Capital Letters (London) Limited
Financial Statements
For the year ended 31 March 2025
Pages for Filing with Registrar
Company Registration No. 11729699 (England and Wales)
Capital Letters (London) Limited
Contents
Page
Strategic report
1 - 3
Balance sheet
4
Notes to the financial statements
5 - 11
Capital Letters (London) Limited
Strategic Report
For the year ended 31 March 2025
Page 1
The directors present the strategic report for the year ended 31 March 2025.
1. Context
Capital Letters was established as a unique pan-London vehicle to address the implications of the introduction of the Homeless Reduction Act in 2018 and the systemic issues facing London Boroughs in managing the challenges of homelessness and escalating costs of temporary accommodation, supported initially by MHCLG grant funding.
Capital Letters’ original success procuring great quality, safe, secure, and affordable homes for homeless Londoners was stopped by rent inflation in the capital. Capital Letters relied on landlords letting their properties at Local Housing Allowance (LHA) rates, which are set by the government. Escalating costs and opportunities to increase revenue for landlords has resulted in rents inflating beyond LHA making them unaffordable; in addition, over the past year landlords have been leaving the market completely reducing the supply of homes in the market. Properties with rents at LHA levels now make up less than 2.5% of London rental stock when LHA was designed to cover the lowest 30%.
As a result, there is now an escalating housing and homelessness crisis, principally driven by insufficient supply of accommodation and the escalating rents that are unaffordable for households on low incomes. Over the last three years, Capital Letters’ Executive Team has actively pursued alternative funding options and new business models in order to continue to deliver the Company’s mission. The team have worked with prospective partners, investors and London Borough Members (who jointly own Capital Letters) to develop schemes to deliver much needed good quality and secure homes for homeless London families, assisting Members in discharging their homelessness duties, reducing the call on the public purse and improving the standards of private sector rented accommodation. The purpose was also to generate sufficient income to enable Capital Letters to cover operating costs, continuing to deliver much needed services for London and to operate as a going concern.
The impact of the post-pandemic housing crisis both in the unprecedented rise in rental prices and changes in the financial markets has made accessing affordable capital to deliver more homes for London impossible for Capital Letters to deliver. As an ethical not-for-profit organisation, the small margins Capital Letters was working with has meant that none of the options being considered were capable of supporting a long-term viable business for the Company.
After supplying Londoners with almost 5,000 homes, saving taxpayers an estimated £240m* and supporting thousands of tenants, in March 2025 the Board and ten London Borough Member owners of Capital Letters therefore proactively took the very difficult but prudent decision to close the Company at the end of the 2025/26 financial year once all operations have been formally concluded when Capital Letters continues to be solvent with more than sufficient reserves to meet all creditor and other financial liabilities.
Capital Letters (London) Limited
Strategic Report (Continued)
For the year ended 31 March 2025
Page 2
The Board is extremely proud of what Capital Letters has achieved over the past six years and the positive impact the Company has had driving new ways of working and approaches to solving homelessness across London.
The value of Capital Letters goes beyond the company’s purpose to support London Borough Members to access an improved supply of good quality accommodation to prevent and relieve homelessness, it’s been a mechanism to pull together ten London boroughs to collaborate and to find better ways to address homelessness. It is a great loss to London that the prudent decision to close Capital Letters has been taken.
Capital Letters’ unique offer to London boroughs extended to tirelessly campaigning for a better and more diverse housing ecosystem. The Company has helped change the conversation about commercial to residential conversions, a multi approach solution to the housing crisis, and the issue of empty homes. From Capital Letters’ conference in 2022 the Company has been at the fore front of thought leadership in the sector.
In 2023 Capital Letters supported the joint APPG inquiry into rethinking commercial to residential conversions as a solution to the housing and homelessness crisis; Capital Letters was part of the GLA Housing Committee investigation into Temporary Accommodation, and most recently Capital Letters has supported the MPs Round Table event looking at the issue of empty homes in the UK.
Capital Letters was part of the successful lobbying effort to increase LHA at the end of the last parliament, and a partner with London Councils, the LSE and Trust for London in ground-breaking research into the sentiment of London landlords who are facing new regulation and new economic outlooks.
We are proud of the legacy Capital Letters will leave both in terms of the families the Company has housed and supported to avoid repeat homelessness, and the thought leadership that has contributed to the changing perspectives about possible solutions to the intractable issues Londoners face in dealing with the homelessness crisis.
* Campbell Tickell: Future service and income options feasibility review January 2023 - Campbell Ticket calculated that member boroughs would achieve savings of £47,983 for each PSL property transferred to Capital Letters over 5 years.
2. Annual Compliance statement
The Board annually reviews compliance with the adopted Code of Governance – currently the National Housing Federation Code of Governance 2020 – and confirmed that Capital Letters (London) Ltd complies with the principle of this Code (apart from those elements not applicable to a private company limited by guarantee).
Capital Letters (London) Limited
Strategic Report (Continued)
For the year ended 31 March 2025
Page 3
P Doe (Chair)
Director
12 August 2025
Capital Letters (London) Limited
Balance Sheet
As at 31 March 2025
Page 4
2025
2024
Notes
£
£
£
£
Fixed assets
Intangible assets
5
116,118
Tangible assets
6
2,296
5,291
2,296
121,409
Current assets
Debtors
7
319,047
429,200
Investments
8
1,750,000
Cash at bank and in hand
1,832,002
3,058,025
2,151,049
5,237,225
Creditors: amounts falling due within one year
9
(1,448,757)
(5,015,539)
Net current assets
702,292
221,686
Net assets
704,588
343,095
Reserves
Income and expenditure account
704,588
343,095
Members' funds
704,588
343,095
The directors of the company have elected not to include a copy of the income and expenditure account within the financial statements.true
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 12 August 2025 and are signed on its behalf by:
P Doe (Chair)
Director
Company Registration No. 11729699
Capital Letters (London) Limited
Notes to the Financial Statements
For the year ended 31 March 2025
Page 5
1
Accounting policies
Company information
Capital Letters (London) Limited is a private company limited by guarantee, domiciled and incorporated in England and Wales. The registered office is Sierra Quebec Bravo, 77 Marsh Wall, London, England, E14 9SH.
1.1
Accounting convention
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 as applicable to companies subject to the small companies regime.
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 accounting policies adopted are set out below.
1.2
Going concern
In April 2025 the Borough Representative Board (BRB) of Capital Letters made the decision to close the company's operations by the end of 2025. As Capital Letters will cease trading after the reporting period date, under FRS 102, these financial statements are prepared on a basis other than that of a going concern.true
Capital Letters remains solvent to allow for an orderly winding-up of the business. No adjustments have been required to be made to the financial statements as a result of the change in basis of preparation.
1.3
Income and expenditure
Income and expenses are included in the financial statements as they become receivable or due.
Expenses include VAT where applicable as the company cannot reclaim it.
Government grants are recognised at the fair value of the asset received or receivable. A grant without specified future performance conditions is recognised in income when the grant proceeds are receivable. A grant that imposes specified future performance conditions is recognised in income when those conditions are met.
Government grants are presented separately from the assets to which they relate. Government grants recognised in income are presented separately in the notes. Government grants received before the income recognition criteria are satisfied are presented as a separate liability in the statement of financial position.
Incentives and void payments made to landlords recognised at cost when due and income from reimbursement charged to member boroughs is shown at cost less DLUHC grant when due.
Staff employed on behalf of boroughs who do not second staff are recharged at a fixed annual fee recognised when due each quarter.
No amount is recognised for those forms of government assistance that cannot reasonably have a value placed on them. However, the entity discloses information about such assistance.
Capital Letters (London) Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2025
1
Accounting policies
(Continued)
Page 6
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
IT System
5 years
CAPs System
5 years
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Where a housing property comprises two or more major components with substantially different useful economic lives (UELs), each component is accounted for separately and depreciated over its individual UEL. Expenditure relating to subsequent replacement or renewal of components is capitalised as incurred.
Depreciation is charged on a pro rata basis depending on when the item was purchased in the year. It is done on a straight-line basis over the expected economic useful lives which are as follows:
Fixtures, Fittings and Equipment
5 years
Computer Hardware
3 years
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 surplus or deficit.
1.6
Impairment of fixed assets
At each reporting period end date, the company 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.
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 surplus or deficit, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Capital Letters (London) Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2025
1
Accounting policies
(Continued)
Page 7
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 surplus or deficit, 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.
1.7
Cash at bank and in hand
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of 95 days or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
Basic financial instruments are measured at cost. The company has no other financial instruments or basic financial instruments measured at fair value.
1.9
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
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.
1.10
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
Capital Letters (London) Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2025
Page 8
2
Judgements and key sources of estimation uncertainty
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.
As a company limited by guarantee Capital Letters is not designed to make profits. Therefore to ensure this is reflected in the financial statements all grant income received in advance is treated as deferred income in the accounts and the balance is included in creditors due within a year on the balance sheet. This reflects the position that there is no requirement to repay the grant under the tripartite Memorandum of Understanding between Capital Letters, the Department of Levelling Up Homes & Communities, and Tower Hamlets provided it is spent in subsequent years in accordance with the company's objectives.
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2025
2024
Number
Number
Total
36
63
4
Taxation
2025
2024
£
£
Current tax
UK corporation tax on profits for the current period
157,003
173,320
Capital Letters (London) Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2025
Page 9
5
Intangible fixed assets
IT System
CAPs System
Total
£
£
£
Cost
At 1 April 2024 and 31 March 2025
245,313
46,746
292,059
Amortisation and impairment
At 1 April 2024
148,662
27,279
175,941
Amortisation charged for the year
49,063
9,349
58,412
Impairment losses
47,588
10,118
57,706
At 31 March 2025
245,313
46,746
292,059
Carrying amount
At 31 March 2025
-
At 31 March 2024
96,651
19,467
116,118
6
Tangible fixed assets
Plant and machinery etc
£
Cost
At 1 April 2024 and 31 March 2025
127,648
Depreciation and impairment
At 1 April 2024
122,357
Depreciation charged in the year
2,995
At 31 March 2025
125,352
Carrying amount
At 31 March 2025
2,296
At 31 March 2024
5,291
7
Debtors
2025
2024
Amounts falling due within one year:
£
£
Service charges due
115,933
122,754
Other debtors
155,872
253,346
Prepayments and accrued income
47,242
53,100
319,047
429,200
Capital Letters (London) Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2025
7
Debtors
(Continued)
Page 10
8
Current asset investments
2025
2024
£
£
Fixed term deposits
1,750,000
9
Creditors: amounts falling due within one year
2025
2024
£
£
Corporation tax
156,024
173,320
Other taxation and social security
46,268
62,606
Other creditors
1,209,262
4,648,758
Accruals
37,203
130,855
1,448,757
5,015,539
10
Deferred income
2025
2024
£
£
Other deferred income
1,174,609
4,596,743
11
Members' liability
The company is limited by guarantee, not having a share capital and consequently the liability of members is limited, subject to an undertaking by each member to contribute to the net assets or liabilities of the company on winding up such amounts as may be required not exceeding £1.
12
Audit report information
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was unqualified.
Senior Statutory Auditor:
Adam Fullerton
Statutory Auditor:
Moore Kingston Smith LLP
Capital Letters (London) Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2025
Page 11
13
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2025
2024
£
£
2,365,701
308,428
14
Related party transactions
During the year income of £1,072,750 (2024: £1,692,470) was invoiced to the London Borough councils who jointly set up Capital Letters (London) Limited. At year end there was an amount of £115,933 (2024: £122,754) that was still outstanding.
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