The directors present the strategic report for the year ended 31 May 2025.
The Directors are pleased to report that, despite ongoing economic uncertainty, the group has made significant strides in strengthening its market position. By expanding partnerships with more local authorities and forging new relationships with large developers, the property portfolio has grown considerably. Additionally, the implementation of streamlined processes has led to improved profitability. The group remains committed to meeting the increasing demand for social housing, with continued strategic investment driving sustainable growth.
Outlook
Looking ahead, the directors remain optimistic about the company’s growth trajectory. With a renewed focus on business development and an increased investment in marketing, we anticipate further improvements in profitability, particularly by 2026.
While the past few years have presented challenges, market conditions have begun to stabilise, and this is already being reflected in the group’s improved performance. We are confident that the foundations laid this year will support sustained success in the years to come.
To achieve the group's business objectives, the directors regularly assess and evaluate the main risks to the group identified below. The list does not include all risks that the group faces.
Liquidity risk
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
The group is exposed to interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.
Credit risk
Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the Board.
Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The Group achieved revenue growth in the year ended 31 May 2025, underscoring our ability to thrive in a competitive market:
Turnover increased by 3.90% to £46.22 million (2024: £44.49 million), driven by expanded property management portfolios and enhanced service offerings. Gross profit reduced by 26.72% to £7.54 million (2024: £10.29 million) while profit before tax reduced by 52.38% to £4.2 million (2024 : £8.82 million). This decrease primarily arises from an increase in rent payable and other direct costs, reflecting inflationary pressures and higher service charges across the property portfolio.
Net assets increased by 25.94% to £11.36 million (2024: £9.02 million), reinforcing our financial stability.
These results validate our strategic focus on cost optimisation, portfolio diversification, and partnership development, positioning us strongly for future expansion.
The key performance indicators are as follows:
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2025.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £550,100. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company’s treasury function is responsible for managing its liquidity, interest rate, foreign currency, and credit risks. It oversees the financial instruments used in the company’s operations, including cash deposits, trade debtors, trade creditors, and borrowings, to ensure sound financial management and support sustainable growth.
The company actively manages its cash and borrowing requirements to ensure it maintains sufficient liquid resources to meet operational and capital commitments as they fall due. Cash flow forecasts are reviewed regularly to optimize interest income and minimize borrowing costs. The company’s policy is to maintain adequate headroom in available facilities to support its ongoing trading activities.
The company is exposed to interest rate risk through its interest-bearing borrowings and cash deposits. The treasury function manages this exposure by maintaining an appropriate balance between fixed and variable rate debt, reviewing market conditions regularly, and assessing the impact of potential interest rate movements on future cash flows. The overall sensitivity to interest rate changes is not considered material.
The company’s principal foreign currency exposure arises from trading with international customers and suppliers. Although the use of hedging instruments is not mandatory, the company may enter into foreign exchange forward contracts to mitigate short-term fluctuations and to stabilise sterling-denominated costs. The exposure to foreign exchange movements is monitored on an ongoing basis.
Credit risk arises primarily from trade receivables and deposits held with financial institutions. The company manages its exposure by conducting business with creditworthy counterparties that meet board-approved credit criteria. Trade receivables are subject to ongoing credit evaluations, and provisions are made for doubtful debts where required. Cash balances are maintained with reputable banks that have strong credit ratings.
In accordance with the company's articles, a resolution proposing that Vision Consulting Accountants Limited be reappointed as auditor of the group will be put at a General Meeting.
United Kingdom company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected to prepare the group and parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and parent company, and of the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent company, and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and parent company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of ZFA Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2025 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows 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 group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and noncompliance with laws and regulations, we considered the following:
The nature of the industry and sector, control environment, business performance including the design of the policies and performance targets.
Results of our enquiries of management. Any matters we identified having obtained and reviewed the entity’s documentation of their policies and procedures relating to ;
Identifying, evaluating and complying with laws and regulations such as companies act 2006 as applied to limited company and whether management were aware of any instances of non-compliance .
Detecting and responding to the risks of fraud and whether management have knowledge of any actual, suspected or alleged fraud .
Entity's procedures to identify related party transactions.
The internal controls established to mitigate risks of fraud or non-compliance with laws and regulations and
The matters discussed among the audit engagement team where fraud might occur in the financial statements and any potential indicators of fraud.
It is common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the entity operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the entity’s ability to operate.
As a result of performing the above, our procedures to respond to risks identified included the following:
Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations having a direct effect on the financial statements.
Enquiring the management regarding related party disclosures and transactions outside the normal course of the business.
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
Reading minutes of meetings of those charged with governance.
In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments.
Assessing whether the judgments made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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 parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s members those matters we are required to state to them in an 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by section 408 of the Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £545,593 (2024 - £796,304 profit).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
ZFA Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 7 Anderson Road, Woodford Green, England, IG8 8ET.
The group consists of ZFA Group Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
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: Interest income/expense and net gains/losses for financial instruments not measured at fair value; 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 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company ZFA Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 May 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group and parent company have adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts receivable for rents.
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible 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 profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Investment properties are based on fair value measurement. The valuation was performed by directors and their opinion of fair value was primarily derived using comparable recent market value, see note 12 for valuation.
Stocks are stated in line with FRS 102 which requires stocks to be measured at the lower of cost and estimated selling price less costs to complete and sell, see note 15 for stock value.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives. The assets are estimated to lose their value at the following rates:
Motor Vehicle 20% straight line basis
Fixtures, fittings and equipment 5% straight line basis
Computer equipment 33% cost basis
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
This loss represents loss arising on the disposal of a subsidiary during the year as part of a group restructure.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Finance No. 2 Bill 2021 became substantively enacted on 24 May 2021. As a result, deferred tax for timing differences that are forecast to unwind on or after 1 April 2023 will need to be re-measured and recognised at 25% if the company profits are expected to be in excess of £250,000 (or at the marginal rate if profits are expected to be between £50,000 and £250,000) with an adjustment recognised in the 2021 total tax charge.
Investment property comprises residential properties. The valuation was made by the directors on an open market value basis by reference to market evidence of transaction prices for similar properties. The disposals were in respect of a disposal of a subsidiary during the year.
Details of the company's subsidiaries at 31 May 2025 are as follows:
Top Grade Education Limited was dissolved on 18 June 2024 and ZFA Properties Limited was disposed off on 2 May 2025.
These are unsecured balances which are repayable on demand and carry no interest.
Bank loans and overdrafts are secured by a fixed and floating charge over the assets of the group. In addition, the directors have also provided additional personal guarantees.
The following are the major deferred tax liabilities and assets recognised by the group and company:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Other reserves represents fair value gains net of deferred tax on revaluation of investment property.
On 2 May 2025 the group disposed of its 100% holding in ZFA Properties Limited. Included in these financial statements are profits of £158,485 arising from the company's interests in ZFA Properties Limited up to the date of its disposal.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
After the year end, the company invested £1.2 million in a number of properties under the course of construction overseas. Due to worldwide events following the investment the construction of the properties has ceased and the value of their investment is uncertain. The directors are of the opinion that in due course construction should continue and they will be able to realise a profit on their investment.
The remuneration of key management personnel is as follows.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
Company
At the year end the company owed £105,995 (2024: £105,995) to a company in which the close family member of a Director has significant influence.
The following amounts were outstanding at the reporting end date: