern and have confirmed the company and the group have sufficient funds to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. Below is a summary of the specific recognition criteria relevant to the Group's sources of revenue.
Turnover
The Group's turnover comprises income earned from:
the provision of property development services relating to assisted living and other healthcare related assets, and
the sale of open market affordable housing and shared ownership properties, including those sold through its wholly owned subsidiary, Affordable Housing Communities Limited, a Registered Provider.
Sale of properties can take place either as a direct sale of the Group or on an agency basis.
A direct sale is regarded as one where the Group has the ability to determine price and is exposed to other factors including, but not limited to inventory and credit risk. Where direct sales arise, the Group recognises the full value of the sale on exchange as this is the point where the group has transferred the significant risks and rewards of ownership to the buyer.
An agency sale arises where the Group is acting on behalf of another party and the Group does not have the commercial development and credit risk. Where such sales arise the gross sales value and associated cost of sale are excluded from the financial statements. The commission or other sales incentive earned from facilitating the sale is recognised when the sale of the underlying property is regarded as unconditional and the Group has fulfilled its agency obligations and has thus earned the right to its commission.
Other operating income
Other operating income relates to ancillary income earned from the Group's activities and includes service charge income, rental income and grant income.
Rent and service charge income are recognised as earned under the terms of the underlying agreement.
Grant income is recognised as the awarding criteria are met.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, which include debtors, 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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, 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. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors 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 creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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 fixed 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.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Government grants include grants receivable from Homes England (HE) for the provision of affordable housing. A grant which does not impose specific future performance conditions is recognised as revenue when the grant proceeds are received or receivable. A grant that imposes specific future performance related obligations on the Group or one of its subsidiaries is only recognised when those conditions are met. A grant received before those performance criteria are satisfied are recognised as a liability.
Grants due from government organisations or received in advance are included in on the balance sheet within current liabilities. Where performance criteria for grants received extent over a period in excess of one year at the balance sheet date, the relevant proportion of the grant is shown in long term liabilities.
By agreement with HE, grants received for the provision of affordable housing are subordinated to development financing loans. Government grants are repayable when the property for which the grant was received is no longer classed as affordable housing.
If there is no requirement to repay the grant, any unamortised grant remaining within creditors is released and recognised as income in the statement of comprehensive income.
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.
Finance costs
Finance costs are charged to the consolidated statement of comprehensive income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount.
Where eligible, finance costs directly attributable to the construction of tangible fixed assets, stock and work in progress are capitalised within those balance sheet categories.
Housing properties
Housing properties are properties held for the provision of social housing or to otherwise provide social benefit.
Completed housing and share ownership properties are stated at fair value at the date of valuation less subsequent accumulated depreciation and accumulated impairment losses. Fair value of the asset is based on anticipated discounted cash flows generated by the asset. This takes into account the regulated nature of the future expected rent reviews. Revaluations are made with sufficient regularity to ensure the carrying amount does not materially differ from the fair value of the properties as at the year end. The surplus or deficit on revaluation is recognised in the profit and loss account.
Sale and leaseback
Where the group enters into a sale and leaseback transaction, consideration is given to the substance of the transaction. The group applies various 'tests' when considering whether to derecognise an asset, or whether the transaction should be treated as a financing transaction. These 'tests' include: the duration of the lease, whether ownership options exist at the end of the lease, the risks and rewards which exist which may indicate ownership.
Where the asset remains on the balance sheet, it will be accounted for according to FRS 102, with a liability being recognised for the fair value of future lease payments, discounted at the rate implicit within the lease.
In the application of the group’s accounting policies, the directors are required to make judgements, 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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
- The carrying value of freehold land and buildings
- The useful economic life of goodwill and the period over which to write off negative goodwill
- The carrying value of work in progress
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
During the period staff cost directly attributable to the development of tangible fixed assets, stock and work in progress of £nil (2023: £1,770,950) have been capitalised within those balances.
The total remuneration of £nil (2023: £11.2m) includes £nil (2023: £0.45m) of retention bonuses paid to staff during the period and includes a provision for restructuring costs of £nil (2023: £0.8m).
The actual charge/(credit) for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the income statement.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts:
More information on impairment movements in the year is given in note 12.
Interest costs of £nil (2023: £1,094,910) were capitalised within land and buildings during the period.
Included within land and buildings above are shared ownership housing properties with a value of £100,253,350 (2023: £93,073,418) which are held by the Group's subsidiary, Affordable Housing Communities Limited, a 'for profit' registered housing provider. These properties were revalued at 31 January 2024 by the directors by reference to sales prices achieved on unit sales to third parties and independent valuations undertaken by Savills (UK) Limited between December 2022 and December 2023.
