Joseph Homes Ltd - Limited company accounts 23.1

REGISTERED NUMBER: 06601040 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MAY 2022

FOR

JOSEPH HOMES LTD

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Consolidated Income Statement

9

Consolidated Other Comprehensive Income

10

Consolidated Balance Sheet

11

Company Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Company Statement of Changes in Equity

14

Consolidated Cash Flow Statement

15

Notes to the Consolidated Cash Flow Statement

16

Notes to the Consolidated Financial Statements

17

DIRECTORS:

Mr J V T Rajah

Mr P Dipino

REGISTERED OFFICE:

Unit 8 Waterloo Court

10 Theed Street

London

SE1 8ST

REGISTERED NUMBER:

06601040 (England and Wales)

AUDITORS:

Raffingers LLP, Statutory Auditor

19-20 Bourne Court

Southend Road

Woodford Green

Essex

IG8 8HD

The directors present their strategic report of the company and the group for the year ended 31 May 2022.

REVIEW OF BUSINESS

The group has had a positive year and has made progress in many areas after a challenging Covid-19 period.

In the period, the group sold all the units of its development on Balham High Road. The company also changed its Vinyl Square scheme to 100% affordable homes and sold all the units to Network Homes.

With the increase in interest rates and the drastic rise in construction costs, the group has reassessed some of its development pipeline and is looking at alternative uses for some sites, including student housing, industrial and 100% affordable products.

Joseph Homes group is proud to be B-Corp certified, a signatory to the World Green Building Councils Net Zero Carbon Building Commitment and to promote well-being through its Live Well manifesto.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties affecting the business include:-

- Rising interest rates

- Increases in the cost of construction, reducing our ability to build.

- Risk of property valuations falling

- A more challenging funding environment.

- Planning delays and constant changes to what is required.

- Constant new regulations and changes in our sector from Central and Local Government.

Price risk

The company is exposed to price risk due to normal inflationary increases in the purchase price of the goods and services purchased in the UK. The company has no exposure to equity securities price risk as it holds no listed or other equity investment.

Liquidity risk

The company actively maintains short-term debt finance that is designed to ensure that the company has sufficient available funds for operations and planned expansions.

Interest rate risk

The company has both interest bearing assets and interest bearing liabilities. Interest bearing assets include only cash balances which earn interest at fixed rate. The company has a policy of maintaining debt at a fixed rate to ensure certainty of future interest cash flows. The directors will revisit the appropriateness of this policy if the operations of the company change in size or nature.

FUTURE DEVELOPMENTS

The group has a strong pipeline of development work and is increasingly seeking to diversify from just residential for-sale homes as this market sector becomes more challenging due to increased taxes and build costs.

The directors are confident of delivering sustainable future growth in its sector.

EMPLOYEES

The company has outsourced some functions within the business, which has led to a slightly reduced headcount. It has refocused on staff engagement, retention and training in the period as its team is one of its key stakeholders.

The company operates an equal opportunities policy. This policy aims to ensure that there should be equal opportunity for all, and this applies to external recruitment, internal appointments, terms of employment, conditions of service and opportunity for training and promotion regardless of gender, ethnic origin or disability.

The company maintains its own health, safety and environmental policies covering all aspects of its operations. Regular meetings and inspections take place to ensure all legal requirements are adhered to and that the company is responsive to the needs of the employees and the environment.

FINANCIAL INSTRUMENTS

The company has banking facilities with Metro Bank & Lloyds Bank and operates within its facility limits.

KEY PERFORMANCE INDICATORS

The group's income statement is set out on page 9 and 10. The group reported a gross profits of £131,669 (2021 - loss of £1,383,906).

The groups administration expense were £3,318,868 (2021 - £3,308,426).

ON BEHALF OF THE BOARD:

Mr J V T Rajah - Director

5 July 2023

The directors present their report with the financial statements of the company and the group for the year ended 31 May 2022.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of the developer of real estate in the UK, in line with its LIVE WELL® Manifesto; www.josephhomes.co.uk/live-well.

DIVIDENDS

No dividends will be distributed for the year ended 31 May 2022.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 June 2021 to the date of this report.

Mr J V T Rajah

Mr P Dipino

POLITICAL DONATIONS AND EXPENDITURE

During the previous year, the company made donations amounting to £3,140.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 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 company and the group 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;

-	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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

ON BEHALF OF THE BOARD:

Mr J V T Rajah - Director

5 July 2023

Opinion

We have audited the financial statements of Joseph Homes Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2022 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 May 2022 and of the group's loss for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC'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.

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 the 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.

Emphasis of matter

We draw attention to note 3 to the financial statements that describes the director's assessment for the company to appropriately adopt the going concern basis of accounting in preparing the financial statements. Our opinion is not modified in this respect of this matter.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

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 a Report of the Auditors 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.

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 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 and data protection, employment, and health and safety legislation;

We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence;

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 journal entries to identify unusual transactions;

- assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.

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;

- enquiring of management as to actual and potential litigation and claims; and

- reviewing correspondence with HMRC, relevant regulators where appropriate.

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 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 Report of the Auditors.

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 a Report of the Auditors 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.

Mr Thurairatnam Sudarshan FCCA (Senior Statutory Auditor)

for and on behalf of Raffingers LLP, Statutory Auditor

19-20 Bourne Court

Southend Road

Woodford Green

Essex

IG8 8HD

5 July 2023

TURNOVER

15,586,217

19,124,707

Cost of sales

(15,454,548

)

(20,508,613

)

GROSS PROFIT/(LOSS)

131,669

(1,383,906

)

Administrative expenses

(3,318,868

)

(3,308,426

)

(3,187,199

)

(4,692,332

)

Other operating income

27,937

14,145

GROUP OPERATING LOSS

5

(3,159,262

)

(4,678,187

)

Share of operating loss in

Associates

(8,017

)

(1,308,882

)

Impairment of stock

6

(412,219

)

(33,681

)

Elimination of goodwill on

impairment of an investment

6

251,030

-

Abortive project costs

6

(4,255

)

(15,587

)

(3,332,723

)

(6,036,337

)

Interest receivable and similar income

5

-

(3,332,718

)

(6,036,337

)

Gain on revaluation of

investment property

-

385,000

(3,332,718

)

(5,651,337

)

Interest payable and similar expenses

7

(623,650

)

(425,708

)

LOSS BEFORE TAXATION

(3,956,368

)

(6,077,045

)

Tax on loss

8

82,650

(14,396

)

LOSS FOR THE FINANCIAL YEAR

(3,873,718

)

(6,091,441

)

Loss attributable to:

Owners of the parent

(3,680,474

)

(5,196,962

)

Non-controlling interests

(193,244

)

(894,479

)

(3,873,718

)

(6,091,441

)

LOSS FOR THE YEAR

(3,873,718

)

(6,091,441

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(3,873,718

)

Prior year adjustment

1,855,000

TOTAL COMPREHENSIVE INCOME SINCE LAST ANNUAL REPORT

(4,236,441

)

Total comprehensive income attributable to:

Owners of the parent

(3,680,474

)

(3,341,962

)

Non-controlling interests

(193,244

)

(894,479

)

(3,873,718

)

(4,236,441

)

FIXED ASSETS

Intangible assets

11

6,597

(244,433

)

Tangible assets

12

9,962

22,157

Investments

13

Interest in associate

598,306

606,313

Investment property

14

-

610,000

614,865

994,037

CURRENT ASSETS

Stocks

15

13,203,827

21,168,803

Debtors

16

6,919,403

7,725,381

Cash at bank and in hand

19,161

131,224

20,142,391

29,025,408

CREDITORS

Amounts falling due within one year

17

29,861,611

35,217,676

NET CURRENT LIABILITIES

(9,719,220

)

(6,192,268

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(9,104,355

)

(5,198,231

)

CREDITORS

Amounts falling due after more than one year

18

(378,979

)

(328,734

)

PROVISIONS FOR LIABILITIES

22

(1,300,000

)

(1,382,650

)

NET LIABILITIES

(10,783,334

)

(6,909,615

)

CAPITAL AND RESERVES

Called up share capital

23

1

1

Fair value reserve

-

506,344

Retained earnings

(9,686,711

)

(6,512,581

)

SHAREHOLDERS' FUNDS

(9,686,710

)

(6,006,236

)

NON-CONTROLLING INTERESTS

24

(1,096,624

)

(903,379

)

TOTAL EQUITY

(10,783,334

)

(6,909,615

)

The financial statements were approved by the Board of Directors and authorised for issue on 5 July 2023 and were signed on its behalf by:

Mr J V T Rajah - Director

FIXED ASSETS

Intangible assets

11

-

-

Tangible assets

12

9,962

22,157

Investments

13

600,165

600,155

Investment property

14

-

-

610,127

622,312

CURRENT ASSETS

Stocks

15

930,065

810,498

Debtors

16

12,631,835

8,640,727

Cash at bank

693

-

13,562,593

9,451,225

CREDITORS

Amounts falling due within one year

17

27,926,017

20,209,162

NET CURRENT LIABILITIES

(14,363,424

)

(10,757,937

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(13,753,297

)

(10,135,625

)

CREDITORS

Amounts falling due after more than one year

18

49,360

40,000

NET LIABILITIES

(13,802,657

)

(10,175,625

)

CAPITAL AND RESERVES

Called up share capital

23

1

1

Retained earnings

(13,802,658

)

