Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2023
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SAFE AS HOUSES INVESTMENT PLC
CONTENTS
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SAFE AS HOUSES INVESTMENT PLC
COMPANY INFORMATION
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SAFE AS HOUSES INVESTMENT PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present the Strategic Report for Safe as Houses Investment Plc ("SAH") for the year ended 31 December 2023.
Principle activities The principal activities of the Company are in the provision of solutions within the care sector across the UK, collaborating with and funding an evolving portfolio of dynamic partners which enables the creation and funding of desperately needed high-quality accommodation and future proofed environments. Business review and future developments Results for the year During the year, the Company continued to build upon its track record of delivering innovative and unique solutions in a sector where there is a genuine and increasing demand. The Company acquires and develops care sector properties in wholly owned SPVs and exits by sale of the shares in the SPV or sale of the underlying property asset. Throughout the year, the company continued to navigate a challenging operating environment marked by persistent market, financial and external uncertainties. The Company sold the underlying property asset in one of its SPVs during the year to a leading institutional sector fund. The Company also sold land to the same institutional fund via a sale and forward funding agreement to build an apartment block incorporating 1 three-bedroom, 1 four-bedroom and 5 one-bedroom apartments on the site for supported living. The underlying attributable property value to these sales totalled £2.6million (2022: £17.6million). A management fee was also charged to the SPVs in relation to the development activity of £510,537 (2022: £532,772). The profit for the financial year was impacted by a £10.7 million impairment provision (2022 £2.8million) against the amounts due from Safe as Houses Limited, a related party and the Company’s development manager during the year. Significant impairments against other assets have also been recorded, recognising the challening economic conditions during the year and post year end. The Company also has strategic 50% shareholdings in two care operators, Bespoke Care Services Limited and Prime Calibre Care Group Limited. Both companies are trading successfully, and the Company is currently working with the other shareholders in the pursuit of expansion opportunities in the form of additional facilities. The Company has continued to develop strong relationships in the care sector.
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SAFE AS HOUSES INVESTMENT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Due to the early stage of the Company's activities the key performance indicators primarily relate to factors impacting growth and viability. The Board monitors funding and cashflow, performance against forecast, pipeline and the identification of suitable development sites and individual sub-sector growth and profitability. During the year the Company created business sectors for each major care sector in which it either operates or is seeking to operate – six business sectors in total. The Company has started measuring financial performance at sector level and will develop these metrics further, including profit per project, as the Company grows.
Future developments Post year end, the Company completed the sale and forward funding of a further development for £2.5 million to a leading institutional sector fund, building on previous sales and forward funding with the fund. We are in advanced discussions whereby the same fund will forward fund and acquire further properties from the Company. The Company is also progressing discussions with multiple funds who are either active in the sector, or who are seeking to enter the sector. With the increasing care requirements across the UK, the Company is confident that demand will remain strong. While advancing funding solutions, the Company continues to progress existing projects, manage cash flow, and strengthen its core business operations. Principal risks and uncertainties The Directors have identified below a number of risks which they believe may affect the Company's ability to deliver its strategic goals. This list does not purport to be an exhaustive summary of the risks affecting the business and is given in no particular order of priority. Where possible steps to mitigate risks have been highlighted as have those risks considered to be outside the control of the Directors. Economic risk The main economic risks that could affect the businesses performance are increasing construction costs and a widening of yields, both of which impact upon margins. The business operates on a buy to order basis where the key participants engage in advance. The end sale price is based on a long-term yield from a property based lease. The Company will respond to these risks by ensuring that it is achieving value in its construction contracts and that the pre-agreed yield with the fund buyer is set at a financially sustainable level for the particular project prior to committing significant sums such as the purchase completion. To this first point, a partnership relationship has been formed with a new contractor which will promote full transparency on costs and enhance the Company’s capability to robustly appraise projects prior to entering into them. In addition, it should be noted that the Company sees a buying opportunity as residential property prices are expected to fall. Regulatory change risk The Company does not operate in a heavily regulated environment but is affected by the impact of regulatory change on its customers and partners. The business has adapted to mitigate these concerns and to position itself as best in class and continues to monitor and react positively to changes of this nature. Reacting to such changes impacts cost by way of carried overheads whilst future proofing the business can take time and impact the structure and timing of future sales. The Board regularly reviews the regulatory environment, potential developments and maintains open dialogue with its key customers and partners to enable it to plan and adapt as change arises.
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SAFE AS HOUSES INVESTMENT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Principal risks and uncertainties (continued)
Funding and liquidity risk In order to grow the business in line with projections the business needs to be assured of adequate funding at competitive rates, so that the pipeline of demand from the Company’s partners and stakeholders can be fulfilled. Post year end the Company completed a forward funding agreement with an institutional fund. The Company monitors its levels of working capital to ensure that it can meet its debt repayments as they fall due through regular cash flow forecasting and a longer-term business plan and forecasts. The key risk to liquidity comes from the loan note debt of £15m principal plus premium and outstanding interest. The Company was unable to make this payment when it fell due in December 2023. The Company is engaged with the loan note holders representatives to explore a longer term financing solution that will maximise returns to the loan note holders and all creditors. Sustainability of market The market that the business operates within continues to grow at a rate that is not being met by providers and there is no sign of this letting up. In fact, recent economic pressures are only going to increase the need for the private sector to assist with. Increased competition is welcome as currently there is no sign of market tensions resulting in anyone being displaced and those that strive as the business does to be best in sector and are supported by adequate funding are assured of a long- term future. Interest rate risk The Company has both interest-bearing assets and interest-bearing liabilities. Interest bearing assets comprise loans receivable and cash and cash equivalents which earn interest at variable and fixed rates. Interest bearing liabilities are at fixed rates. The Company has a policy of maintaining debt at fixed rates to ensure certainty of future interest cash flows. The Company is engaging with the trustee of the loan note holders to explore options on the maturing loan stock and is monitoring the movements in interest rates in the wider market to inform these discussions. Going concern The financial statement have been prepared on a going concern basis. The loss for the year was £12,569,289 (2022: loss of £1,827,129) and the Company had net current liabilities of £16,147,232 (2022: £3,577,943). The Directors have prepared cashflow forecasts for the eighteen months to 31 December 2026 and considered carefully the future prospects of the Company. The cashflow forecasts, on a worst-case scenario basis, show that the company would still be able to meet its day-to-day cash requirements as they fall due. The results subsequent to the year end, having navigated a prolonged period of unprecedented economic turmoil, have been positive. The Company has a pipeline of opportunities and has established relationships with key stakeholders, including local authorities and care commissioners throughout the UK. As at the date of signing, the Company has an agreed standstill with its loan note holder and is in the process of concluding the terms of the loan note restructuring whereby it is likely that a portion of the loan note debt will remain, with amended terms and the Directors are comfortable that these obligations can be serviced, and a portion will be converted to equity. The directors and loan note holders are working towards concluding this restructuring by the end of June 2025. The directors have considered a scenario in which negotiations with the loan note holders, and the debt for equity swap, is not completed, and the loan note holder demands full repayment of the loan note. In this event, the Company would not be a going concern as it would be unable to repay the outstanding balance based on the projected cash flows. Therefore, the directors consider that there is a material uncertainty in relation to going concern as a result of such a failure of the ongoing negotiations.
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SAFE AS HOUSES INVESTMENT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Section 172(1) of the Companies Act requires directors of a company to act in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole. In doing so the Directors have had regard to the matters set out in section 172(1) a) to f) when performing their duty under section 172.
The matters set out are: a) the likely consequences of any decision in the long term The Company’s mission is to enhance the lives of society’s most vulnerable, by facilitating future proofed accommodation solutions to the significant issues of shortfalls and inadequate accommodation for persons in need across the U.K. The Company puts in place long term leases with vetted tenants and operators. These leases are ethical and sustainable and outline terms which are not designed to be in any way onerous upon the tenant and which address the Regulator’s concerns on onerous leases. For example, a rent neutral model is operated whereby we do not charge the tenant for any communal space. We continue to collaborate with a number of institutional investors who have access to the funding to be able to meet the growing needs of Local Government / NHS and Assisted Care over the longer term. The Company has a dedicated R&D function which researches and identifies cross sector care needs across the UK. Without exception, there is a growing need over the next decade for both additional beds in the sector, and an improvement in the quality of the beds and accommodation that is available. Again, this demonstrates the Company’s recognition that its decisions carefully consider the short, medium and long terms. b) the interests of the Company's employees The Company does not have any employees, bar the directors, and is reliant on collaboration and partnership agreements. The Company is committed to being a responsible business and we utilise our position to influence and encourage our partners. Our behaviour is aligned with the expectations of our partners, clients, investors, communities, and society as a whole. People are clearly at the heart of our specialist services. For our business to succeed we need to manage our partners performance and develop and operate as efficiently as possible. We must also ensure we share common values that in form and guide our behaviour, so we achieve our goals in the right way. During the year the Directors approved and actively promoted our partners' continued investment in its people. Business divisions were created for each major care sector, with a separate team aligned under each, enabling that team to focus on its sector. The recruitment of new people reflected these growing specialisms. As collaboration is at the heart of what we do, we rolled out a new flexible hybrid working policy which enabled persons who work more effectively in an office environment to do just that. All these employees are actively encouraged to visit the Company’s sites to gain a further understanding of the business and the value-added work the business is achieving, which is a highly effective motivator. c) the need to foster the Company's business relationships with suppliers, customers and others SAH has positioned itself as the leading provider of solutions within the sector providing the increased and enhanced infrastructure that is desperately required. We work with a range of collaborative partners which is constantly expanding. Our funding model enables Local Authorities, NHS and Registered Providers of Social Housing to expand quickly and safely to meet the needs. We engage with as many involved parties, on a collaborative basis as early as possible, in order to facilitate the development of services for those needing them.
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SAFE AS HOUSES INVESTMENT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Section 172(1) Statement (continued)
The overarching aim is to help alleviate financial constraints in order create a better overall quality of life for society’s most disenfranchised members. The Company has entered into a formal partnering relationship with a main contractor. In addition during the year, we have entered into further formal and informal partnering relationships with a number of stakeholders in the care sector, which are subject to confidentiality provisions. d) the impact of the Company's operations on the community and the environment Deploying our extensive Research and Development capability and in consultation with many stakeholders in the sector, SAH will develop properties for vulnerable people which includes but is not limited to people with learning disabilities, autism, mental health, elderly, dementia, children's service, complex needs and the homeless. These properties are developed to the specification of the operator, are high quality and future-proofed, and therefore the work that we do has a hugely positive impact on our communities in general. Our research and operating model also ensures that these facilities are developed in areas and communities with high need. We are reacting to a growing trend towards environmentally responsible and sustainable solutions in the industry, for example by including an improvement in a property’s EPC rating in our feasibility assessment and by providing options to our fund buyers and operators to include environmentally responsible solutions as part of our product offering. The use of renewable energy sources is at the forefront of SAH thinking and where practical we always enhance the energy efficiency of all sites to reduce running costs and carbon footprint. We always seek to incorporate tech and automation where this is practical and offer free of charge access to Person Centred Software’s award-winning operating App as well as the Sounds Like Me Care personalisation app. e) the desirability of the Company maintaining a reputation for high standards of business conduct As a Board we are supremely conscious of the fact that our Core Business focusses on the delivery of Care for societies most vulnerable and must balance the of delivering profit whilst doing good. Our brand and reputation is therefore precious to us and we strive at every opportunity to cement our values through all that we do and support and pride ourselves in going the extra mile whilst staying true to our principles. During the year, working alongside our partner, we achieved a very positive Ofsted rating for a new children’s services operation in Kent. We continue to support our adult complex needs partner in the operation of the Parklands facility and the local commissioners have outlined their support for further services and have engaged our partner to carry out quality reviews at other sites. Again, we put in place leases that are sustainable and ethical, and we complete properties to the specification of tenants, operators and the ultimate landlord, often making late amendments and additions at our cost. This demonstrates our commitment to high standards of business conduct. f) the need to act fairly between members of the Company The Board is supporting the Executive Chairman in embedding a culture that will help deliver long- term success. The Executive Chairman reinforces the Company's values and ensure that we have the right culture to meet the strategic needs of the Company. Further work on this will be carried out on a continuous basis. The Board sets the values and standards required of all partners through its Operational Framework, which contains our Code of Conduct. The Company has a proprietary process system designed to both mitigate risk and ensure a consistent fair approach to each project and partners. The integrity of these processes is an important part of our governance arrangements and the Board reviews these processes regularly to ensure they remain effective.
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SAFE AS HOUSES INVESTMENT PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Section 172(1) Statement (continued)
During the year, our transparent and fully inclusive property acquisition and sale member approval process was successfully implemented across a number of projects. Further, we improved the process to include senior executive approval earlier in our project feasibility prior to making an offer, effectively adding another layer of transparency into our acquisition process.
This report was approved by the board and signed on its behalf.
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SAFE AS HOUSES INVESTMENT PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The loss for the year, after taxation, amounted to £12,569,289 (2022 - loss £ 1,827,129).
The directors do not recommend a dividend.
The directors who served during the year were:
As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information, required to be in the directors' report by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.
