The directors present the strategic report for the year ended 31 March 2023.
Nuplace Limited was incorporated on 1 April 2015. Nuplace is a wholly owned subsidiary of Telford and Wrekin Council, limited by shares.
The principal activity of the company is the procurement of the construction and management of private and affordable residential property for rent, responding to the Borough’s housing needs including the availability of accessible and adaptable housing. In addition, the company aims to:
Raise the standard of rental provision, both in terms of the quality of the rental homes and the landlord service.
Deliver added value and stimulate local economic growth through supply chain engagement, offering skills and employment opportunities and working with the community.
Develop brownfield and stalled sites in order to deliver widespread regeneration benefits.
Invest in and protect existing housing stock through high quality renovations which help to address issues of poor housing in communities, through the sub brand of Telford & Wrekin Homes.
The company is financed by Telford and Wrekin Council, through a combination of equity in the form of share capital and debt finance.
The year ended 31 March 2023 was the eighth year of operation of the company. Nuplace’s housing portfolio now comprises of 485 homes of which 64 are available to let at affordable rents, 19 are built to accessible standards, and 46 have been built to meet the new Building Regulation requirements regarding low carbon design. The programme has resulted in over 23 acres of brownfield land being regenerated, addressing sites that might otherwise blight communities, with a further 38 acres currently being regenerated at Wild Walk, Muxton. The programme is also delivering added value in terms of local employment, apprenticeships, supply chain development and the delivery of a range of community projects.
Nuplace’s growing portfolio now provides a range of homes across the Borough with houses available within North and South of Telford, including properties in Newport, with circa 1,200 people living in properties across the ten sites and the Telford & Wrekin Homes portfolio.
During the year the following schemes were progressed:
Works were completed at Southwater Way, Telford, Nuplace’s low carbon Town Centre scheme of 46 housing units.
Works commenced at the Gower, St Georges where 10 new build dwellings are being delivered alongside 3 within the retained listed building.
Wild Walk, in Muxton commenced on site, and will see delivery of 66 homes for private rent including 18 accessible and adaptable dwellings and 18 built to Future Homes & Buildings Standards.
19 homes were refurbished and brought back into use through Telford & Wrekin Homes.
Planning consent was granted for:
New College Wellington: A scheme of 20 private rent homes, which will be delivered alongside older people’s housing being delivered by a Housing Association Partner.
Keltey Bank, Telford: 28 homes, including, 7 converted dwellings alongside 21 new build.
Oakengates, Telford: Conversion and refurbishment of 10 one and two bedroom apartments as part of a wider regeneration scheme.
All of the above scheme are due to start on site late in 2023.
A planning application was submitted for a mixed use scheme within the Station Quarter area of Telford Town Centre was. If approved, the scheme will see the delivery of 117 town houses and apartments for Nuplace, kick-starting the creation of a “city living” offer.
Rental income for the year totalled £3.9m (£3.5m; 2021/22), the increase representing rental incomes from Southwater Way and Telford & Wrekin Homes portfolios. Void levels rose slightly to 1.91%, (1.35%; 2021/22), reflecting the time needed to get Telford & Wrekin Homes properties tenant ready. High levels of customer satisfaction were demonstrated in the tenancy survey completed in December 2022, with 95% of respondents confirming they would recommend Nuplace to friends and family and 71% of tenants stated that they consider their Nuplace home to be their forever home.
The Company has continued to work with its tenants to offer support where there may be difficulties in making rent payments, and has closely monitored overdue debt and ensured appropriate payment plans are in place. Inflationary increases experienced for certain materials is unprecedented meaning that cost certainty is currently challenging. Ongoing Bank of England interest rate rises continue to have an impact on pipeline schemes. Therefore, new viability appraisals will be reviewed over the forthcoming year taking these risks into consideration.