Completed shared ownership housing properties with a carrying amount of £100,253,350 were revalued at the reporting date by the directors by reference to sales prices achieved on unit sales to 3rd parties and independent valuations undertaken by Savills (UK) Limited between December 2022 and December 2023.
If previously revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
Details of the group's subsidiaries at 31 January 2024 are as follows:
On 11 July 2024, the company sold its interests in the following entities to Pasture Housing Limited for £44,779,910:
Platinum Skies Holdings Limited
Platinum Skies Vista LLP
Platinum Skies Esprit LLP
Platinum Skies Quantock House LLP
Platinum Skies Chapters (Salisbury) Limited
Platinum Skies Chapters LLP
Platinum Skies Sherborne LLP
Borrowing costs of £135,072 (2023: £71,500) have been allocated to stock during the period.
The bank loans are secured by fixed and floating charges over various of the groups assets.
The bank loan bears interest at 6% plus SONIA and is due for repayment in November 2023 and is secured on the group's assets.
On 11 July 2024, the bank loans were settled in full upon sale of Platinum Skies Holdings Limited to Pasture Housing Limited. As part of this transaction all debt due to OakNorth Bank Plc were settled in full.
The other borrowings terms are disclosed in note 21.
The bank loans are secured by fixed and floating charges over various of the group's assets.
The other borrowings are secured by fixed and floating charges over various of the group's assets and carries interest at 10.5% per annum.
The group is party to a group bank facility of which the company has utilised £nil (2023: £23,400,399). The group balance outstanding was £31,408,300 (2023: £43,429,896). A guarantee has been provided by the company for the full funding by way of a fixed and floating charge over its assets. This is due for repayment on 2 July 2024.
Under the Deed of Novation, Amendment and Restatement, the exiting borrower's loans have transferred each of their rights in respect of, and assumption by the new borrower of each of the liabilities and obligations of each exiting borrower under each of the existing loan agreements.
In July 2021 the group entered into a sale and leaseback transaction with a third party, whereby the completed properties and the group's share in OPSO property would be sold and a lease entered into for a term of 150 years. At the end of the lease term the group can pay a peppercorn amount to re-purchase the properties. Given the risks and rewards afforded by the lease under the transaction, the directors have accounted for the transaction as a financing transaction, recognising the net present value of the future lease payments, discounted at the rate implicit within the lease.
Deferred government grant income is included in the financial statements as follows:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Ordinary A shares do not have voting rights, but rights to dividends.
Ordinary shares carry voting rights and rights to dividends.
The other reserves represents transfers made to a sinking fund reserve by one of the subsidiaries.
Profit and loss account
This reserve represents the accumulated profits on distributable reserves.
On 31 May 2019 the Group acquired 100% of the members equity of Platinum Skies Vista LLP (Formerly Mount Road Care Homes LLP). The Group is not entitled to any of the profits of the business purchased, this being split between the exiting members and a related party. The financial statements have been adjusted for a contingent liability of £nil (2023: £nil) in respect of this to adjust the net assets of the subsidiary acquired at fair value.
A reservation of rights letter was received from Homes England on 4th April 2022, in respect of errors in lease agreements which were not in accordance with Homes England grant funding requirements.
The directors assessed the issue, took the necessary legal advice, and rectified the leases. £236k was paid to HE on 13 February 2024 in relation to this issue.
At 31 January 2024 the Group did not have any commitments under non-cancellable operating leases. The Group operates from premises under a licence to occupy and pays rent and associated charges to a related party details of which are shown in note 29. The license agreement has no fixed term and is reviewed annually.
The operating leases represent Older Persons Shared ownership leases to third parties. The leases are negotiated over terms of 125 years. All leases include a provision for annual inflationary rent reviews.There are no options in place for either party to extend the lease terms.
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
The company has taken exemption from disclosing transactions with wholly owned subsidiaries.
Affordable Housing and Healthcare Group Secured Lending Limited (a related party by virtue of common directorships) repaid under a facility agreement with Group companies amounts totalling £10,388,398 (2023: £1,675,000). At the year end the loan balance outstanding totalled £34,983.325 (2023: £24,594,927). The contract rate of interest on the advance is 10.5% per annum. Total interest charged on the advances amounted to £2,977,557 (2023: £2,417,638). During the year loan amounts owed by group entities to Affordable Housing and Healthcare Group Secured Lending Limited were transferred in full to Affordable Housing and Healthcare Group Limited.
As at the year end a loan of £1,750,000 (2023: £1,750,000) was due from Affordable Housing and Healthcare Group Secured Lending LLP to one of the group entities.