The auditor, Blick Rothenberg Audit LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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SAFE AS HOUSES INVESTMENT PLC
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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SAFE AS HOUSES INVESTMENT PLC
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SAFE AS HOUSES INVESTMENT PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
We have audited the financial statements of Safe As Houses Investment Plc (the 'Company') for the year ended 31 December 2023, which comprise the Profit and Loss Account, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related Notes, 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 Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We draw attention to note 2.3 in the financial statements, which indicates that there is a material uncertainty in relation to going concern as a result of loan notes totalling £15,895,476 which were due for repayment in December 2023. The Company has not repaid the loan notes and based on the expected future cashflow forecasts of the Company, the Company does not have sufficient cash reserves to repay the loan notes and must restructure the arrangement.
As stated in note 2.3, these events or conditions, along with the other matters as set forth in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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. Our evaluation of the directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included an assessment of the Company's cash flow forecasts, excluding the repayment of the loan notes and associated interest.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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SAFE AS HOUSES INVESTMENT PLC
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SAFE AS HOUSES INVESTMENT PLC (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's report thereon. The directors are responsible for the other information contained within the Annual Report. 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.
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 Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
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SAFE AS HOUSES INVESTMENT PLC
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SAFE AS HOUSES INVESTMENT PLC (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, being the Companies Act 2006, FRS 102 and taxation legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested a sample of manual journal entries, selected through applying specific risk assessments applied based on the Company’s processes and controls surrounding manual journal entries;
∙assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙reading the minutes of meetings of those charged with governance; and
∙enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance.
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SAFE AS HOUSES INVESTMENT PLC
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SAFE AS HOUSES INVESTMENT PLC (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
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.
for and on behalf of
Chartered Accountants
Statutory Auditor
16 Great Queen Street
Covent Garden
WC2B 5AH
Date: 9 May 2025
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SAFE AS HOUSES INVESTMENT PLC
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
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SAFE AS HOUSES INVESTMENT PLC
BALANCE SHEET
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 33 form part of these financial statements.
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SAFE AS HOUSES INVESTMENT PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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SAFE AS HOUSES INVESTMENT PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Safe As Houses Investment PLC is a public company limited by shares, incorporated in Scotland. The registered office is Cottage 13 Praise Road, Quarriers Village, Bridge Of Weir, Renfrewshire, Scotland, PA11 3SX.
The financial statements are presented in Sterling (£), which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company is a parent Company which would be subject to the small companies regime but for being a public Company, and is therefore exempt from the requirement to prepare consolidated financial statements under section 399 of the Companies Act 2006.
The financial statement have been prepared on a going concern basis.
The loss for the year was £12,569,289 (2022: loss of £1,827,129) and the Company had net current liabilities of £16,147,232 (2022: £3,577,943). The Directors have prepared cashflow forecasts for the eighteen months to 31 December 2026 and considered carefully the future prospects of the Company. The cashflow forecasts, on a worst-case scenario basis, show that the company would still be able to meet its day-to-day cash requirements as they fall due. The results subsequent to the year end, having navigated a prolonged period of unprecedented economic turmoil, have been positive. The Company has a pipeline of opportunities and has established relationships with key stakeholders, including local authorities and care commissioners throughout the UK. As at the date of signing, the Company has an agreed standstill with its loan note holder and is in the process of concluding the terms of the loan note restructuring whereby it is likely that a portion of the loan note debt will remain, with amended terms and the Directors are comfortable that these obligations can be serviced, and a portion will be converted to equity. The directors and loan note holders are working towards concluding this restructuring by the end of June 2025. The directors have considered a scenario in which negotiations with the loan note holders, and the debt for equity swap, is not completed, and the loan note holder demands full repayment of the loan note. In this event, the Company would not be a going concern as it would be unable to repay the outstanding balance based on the projected cash flows. Therefore, the directors consider that there is a material uncertainty in relation to going concern as a result of such a failure of the ongoing negotiations.
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.
For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discontinued at the financial asset's original effective interest rate. For financial assets carried at cost less impairment, the impairment loss is the difference between the asset's carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date. Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impairment financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.
The tax expense for the year comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
Current tax is the amount of income tax payable in respect of taxable profit for the year or prior years. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Cost includes all statutory and professional fees relating to the acquisition of a property, obtaining planning consents, legal fees in relation to the granting of new leases together with the costs of construction and redevelopment. Finance costs are not capitalised.
Ordinary shares are classified as equity.
