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2025-03-31-accounts

homes •• Annual Report and Financial Statements Year ended 31 March 2025 mhs homes limited Prlvate company Ilmlted by guarantee I Company number.. 10704997 Registered Charity l Registration number.. l 177565

CONTENTS PAGE

Strategic report

Trustees annual report

Financial Statements

INTRODUCTION TO THE FINANCIAL STATEMENTS

We are pleased to present the mhs homes Annual Report 2025 and with it the start of a new era.

Ashley Hook retired as Chief Executive after 16 years leading mhs homes. His commitment to our customers, homes and communities has been fundamental in the successes achieved, and it is noteworthy that mhs homes increased in size by over 2,000 homes during his tenure.

We are delighted to welcome Marie-Claire Delbrouque as Chief Executive. Marie-Claire brings a wealth of experience in social housing and will lead mhs homes as we continue working towards our strategic priorities outlined in the plan published last year.

Our progress against the plan is described in detail later in the report, but it is worth highlighting some notable successes. We started the year with response times for call handling and repairs below what our customers deserved. During the year we improved in both areas until by the last quarter we were meeting target.

Our continued thanks to the Customer Scrutiny Panel, who provide a unique insight into what it is like to be a customer of mhs homes, and whose work has been invaluable in improving our service. The voice of the customer is at the heart of everything we do, learning and acting on what people tell us to drive forward service improvements.

The consumer standards came into effect from April 2024 and our ambition, as outlined in our strategic plan, is for Heart of Medway to achieve the highest rating.

We are striving for a proactive approach to handling complaints so we can improve when we get things wrong. Therefore, an area of focus in the upcoming year will be to meet the targets on response times, which should help increase customer satisfaction both in this area and generally. It is encouraging that

an increasing number of our customers say we listen to them and act on what we hear.

Safety of customers and colleagues is at the core of all we do. We have a duty to ensure that each home is safe, secure and comfortable. Our approach is summed up by our accreditation as a Building a Safer Future Champion, which has helped embed a positive building safety culture. We were also delighted to retain the prestigious “5 star” award by the British Safety Council.

We were successful in bidding for £2.9 million from the social housing decarbonisation fund, combined with a successful bid to the Great British Insulation Scheme, this gives us renewed confidence that all our homes will, at a minimum, meet the Energy Performance Status C by 2030. Improved energy efficiency will lead to healthier and warmer homes for our customers, as well as helping to reduce both energy costs and emission.

Financial resilience underpins our ambitions, and though margins have fallen, as we invest more in the quality and sustainability of our homes, the results continue to be strong. As custodians of our customers’ homes, we will never risk our financial strength for short term goals. This financial strength gives us choices in our future decision making.

It also allows us to invest in new homes, and during the year we completed 134 new homes, with a further 102 planned to be finished in 2025/26.

Our colleagues are critical to our success and for making sure that we respond effectively to customers and other key stakeholders. The Board would like to thank them for their hard work and passion in delivering our services.

Our thanks also to Lord Kennedy, who stepped down from the Board during the year, for his valuable service to the organisation.

Nigel Hopkins Chair

mhs homes limited

Company Number 10704997

Page 1

mhs homes AT A GLANCE

mhs homes limited (‘mhs homes’) was established in 1990 following a stock transfer from Rochester upon Medway City Council. We are the largest independent social landlord, being registered with the Charity Commission rather than the Regulator of Social Housing. Our objectives are to provide social housing in Kent and all services linked to this provision. All surpluses are reinvested into building more new homes, improving existing homes and supporting local communities. It is the parent body of mhs homes group (‘the Group’).

Heart of Medway Housing Association is a subsidiary of mhs homes and is registered with the Regulator of Social Housing.

Our ultimate ambition is to help end the housing crisis in North Kent by providing safe and sustainable homes.

mhs homes continues to be the only housing association of size not to be a registered provider and, although we comply with the

ethos and aims of the social housing sector, our status allows us greater control of our own destiny and objectives. We value our relationships with the regulated sector and mhs homes generally follows the guidance of the Regulator of Social Housing in areas such as service to customers, quality of homes and effective corporate governance.

We own and manage 10,069 homes, mainly in Medway, but with an increasing number in surrounding areas of North Kent. Most are social rented, though we also provide shared ownership and market rented. mhs homes owns the majority of our social properties - 8,119, with a further 1,219 in Heart of Medway. We are the corporate trustee of 6 homes in the Lord Kitchener Memorial Homes Trust. The Group manages 84 social properties for third parties with a further 19 managed by third parties. In addition, there are 424 market rent and commercial properties along with 198 managed freeholders.

Our properties are spread over North Kent as shown below

mhs homes limited

Company Number 10704997

Page 2

mhs homes AT A GLANCE

Financial Highlights

2024/25 2023/24
Turnover £82.7 million £70.7 million
Operating Surplus £24.9 million £23.3 million
Surplus excluding movement in fair value £10.6 million £10.6 million
Net Interest costs £14.3 million £12.8 million
EBITDA MRI1 £22.8 million £22.0 million
EBITDA – MRI1Margin to turnover 28% 31%
Debt less cash and cash equivalents £302.5 million £287.5 million
EBITDA - MRI1/ Interest Cover 151% 164%
Net Debt / EBITDA - MRI1 13.3 13.1

1 EBITDA – MRI: Earnings before interest, tax, depreciation, capitalised major repairs and surplus on sale of fixed assets

Operational Highlights

2024/25 2023/24
Total stock owned and managed 10,069 9,961
% Homes at Decent Homes Standard 99% 99%
% Homes at SAP rating C or above 79% 76%
New homes brought into management 134 94
New homes started on site 37 91
Homes purchased from a registered provider 10* 255
% of lettings to Homeless 38% 29%
Investment in new homes £31 million £29 million
Investment in existing homes £35 million £30 million
Existing homes purchased from a registered provider -* £22 million
Customer Satisfaction 78% 81%

A full report on the Tenant Satisfaction Measures is available on the mhs homes website

mhs homes limited

Company Number 10704997

Page 3

y STRATEGIC REPORT: AN OVERVIEW OF 2024/25 RESULTS

The surplus (before tax and fair value adjustment) of £10.6 million is broadly in line with last years, as our increase rental income, from the new homes brought into management in the last financial year, was offset by increased investment in repairs. We also invested £31 million in new homes, with a further 134 homes year brought into management, and another 102 planned for the following year.

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2021 2022 2023 2024 2025
Rental & other income Sale of shared ownership
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Turnover increased in the year with additional rental and service charge income of £7 million, through a combination of rent increases and new properties. Sales of first tranche shared ownership sales increased in line with the planned programme. During the year we sold 59 new shared ownership properties (2024:30).

The majority of the surplus continues to be derived from low-risk social housing, reducing the risk of significant variations in future years.

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Surplus from market rent and other non charitable activities Surplus from property sales including 1st tranche shared ownership Surplus from social housing activities

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Routine Planned Major Capitalised
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Repair costs have increased significantly over the last five years reflecting additional demands around buildings safety, sustainability, damp and mould and the life cycle of components following significant investment in the 1990’s.

mhs homes limited

Company Number 10704997

Page 4

y STRATEGIC REPORT: AN OVERVIEW OF 2024/25 RESULTS

Movement from year to year: the movement in surplus before fair value from last year to the current is shown below.

Movement from year to year:the movement in surplus before fair value from
current is shown below.		 last year to the
£’ million
Increase in income from rents & service charges 7.5
Increase in income from other income 0.5
Increase in surplus from non-social housing 0.2
Increase in surplus from sale of fixed assets and 1sttranche shared ownership 0.9
Increase in income and surplus from non-social housing 9.1
Increase in repairs expenditure 6.2
Increase in service charge costs 0.5
Increases in other operating costs 1.9
Increase in net financing costs 1.5
Increase in costs 10.1
Increase in surplus due to movements in depreciation, amortised grant &
impairment		 1.0
Change in surplus before fair value adjustments compared to 23/24 -

Interest payable costs increased through additional borrowing with £17.75 million borrowed in the year. This, combined with additional investment in our current homes, has led to a reduction in interest cover, though still substantially ahead of covenant requirements.

The mhs Board have agreed a “golden rule” to ensure that cash generated from ongoing activities will always be sufficient to pay interest costs.

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16 300%
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250%
12
200%
10
8 150%
6
100%
4
50%
2
0 0%
2021 2022 2023 2024 2025
Gross interest costs EBITDA-MRI/ interest costs
MRI/Interest costs
£' million interest costs
EBITDA-
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Investment properties: Over the years the Group has built up an investment portfolio of 379 properties rented to tenants at market rent. These are a valuable investment and produce a return to our original cost of 5.9% (2024: 5.9%). The Group has invested £54 million in acquiring this portfolio, which are now estimated to be worth £84 million. They are held as a long-term investment so that the annual surpluses from the rental stream can be invested into charitable activities rather than for capital gain.

Pension: The annual FRS102 actuarial review of the defined pension scheme, closed to new entrants since 2005, shows the scheme has assets £13.7 million greater than its liabilities, an increase of £3.9 million over the previous year. However, as consistent with last year, an asset ceiling has been applied so no pension asset is shown within the accounts.

mhs homes limited

Company Number 10704997

Page 5

STRATEGIC REPORT: OUR STRATEGIC PLAN 2024 – 2027

The 2024 – 2027 strategic plan was approved by the Board in March 2024 and drives our priorities, keeping our customers at the heart of everything we do. It sets out our ambitions and the commitments we will work towards to deliver safe, sustainable homes and communities where people can live well. Our strategic priorities are:

We want everyone to live in a home they can be proud of. This includes ensuring the voice of the customer helps shape how we develop and deliver services. Over the next three years of the plan, we’ll invest more resources into our existing homes. But if we're going to drive forward our ambition to tackle the housing crisis in North Kent, we still have a responsibility to balance this with investment in the supply of new homes. We therefore need to use our resources wisely to maximise the delivery of new homes.

We have agreed six interlinked strategic priorities, and these are described below along with how we are progressing against meeting the targets for the period to 2027. Further details can be found on page 13.

Strategic priority one: Visible, responsive & caring landlord 2027 Target Update on Progress

Achieve 85% overall customer satisfaction

Make sure 90% of repairs are completed within target time

Make sure 95% of complaints are responded to within timescale

Customer satisfaction dropped slightly in the year from 81% to 78% though we expect this to increase as frontline services have been strengthened

68% repairs were completed on time in the year end 31[st] March 2025, though this represented a significant improvement from 57% in the year before, and we expect this progress to continue

Performance slipped from 92% to 68% in the year due to increases in the number of complaints. In response the service has been strengthened

Make sure 30% of lettings go to homeless households

We were delighted to exceed this target with 38% being achieved, an increase of 9% from the previous year.

Reduce rent areas to 2%

Arrears have reduced from 4.20% last year to 4.03% thanks to service improvements, including a new rent management system, and additional resources.