As at the year end the total amount owed to Quantum Group (Management) Limited (a related party by virtue of common control) from group entities was £747,500 (2023: £498,691).
A loan of £5,610,735 (2023: £2,345,000) was due from Encore Care Homes Ltd (a related party by virtue of common control). This balance has been fully provided as a bad debt by the group.
A loan of £1,468,426 (2023: £50,737) was due from Encore Care Homes Management Ltd (a related party by virtue of common control). This balance has been fully provided as a bad debt by the group.
As at year end a loan of £177,312 (2023: £nil) was due from The Park Gate Care Home LLP (a related party by virtue of common control). This balance has been fully provided as a bad debt by the group.
As at year end a loan of £199,789 (2023: £nil) was due from Christchurch Fairmile Village LLP (a related party by virtue of common control). This balance has been fully provided as a bad debt by the group.
A loan of £1,530,120 (2023: £1,530,120) was due from AHH SET Ltd (a related party by virtue of common control).
Included in trade debtors is an amount of £284,147 (2023: £128,702) due from Bournemouth Care LLP (a related party by virtue of common control) this balance has been fully provided as a bad debt by the group. During the year, expenses of £34,559 (2023: £98,758) were recharged from Bournemouth Care LLP to group entities. Expenses of £nil (2023: £nil) were recharged by group entities to Bournemouth Care LLP.
Included in trade debtors is an amount of £nil (2023: £439,160) due from Encore Care Homes Limited (a related party by virtue of common control) this balance has been fully provided as a bad debt by the group. During the year, expenses of £439,160 (2023: £132) were recharged by group entities to Encore Care Homes Limited.
Included in trade debtors is an amount of £551,693 (2023: £928,068) due from Encore Care Homes Management Limited (a related party by virtue of common control) this balance has been fully provided as a bad debt by the group. During the year, expenses of £448,815 (2023: £720,147) were recharged by group entities to Encore Care Homes Management Limited.
Included in trade debtors is an amount of £66,582 (2023: £136,917) due from Encore Oakdale Poole Ltd (a related party by virtue of common control) this balance has been fully provided as a bad debt by the group. During the year, expenses of £70,266 (2023: £131,360) were recharged by group entities to Encore Oakdale Poole Ltd.
Included in trade debtors is an amount of £89,267 (2023: £139,910) due from Christchurch Fairmile Village LLP (a related party by virtue of common control) this balance has been fully provided as a bad debt by the group. During the year, expenses of £50,643 (2023: £142,313) were recharged by group entities to Christchurch Fairmile Village LLP. Also during the year, expenses of £425,648 (2023: £nil) were recharged by Christchurch Fairmile Village LLP to group entities.
Included in trade debtors is an amount of £83,018 (2023: £133,588) due from The Park Gate Care Home LLP (a related party by virtue of common control) this balance has been fully provided as a bad debt by the group. During the year, expenses of £50,366 (2023: £133,093) were recharged by group entities to The Park Gate Care Home LLP.
Included in trade debtors is an amount of £1,974 (2023: £10,057) due from Quantum Swansea LLP (a related party by virtue of common control). During the year, expenses of £290,677 (2023: £9,335) were recharged by group entities to Quantum Swansea LLP.
Included in trade creditors is an amount of £nil (2023: £1,449) due to Quantum Group (Management) Limited (a related party by virtue of common control). During the year, expenses of £17,480 (2023: £8,261) were recharged by Quantum Group (Management) to group entities.
Included in trade creditors is an amount of £nil (2023: £11,942) due to Quantum Homes Holdings Ltd (a related party by virtue of common control). During the year, expenses of £35,825 (2023: £47,767) were recharged by Quantum Homes Holdings Ltd to group entities.
Included in debtors are amounts totalling to £9,780 (2023: £42,439) due to other entities (Related parties by virtue of common control).
On 11th July 2024 99% of Platinum Skies Holdings Limited was sold to Pasture Housing Limited for £44,779,910. As part of this transaction all debt due to OakNorth Bank Plc (FY23: £31,519,503) was settled in full.
On acquisition of certain subsidiaries in previous periods, fair value uplift adjustments were made to the acquired work in progress balances. In each period, the fair value adjustment is recalculated based on the sale of the underlying development, releasing the fair value uplift to cost of sales on a systematic basis. An error was made in formulating this adjustment for the 31 January 2023 year end which has been adjusted for in the previous reporting period. There has been no impact on the company, or any of the underlying subsidiaries, with the adjustment impacting the consolidated result only.
Further details on the adjustment are set out below: