The directors present the strategic report for the period ended 31 December 2024.
The company’s results for the 18 month period comprised turnover of £90.9m (2023 - £58.1m), a gross loss of £1.5m (2023 - £1.2m gross profit), operating loss of £4.3m (2023 – £3.0m operating profit) and loss on ordinary activities before taxation of £3.7m (2023 - £2.4).
The past 18 months has been a period of significant transition for the Highwood Group. At the beginning of the period, the business underwent a change in leadership following a period marked by strategic decisions that, in hindsight, did not align with the long-term needs of the business. While these choices presented operational and financial challenges, the company responded with focus and determination. Through disciplined execution, stronger forecasting practices, and a realignment of strategic priorities, we have not only stabilised performance but also laid the foundation for sustainable growth.
Performance in the period continued to be challenged by inflationary pressures and subcontractor insolvencies. Many project prices were fixed prior to the outbreak of conflict in Ukraine, leaving the business exposed to significant increases in energy, material, and labour costs. The market remained turbulent throughout the period, with procurement often occurring at higher costs than originally tendered
Despite these challenges, the group achieved significant milestones by successfully securing and initiating four new contracts with a combined value of £36 million Throughout the period, the group completed, or was in the contractual process for a total of 6 care home and housing schemes delivering 259 beds and 63 housing units and completed on a further 223 mix of care units and apartments, which completed after the period end. Additionally, the group finalized two land deals, incorporating two associated contracted construction projects with trusted clients at Storrington for a 60-bedroom care home as well as land at Rowlands Castle which will deliver a mix of 100 housing units, with a combined value of £30m, all expected to complete in financial year 2026. A new contract for £10m at Waterlooville was also concluded after the period end, this is scheduled to deliver a 64 bed care home within the financial year 2026.
The key risks and uncertainties expected to impact the group in the future include:
Housing incentives and supply chain implications
Government-led housing incentives, whether in the form of subsidies, planning reforms, or new-build targets - have the potential to increase demand sharply. While this presents growth opportunities, it also places strain on a supply chain already under pressure. Increased demand for materials and labour could inflate costs and elongate delivery timelines, challenging our ability to meet client expectations efficiently. Strategic partnerships and long-term supplier agreements are increasingly essential.
Demographic challenges in the construction workforce
The construction sector continues to face a critical shortage of new talent entering the workforce, compounded by an aging demographic among skilled tradespeople. This talent gap threatens future capacity and raises concerns about knowledge transfer, continuity, and project resilience. Highwood is prioritising engagement with apprenticeships, training initiatives, and strategic recruitment to address this systemic issue and secure a sustainable talent pipeline.
Geopolitical risk
Ongoing global instability heightens uncertainty in supply chains, financing, and investor confidence. These factors can also affect energy prices and material availability. Highwood is incorporating scenario-based forecasting to prepare for potential disruptions and maintain business continuity under a variety of global risk conditions.
Building safety act
The UK Government’s evolving stance on building safety - particularly post-Grenfell reforms - continues to reshape compliance expectations across the industry. The implementation of the Building Safety Act introduces stricter requirements on accountability, documentation, and oversight, especially for high-risk buildings. Highwood supports these reforms and is investing in internal systems and training to ensure full compliance and to contribute meaningfully to safer, more transparent construction practices.
Performance bond availability
The tightening of availability and terms for performance bonds poses a significant constraint on our ability to bid for and deliver larger projects. As insurers adopt more cautious risk appetites, it becomes more difficult for SMEs to secure bond cover without offering onerous terms. We are engaging with clients and insurers to explore alternatives to support our continued growth without undue exposure.
Our strategy and core strengths remain aligned with our long-established approach: delivering successful partnership-led developments by securing land, expertly managing the planning process, and building out in close collaboration with housing associations, local authorities, and private sector partners. This end-to-end capability has continued to underpin our reputation for reliability, agility, and value creation.
In this period and looking ahead, we have made a strategic pivot to prioritise operational efficiency over headline turnover. This deliberate shift enables us to strengthen margins, reduce exposure to market volatility, and invest in the long-term value of our relationships. Our focus has been on forming deeper, more purposeful partnerships in the care, retirement living, and general housing sectors. By maintaining a diverse delivery pipeline across these subsectors, we not only mitigate risk but also position ourselves to selectively capitalise on the most promising opportunities.
While our contracting business encountered notable challenges during the period resulting in a negative profit position, it nonetheless achieved meaningful delivery milestones, contributing £86.5m in revenue with £29.5m of secured work for the next financial year. The contracting arm remains a vital component of our integrated model, particularly where it supports the Group’s land-led developments for key clients. We have taken swift action to strengthen governance and cost control in this area, and we remain confident in its future contribution to Group performance.
The business will make appropriate provisions for a small number of legacy sites, reflecting our commitment to acting responsibly and maintaining high standards of corporate governance. As directors, we are taking a prudent and proactive approach to managing historical liabilities, ensuring the business remains on a stable and compliant footing.
The diversity within our business model has been a source of resilience and differentiation. Our ability to operate across the value chain, from land acquisition to delivery, gives us both flexibility and control in a market where certainty is at a premium. This adaptability will be crucial as we continue to navigate a changing economic and regulatory landscape.
Looking forward, we are optimistic about the opportunities ahead. Our land pipeline is strong, our client partnerships are deepening, and we have a team that is both experienced and energised. With a sharpened focus, a balanced portfolio, and a clear commitment to quality and trust, Highwood Group is well positioned to thrive in the next phase of its journey.
Management consider key performance indicators to include: turnover, gross profit, profit on ordinary activities before taxation, number of housing units completed and number of beds completed or in contractual process. The values of these key performance indicators can be found in the 'Review of the business' section.
The Highwood Group operates as a consolidated entity, bringing together both contracting and development activities under the unified oversight of the Board. This central Board provides strategic leadership and governance, overseeing and evaluating major decisions made by the subsidiary company boards. This structure ensures that all key decisions are thoroughly reviewed and consistently aligned with the group’s high standards, long-term strategy, and core values.
The Directors of Highwood Group acknowledge their duty under Section 172 of the Companies Act 2006 to act in a way that promotes the success of the company for the benefit of its members as a whole. In doing so, the Board considers a wide range of stakeholders and balances long-term sustainability with short-term objectives. Our strategic decisions take into account the impact on employees, suppliers, clients, the environment, and the communities in which we operate.
Long-term decision making
Our business model is built around long-term value creation, both commercially and socially. We continue to focus on land-led development in partnership with housing associations, care providers, and private sector clients, ensuring each project is viable, sustainable, and aligned with our stakeholders’ expectations. Recent strategic decisions, such as shifting focus toward efficiency and margin rather than turnover, were made to strengthen the group’s foundations for future resilience.
Employees
Our people are at the core of everything we do. The Directors are committed to creating a safe, inclusive, and empowering workplace that fosters loyalty and professional growth. Regular communication, clear career pathways, and ongoing training initiatives ensure that staff remain engaged and equipped to meet evolving industry standards. During the period we provided 284 apprenticeship weeks. We also place strong emphasis on employee wellbeing, recognising that a healthy and motivated workforce is essential to delivering high-quality outcomes for our clients and partners. We continue to investing in the wellbeing of our people by providing digital health service with cash plan including tailored wellbeing and mental health support as part of our benefits offering.
Suppliers and subcontractors
Our supply chain relationships are vital to the quality, reliability, and integrity of our delivery. We work closely with a trusted network of subcontractors, consultants, and material suppliers, and we view them as valued partners. In an increasingly constrained market, we prioritise fairness, prompt payment practices, and collaboration, which strengthens our ability to secure reliable delivery and long-term commitment. The Board regularly reviews procurement strategies to ensure they reflect ethical practices, commercial fairness, and environmental standards.
Clients and partners
The group is built on deep-rooted partnerships with registered providers, local authorities, care providers, and private clients. We take pride in maintaining open, transparent communication, and tailoring our services to meet their long-term needs. By fostering mutual trust and alignment of values, we are able to create sustainable developments that serve the public good while supporting our commercial objectives.
