The director presents the strategic report for the year ended 30 September 2024.
The past year has seen challenges remain in the housing market and the wider economic environment in general, however the business has successfully navigated the uncertainty through a strong order book built on relationships with our key Affordable Homes and BTR clients. This partnership led strategy has allowed for the business to deliver increased turnover and profitability with good execution by delivering on contracted sites during a period of low demand in the private sales market.
There continues to be a generational shortage of new homes in the UK. The Government’s agenda and focus on housebuilding through a reform of the planning system and the re-introduction of housing targets, will take some time to bear fruit, but does indicate a desire to accelerate the supply of new homes across multiple tenures. Recent Government focus and comment in regard to Regulators is also noteworthy, as these bodies have a significant impact on delivery of new homes, especially if they are refocused on economic growth as a performance metric.
Whilst the private sales market remains cautious, we have seen some increased momentum in the last few months as mortgage costs have stabilised and there is early evidence of competition amongst the major lenders for market share.
We can also see that BTR demand remains strong with the pace of lettings post-handover to our clients, especially in the suburban housing market particularly within the Greater Manchester region.
The business continues to exercise controlled growth on a year to year basis. We have the advantage of a robust future pipeline, strong customer base and additional new clients seeking to partner with Kellen for the delivery of mixed tenure housing and communities.
Consistent Government policy and stable financial markets are a pre requisite for most businesses to succeed. With these factors Kellen will strive to make a contribution to the national housing crisis, working with quality private and public partners to deliver an increasing number of quality mixed tenure, sustainable communities.
Transitioning land opportunities into developments is fundamental to our future financial and operational success. Kellen has the skill set , experience and resources to meet this challenge and believe we are well placed to contribute to the national agenda of delivering more quality, multi tenure, sustainable new homes throughout the North West.
Supply Chain
Key to delivery is the management of the supply chain and the ability to ensure a continuing supply of materials and a skilled labour force. The high level of visibility on our forward activity enables long term supply side relationships to support our increasing growth and business expansion. Our ability to offer greater security and continuity of work, together with a focus on meeting supplier trade payments on time, Health & Safety training for our subcontract partners and open communications, helps to negotiate competitive terms and builds supplier loyalty.
People
The success of the business is built on the foundations of our people and are conscious that we need to continue to attract and retain the best people to achieve our growth plans. Our headcount increased during the year by 43% to 80 employees (2023: 56) which included recruitment of 9 new apprentices. This supports our dedication to investing in young talent and giving them a platform and opportunity to develop the skills needed as they embark on a career that enhances an industry need. We are currently supporting 20% of our employees through training and development programmes, providing valuable skills and knowledge that will continue to support and achieve our growth plans.
The health and safety of our employees and all stakeholders on our sites remains a key priority. Through a continuous monitor of processes and procedures we identify those key risks that have the potential to impact on business operations, which provides for a well considered approach on maintaining a safe work environment for all. This strong promotion of our health and safety culture has led to the successful accreditation of the ISO 45001 quality management certification in the year, alongside being awarded the Safety Schemes in Procurement (SSIP) for Principal Contractor and Principal Designer.
The business continued to demonstrate the resilience of its Partnership model delivering strong growth in revenue and profit.
Revenue in the year increased 143.6% to £101.6m (2023: £41.7m) reflecting strong operational performance for pre-sold equivalent housing units with our Housing Association (HA) and Build to Rent (BTR) clients. Private for sale completions delivered 17 new homes following a successful launch of the development at Mill Vale, Middleton (16 unit completions) and the sale of the last remaining home at Vernon Gardens, Oldham.
Profit before taxation of £17.8m (2023: £1.5m) giving margin of 17.5% (2023: 3.6%) which further demonstrates the ability to navigate exposure on its cost base and reported margins on each of its projects.
Key Performance Indicators
| 12 Months to Sept 2024 | 12 Months to Sept 2023 |
Turnover (£’000) | 101,582 | 41,745 |
Gross Profit (£’000) | 18,409 | 6,302 |
Gross Profit % | 18.12% | 15.10% |
Net Profit/(loss) (£’000) | 14,296 | 1,489 |
Net Profit % | 14.07% | 3.57% |
The Board of Directors oversee risk management across the business that determines the risk policy, it’s overall appetite for risk and the procedures that are put in place to manage the identified risks. The key principal risks which the Group faces are:
Health & Safety and its commitment to ensuring a safe working environment, preventing accidents that harm people and the communities in which we build. It is pleasing to report that the business incurred no reportable incidents in the year;
Political uncertainty and changes to Government policy on legislation and building safety, that may affect on the business strategy through delays and increased costs;
Land supply and the lack of developable opportunities through difficulties in sourcing land or obtaining planning approval, impacting the ability to achieve growth targets;
Supply chain and the costs and supply of raw materials and labour that may impact on delivery to programme and budget. We actively engage with our supply chain throughout the procurement to construction process with knowledge sharing at the forefront to ensure we meet high levels of quality, safety and sustainability standards. We are also pride ourselves on our commitment to pay our suppliers on time;
People and Skills and the ability to recruit, develop and retain the right people.
Through a robust and regular management review, the business monitors and encompasses mitigating actions to ensure that risk appetite is managed consistently by the Directors. Risk management remains inherent in all operations and is given prominent place through the project review process in place, monthly health and safety committee meetings and weekly site visits by the senior team.
The Directors of the company confirm that during the year ended 30 September 2024 they have acted to promote the long-term success of the Company for the benefit of the members as a whole (having regard to the stakeholders and matters set out in s172 (1)(a-f) of the Companies Act 2006).
This statement sets out how the Directors have considered the following matters:
Consequence of any decision in the long term; business performance and strategy is reviewed on a monthly basis looking out across a 5 year period, with progress monitored against the Company’s strategy through each reporting cycle. Detailed budgets and reforecasts are prepared that allow the company to track performance, with consideration of risks and opportunities, taking any necessary actions to support the long-term success and sustainability of the company’s business model.
The interests of the Company’s employees; our employees are our greatest asset and as such are key to the success of the business. We seek to recruit and retain the best people, look after them and provide them with the support they need so that they perform to the best of their ability. Ensuring we have the right employees with the skill set and knowledge is fundamental to all that we do, and through constant engagement with our employees, consideration is given to the interests of the employees and the part they play in the company’s performance.
The need to foster the Company’s business relationships with suppliers, customers and others; good working relationships with suppliers are essential in order for the company to deliver schemes at pace and quality our customers come to expect. Working closely with our supply chain ensures that quality, safety and sustainability standards remain high, supports development for energy efficient homes and controls costs. For customers, we are dedicated to providing excellent customer service to all clients through our dedicated sales and customer care teams, that engage and support all our clients through the home buying journey, both pre and post completion. The Management Team regularly reviews feedback and consider ways in which the processes can be improved.
The impact of the Company’s operations on the community and the environment; the Board are committed to improving the wellbeing of the communities in which we build, both now and in the future, minimising the environmental impact of its operations and leaving a positive legacy with its residents and stakeholders. This includes supporting the use of local labour, engagement with local schools to inspire the younger generation and engaging effectively with the local community with regard to our development aspirations and delivery.
The desirability of the Company maintaining a reputation for high standards of business conduct; the Company’s culture is underpinned by it’s clear policies and processes. It is the responsibility of the Board for imparting the culture and maintain oversight to ensure that it is embedded throughout the business. All employees are inducted on employment that sets the tone and alignment of our culture and embodies the values that are fundamental to everything we do.
On behalf of the board
The director presents his annual report and financial statements for the year ended 30 September 2024.
The results for the year are set out on page 10.
No ordinary dividends were paid. The director does not recommend payment of a further dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The auditor, Sumer Auditco Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This financial year is the first streamlined energy and carbon report, covering the 12 months to 30 September 2024.
The figures set out are in accordance with the Greenhouse Gas (GHG) protocol including Streamlined Energy and Carbon Reporting guidelines. The latest published UK Government Conversion factors have been used for all calculations.
We have identified the relevant emission sources which we are required to report under SECR requirements:
Scope 1 – Direct Emissions – Gas Combustion:
The quantity of energy consumed resulting from the purchase of gas across the business, with consumption encompassing both our office and development sites. We have calculated the quantity of gas consumed by analysing our expenditure with our utility providers and apply an average unit price in the period.
Scope 1 – Direct Emissions – Transport:
Calculated as the quantity of fuel purchased for our owned customer care van. Volume of fuel purchased as analysed from fuel card reports.
Scope 2 – Indirect Emissions – Electricity:
Calculated as the quantity of energy consumed resulting from the purchase of electricity across the business. Our electricity consumption encompasses both our development sites and office. We have calculated the quantity of gas consumed by analysing our expenditure with our utility providers and apply an average unit price in the period.
Scope 3 – Other Indirect Emissions – Transport:
We have calculated the quantity of energy consumed by our employees in their personal cars on business. Mileage claims have been collated during the period and applied the government issued conversion factors to determine our emissions and energy use.
| Scope | GHG Emissions (tCo2e) | Energy Consumption (kWh) |
Combustion of Gas at premises | 1 | 183 | 744,414 |
Consumption of fuel for transport | 1 | 2 | 7,873 |
Purchased Electricity | 2 | 16 | 78,525 |
Sub total |
| 201 | 830,813 |
Consumption of fuel for transport | 3 | 84 | 346,376 |
Totals |
| 285 | 1,177,188 |
Intensity measurement
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £1m of revenue, the recommended ratio for the sector.
| 2024 |
tCo2 per £1m revenue | 2.7 |
Kellen Homes are actively identifying environmental opportunities, working positively towards our energy efficiency and minimising risk.