We are working on improving our approach towards Gain Domestic Abuse Housing Alliance domestic abuse and are proud to be working towards an (DAHA) accreditation accreditation with DAHA

mhs homes limited

Company Number 10704997

Page 6

STRATEGIC REPORT: OUR STRATEGIC PLAN 2024 – 2027

Strategic priority two: Safe and sustainable homes 2027 Target Update on Progress

Build 363 new homes

Progress is good with 301 homes contracted to handover by 2027

Make sure that at least 85% of homes meet a minimum of EPC C rating

With 79% meeting the target already we have every confidence of achieving this target especially with the new funding noted below.

Secure £1.25 million funding from the Social Housing Decarbonisation Fund

Funding of £2.9 million over the three years to March 2028 was confirmed in March 2025 in addition to the £0.4 million received in 24/25

Make sure that all homes meet the Decent Homes Standard

Updated surveys at the end of year identified 44 units as failing the standard with works already programmed to bring them back to standard. The long term financial plan has the funding allocated to meet this target

Ensure that all building safety remedial works are completed

We have completed remedial works to 56 blocks with work on all high-risk blocks being completed. The project looks to complete by March 2027, with the final 22 blocks programmed in over the next two year

Open a new Foyer for young vulnerable people

The Sunrise Foyer was opened in December 2024

Obtain SHIFT Sustainability Standard accreditation

For our first year of reporting, we received the Silver Award demonstrating our commitment to embedding sustainability and working towards our ultimate ambition of net zero carbon

Strategic priority three: Listening & acting on customers’ views 2027 Target Update on Progress

Ensure that the views of our customers are front and centre of all we do

Respond proactively to all Customer Scrutiny Panel (CSP) reviews

Launch a Resident’s Asset Management Panel as a ‘critical friend’ on repairs services

Launch new opportunities for homeowners so that their voices are heard

We have increased opportunities for customers to have their say through formal and informal routes as well as increasing the focus on sharing ‘you said, we did’ to show how customer views have influenced decisions

Three reviews took place during the year: Gas Servicing, Customer Journey and Aids & Adaptation. Our website details the outcomes and resulting changes to our processes

The first meeting was held in March 2025

A Homeowner conference took place in February 2025 focusing on the areas we receive most contact from homeowners about.

mhs homes limited

Company Number 10704997

Page 7

STRATEGIC REPORT: OUR STRATEGIC PLAN 2024 – 2027

Strategic priority four: Community champion and partner of choice 2027 Target Update on Progress

Publish our performance against the Homes for Cathy commitments

We are on target to publish our performance in the upcoming year

Create Neighbourhood Plans in collaboration with local communities

Work is progressing well in this area, with discussions taking place with a number of neighbourhoods

Raise at least £20,000 per year for our chosen mhs charity

Colleagues raised over £21,000 for Swale Community Project in the first year of the plan

Strategic priority five: Safe, inclusive and rewarding workplace 2027 Target Update on Progress

Make sure at least 84% of #teammhs say “we’re a great employer”

It was great to see that we are currently at 91%.

Maintain the British Safety Council 5 Star rating

The 5-star rating was reconfirmed in February 2025

Attain Gold ‘We Invest in Wellbeing’

We received Silver accreditation in 2025 with the next assessment due in 2027

Attain Gold ‘We Invest in People’

We are at Gold with a reassessment due in 2026

Maintain our ‘Living Wage’ accreditation

This continues to be successfully maintained

Strategic priority six: well governed, well managed and financially strong 2027 Target Update on Progress

Generate £9 million of receipts from We generated £2.2 million in 24/25 and are on course to property disposals meet this target

Maintain our RACE Equality Code and Housing Diversity Networks accreditations

We have successfully maintained our accreditations

Publish our ESG impact via the Sustainability Reporting Standard for Social Housing

Our first report will be published in 2026

mhs homes limited

Company Number 10704997

Page 8

STRATEGIC REPORT: TREASURY

The Group has two active borrowers, mhs homes and Heart of Medway. The treasury management for the Group is governed by a policy and strategy regularly reviewed and approved by both the mhs homes and Heart of Medway Boards, with the Group Treasury Committee monitoring activities and making recommendations to the Board.

Borrowings and arranged facilities at 31
March 2025		 Borrowings and arranged facilities at 31
March 2025		 Borrowings and arranged facilities at 31
March 2025
Arranged
Drawn
£’m £’m
mhs homes 340 260
Heart of Medway 60 50
Total 400 310

At the end of the year the Group had substantial liquidity with:

Security of £198 million is available to allocate to new loans if required, as calculated under existing use value – social housing.

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£'million of loans and length of interest rate
fix
Fixed for 10 or more years
Fixed for 5 - 10 years
Floating rate
0 50 100 150 200 250 300
£' million
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A key risk is our exposure to interest rate increases, which is mitigated by having only £35m (11%) of debt floating for less than one year.

Repayment on borrowings

The Group has no debt due for repayment in the next five years. There is £10 million drawn on a revolving credit facility which expires in 2027, though we would expect to renew or replace the facility.

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200 £179 million
180
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140
£106 million
120
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60
40 20 £0 million [£10 million][£15 million]
-
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Within 1 year Within 2- 5 years Within 6 - 10 years Within 10 to 20 years More than 20 years
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mhs homes limited

Company Number 10704997

Page 9

STRATEGIC REPORT: 5 YEAR FINANCIAL REVIEW

The last 5 years financial performance along with key ratios is summarised below.

Year Ending 31 March 2021 2022 2023 2024 2025
£’m £’m £’m £’m £’m
Excluding 1st tranche shared ownership sales
Turnover 57 60 64 68 77
Expenditure 31 34 37 45 54
Surplus on rents 26 26 27 23 23
Surplus on sales of 1sttranche & fixed
assets		 2 2 2 1 2
Operating surplus 28 28 28 24 25
Net interest cost 11 11 11 13 14
Surplus for the year before
tax and fair value		 17 17 17 11 11
Net fixed assets 528 546 557 607 636
Investments 79 88 85 81 87
Net current assets 24 25 7 (3) (2)
631 659 649 685 721
Creditors: > than one year 279 285 260 290 310
Pension liability 10 9 - - -
289 294 260 290 310
Total reserves 341 365 389 395 411
Financial Performance
EBITDA-MRI*: Turnover 48% 43% 42% 31% 28%
EBITDA-MRI*: Turnover excluding s\o 49% 45% 42% 30% 27%
Ratio of Debt: EBITDA-MRI* 8.7 9.1 9.0 13.1 13.3
Ratio of EBITDA-MRI*: Interest Payable 2.4 2.4 2.4 1.6 1.5
Other Key Ratios
Voids: net rental income 1.0% 0.8% 0.8% 0.9% 1.20%
Bad Debt: net rental income 1.1% 0.5% 0.4% 0.9% 0.6%

*EBITDA – MRI: Earnings before interest, tax, depreciation, capitalised major repairs and surplus on sale of fixed assets

mhs homes limited

Company Number 10704997

Page 10

STRATEGIC REPORT: FUTURE PLANNING

The Group is planning to build over 360 new homes over the life of the strategic plan. We are currently on course to deliver this with 301 new homes either completed or contracted with handed over dates in the next two years.

Over the next five years the Group is planning to commit £43 million to building or purchasing new homes. Approximately half of this will be funded through surpluses from day-to-day activities and £15m through new borrowings. The balance will be financed through staircasing and voluntary disposals. The Group has £80 million of funding across two revolving credit facilities and a £10 million private placement arranged for drawn down in January 2026, which mitigates against the risk of reducing sales income.

Our results are stress-tested against several different scenarios. These show that our covenants are met in mhs homes, even if interest rates rise over the long term to 15% or rental income is reduced by 10%.

The projected financial ratios below from the long-term financial plan, approved by the Board in February 2025, show the ongoing financial strength of the Group.

Group Ratio 2026 2027 2028 2029 2030
Ratio of Debt: EBITA-MRI* 16.2 16.6 15.7 14.7 15.3
EBITDA-MRI*: Interest Payable % 1.3 1.3 1.3 1.4 1.4
  • EBITDA – MRI: Earnings before interest, tax, depreciation and capitalised major repairs expenditure. Property sales including shared ownership first tranche are excluded.

We are continuing to investigate our buildings to ensure that they meet all current safety requirements. The Board is clear on the importance of building and customer safety and that cost will never be a barrier to the work required. We will, therefore, continue to prioritise our Building Safety Programme, which is discussed in detail later in the report. The full costs of these remedial works over the next three years, £1.7 million for Heart of Medway and £4.4 million for mhs homes, are included in our long-term financial forecasts. The plan also includes £16.1 million for mhs homes and £0.5 million for Heart of Medway for the cost of ensuring all our properties are at a minimum of EPC rating ‘C’ by 2030. It is assumed that none of these costs will be capitalised.

Our long-term financial planning will continue to ensure that there are sufficient resources to proactively manage our assets, so that all our homes continue to meet the Decent Homes Standard .

mhs homes limited

Company Number 10704997

Page 11

STRATEGIC REPORT: BUILDING SAFETY

As of the end of March 2025 all but 44 homes met the Decent Homes Standard, with work on these programmed for the early part of 2025/26.

Building safety remains of paramount importance, and there are robust procedures and comprehensive controls in place regarding fire safety which are reviewed and tested on a regular basis. We have a Primary Authority Agreement in place with Kent Fire and Rescue Service which is a legally recognised partnership to make sure we keep our buildings and customers safe. The Group owns 5 blocks above 18 metres or over 6 storeys that fall under the requirement of The Building Safety Act to create building safety cases. None of these have ACM cladding and all building remedial works have been completed. As of 31 March 2025, all Fire Risk Assessments were up to date.

ate.
Building name No of No of Cladding
storeys homes
Melville Court 14 56 No
Regent Court 13 48 No
Steddy’s Court 13 48 No
Wellington Court 13 48 No
The cladding is defined as non-combustible or low risk
The Auditorium 7 26 in the Building Regulations, meaning that it improves
the fire safety standards of the building and protects
our customers living within it.

We have completed a programme of identifying any issues on the buildings over eleven and below eighteen metres. We have a five-year fire safety programme in place and are in the fourth year of completion. We’ve identified seventy eight blocks across the Group that require an intrusive inspection in line with our programme. Fifty six of these have been inspected and works completed, two are in progress and twenty left to start. All the remaining buildings are three stories or lower.

During the year mhs homes invested £1.3 million and Heart of Medway £0.4 million on fire safety remediation costs. The full costs of these remedial works over the next three years, £1.7 million for Heart of Medway and £4.4 million for mhs homes, are included in our long-term financial forecasts.

Damp and Mould

We want all our homes to be free from damp and mould and to meet this aspiration we have increased our resources in this area. We are also reviewing our processes so we can comply with Awaabs’ Law when this comes into force later this year. When damp is identified customers are supported through the process with regular checks on the effectiveness of the treatments. We also provide information to our customers on how to reduce the likelihood of damp and mould in their homes and we are investigating how we can use new technologies to help reduce condensation and identify issues at an earlier stage. There were eight high risk cases reported during the year, five of which have had repairs successfully completed and the cases closed and the remaining three have work starting shortly.

mhs homes limited

Company Number 10704997

Page 12

STRATEGIC REPORT: TENANT SATISFACTION MEASURES

The Tenant Satisfaction Measures were introduced by the Regulator of Social Housing in England in 2024 to assess how well landlords are doing in providing good quality homes and services and helps tenants hold social housing landlords to account. Our results are also published on our website .

The benchmarking data is against data provided by a third-party organisation, who looked at the outcomes of 84 housing associations, with the results from 2024. There is much in these results to be proud of, with satisfaction levels of customers generally above that the sector, and it is pleasing to see improvements year on year in most areas. However, there are areas where improvement is required, especially around our approach to complaints, where action has been taken to improve performance.

Measure 23/24 24/25 Movement Benchmarking
Overall satisfaction with the service provided 78% 78% - 71%
Repairs and maintenance
Satisfaction:-
with repairs carried out
79%		 80% +1% 72%
with time take to complete repairs 67% 56% -11% 68%
that the homes provided are well maintained
78%		 79% +1% 71%
Homes that fail the Decent Homes Standard 0.8% 0.5% +0.3% Not available
Repairs completed within target timescale 57% 68% +11% Not available

We expect repair satisfaction to increase as over the year there was a marked improvement in the speed of completing repairs due to increased resources and improved processes.

Complaints and engagement Satisfaction: -

Complaints and engagement
Satisfaction: -
that we listen and act on our customer’s views 54% 63% +9% 62%
that we keep our customers informed 71% 82% +11% 70%
with our approach to handling complaints 44% 36% -8% 37%
that we treat customers with respect 87% 86% -1% 77%
Complaints per 1,000 properties 108 116 +8 Not available
Complaints responded to within timescales 92% 67% -25% Not available

An increase in resources and improvement in processes in complaints handling will make sure that the year’s disappointing performance, due to an increase in the number of complaints reflecting similar experiences across the sector, will not be repeated.

Building safety

Building safety
Satisfaction we provide a home that is safe 82% 86% +4% 77%
Gas safety checks completed 100% 100% - Not available
Fire safety checks completed 100% 100% - Not available
Asbestos safety checks completed 100% 100% - Not available
Water safety checks completed 100% 100% - Not available
Lift safety checks completed 98% 100% +2% Not available
Neighbourhood and anti-social behaviour (ASB)
Satisfaction: -
that we keep communal areas well maintained 67% 70% +3% 65%
that we make a +’ve impact on communities 70% 79% +9% 63%
with our handling of ASB behaviour 58% 64% +6% 59%
ASB cases per 1,000 properties 11 20 +9 Not available

mhs homes limited

Company Number 10704997

Page 13

STRATEGIC REPORT: STREAMLINED ENERGY AND CARBON REPORT & SUSTAINABILITY

The Streamlined Energy and Carbon Report (SECR) framework is a mandatory UK-wide energy and carbon reporting scheme, implemented to create a straightforward carbon reporting framework and our results, which cover our head offices, communal areas in our properties and vehicle fleet, are shown below.

hown below.
kWh: kilowatt hours tCO2e
2024/25 2023/24 2024/25 2023/24
Natural Gas 4,345,372 4,283,105 795 783
Transportation 1,419,703 1,000,546 339 239
Scope 1 5,765,075 5,283,651 1,134 1,022
Electricity 2,086,640 2,351,025 432 487
Transportation 71,021 63,754 15 13
Scope 2 2,157,661 2,414,779 447 500
Transportation 78,717 65,311 18 15
Scope 3 78,717 65,311 18 15

Scope 1 consumption and emissions include direct combustion of natural gas and fuels utilised for transportation operations, for example, company vehicle fleets.

Scope 2 consumption and emissions cover indirect emissions related to the consumption of purchased electricity in day-to-day business operations.

Scope 3 consumption and emissions cover emissions resulting from sources not directly owned by mhs homes.

The intensity ratio

The location-based intensity ratio, which is considered the most relevant to mhs homes and is calculated by comparing tCO2e by turnover, decreased from 21.75 Tco2e/£m to 19.12 Tco2e/£m through the actions noted below.

Energy efficiency actions taken during the year

mhs homes continues to procure the majority of electricity from renewable and green tariffs, hence the small amount of CO2 released compared to that from other energy sources. We are focused on having all homes at a minimum EPC rating C by, at the latest, 2030 and are confident of achieving this target as the year-on-year improvements are shown below.

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% of stock
A
B
C
D
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March 2025 March 2024 March 2023 March 2022
EPC Rating
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mhs homes limited

Company Number 10704997

Page 14

STRATEGIC REPORT: STREAMLINED ENERGY AND CARBON REPORT & SUSTAINABILITY

We are taking the following actions to further reduce our impact on the environment: -

During the year we enhanced out planned programme delivery by securing funding through the Social Housing Decarbonisation Fund Wave 2.2, funding to support the installation of energy performance measures. As part of this initiative energy efficiency measures were completed in 74 homes, with an additional 36 homes scheduled for upgrades to achieve EPC band C.

As part of the Planned Programme focused on improving energy efficiency, mhs homes delivered a range of upgrades across our housing stock: 209 homes received new double-glazed uPVC windows, 253 homes had external composite doors installed, 514 boiler upgrades were completed, 4 homes received external wall insulation (EWI) as part of a pilot scheme and Solar PV systems were installed on two residential blocks. These measures contributed to reducing energy consumption and improving resident comfort

All the lighting at our head office was replaced with energy-efficient LED fixtures, supporting the commitment to sustainability by reducing electricity consumption.

Measures to be addressed in 2025/26

mhs homes was successful in its Wave 3 bid under the Warm Homes: Social Housing Fund securing approximately £2.9 million in funding over a three-year programme. This funding will support the retrofit of at least 331 homes to achieve EPC (Energy Performance Certificate) band C.

As part of our ongoing commitment to improving energy performance, mhs homes will continue delivering standalone energy efficiency measures through the Planned Maintenance Programme in the next financial year. We anticipate completing the following upgrades: 209 window replacements, 217 door installations and 464 boiler upgrades.

mhs homes will deliver cavity wall insulation under the Great British Insulation Scheme. Initial modelling indicates that 336 homes are suitable for the scheme. Survey work is already underway to confirm eligibility and begin installations.

mhs homes limited

Company Number 10704997

Page 15

STRATEGIC REPORT: SOCIAL IMPACT

The social housing sector has a clear social purpose: to provide affordable, secure, quality housing to those who are unable to afford to buy or rent in the private market. We take this responsibility seriously as evidenced by the actions below.

Our Tenancy Support Programme is designed to help customers with the cost-of-living crisis and more effective multi-agency interventions on domestic abuse, mental health, safeguarding, community safety, anti-social behaviour and hate crime.

As a charitable social housing provider our properties must be affordable whilst generating sufficient income to both maintain our existing stock to the highest standard and provide new homes. We therefore monitor our rents closely against market rents and Local Housing Allowance (LHA) as summarised. The results in Medway and Maidstone, where the majority of our stock is located, are shown below. Our rents tend to be higher in Maidstone as the majority of homes are let at affordable rather than social rent.

----- Start of picture text -----
Maidstone
Medway
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
1 Bed 2 Bed 3 Bed 4 Bed 1 Bed 2 Bed 3 Bed 4 Bed
% of Market Rent % of LHA % of Market Rent % of LHA
----- End of picture text -----

One of our core aims is to create balanced and sustainable communities, where people want to live and choose to stay. Security of tenure is crucial to this and, apart from starter tenancies and the market rented portfolio, all tenants have a lifetime tenancy.

mhs homes limited

Company Number 10704997

Page 16

STRATEGIC REPORT: DIVERSITY AND INCLUSION

Whatever someone’s age, gender, disability status, sexual orientation, religion, ethnicity or family circumstances, it is central to our culture to make sure they are treated with fairness and respect. One of our key values is respect for the diversity of our customers and colleagues. We know that this brings creative advantage and innovation.

We continue our inclusion journey and have made progress in all of our areas of focus. When we revised our values in 2024, we included Respect and Inclusion as two of our five new PRIDE values, embedding our commitment. We also included some targets with EDI specific elements in our strategic plan 2024-27, including a more proactive approach to tackling hate crime and better understanding of our customers to more effectively design and target services.

During the year we delivered customer service training for all-staff, delivering modules on communications and empathy, and we have heard from a variety of local partners on EDI issues in ‘lunch and learns’. We will continue this mix of formal and informal means of improving our knowledge of all aspects of diversity and inclusion. Last year we developed an EDI Strategy, an Individual Needs and Reasonable Adjustments Strategy and Policy and a Customer Engagement Framework. We will be working on embedding these, including improving our customer EDI data so we can better respond to individual needs.

We will seek to maintain our RACE Equality Code quality mark accreditation (awarded in 2023), which speaks to our commitment both to equality and effective Governance. As seen below we have made good progress on board diversity over the last two years and increased our percentage of Black, Asian and minority ethnic employees. Most recommendations from the Housing Diversity Network accreditation process are closed, with others to progress in 2025/26.

The Board have committed to being open and transparent about where we are on the inclusion journey, about our targets to get us to where we want to be and the progress we are making. We recognise that we can make improvements in understanding and responding to diversity and in providing a fully inclusive service for all our customers, we commit to making those improvements, including improving representation of underrepresented groups.

Our Equality, Diversity & Inclusion Task Force, chaired by the Director of Governance and Compliance, ensures that progress is monitored against targets. This Task Force is responsible for leading on race diversity and other aspects of inclusion, setting targets based on the most up to date census data, with reports being presented to Board twice a year.

The Board has agreed an Anti-Racism Statement for the organisation, making a public and conscious effort to work against all aspects of overt and systemic racism. This statement is available on our website with our commitments which include: -

Current position
▪ By September 2023 we aimed to have at least Board Leadership Team
one Black, Asian or minority ethnic board Asian British - 1
member and two Black, Asian or minority Black British 2 1
ethnic members of the senior Leadership White British 7 7
Team. This was successfully achieved_._ Total 9 9

Company Number 10704997

STRATEGIC REPORT: DIVERSITY AND INCLUSION

All our recruitment has details on protected characteristics covered under the Equality Act omitted at the shortlisting stage to ensure a fair and merit-based approach to interview selection. As a Disability Confident employer if a candidate has a disability and meets the essential requirements of the post, they will be offered an interview for the job.

Last year we completed an accessibility review of our website to ensure that it meets the need of people with disabilities. Currently 2.4% of our workforce have a long-term disability compared to 18% of the population in the areas we work. but we have a significant number of staff for whom we do not have this information. We will seek to improve our staff data in the upcoming year with a positive campaign on how sharing this important information with us can benefit individuals.

Breakdown of employees by gender and Quartile % %
pay band by pay quartiles Female Male
Our average gender pay gap has fallen to 0% Upper 50 50
from 0.4% in favour of men. The national Upper middle 40 60
average is 13.1%. Lower middle 54 46
Lower 46 54
Breakdown of employees by race and pay % %
band by pay quartiles Quartile Non-white White
Our average ethnicity pay gap is 0.6% in Upper 16 84
favour of colleagues from a white ethnicity Upper middle 18 82
(2024: 2.2% in favour of colleagues from a Lower middle 12 88
“non-white” ethnicity). Lower 15 85
Total in company 15 85
Total in local area 16 84

No differences are because people are paid differently for the same or equivalent work. To make sure all colleagues are treated fairly, we benchmark all of our salaries against the external market every three years and did so last year.

mhs homes limited

Company Number 10704997

Page 18

STRATEGIC REPORT: RISK MANAGEMENT

The Group’s definition of a risk is an event which could hinder the Group from achieving its strategic objectives. We use a system of risk scoring which reflects a combination of the probability of an event occurring and its consequences under the Group’s Risk Management Strategy. All risks are managed within an acceptable level of residual risk to the business. The risk register is split into strategic and operational risks. The mhs Group Board is responsible for ensuring the organisation has an appropriate risk and control framework in place Strategic risks are managed by the Leadership Team and reported to the Group Board and Group Finance, Risk and Audit Committee.

Assistant Directors sign assurance statements, which are presented to the Group Finance, Risk and Audit Committee quarterly as part of the strategic risk update, with an annual compliance confirmation, detailing that all risks have been considered, and that controls and assurances are in place. This includes that all appropriate legislation has been considered and flowed into policies where necessary. All controls have specific accountability to operational managers and colleagues with timescales for implementation and on-going review through the assurance map. The Company Secretary meets monthly with the Internal Audit Manager to ensure audit actions are monitored and progressed. Internal Audit compliance is reported quarterly to senior management and the Group Finance, Risk and Audit Committee.

These controls are assessed using the three lines of defence model and the Board has agreed that its definition of risk appetite is “the amount of risk mhs homes is prepared to accept, tolerate, or be exposed to at any point in time based upon current risk exposure”. This is regularly reviewed, and our current risk appetite is summarised below on key risks.

Risk appetite

Risk category

Avoid: Zero tolerance, avoiding risk is the key objective.

Non-compliance with regulatory or legal requirements Data protection and cyber security Health and safety of colleagues

Cautious: Preference for safe options with low inherent risk, even if this gives limited potential reward.

Decent, safe, compliant and sustainable homes Funding, liquidity & covenant compliance

Service delivery meeting customer expectation

Open: Willing to consider all potential options that also provide acceptable reward and Value for Money.

Ambitious growth in new homes

Attracting and maintaining a diverse, engaged and talented workforce

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Company Number 10704997

Page 19

STRATEGIC REPORT: RISK MANAGEMENT

The mitigations and assurances for these risks are noted below.

Risk Mitigations and assurances
Failure to provide
decent, safe,
compliant &
sustainable homes		 •
Champion status under the Building a Safer Future Charter.
•
Primary Authority Partnership with Kent Fire & Rescue Service.
•
Intrusive Type 4 Fire risk assessments in high-risk buildings.
•
Landlord compliance reports to Finance Risk and Audit.
•
Committee and mhs and Heart of Medway Boards.
•
Dedicated damp and mould and building and customer safety
teams.
•
Our stock condition data is validated externally.
•
Aim of every property to have a survey no more than 5 years
old.
•
An internal Safeguarding Board monitor our controls and processes
around children and vulnerable adults living in our homes.
Failure to ensure
colleagues are safe
at work		 •
5-star award from the British Safety Council in 2025.
•
Health and safety culture audit in 2023 with an update in 2025.
•
Dedicated Health and Safety Committee.
Failure to maintain a
talented, diverse,
engaged workforce		 •
We invest in People ‘Gold’ accreditation.
•
We Invest in Wellbeing ‘Silver’ accreditation.
•
Diversity Network and RACE Code Accreditation.
•
Salaries are benchmarked every three years.
Failure of data
security		 •
Penetration tests on our overall cyber security system.
•
Regular security and data protection training for colleagues.
•
Regular phishing tests for staff with follow up targeted training.
•
Regular vulnerability scans on our systems.
Failure to maintain
long-term financial
viability and meet
existing covenants		 •
Long term financial planning with robust stress testing.
•
Annual review and approval of golden rules and stress testing to
test and reaffirm risk appetite.
•
Regular economic updates from our treasury advisors.
•
Annual review of treasury policy including controls on liquidity.
Failure to maintain
excellent customer
service levels		 •
Regular in-depth customer surveys.
•
Well established and accessible complaints procedure.
•
Customer Service Excellence accreditation.
•
Customer experience training for all staff.
Non-compliance with
regulatory or legal
requirements		 •
Governance Framework & annual review
•
Review of compliance performance including safety information
•
Annual review of compliance with Regulator of Social Housing
•
Robust management of all policies and procedures across the
business
Failure to meet
development
aspirations		 •
Financial capacity to build new homes updated annually in the long
term financial plan
•
Homes England contract agreed 2021 - 26
•
Financial sensitivities modelled on new sales schemes and exit
options considered

mhs homes limited

Company Number 10704997

Page 20

VALUE FOR MONEY STATEMENT

Housing associations must demonstrate a robust approach to Value for Money (VFM). The section below outlines our approach and demonstrates how:

Approach to VFM

The success of the approach taken by the Group in embedding VFM can be seen in our results with a robust framework at the heart of all decision-making. The Board ensure that our strategic plans include challenging targets for efficiency, cost control and customer service. The primary financial control in the 2024 - 2027 strategic plan is the operating margin. Without this level of performance, we would be unable to sustain the development programme that is in place. The Board carefully monitors progress and decisions made are considered through this prism. Other arrangements for ensuring that VFM is being obtained include:

mhs homes limited

Company Number 10704997

Page 21

VALUE FOR MONEY STATEMENT

How we use our money

Our rental income is used to maintain our homes and provide our housing management and community services. Any surplus is reinvested in our homes and building new homes. These graphs show the income we received and how we have used it in 2024/25.

----- Start of picture text -----
120,000
100,000
1
New borrowings
80,000 Spend on new homes
Property sales
60,000
Net Interest costs
Salaries and overheads
40,000 Service Costs
Rents & Service charges
20,000 Repairs to existing
homes
-
Income Costs
£'000
----- End of picture text -----

Our performance compared to comparable organisations

We have compared the Group’s results with the sector using the Regulator of Social Housing Summary of Global Accounts for 2024 for Registered Providers in the Southeast of England between 5,000 and 20,000 units. The results highlight the financial strength of the organisation. The increase in unit costs reflects a substantial increase in investment in our existing housing stock.

The Group
Budget Actual
Metric 2026 2025 2024 **Median **
Investment in - new and existing properties 4.8% 5.9% 5.8% 6.9%
New supply delivered – social housing 1.4% 1.4% 1.0% 2.1%
New supply delivered – non-social housing 0% 0% 0% 0%
Gearing 49% 45% 44% 56%
EBITDA: interest rate cover 123% 151% 164% 115%
Social housing cost per unit £ 6,121 5,367 4,642 5,414
Operating margin (overall) 28% 29% 32% 23%
Return on capital employed 3.0% 3.5% 3.4% 2.9%

mhs homes limited

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VALUE FOR MONEY STATEMENT

Our performance against our targets (the group) in 2024/25

Metric Actual Budget
Investment in properties - new and existing 5.9% 6.9%
New supply delivered – social housing 1.4% 1.8%
New supply delivered – non-social housing 0.0% 0.0%
Gearing 45% 50%
EBITDA: interest rate cover 151% 121%
Social housing cost per unit £ 5,367 5,439
Operating margin (overall) 29% 32%
Return on capital employed 3.5% 3.5%

The overall development programme was smaller than budgeted due to delays on site.

Return on investment by asset type

2024/25 2024/25 2023/24 2022/23
Net Cost
of Asset*
Income		 Surplus Return Return Return
£’m £’m £’m % % %
General needs 312,595 63,553 18,179 5.8% 6.4 9.1
Shared ownership 69,171 3,725 2,070 3.0% 1.8 1.9
Market rented** 45,928 4,662 2,694 5.9% 5.9 3.5

* Based on net book value excluding revaluations taken as transition to FRS102.

** After adjusting for deprecation to ensure comparability with other income streams

mhs homes limited

Company Number 10704997

Page 23

TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: GROUP BOARD AND ADMINISTRATIVE DETAILS

The Board is comprised of up to nine Trustees, including two tenant board members.

The role of the Board is to govern the Group to provide accountability, strategic direction and to be responsible for the proper stewardship of the organisation.

The Board delegate the day-to-day management within the strategic direction agreed by the Board to the Executive Team. Major financial contracts where the charity is committed to expenditure of more than £5 million are agreed by the Board. The Board monitor this expenditure through an agreed budget and long-term financial plan, with management accounts being scrutinised by both the Group Finance Risk and Audit Committee and the Board.

one of which is the Annual General Meeting. In 2024/25 the Board held eight meetings, including the Annual General Meeting, at which the average attendance rate was 88% (2024: 98%).

Applications for Board membership are invited by open advert. Applicants are shortlisted and interviewed with appointments made according to required skills, competencies and experience. In the case of tenant annual elections take place.

Regular skill audits of the Board are undertaken. Trustee terms are normally limited to two terms of three years, although with the provision of our chosen governance code by exception a Trustee may serve up to a maximum of nine years.

During the year there are at least six meetings,

Trustee Position N Hopkins Chair Marie- Claire Delbrouque Chief Executive Appointed 9 April 2025 A Hook Chief Executive Retired 30 April 2025 I Cain Non-Executive Lord Kennedy Non- Executive Resigned 10 July 2024 M Miles Lea Non-Executive R Christopher Non-Executive J Carr Non-Executive S Skeete Non-Executive Appointed 23 January 2025 S O’Brien Non-Executive Appointed 9 June 2025 L Heffernan Tenant Nominee M Mulligan Tenant Nominee

Auditors Charity’s address BDO LLP mhs homes First Floor, Bottleworks Broadside The Bars Leviathan Way Guildford Chatham Surrey Kent GU1 4LP ME4 4LL

Country of incorporation: England

Bankers: National Westminster Bank Plc

Legal status

Private company limited by guarantee without share capital No. 10704997 Registered charity with the Charity Commission No. 1177565

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TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: GROUP BOARD AND ADMINISTRATIVE DETAILS

Nigel Hopkins | Chair

Nigel has over 30 years’ experience in finance in a variety of roles including Finance Director for Abbeyfield, a leading charity in the supported housing sector. Nigel is currently a Group board member and Chair of the Audit & Risk Committee at London & Quadrant housing group.

Marie Claire Delbrouque | Chief Executive

Marie-Claire joined mhs homes group in April 2025 from Flagship Group where she was Managing Director from 2018. Alongside her role at Flagship Group, Marie-Claire was also chief executive at a registered charity dedicated to ending homelessness. She is passionate about ending homelessness and delivering better health outcomes for the communities that we serve.

Joseph Carr | Board member

Joseph is a chartered accountant of more than three decades and has been associated with the housing sector, on and off, for the majority of his working life, including more than 10 years at the National Housing Federation. He has invaluable experience both in policy and treasury.

Ian Cain | Board member

Ian’s career extends to some 30 years in corporate and commercial organisations focusing on providing essential services to customers and communities. He is currently CEO of SES Water. Ian brings a wealth of leadership and board experience.

Ray Christopher | Board member

Ray is a corporate financier and treasurer with more than 30 years of international finance experience across many sectors including energy, high-tech and social housing. His expertise includes capital markets, risk and active asset management.

Mark Miles Lea | Board member

Mark has worked in the housing sector for over 25 years, including over 5 years at a senior executive level. He has particular expertise in the development of new homes. He is also a nonexecutive director for a community-based housing association in east London.

Michelle Mulligan | Board member

Michelle is a mhs homes tenant. Michelle is retired from full time work; her previous careers have included banking and working for a children’s literacy charity.

Louise Heffernan | Board member

Louise is a mhs homes tenant and understands how having an affordable, safe and secure place to call home is vital.

Sandra Skeete | Board member

Sandra has a strong background in social housing with extensive experience in delivering resident and property services and has held leadership roles with several housing associations. Most recently, she served as the Chief Executive of a Registered Provider.

Suzanne O’Brien | Board member

Suzanne is an experienced non-executive director with extensive senior leadership experience. A qualified accountant and tax consultant with over thirty years’ experience in business, primarily Financial Services, she now has a portfolio career. An advocate for social justice, she champions equity for all.

mhs homes limited

Company Number 10704997

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TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: COMMITTEES AND EXECUTIVE TEAM

Trustee Position Changes in year

Group Finance Risk and Audit Committee

J Carr Chair G Taylor Member E Thomas Member

The Committee met five times last year and is responsible for reviewing the finances, including budget, long term financial plan, stress testing and mitigation plans before recommending to the Board. The committee recommends policies and procedures for identifying and assessing business risks, and the on-going management of those risks. The Committee also reviews the effectiveness of internal control systems, considers reports from the internal and external auditors and reviews the annual financial statements prior to Board approval.

Nominations and Remuneration Committee

I Cain Chair N Hopkins Member R Christopher Member S Ironmonger Member Appointed 3 October 2024

The Nominations and Remuneration Committee is responsible for reviewing the pay and conditions of service of the executives and has oversight of the Chief Executive’s annual appraisal. It met on three occasions in the year and consists of four non-executives from the Group Board’s. Where needed the Nominations and Renumeration Committee seek independent external advice

Treasury Committee

R Christopher Chair S O’Brien Member Appointed 9 June 2025 G Taylor Member N Hopkins Member J Chia Member

The Treasury Committee has met three times during the year. It is responsible for scrutinising treasury activities and recommending policies, strategies and new borrowings to the Boards.

Executive Team

M Delbrouque Chief Executive Appointed 9 April 2025 A Hook Chief Executive Resigned 30 April 2025 B Shelmerdine Finance Director A Cheswick Executive Director - Customer & Transformation G Hancock Executive Director - Assets & Development

The Leadership Team during the year consisted of the Chief Executive, Executive Directors, Company Secretary and Assistant Directors. Together they are responsible for the day-to-day operations of the Group and act within the authority delegated to them by the Board, as set out in Standing Orders and Delegated Arrangements.

mhs homes limited

Company Number 10704997

Page 26

TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: OBJECTIVES, ACTIVITIES & PUBLIC BENEFIT STATEMENT

Objectives and activities

mhs homes limited (‘mhs homes’) is a registered charity with the objectives to provide social housing in Kent and all services linked to this provision to alleviate housing need in Medway and the surrounding areas. These include constructing, improving and managing social housing, along with the sale of shared ownership properties. It was formed on 29 July 1990 as a Community Benefit Society when it acquired the entire housing stock of the then Rochester upon Medway City Council being one of the first large-scale voluntary transfers and the only one to take place that was not registered with the regulator. mhs homes became a registered charity in 2018.

Public Benefit Statement

The Trustees of mhs homes ensure that the purpose of the charity is for the public benefit by:

The homes we own are managed in a way that provides an excellent customer service through our day-to-day interactions with our customers and a high-quality home to live in. Specific examples of practical differences made to our community include:

The Trustees recognise that a financially successful mhs homes is able to provide more new social housing. Therefore, as well as having the objective of financial efficiency, which is described in more detail under the Value for Money statement on page 21 the objectives of mhs homes allow for financial investments. These are defined under an Investments Policy agreed by the Trustees and our current strategy limits the investments to the supply of market rented properties and a loan to a subsidiary that owns the head office building.

The level of investment in new market rented stock is considered each year as part of the annual budget setting procedure, with the current policy stating that no more than 35% of cash surpluses should be used for financial investments. These are purchased with the intention of holding them over the long term, with the returns being reviewed at regular intervals.

mhs homes limited

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TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: OUR STRUCTURE, GOVERNANCE AND MANAGEMENT

mhs homes limited (‘ mhs homes ’), the parent body of the mhs homes group (‘ the Group’ ), is a registered charity (1177565) and a company limited by guarantee (10704997). It is governed through a Memorandum and Articles of Association. The Board of Trustees of mhs homes , who are also directors of the charity for the purpose of the Companies Act 2006, have overall responsibility for the direction, management and control of the charity. Whilst mhs homes is not registered with the RSH it is fully committed to reinvesting any surpluses back into social housing. It is regulated by the Charity Commission and its disclosures and accounting treatment follow those set out by the Charity Commission. However, as a provider of social housing we have structured this report to be comparable with those provided by the regulated social housing sector. As the parent organisation, mhs homes has five subsidiaries:

mhs homes is also the corporate trustee for Lord Kitchener Memorial Homes Trust, an Almshouse in Medway owning six homes and registered with the Charity Commission.

mhs homes has adopted and is fully compliant with the National Housing Federation's Code of Governance: promoting board excellence for housing associations (2020 edition). This code is more relevant to mhs homes than the Charity Governance Code. In common with many housing associations, Board members receive a fee and the reimbursement of properly incurred business expenses. Along with the National Housing Federation Code of Governance mhs homes has adopted the “Conduct Becoming” standard with respect to conduct and probity. There is a system of open declaration recorded in the minutes of Board meetings and for other matters occurring outside the boardroom there is a Declarations Register. This is accessible to all members of the Board and is systematically scrutinised by the Group Finance, Risk and Audit Committee.

Induction and training opportunities for Trustees

All new trustees receive a structured induction programme which includes visits to projects, a briefing session on governing documents, meetings with colleagues and one-to-one sessions with the executives. All new Trustees, irrespective of experience, are also required to attend an Institute of Directors course on the role of the Director and the Board. All Trustees undergo an annual appraisal with the Chair, as well as conducting a review of effectiveness of the Board as a whole.

Arrangement for remuneration of Trustees

To ensure transparency and independence the Board has established that the fees of the NonExecutive Directors be reviewed annually, with external benchmarking advice taken every three years. The fees were last benchmarked in 2025 and will be reviewed next in the year ending 31[st] March 2028.

Fair representation

The Board communicates with and manages the interests of its stakeholders through the full-time professional input of the Executive Directors’ team. The Board conforms to best practice as defined in standards published by the National Housing Federation. There is an annual governance report which scrutinises and appraises the Board, and to which each member contributes. The report

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TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: OUR STRUCTURE, GOVERNANCE AND MANAGEMENT

confirms that boardroom conduct meets the highest standards of corporate governance.

Customer Scrutiny Panel

The Customer Scrutiny Panel is an essential part of the governance structure and exists to hold the organisation to account from a customer perspective. In the last year, the Panel carried out three reviews of the following services:

A range of recommendations were made to help improve and shape future service delivery. This process is supported by external consultants so the Panel can call upon independent expertise as required.

Modern Slavery and Human Trafficking Act 2015

We have a Modern Slavery and Human Trafficking statement. It was agreed by the Board and signed by the Chief Executive. Our statement is published on our website and confirms our commitment to ensuring that there is no modern slavery in our business or in our supply chains.

Interests of the Employees

The Board is committed to maintaining a competent and motivated workforce by ensuring that sufficient people with the appropriate skills, knowledge and experience are employed to meet all business objectives. Details on employee numbers are contained in note 9 to the financial statements. Our colleagues are our most valuable resource, and we place great emphasis on high levels of colleagues’ engagement. We are proud to hold ‘Gold Investors in People’ and ‘We Invest in Wellbeing’ Silver accredited status.

There is an Employee Forum (“Voice”) which meets regularly to discuss terms and conditions of service and matters of colleagues’ interest and input. The constitution has provision for meetings between the Directors and colleagues’ representatives. For purposes of understanding and clear direction, there is a framework of delegation to colleagues set out in our Financial Regulations and Procurement Guide. It provides the details of the fundamental rules and procedures by which business is conducted, including the high expectation we have regarding integrity and probity.

Our Equality Diversity and Inclusion Policy covers all aspects of employment practices, from recruitment through to appointments, training, career development and succession planning. The Group is committed to having an inclusive and diverse workforce.

We aim to attract and retain the most talented people. The Human Resource team ensures that we have effective procedures for employee relations, recruitment, selection, compliance, pay, wellbeing, reward, and learning and development in place. Terms and conditions, including salaries, are set at competitive rates to attract and retain high calibre employees and are regularly benchmarked.

Creditor Payment Policy

It is the policy to agree terms of payment with suppliers at the time of negotiating the transaction and abide by those arrangements conditional on being satisfied that the goods or services are delivered in accordance with the agreed specification.

Exemptions from disclosures

No exemptions from disclosures have been taken in this report.

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TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: OUR STRUCTURE, GOVERNANCE AND MANAGEMENT

Impact on the environment

The Group recognises that it spends substantial amounts on new build projects and maintenance, and there is therefore a strong commitment to minimise our environmental impacts as far as is reasonably practicable. An Environmental Management System (EMS) is in place that is certified to ISO14001. We are committed to conserving resources, minimising the risk of pollution and reducing waste. The EMS is regularly reviewed, and all significant impacts are monitored to ensure that adequate measures are in place to reduce our impacts and promote environmental sustainability. Further information is available on page 14.

Health and Safety

The Board is aware of its health and safety responsibilities and receives reports on health and safety issues. Detailed health and safety policies and procedures are in place and provide colleagues training and education on matters of health, safety and welfare. The Health and Safety Manager reports to the Board, Leadership Team and Group Finance, Risk and Audit Committee. Besides the duties of compliance testing and evaluation, the Health and Safety Manager serves the interests of colleagues reducing the risk of accidents and loss to the business . The British Safety Council audit grading has been in place since 2015 and is a validation of the work taking place organisation wide and the importance given to a safe working culture. Our last assessment on health and safety in January 2025 resulted in us achieving British Safety Council level 5 award (‘excellent’). This is an important external validation of our robust approach to health and safety management.

Going concern

After reviewing the budget of mhs homes for 2025/26 and a period beyond 12 months from the signing of the accounts, and based on normal business planning and control procedures, the Directors have a reasonable expectation that mhs homes has adequate resources to continue in operational existence for the foreseeable future. The Group has available £90 million of undrawn funding across two revolving credit facilities and a private placement.

Compliance with Governance and Financial Viability Standard

The Board of mhs homes determines and monitors the strategic direction of the Group and has adopted the National Housing Federation’s Code of Governance: promoting board excellence for housing associations (2020 edition). It is an RSH requirement under the Governance and Financial Viability Standard to adopt an appropriate code and therefore a regulatory requirement for Heart of Medway. Both mhs homes and Heart of Medway undertake an annual review of compliance against this code which is certified by the Board. As the unregistered Parent of a registered provider, mhs homes is fully committed to maintaining Heart of Medway compliance with the RSH’s Governance and Financial Viability Standards. mhs homes has formalised the management arrangements in place through an Intra Group Agreement that acknowledges and supports the Registered Provider status of Heart of Medway.

Auditor

All of the current Board members have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Associations’ auditor for the purpose of their audit and to establish that the auditor is aware of that information. The Board members are not aware of any relevant audit information of which the auditor is unaware. BDO LLP have expressed their willingness to continue to act as our auditors. A resolution for the re-appointment of BDO LLP as auditors of the Association is to be proposed at the forthcoming Annual General Meeting.

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Fundraising statement

Although we do not undertake fundraising from the public, the legislation defines fund raising as “soliciting or otherwise procuring money or other property for charitable purposes.” Such amounts receivable would be presented in our accounts as donations. In relation to the above we confirm that if funds were held, they would be managed internally, without involvement of third parties. The dayto-day management of all income generation is delegated to the Leadership Team, who are accountable to the Trustees. The charity has no undertaking to be bound by any regulatory scheme. We have received no complaints in relation to fundraising activities. Our terms of employment require colleagues to behave reasonably at all times; as we do not approach individuals for funds, we do not consider it necessary to design specific procedures to monitor such activities.

Our Reserves Policy

Reserves held by a registered charity will normally be the amount of unrestricted funds held. However, the past activities of mhs homes have been funded through a combination of surpluses and borrowings which means that this methodology is not appropriate and does not reflect the substantial portfolio that is held that allows mhs homes to meet its charitable objectives. mhs homes is in the position where it has a high degree of certainty over the income from its property portfolio, being able to set rents that it feels are affordable within the boundaries of providing social housing. This allows the long-term financial plans to incorporate:

For the purpose of financial management, the Trustees are concerned more with the management of working capital and consider that a healthy working capital position is in line with a policy of keeping reserves to fund future unrestricted expenditure in the event of a material decline in surpluses. Therefore, mhs homes has a robust treasury strategy that ensures:

mhs homes currently exceeds the requirements of the reserves policy and our future planning shows us maintaining this position for the foreseeable future.

Qualifying third part indemnity provisions

The directors have the benefit of an indemnity which is a qualifying third-party indemnity provision. The indemnity was in force throughout the last financial year and is currently in force. The group also purchased and maintained directors and officer’s liability insurance in respect of itself and its directors throughout the financial year.

Responsibility to Heart of Medway Housing Association

mhs homes acknowledges its responsibility as Parent of Heart of Medway; an entity regulated by the RSH and subject to the regulatory Framework. An Intra Group Agreement exists between Heart of Medway Housing and mhs homes that recognises the duty of the unregistered parent to provide support or assistance to the registered provider to ensure that it fulfils its regulatory requirements. It further ensures that the social housing assets within Heart of Medway cannot be put at risk through the activities of the Parent.

mhs homes limited

Company Number 10704997

Page 31

TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: OUR STRUCTURE, GOVERNANCE AND MANAGEMENT

Trustees’ responsibilities for the financial statements

The Trustees, who are also Directors of mhs homes limited for the purposes of company law, are responsible for preparing the Strategic Report, the Trustees’ Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Trustees to prepare financial statements for each financial year. Under that law the Trustees have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. Under company law, the Trustees 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 charitable company and the Group and of the incoming resources and application of resources, including the income and expenditure, of the charitable company and the Group for that period.

In preparing these financial statements, the Trustees are required to:

The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s and 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.

The Trustees are also responsible for safeguarding the assets of the charitable company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Trustees are also responsible for the maintenance and integrity of the corporate and financial information included on the Parent Charitable Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

mhs homes limited

Company Number 10704997

Page 32

TRUSTEES’ ANNUAL REPORT INCORPORATING DIRECTORS REPORT: S172 STATEMENT

How the Board complied with its Section 172 duty

The Companies Act 2006 (CA2006) sets out a number of duties which directors owe to the company. Under section 172, directors have a duty to promote the success of the company for the benefit of the members as a whole and also should have regard to (amongst other matters) six specified areas below that relate to wider stakeholder interests.

1. Likely consequence of any decision in the long-term

mhs is a long-term business that provides homes and security for our customers whilst generating surpluses that allow us to invest, in new social housing. As new social housing developments can be a loss-making activity, we monitor closely the impact of our developments on the long-term financial plan. This is considered by the Board on an annual basis, or more often if the situation demands, and is considered in detail in the section “Future Planning” on page 11.

2. Foster business relationships with suppliers, customers and other

mhs homes works in collaboration with a variety of national, regional and local suppliers, including voluntary and charitable organisations. Our engagement with suppliers promotes fair and open competition, and where appropriate we look to foster long-term relationships. We work closely with the councils and other stakeholders in the areas in which we are based and value highly their support. We engage with our customers in several ways:

3. Maintain a reputation for high standards of business conduct

As a charity our reputation for high standards is essential to how we work. To ensure we meet the highest standards we have policies on fraud, whistleblowing and anti-bribery in place which are described in more detail on page 35 and 36.

4. Act fairly as between members of the company

The disclosure is relevant to joint ventures and associates, and those companies with multiple classes of shares, minority or dissenting shareholder groups. mhs homes is a company limited by guarantee without share capital and no payment of dividends. In the event of the charity being wound up, the liability in respect of the guarantee is limited to £1 per member.

5. Interests of employees

This is considered on page 29.

6. Impact of operations on the community and the environment

See pages 14 and 16 for our impact on the environment and community.

mhs homes limited

Company Number 10704997

Page 33

ASSESSMENT OF THE EFFECTIVENESS OF INTERNAL CONTROLS

Statement of Internal Control

The Board has overall responsibility for establishing and maintaining the whole system of internal control for the organisation and for reviewing its effectiveness. The Board recognises that no system of internal control can provide absolute assurance against material misstatement or loss or eliminate all risk of failure to achieve business objectives. The system of internal control is designed to manage key risks and to provide reasonable assurance that planned business objectives and outcomes are achieved. It also exists to give reasonable assurance about the preparation and reliability of financial and operational information and the safeguarding of the Group’s assets and interests.

Whilst mhs homes is not a registered provider, our subsidiary, Heart of Medway Housing Association, is registered with the Regulator of Social Housing (RSH). In accordance with the RSH regulatory framework, mhs homes must support and assist Heart of Medway to comply with the regulatory requirements.

The focus on financial controls extends to the commitment of resources for monitoring operations, compliance testing, reputational risk evaluation and a wide range of risk management activities. This has included stress-testing of different scenarios, and the creation of an Assets & Liabilities Register. Self-assessments against the Governance and Viability Standard have found that the Heart of Medway is compliant. In meeting its responsibilities, the Board has adopted a risk-based approach to internal controls. This approach includes the regular evaluation of the nature and extent of risks to which the Group is exposed.

The Group Treasury Committee is responsible for scrutinising treasury activities and recommending policies, strategies and new borrowings to the Boards. The Group Remuneration Committee is responsible for reviewing the pay and conditions of service of the Executives and has oversight of the Chief Executive’s annual appraisal.

The Group has adopted the National Housing Federations Code of Governance (2020) and is compliant. The process adopted by the Board in reviewing the effectiveness of the system of internal controls, together with some key elements of the controls framework, includes the items listed below:

Identification and evaluation of key risks

Management responsibility has been clearly defined for identification, evaluation and control of significant risks through the Risk Management Strategy. This puts in place a formal and on-going process of management review for all areas of the Group’s activities. The Leadership Team regularly reviews and receives reports on significant risks facing the organisation and the Chief Executive is responsible for reporting to the Group Finance Risk and Audit Committee and the Board any significant changes affecting key risks. The key risks are described on page 19.

Control environment and control procedures

The Board retains responsibility for a defined range of matters covering strategic, operational, and financial and compliance issues, including treasury strategy and large new investment projects. The Board has adopted and disseminated a code of conduct for employees. This sets out the Group’s policies regarding the quality, integrity and ethics of its employees. It is supported by a framework of policies and procedures with which employees must comply. These cover issues such as delegated authority, segregation of duties, accounting, treasury management, health and safety, data and asset protection, and fraud prevention and detection.

mhs homes limited

Company Number 10704997

Page 34

ASSESSMENT OF THE EFFECTIVENESS OF INTERNAL CONTROLS

Information and financial reporting systems

The Board approves a long-term financial plan and limits on investment in its various activities on an annual basis that link through to the strategic plan. This is agreed in three-year cycles but is updated and reviewed regularly. Financial reporting procedures include detailed budgets for the year ahead, management accounts produced monthly and forecasts for the remainder of the financial year. These are reviewed in various levels of detail by appropriate colleagues and in summary on a quarterly basis by the Board. The Board also regularly reviews progress towards the achievement of key business objectives, targets and outcomes.

Fraud

The Board has a policy on fraud covering prevention, detection and reporting of fraud and the recovery of assets. A register is maintained of any frauds or potential frauds. The Finance, Risk and Audit Committee reviews the fraud register at each meeting and has taken the results of these reviews into account in its report to the Board.

Anti-bribery Policy Statement

We seek to maintain the highest standards of ethics and integrity in the way we conduct our business. We recognise that bribery and corruption, in all forms, are illegal and unacceptable. Our Anti-bribery Policy Statement has been integrated into our code of conduct and our gifts and hospitality policy, adopted by the Board, and made available on our intranet.