Environment and sustainability
As a responsible developer, Highwood is committed to minimising our environmental impact and supporting the transition to a low-carbon, climate-resilient economy. We incorporate sustainability principles across all project phases, from land acquisition and planning to construction and aftercare. Our approach includes prioritising biodiversity, meeting or exceeding energy efficiency targets, and responding proactively to emerging policy frameworks such as water neutrality. The Board considers environmental performance a key pillar of risk management and long-term success.
Community and social value
The developments we deliver directly impact local communities, and we take that responsibility seriously. For each new project undertaken, Highwood commits a financial contribution to support community-led initiatives in the local area, ranging from outdoor classrooms for schools to charitable funds and social infrastructure. We engage early and meaningfully with residents, local authorities, and other stakeholders to understand local needs and aspirations. Wherever possible, we aim to generate wider social value through placemaking, employment opportunities, and community investment.
Governance and stakeholder engagement
The Board maintains strong governance practices and ensures that stakeholder perspectives inform key decisions. Structured engagement with clients, staff, supply chain partners, and professional advisors ensures that diverse viewpoints are considered. This inclusive approach allows us to anticipate challenges early, adapt confidently, and remain accountable to those we serve.
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 December 2024.
The results for the period are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The company operates a treasury function which is responsible for managing the liquidity and interest risks associated with the company's activities.
The company's principal financial instruments include bank balances, trade debtors and trade creditors arising directly from its operations.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Investments of cash surpluses and borrowings are made through financial institutions which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The directors consider that the company faces the usual pricing risk of any other company operating in a competitive, commercial environment.
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of strategies and future outlook.
The auditor, Fiander Tovell Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Highwood Construction Limited (the 'company') for the period ended 31 December 2024 which comprise the statement of income and retained earnings, the balance sheet 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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 directors' report for the financial period 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.
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
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.
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, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation.
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.
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 journal entries to identify unusual transactions.
assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 2 were indicative of potential bias.
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.
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. 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.
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Highwood Construction Limited is a private company limited by shares, incorporated in England and Wales. The registered office is The Hay Barn, Upper Ashfield Farm, Hoe Lane, Romsey, Hampshire, SO51 9NJ.
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 £1,000.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The financial statements of the company are consolidated into the financial statements of Highwood Group Limited which are consolidated into the financial statements of Highwood Holdings Limited and then consolidated into the ultimate parent Highwood Group Holdings Limited. All sets of consolidated financial statements are available from Companies House.
The financial statements cover the 18 month period ended 31 December 2024, the prior period covers the year ending 30 June 2023. The company has decided to change it's reporting period to better reflect it's business cycle. As a result, the comparative amounts presented in the financial statements (including the related notes) are not entirely comparable.
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 credited or charged to profit or loss.
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 are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company 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 company 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 company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Recognition of revenue and profit is based on judgements made in respect of the ultimate profitability of a contract. Such judgements are arrived at through the use of estimation in relation to costs and value of work performed to date and to be performed in bringing contracts to completion. These estimates are made by reference to recovery of pre-contracts costs, variations in work scopes, claim recoveries and expected contract costs to complete. The company has appropriate control procedures to ensure all estimates are determined on a consistent basis and subject to review and authorisation. The amount included in cost accruals which has been estimated based on the expected profit margin for the contract is £8,938,860 (2023: £10,535,000).
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the period was:
All employees and directors are employed and remunerated through other group companies. Costs are recharged from these companies to the group company which utilises the employees services. During the year £7,142,288 (2023: £5,134,000) of costs were recharged to Highwood Construction, representing the value of services provided to this company.
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2023 - 6).
The actual (credit)/charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2024 are as follows:
During the year ended 30 June 2023, the company acquired a 100% shareholding in Highwood Ventures 2 Limited. The results for the period for this subsidiary has been consolidated into the financial statements of the parent company, Highwood Group Limited.
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The amount payable at the period end amounted to £Nil (2023: £Nil).
Ordinary A shares have attached to them full voting, dividend and capital distribution (including on winding up) rights.
The company has taken advantage of the provision of FRS102 section 33 to not disclose transactions with other wholly owned members of the group.