(10,175,626

)

SHAREHOLDERS' FUNDS

(13,802,657

)

(10,175,625

)

Company's loss for the financial year

(3,627,032

)

(4,960,502

)

The financial statements were approved by the Board of Directors and authorised for issue on 25 May 2023 and were signed on its behalf by:

Mr J V T Rajah - Director

Called up

share

Retained

Share

Other

capital

earnings

premium

reserves

£

£

£

£

Balance at 1 June 2020

1

(2,858,769

)

-

-

Prior year adjustment

-

1,855,000

-

-

As restated

1

(1,003,769

)

-

-

Changes in equity

Total comprehensive income

-

(5,508,812

)

-

-

Balance at 31 May 2021

1

(6,512,581

)

-

-

Changes in equity

Total comprehensive income

-

(3,174,130

)

-

-

Balance at 31 May 2022

1

(9,686,711

)

-

-

Fair

value

Non-controlling

Total

reserve

Total

interests

equity

£

£

£

£

Balance at 1 June 2020

194,494

(2,664,274

)

(8,900

)

(2,673,174

)

Prior year adjustment

-

1,855,000

-

1,855,000

As restated

194,494

(809,274

)

(8,900

)

(818,174

)

Changes in equity

Total comprehensive income

311,850

(5,196,962

)

(894,479

)

(6,091,441

)

Balance at 31 May 2021

506,344

(6,006,236

)

(903,379

)

(6,909,615

)

Changes in equity

Total comprehensive income

(506,344

)

(3,680,474

)

(193,244

)

(3,873,718

)

Balance at 31 May 2022

-

(9,686,710

)

(1,096,623

)

(10,783,333

)

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 June 2020

1

(4,840,124

)

(4,840,123

)

Prior year adjustment

-

(375,000

)

(375,000

)

As restated

1

(5,215,124

)

(5,215,123

)

Changes in equity

Total comprehensive income

-

(4,960,502

)

(4,960,502

)

Balance at 31 May 2021

1

(10,175,626

)

(10,175,625

)

Changes in equity

Total comprehensive income

-

(3,627,032

)

(3,627,032

)

Balance at 31 May 2022

1

(13,802,658

)

(13,802,657

)

Cash flows from operating activities

Cash generated from operations

1

5,038,116

(8,631,818

)

Interest paid

(623,650

)

(416,487

)

Tax received

21

-

Provision

-

1,300,000

Net cash from operating activities

4,414,487

(7,748,305

)

Cash flows from investing activities

Purchase of tangible fixed assets

(1,417

)

(9,928

)

Purchase of fixed asset investments

(10

)

-

Sale of investment property

583,937

-

Interest received

5

-

Net cash from investing activities

582,515

(9,928

)

Cash flows from financing activities

New loans in year

-

6,987,742

Loan repayments in year

(3,531,665

)

-

Amount withdrawn by directors

-

(4,382

)

Amounts repaid to associate undertakings

(1,577,400

)

-

Amounts paid by associate undertakings

-

743,558

Net cash from financing activities

(5,109,065

)

7,726,918

Decrease in cash and cash equivalents

(112,063

)

(31,315

)

Cash and cash equivalents at beginning of year

2

131,224

162,539

Cash and cash equivalents at end of year

2

19,161

131,224

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2022

2021

£

£

Loss before taxation

(3,956,368

)

(6,077,045

)

Depreciation charges

13,612

13,938

Loss on disposal of fixed assets

26,063

-

Gain on revaluation of fixed assets

(251,030

)

(385,000

)

Non cash movement in investments

8,017

1,308,882

Finance costs

623,650

425,708

Finance income

(5

)

-

(3,536,061

)

(4,713,517

)

Decrease/(increase) in stocks

7,964,976

(4,150,317

)

Decrease/(increase) in trade and other debtors

2,383,378

(2,876,574

)

(Decrease)/increase in trade and other creditors

(1,774,177

)

3,108,590

Cash generated from operations

5,038,116

(8,631,818

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 May 2022

31.5.22

1.6.21

£

£

Cash and cash equivalents

19,161

131,224

Year ended 31 May 2021

31.5.21

1.6.20

£

£

Cash and cash equivalents

131,224

162,539

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.6.21

Cash flow

At 31.5.22

£

£

£

Net cash

Cash at bank and in hand

131,224

(112,063

)

19,161

131,224

(112,063

)

19,161

Debt

Debts falling due within 1 year

(23,487,633

)

3,581,910

(19,905,723

)

Debts falling due after 1 year

(328,734

)

(50,245

)

(378,979

)

(23,816,367

)

3,531,665

(20,284,702

)

Total

(23,685,143

)

3,419,602

(20,265,541

)