The Company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the Company becomes party to the contractual provisions of the instrument. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The Company’s policies for its major classes of financial assets and financial liabilities are set out below. Financial assets Basic financial assets, including trade and other debtors, cash and bank balances, intercompany working capital balances, and intercompany financing are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Financial instruments (continued)
Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment. Financial liabilities Basic financial liabilities, including trade and other creditors, 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Impairment of financial assets Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account. For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the Company would receive for the asset if it were to be sold at the reporting date. For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss. Derecognition of financial assets and financial liabilities Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires. Offsetting of financial assets and financial liabilities Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet. 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Critical judgements in applying the Company’s accounting policies The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements. Financial instruments classification The classification of financial instruments as “basic” or “other” requires judgement as to whether all the applicable conditions for classification as basic are met. This includes consideration of the form of the instrument and its return. Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. Stock The directors are required to assess the expected selling price and costs to sell of each of the sites that constitute the Company’s stock to determine the correct carrying value. Estimation of the selling price is subject to significant inherent uncertainties concerning market yields, the property market generally and investor return expectations. The interrelationship between all of these inputs is determined by market conditions. Estimated costs to complete any work also requires estimation. A change in any of these factors will change the estimates valuation. The carrying amount of stock is disclosed in the note to the financial statements.
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
3.Judgements in applying accounting policies (continued)
The directors are required to assess whether the carrying value of loans receivable is appropriately stated and whether any impairment provision is required. Estimation of the recoverable amount of loans receivable requires the directors to make an assessment of the counter party’s ability to repay the debt and over what period. This assessment is inherently uncertain and can be impacted by external market conditions as well as factors specific to the borrower. An impairment provision of £11,707,938 was recognised during the year and a total of £15,957,938 as at 31 December 2023 (2022: £4,250,000). The carrying amount of loans receivable is disclosed in the note to the financial statements.
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
11.Taxation (continued)
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. From this date companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Subsidiary undertakings (continued)
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Profit and loss account
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company registered a charge on 22 December 2018 between the Company and Truva Services Limited in relation to the £500 million (maximum) Secured Note Programme. The Company has agreed to pay all monies and liabilities that arise in relation to the Secured Note Programme under the deed of charge. The Company has issued a first fixed charge over all property of the Company and a floating charge over all monies of the Company (which can be converted to a fixed charge on demand).
See note 21 for details of the directors loan.
Safe as Houses Limited is a related party by virtue of common shareholders and directors. During the year, the Company paid fees to Safe as Houses Limited amounting to £1,771,045 (2022: £3,535,433) relating to development and development management fees. The Company also loaned funds to Safe as Houses Limited of £4,816,290 (2022: £10,119,468). During the year an impairment provision of £10,740,074 (2022: £4,250,000) was recognised in respect of this balance. The balance at the year end, excluding interest, was £Nil (2022: £5,869,468). Interest was earned on this loan at an interest rate of 8.5% amounting to £524,304 (2022: £633,783). However, as the amount is not deemed recoverable, an impairment provision has been recognised. The transactions in the year and the loan balances outstanding from subsidiary companies at year end are as follows:
The Company entered into a strategic arrangement during 2020 with Bespoke Care and Support Limited (BCS), whereby the Company advanced loans to fund BCS’s initial set-up and operating costs at interest rates of 15% per annum for amounts up to £500,000 and 8% per annum for amounts over £500,000 and under £1,000,000, and took a 50% equity share in BCS for consideration of £10. Loans of £Nil (2022: £Nil) were advanced during the year and amounts repaid of £798,444 (2022: £650,000). The outstanding balance at year end was £Nil (2022: £537,126). Interest earned on this loan in the year amounted to £30,246 (2022: £103,967) and £nil (2022: £232,398) was outstanding at the year end and is included in accrued income.
The Company has loaned funds to the Lotus Corporation, a company with mutual directors and shareholders. Interest of £2,000 (2022: £2,000) was earnt during the year. The interest rate was 8%. At the year-end £25,000 was receivable (2022: £25,000) in loan amounts and £Nil (2022: £6,870) in accrued interest from the company as the interest amount was deemed irrecoverable. There are no key management personnel other than the directors, whose remuneration is disclosed in note 6.
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SAFE AS HOUSES INVESTMENT PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
At the year end, £150,000 (2022: £150,000) was owed to the Company by D I Ritchie, a director. Interest was earned on this loan at an interest rate of 8% amounting to £12,000 (2022: £12,000) and £77,600 (2022: £65,600) was outstanding at the year end and is included in accrued income. This loan is repayable on demand. The maximum balance outstanding during the year was £150,000 (2022: £150,000). An impairment provision of £50,970 (2022: £nil) has been recognised during the year. All other amounts were repaid subsequent to the year end.
The controlling parties are David Ashton and Amity Partnership Holdings Limited by virtue of ownership of shares with 75% or more control over the trustees of the trust that is the majority shareholder.
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