The Directors acknowledge that ongoing asset maintenance will be required to the investment properties, however, a provision in the financial statements has not been possible due to accounting standards requirements. The cost of asset and site maintenance in the year increased to £407,000 (£252,000; 2021/22) which is included in the cost of sales in the financial statements. A large proportion of this increase was attributed to one-off planned maintenance required to remediate gardens to rectify issues associated with drainage and painting of external doors at earlier sites. The cost also includes statutory gas and fixed wiring checks which will increase as the portfolio continues to age. The Directors will ensure suitable reserves are held in order to meet asset maintenance obligations.
In accordance with the company’s accounting policy, the housing portfolio was revalued at the year end. As a result of the challenging national economic conditions, house prices have fallen over the past 12 months however, there has been a net increase in value of 3.28% or £2.8m over all completed houses in the portfolio.
The company has reported an operating profit before interest and taxation for the year ended 31 March 2023 of £2,762,409, (2021/22: £2,616,713). The company capitalises interest on loan finance during the site’s construction period, following which, interest is charged to the profit and loss account upon the site’s practical completion. In line with this policy, the company has incurred interest charges on the year’s profit of £2,235,453 (2021/22: £2,052,704). The company reported an operating profit after interest and taxation of £315,923 (after allowing for the increased rate of Corporation Tax) for the year (2021/22: £406,810). During the year the directors declared a final dividend of £0.01p per ordinary share registered on 20th March 2023 totalling £188,000. The residual profit, after paying the dividend, has been added to reserves.
The investment outlined in this report would deliver approximately a further 400 homes comprising new build and refurbishment in suburban and town centre locations, which will require additional funding to be drawn down from the shareholder in the form of further loans and equity. Nuplace continues to explore opportunities for further expansion with a number of pipeline sites currently under review
On behalf of the board
Nuplace Limited is a private company limited by shares incorporated in England and Wales. The registered office is Legal Services, Darby House, Lawn Central, Telford, Shropshire, TF3 4JA.
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 company’s parent undertaking, Telford and Wrekin Council, includes the company in its Consolidated Financial Statements. The consolidated financial statements of Telford and Wrekin Council are prepared in accordance with International Financial Reporting Standards as adopted by the EU and are available to the public as may be obtained from Legal Services, Darby House, Lawn Central, Telford, TF3 4JA. In these financial statements, the company is considered to be a qualifying entity and has applied the exemptions available under FRS102 in respect of the following disclosures; related party transactions, cash flow statement, key management personnel and financial instruments.
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.
Investment properties are valued by MRICS Registered Valuers and is an estimate of market value at 31 March 2023. There are no other items within the financial statements that require judgments or estimates.
Directors of the company received no remuneration or benefit over the year 2023 - £nil (2022 - £nil).
The Directors are employees of the parent organisation.
Included in additions is capitalised interest of £85,434 (2022: £111,983) on the cost of construction. The total value of capitalised interest included within tangible fixed assets and investment properties at the year end is £1,838,867 (2022: £1,753,433).
Nuplace Limited's property assets were valued on 31 March 2023 by internal valuers, Dawn Toy MRICS and David Scrimgeour MRICS, both Registered Valuers of Telford & Wrekin Council.
The valuations were carried out in accordance with the Standard terms of Engagement, detailed in Appendix 2 of the valuation report, CIPFA and the RICS Valuation - Global Standards and RICS Global Standards - UK National Supplement (the Red Book) and the International Valuation Standards (IVS), applicable at the valuation date. The valuation of each property was on the bases of Fair Value, which equates to Market Value and assumes that they would be sold subject to the Special Assumptions listed below. The valuer's opinion of Market Value was primarily derived using the comparables method as there was good evidence of previous sales on arm's-length terms.
Special Assumptions:
There would be no bids from Special Purchasers.
It is assumed that the interests being valued can be offered freely and openly in the market for non-specialist property, and based on existing use for specialist property.
There are no past changes in the physical aspects of the property or asset where the valuer has to assume those changes have not taken place.
All impending or proposed changes in the physical circumstances of the property, for example a new building to be constructed, were ignored.
There were no anticipated change in the mode of occupation or trade at the property:
- Planning consent has been, or will be, granted for development (including a change in use) at the property. The impact of any conditions which may be imposed have also been considered.