This encompasses prioritising energy efficient homes through a ‘fabric first approach’ to minmise heat loss and improve airtightness in all of our homes, thus reducing energy costs for homeowners and provide a comfortable living environment all year round.
Working closely with build technology partners to create more eco-friendly housing, we are exploring ways to provide renewable technology such as Solar PV, Airsource heat pumps and waste water heat recovery to name a few into our homes as standard, all of which will significantly reduce carbon and lower running costs of our homes.
Our commitment to providing homes that contribute towards energy efficiency aligns with the Future Homes Standard that addresses environmental concerns and paves the way for reducing carbon emissions in all new homes.
Throughout the forever changing outlook on energy consumption, we also continually look to drive down emissions and develop more efficient means of operating and improving on our quality culture. More specifically and not limited to:
Carefully track the maintenance of plant and equipment to ensure they are operating at optimum efficiency
Upskill and increase the number of environmental champions within our workforce to drive positive behavioral change
Observe the environmental challenges and innovations developing within the industry to maximise and apply added value
Consider all opportunities for further environmental improvement across our business
We have audited the financial statements of Kellen Homes Holdco Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The 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).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 director with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
The information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the director's report have been prepared in accordance with applicable legal requirements.
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.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the Directors (as required by auditing standards) and discussed with the Directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect; laws related to Health and Safety, Employment, UK Companies Act, Pension Legislation, Tax Legislation and Construction Regulations.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
We design procedures in line with our responsibilities, outline below to detect material misstatement due to fraud:
Matters are discussed amongst the audit engagement team regarding how and where fraud might occur in the financial statements and potential indicators of fraud
Identifying and assessing the design and effectiveness of controls that management have in place to prevent and detect fraud
Detecting and responding to the risks of fraud following discussions with management and enquiring as to whether management have knowledge of any actual, suspected or alleged fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://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 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
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 £826 (2023 - £620 loss).
Kellen Homes Holdco Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 105 Dalton Avenue, Birchwood Park, Warrington, WA3 6YF.
The group consists of Kellen Homes Holdco 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. The principal account policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Kellen Homes Holdco 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 30 September 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
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 balance sheet 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.
At the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Private housing revenue
Revenue is recognised on the sale of private housing at a point in time on legal completion, as this is when the customer obtains control of the property and the Company has fulfilled its performance obligations.
Affordable housing and private rental section (PRS) revenue
Contract revenue for affordable housing and PRS contracts is recognised over time, by reference to the stage of completion of contract activity at the balance sheet date. This is normally measured by surveys of work performed to date. Where there is a disposal of land to the customer under the contract, revenue for this disposal is recognised in line with the accounting policy for land sales below.
Where the company provides design, contruction, and mobilisation activities on a development across multiple units simultaneously, this is considered to represent one performance obligation. Where these services are provided across multiple development sites, each site is considered to represent a distinct performance obligation.
Bare land sales
Revenue is recognised on bare land sales from the point of control passing to the buyer. Where the Company has significant obligations to perform under the terms of the contract, revenue is recognised when the obligations are performed.
Other revenue
Any other revenue is only recognised at the point that the Group has fulfilled their obligations under the contract.
Government grant income
Government grants are recognised once the Company has reasonable assurance that the related conditions of the grant will be met and that the grant will be received. Government grant income is recorded within other operating income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
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 profit and loss account.
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 balance sheet 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 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.
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, loans from fellow group companies and preference shares that are classified as debt, 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
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 profit and loss account 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. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is 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.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
In the application of the group’s accounting policies, the director is 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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The company recognises revenue and profit based on the stage of completion. In doing so, management must make certain estimations. The management review all contracts on a monthly basis and assess financial and operational performance versus budget as well as physically inspecting the work to corroborate the stage of completion.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The director remuneration of Kellen Homes Holdco Limited was nil (2023: Nil).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
More information on impairment movements in the year is given in note .
Details of the company's subsidiaries at 30 September 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The long term loan of £6,640,254 (2023: £7,351,125) is secured by a fixed and floating charge over the property or undertaking of Kellen Homes (GM) Limited and Kellen Homes Holdco Limited.
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.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The company has taken advantage of the exemption available in accordance with Financial Reporting Standard 102 Section 33, not to disclose transactions entered into between two or more members of a group, where any subsidiary party to the transaction is wholly owned.
Included within other borrowings falling due within one year is an amount of £17,000,000 (2023: £14,000,000) due to QMS (NW) Limited, a company under the same common control as the reporting entity. During the year interest totaling £688,082 (2023: £889,603) was charged on the loan. As at 30 September 2024 a total of £2,379,795 (2023: £1,691,713) of interest was included within accruals.