- A building or other proposed development has been completed in accordance with a defined plan and specification.
- The property has been changed in a defined way (e.g. removal of process equipment)
- The property is vacant when, in reality, at date of valuation it is occupied.
- That a specific contract was in existence on the valuation date which had not actually been completed.
- It is let on defined terms when, in reality, at the date of valuation it is vacant.
- The exchange takes place between parties where one or more has a special interest and that additional value, or synergistic value, is created as a result of the merger of the interests.
Damaged property:
- Treating the property as having been re-instated when it has not;
- Valuing as a cleared site with development permission assumed for the existing use; or
- Refurbishment or re-development for a different use reflecting the prospects of obtaining the necessary development permissions.
It is assumed that there were no alterations and improvements to be carried out under the terms of a lease.
Details of actual or anticipated market constraints were agreed and included in Standard Terms of Engagement.
If a property cannot be freely or adequately presented to the market, the price is likely to be adversely affected.
If an inherent constraint exists at the valuation date, it is normally possible to assess its impact on value.
For inherent constraints that did not exist at valuation date, but is a foreseeable consequence of a specified event, will be treated as arising on valuation date.
Any Special Assumption that specifies a time limit on disposal must state the reason for the time limit.
A financial instrument is valued using a yield curve that is different from that which would be used by a market participant.
Projected values rely wholly on Special Assumptions and may include assumptions such as the state of the market in the future, yields, rental growth, interest rates etc. The assumptions must be:
- In accordance with any applicable national or jurisdictional standard;
- Realistic and credible; and
- Cleary and comprehensively set out in the report.
Lotting Assumptions:
It is assumed that there are no physically separate properties that are occupied by the client where there is a functional dependence between the properties.
No account made where ownership of a number separate properties would be of particular advantage to them as a single owner.
Where physically adjoining properties that have been acquired separately by the entity for site assembly for future development/regeneration purposes, the proposed development scheme will be used as the basis of valuation for the assembled site(s).
No account made where individual properties are used collectively or are an essential component of the entity's operation.
No record of any groups of properties that should not be valued together.
Properties valued as individual dwellings, with the assumption that any sales would not flood the market.
No account taken of other facilities related to site, such as attenuation features.
Included in other creditors are secured loan facilities with Telford and Wrekin Council. These facilities are secured by the investment properties per note 7.
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.
A grant of £1,008,336 was received from Telford and Wrekin Council in 2017/18 for the construction of 33 affordable units for rent at Springfields, Newport. The terms of this require Nuplace to hold the units as affordable, subject to repayment should the units cease to be held as such. The grant is released to the profit and loss account over the useful life of the units.
A grant of £460,000, of which £232,543 was received during the current year and £227,457 was received during the previous year, was granted by West Midlands Combined Authority for the construction of 46 units including 11 affordable units at Southwater Way. The terms of this required completion of the units by 31 December 2022 and this condition was met. The grant will be released to profit and loss over the useful life of the units, starting from the 2023/24 year.
At 31 March 2023 the company entered into a number of contracts for the development and acquisition of fixed assets estimated to cost £10,746,790 (2022: £1,213,753).
The company has previously entered into loan agreements for secured loan facilities of up to £40,000,000 and up to £5,000,000 respectively with Telford and Wrekin Council. During the year the Telford and Wrekin Council extended a further £10,000,000 secured facility. At the year end the company had drawn down £44,832,334 (2022: £42,642,574). Interest of £2,320,886 (2022: £2,164,687) had been charged by Telford and Wrekin Council. The loans are interest only and repayable at the end of their term.
The company purchased £980,328 (2022: £861,125) of services and acquired properties to the value of £2,028,000 (2022: £nil) from the Telford and Wrekin Council.
The total amount due to Telford and Wrekin Council at the balance sheet date is £45,265,070 (2022: £42,977,067).
The ultimate controlling party and parent is Telford and Wrekin Council (registered office: Legal Services Darby House, Lawn Central, Telford, TF3 4JA) by virtue of it's 100% shareholding.