Audit assurance

A summary of all internal reports and the resultant actions are reported to the Finance, Risk and Audit Committee during the year. The Business Assurance Manager has direct access to the Finance, Risk and Audit Committee. An audit plan was agreed by the Committee for 2025/26. All recommendations are followed up by Internal Audit to ensure complete implementation. The internal audit service is co-sourced with the audit contractor, RSM-UK, with a new contractor, Beevers & Struthers from 1[st] April 2025. The Committee met six times during the financial year and considered internal control and risk at each of its meetings.

BDO LLP provides external auditing services. This service was tendered in 2019. The Board receives a letter from the external auditors identifying any internal financial control weaknesses that may have come to their attention in the course of their duties. This letter is considered by the Finance, Risk and Audit Committee and the Board. The Committee met with the internal and external auditors during the year without the presence of any paid employee or executive directors. The Committee conducts an annual review of the effectiveness of the system of internal control and takes account of any changes that may be needed to maintain the effectiveness of the risk management and control process. The Committee makes an annual report to the Board, which the Board has received.

Other external sources of advice and evaluation

The Board has at its disposal a wide range of independent external sources of advice to validate control mechanisms, verify performance and report on findings. Quality assurance is assessed through the regular renewal of ISO and Customer Service Excellence standards. The Group’s commitment to drive improvement by listening to customers is supported by the use of various methods to measure customer insight and satisfaction which are subject to annual audit. Ad-hoc advice on legal issues is provided by Trowers & Hamlins, who are leading lawyers in the sector. Other expert professionals are engaged from time to time; for example, Savills and Jones Lang LaSalle Limited advise on matters of stock valuation and Centrus Financial Advisors Limited act as advisors on treasury management.

mhs homes limited

Company Number 10704997

Page 35

ASSESSMENT OF THE EFFECTIVENESS OF INTERNAL CONTROLS

Performance indicators

Reports are presented to the Board covering key performance indicators across the activities of the Group. These are subject to a continuous review to reflect current targets and business priorities. Reports cover progress against the annual business plan, budget performance information, treasury management, equal opportunities, employee sickness and absence, colleagues’ turnover, housing statistics, health and safety and customer complaints.

The Board of mhs homes confirms there were no material failures in its control environment, and an effective control framework has been in place for the 2024/25 year and up until the adoption of these accounts.

Financial Controls

On behalf of the Board, the Finance, Risk and Audit Committee has reviewed the effectiveness of the system of internal control, which operated across the Group for the year ended 31 March 2025. Recognising the importance of this Committee, the membership includes two independent committee members. The Chair is also a non-executive director on the Group Board. The system of internal financial control includes:

Approved by the Board of Trustees on 19 July 2025.

Nigel Hopkins Chair

mhs homes limited

Company Number 10704997

Page 36

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF mhs homes limited

Opinion on the financial statements

In our opinion, the financial statements:

We have audited the financial statements of mhs homes limited (“the Parent Charitable Company”) and its subsidiaries (“the Group”) for the year ended 31 March 2024 which comprise the Consolidated Statement of Financial Activity, the Consolidated and mhs homes Limited Statements of Comprehensive Income, the Consolidated and mhs homes Limited Statements of Financial Position, the Consolidated Statement of Cashflows and 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).

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 Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remain independent of the Group and the Parent Charitable Company 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.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Board of Trustees’ 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 of the Parent Charitable 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 Board of Trustees with respect to going concern are described in the relevant sections of this report.

Other information

The Trustees are responsible for the other information. The other information comprises the information included in the Annual Report and Financial Statements , other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information including the Strategic Report, Statement of Corporate Governance and Internal Controls and, in doing so, consider whether the other information is materially

mhs homes limited

Company Number 10704997

Page 37

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF mhs homes limited

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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

Other Companies Act 2006 reporting

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

In the light of the knowledge and understanding of the Group and the Parent Charitable Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report and Report of the Trustees.

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

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

Responsibilities of the Trustees

As explained more fully in the Trustees’ responsibilities statement, set out on page 30, the Board of Trustees is 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 Trustees determine is 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 Trustees are responsible for assessing the Group and the Parent Charitable 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 Trustees either intend to liquidate the Group or the Parent Charitable Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s 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 an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee

mhs homes limited

Company Number 10704997

Page 38

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF mhs homes limited

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.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Non-compliance with laws and regulations

Based on:

we considered the significant laws and regulations to be the applicable accounting framework, Companies Act 2006, Charities Act 2011 and UK tax legislation.

The Group and Parent Charitable Company are also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be Data Protection and health and safety legislation.

Our procedures in respect of the above included:

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:

mhs homes limited

Company Number 10704997

Page 39

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF mhs homes limited

Based on our risk assessment, we considered the areas most susceptible to fraud to be journal entries, judgements and estimates and the revenue recognition relating to property sales.

Our procedures in respect of the above included:

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.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

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 auditor’s report.

Use of our report

This report is made solely to the Charitable 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 Charitable 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 Charitable Company and the Charitable Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Paul Jagger (Senior Statutory Auditor) For and on behalf of BDO LLP, statutory auditor Guildford

Date: 08 August 2025

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

mhs homes limited

Company Number 10704997

Page 40

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Consolidated Statement of Financial Activity

Consolidated
mhs homes group
Revaluation
reserve
2025
£’000
Income from charitable activities
Social housing lettings
4
-
Supporting People
4
-
Other income
4
-
Sale of fixed assets
12
-
First tranche s/o sales
4
-
Income from non-social housing activities
Other
4
-
Income from investment activities
Market rented Properties
4
-
Investment income
13
-		 Unrestricted
funds
2025
£’000
70,442
76
819
6,128
1,063
4,662
217		 Restricted
funds
2025
£’000
-
294
-
-
-
-
-
-		 Total
funds
Total
funds
2025
2024
£’000
£’000
70,442
61,411
294
286
76
367
819
402
6,128
3,445
1,063
1,016
4,662
4,204
217
208
Total income
-		 83,407 294 83,701
71,339
Expenditure on charitable activities
Social housing lettings
4
-
Supporting people
4
-
Other expenditure
6
-
First tranche s/o sales
4
-
Other
4
-
Market rented properties
4
-
Interest costs
14
-		 50,237
109
247
4,897
812
1,968
14,481		 -
294
-
-
-
-
-		 50,237
41,768
403
668
247
615
4,897
2,679
812
619
1,968
1,468
14,481
12,968
Total expenditure
-		 72,751 294 73,045
60,785
Net income
-		 10,656 - 10,656
10,554
Gain / (loss) in fair value of:-
Investments
19
-
Investment properties
18
-
Actuarial (loss)/gain
Defined benefit pension
26
-		 (1)
5,809
(546)		 -
-
-		 (1)
8
5,809
(4,262)
(546)
(479)
Net movement in funds 15,918 - 15,918
5,821
Total funds brought forward
210,601		 184,191 - 364,792
388,971
Movement in reserves
(92)		 92 - -
-
Total funds carried forward
210,509		 200,201 - 410,710
364,792

All activities relate to continuing operations. The notes on pages 45 to 77 form part of these financial statements.

mhs homes limited

Company Number 10704997

Page 41

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Statements of Comprehensive Income

Consolidated mhs homes group Total Total
Note 2025 2024
£'000 £'000
Turnover 4 82,665 70,729
Cost of sales 4 (4,897) (2,679)
Operating costs 4 (53,667) (45,138)
Surplus on disposal of fixed assets 12 819 402
Operating surplus 24,920 23,314
Other interest receivable and similar income 13 217 208
Interest payable and financing costs 14 (14,481) (12,968)
Movement in fair value of investments 19 (1) 8
Movement in fair value of investmentproperties 18 5,809 (4,262)
Surplus before taxation 16,464 6,300
Taxation on surplus 15 - -
Surplus for the year 16,464 6,300
Actuarial loss on defined benefit pension scheme 26 (546) (479)
Total comprehensive income for the financial year 15,918 5,821
mhs homes limited Total Total
Note 2025 2024
£'000 £'000
Turnover 4 72,490 62,456
Cost of sales 4 (4,897) (2,679)
Operating costs 4 (47,717) (38,982)
Surplus on disposal of fixed assets 12 598 239
Operating surplus 20,474 21,034
Other interest receivable and similar income 13 541 599
Interest payable and financing costs 14 (12,579) (11,848)
Movement in fair value of investmentproperties 18 6,265 (4,251)
Surplus before taxation 14,701 5,534
Taxation on surplus 15 - -
Surplus for the year 14,701 5,534
Actuarial loss on defined benefit pension scheme 26 (546) (479)
Total comprehensive income for the financial year 14,155 5,055
All activities relate to continuing operations.

The notes on pages 45 to 77 form part of these financial statements.

mhs homes limited

Company Number 10704997

Page 42

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Statements of Financial Position

Group Group mhs mhs
homes homes
Note 2025 2024 2025 2024
£'000 £'000 £'000 £'000
Fixed assets
Tangible fixed asset - housing properties
16		 628,770 599,568 460,706 448,765
Tangible fixed assets - other 17 7,218 7,259 2,005 1,899
Investment properties 18 86,582 80,790 80,840 74,592
Investments 19 281 282 - -
722,851 687,899 543,551 525,256
Current assets
Stock and work in progress 20 972 3,496 972 3,496
Debtors – receivable within one year 21 4,255 3,130 3,551 2,597
Debtors – receivable after one year 21 - - 28,770 14,943
Short term deposits 3,242 2,884 2,186 1,949
Cash and cash equivalents 7,495 4,719 6,897 2,568
15,964 14,229 42,376 25,553
Creditors: amounts falling due
within one year		 22 (17,617) (17,518) (17,368) (16,028)
Net current (liabilities) / assets (1,653) (3,289) 25,008 9,525
Total assets less current liabilities 721,198 684,610 568,559 534,781
Creditors: Amounts falling due after
more than one year:		 23 (310,488) (289,284) (260,083) (239,926)
Net assets excluding pension 410,710 395,326 308,476 294,855
Defined benefit pension liability 26 - - - -
Provision for liabilityand charges 27 - (534) - (534)
Net assets 410,710 394,792 308,476 294,321
Capital and reserves
Income and expenditure reserve 200,201 184,191 98,005 83,758
Revaluation reserve 210,509 210,601 210,471 210,563
410,710 394,792 308,476 294,321

These financial statements were approved and authorised for issue by the Board on 24 July 2025 and were signed on its behalf by:

Marie Claire Delbrouque Chief Executive

L Humphrey N Hopkins Company Secretary Chair

The notes on pages 45 to 77 form part of these financial statements.

mhs homes limited

Company Number 10704997

Page 43

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Consolidated Statement of Cashflows

Note 2025 2024
Cash flows from operating activities £'000 £'000
Surplus for the financialyear 16,464 6,300
Adjustments for:
Depreciation of fixed assets - housing properties 16 6,966 6,548
Loss on disposal of replaced components 734 460
Depreciation of fixed assets – other 17 451 353
Grant received in year (1,079) (601)
Impairment of assets 16 - 742
Interest payable and finance costs 14,481 12,968
Increase in provisions (534) 7
Cost element of housing property sales in operating surplus 12 1,220 1,145
(Increase)\Decrease in fair value of investment properties 18 (5,809) 4,262
Decrease(Increase) in fair value of investments 19 1 (8)
(Increase) in trade and other debtors (1,125) (129)
Difference between net pension expense and cash (546) (479)
Decrease in stocks 4,016 2,813
Increase in trade and other creditors 3,553 2,982
(Increase) in interest received (217) (208)
Cash from operations 38,576 37,155
Net cashgenerated from operating activities 38,576 37,155
Cash flows from investing activities
Purchase of fixed assets – housing properties 16 (31,148) (53,992)
Purchase of fixed assets – investment properties 18 17 -
Purchases of fixed assets – other 17 (410) (340)
Major repairs capitalised as components 16 (7,896) (8,533)
Receipt of grant 1,079 601
Interest received 13 217 208
Net cash used in investing activities (38,141) (62,056)
Cash flows from financing activities
Interest paid (15,051) (13,350)
New loans 23 22,750 30,000
Repayment of loans 23 (5,000) -
Net cash received fromfinancing activities 2,699 16,650
Net increase(decrease) in cash and cash equivalents 3,134 (8,251)
Cash and cash equivalents at beginning of year 7,603 15,854
Cash and cash equivalents at end ofyear 10,737 7,603

The notes on page 45 to 77 form part of these financial statements

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Company Number 10704997

Page 44

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

1 Legal status

mhs homes is a Charitable Company limited by guarantee incorporated in England and a registered charity. The registered office is Broadside, Leviathan Way, Chatham, Kent ME4 4LL. In the event of the charity being wound up the liability in respect of the guarantee is limited to £1 per member. There were nine members at 31 March 2025.

2 Accounting Policy

The financial statements have been in prepared in accordance with UK accounting standards, including Financial Reporting Standard 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) and the Charities: Statement of recommended practice (FRS102).

Due to the majority activities of the group being social housing, the Parent and Group have chosen to include information required under the Statement of Recommended Practice (SORP) for Registered Social Housing Providers 2018, “Accounting by registered social housing providers 2018” and the Accounting Direction for Private Registered Providers of Social Housing 2022 where it is judged that this information will aid the user of the accounts. The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies. mhs homes is a public benefit entity as defined by FRS 102.

The financial statements are prepared in sterling which is the functional currency of the Group and rounded to the nearest thousand.

Parent Charity Company disclosure exemptions

In preparing the separate financial statements of the Parent Charitable Company, advantage has been taken of the following disclosure exemptions available in FRS 102:

• Only one reconciliation of the number of shares outstanding at the beginning and end of the period has been presented as the

reconciliations for the group and the Parent Charitable Company would be identical.

• No cash flow statement has been presented for the Parent Charitable Company.

• No statement of financial activity has been presented for the Parent Charitable Company.

• No disclosure has been given for the aggregate remuneration of the key management personnel of the parent association as their remuneration is included in the totals for the Group as a whole.

The following principal accounting policies have been applied :

Basis of consolidation

The consolidated financial statements present the results of mhs homes limited and its subsidiaries (mhs commercial services limited, mhs community charity limited, Chatham Maritime K1 Construction Limited, Chatham Maritime K1 Development Limited, Lord Kitchener Memorial Homes Trust and Heart of Medway Housing Association Limited) as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full, mhs homes is required by statute to prepare Group accounts.

Income

Income is measured at the fair value of the consideration received or receivable. The group generates the following material income streams.

Rental income is recognised from the point when properties under development reach practical completion and are formally let. Income from first tranche sales and other property is recognised at the point of legal

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Company Number 10704997

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FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

completion of the sale. Income from revenue and capital grants is recognised when the conditions of the grant are met.

Supported housing schemes

The Group receives Supporting People grants from Medway Council. The grants receivable in the period, as well as costs in the provision of support services, have been included in the statement of Comprehensive Income.

Social Housing Grant

Where developments have been financed wholly or partly by social housing grant the amount of grant received has been included as income and recognised in turnover when it becomes receivable. Where social housing grant funded property is sold, the grant becomes recyclable and is transferred to a recycled capital grant fund until reinvested in a replacement property.

Service charges

The Group operates both the variable and fixed method for calculating and charging service charges to its tenants and leaseholders. Where variable service charges are used expenditure is recorded when a service is provided and charged to the relevant service charge account or to a sinking fund. Income is recorded based on the estimated amounts chargeable with any adjustments made in subsequent years.

profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company’s subsidiaries operate and generate taxable income. Deferred balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except:

Value Added Tax

Management of units owned by others

Management fees receivable and reimbursed expenses are shown as income and included in other income. Costs of carrying out the management contracts and rechargeable expenses are included in operating costs.

Taxation

The charge for taxation is based on surpluses arising from non – charitable group companies for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes, to the extent that an asset or liability is expected to be payable or recoverable in the foreseeable future.

The Group charges Value Added Tax (VAT) on some of its income and is able to recover part of the VAT it incurs on expenditure. The financial statements include VAT to the extent that it is suffered by the Group and not recoverable from HM Revenue and Customs. Recoverable VAT arises from partially exempt activities and is credited to the Statement of Comprehensive Income.

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest rate. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

The tax expense for the period comprises current and deferred tax. Tax is recognised in

mhs homes limited

Company Number 10704997

Page 46

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

Pension costs

The Group participates in two schemes.

The current service cost and costs from settlements and curtailments are charged to income and expenditure. Past service costs are recognised in the current reporting period. Interest is calculated on the net defined benefit liability.

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which has accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.

Social housing properties

Social housing properties constructed or acquired (including land) on the open market since the date of transition to FRS 102 are stated at cost less depreciation and impairment (where applicable). The cost of social housing land and property represents their purchase price and any directly attributable costs of acquisition which may include an appropriate

amount for colleagues’ costs and other costs of managing development. Directly attributable costs of acquisition include capitalised interest calculated on a proportional basis. Where housing properties are under construction, finance costs are only capitalised where construction is on-going and has not been interrupted or terminated. Social housing properties in the course of construction, excluding the estimated cost of the element of shared ownership properties expected to be sold in first tranche, are included in properties under construction and held at cost less any impairment, and are transferred to completed properties when ready for letting.

Deemed cost on transition to FRS 102 for

social housing properties

On transition to FRS 102 the Group took the option of carrying out a one-off valuation exercise of selected items of social housing properties and using that amount as deemed cost. To determine the deemed cost at 1 April 2014, the Group engaged independent valuation specialist Savills to value social housing properties on a EUV-SH basis. Social housing properties are subsequently measured at cost less depreciation. Any difference between historic cost depreciation and depreciation calculated on deemed cost is transferred between the revaluation reserve and income and expenditure reserve.

Shared ownership properties and staircasing

Under shared ownership arrangements, the Group disposes of a long lease to the occupier; the lease premium paid is for between 25% and 75% of the value. The occupier has the right to purchase further proportions up to 100% based on the market valuation of the property at the time each purchase transaction is completed. A shared ownership property comprises two assets: that to be disposed of in the first tranche sale, which is recorded as a current asset and stated at the lower of cost and net realisable value; and that retained by the Group , which is recorded as a fixed asset in the same manner as for general needs housing properties. Proceeds of sale for first tranches are accounted for as turnover in the income and expenditure account, with the apportioned cost being shown as cost of sales

mhs homes limited

Company Number 10704997

Page 47

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

within operating results. Subsequent tranches sold (“staircasing”) are reflected in the statement of comprehensive income as a surplus or deficit on sale of housing properties.

Allocation of costs for mixed tenure and shared ownership developments

Costs are allocated to the appropriate tenure where it is possible to specify which tenure the expense relates to. Where it is not possible to relate costs to a specific tenure, costs are allocated on a floor area or unit basis depending on the appropriateness for each scheme.

Depreciation of social housing property

Social Housing land and property is split between land, structure and other major components that are expected to require replacement over time. Land is not depreciated on account of its indefinite useful economic life. The costs of replacement or restoration of these components are capitalised and depreciated over the same average useful economic life. Assets under construction are not depreciated until they are completed and ready for use to ensure that they are depreciated only in periods in which economic benefits are expected to be consumed. The structure and other major components are depreciated over the determined average useful economic life in years as follows:

Description

Description
Structure – houses 100
Structure – flats 65
Roofs 50
Electrics, External windows & doors 30
Bathroom and new central heating 30
Kitchen & adaptations 20
Boilers 15

Tangible fixed assets – other

Other tangible fixed assets, other than investment properties, are stated at historical cost less accumulated depreciation and any accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

The Group adds to the carrying amount of an item of fixed assets the cost of replacing part of

such an item when that cost is incurred if the replacement part is expected to provide incremental future benefits to the group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Depreciation of other tangible fixed assets

Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method. The estimated useful lives range in years as follows:

Description

Description
Freehold premises 50
Fixtures and fittings 1-5
Other offices 50

Recycled Capital Grant Fund

On the occurrence of certain relevant events, primarily the sale of dwellings, Homes England can direct the Group to recycle capital grants or to make repayments of the recoverable amount. The Group adopts a policy of recycling, for which a separate fund is maintained. If unused within a three-year period, it will be repayable to Homes England with interest. Any unused recycled capital grant held within the recycled capital grant fund, which it is anticipated will not be used within one year is disclosed in the balance sheet under "creditors due after more than one year". The remainder is disclosed under "creditors due within one year".

Investment properties

Investment properties consist of market rented properties and part of the head office rented to other organisations not held for social benefit measured at fair value

Market Rent properties were valued in March 2025 by Jones Lang LaSalle Limited in accordance with the current UK national supplement (the RICS Red Book) published by the Royal Institution of Chartered Surveyors on the basis of Market Value.

The Head Office was valued in March 2025 by Jones Lang LaSalle Limited in accordance with

mhs homes limited

Company Number 10704997

Page 48

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

the current RICS Valuation – Global Standards, incorporating the IVS, and the RICS Valuation – Global Standards – UK National Supplement published by the Royal Institution of Chartered Surveyors. Changes in fair value are recognised in the statement of comprehensive income. Investment properties under construction are carried at cost.

Stock

Stock represents work in progress and completed properties. For shared ownership properties the value held as stock is the estimated cost to be sold as a first tranche. Materials are stated at the lower of cost and net realisable value. Cost comprises of materials and direct development overheads. Net realisable value is based on estimated sales proceeds after allowing for all further costs to completion and selling costs.

Recoverable amount of rental and other

Loans and short-term deposits

All loans and short-term deposits held by the Group are classified as basic financial instruments in accordance with FRS 102. These instruments are initially recorded at the transaction price less any transaction costs (historic cost), FRS 102 requires that basic financial instruments are subsequently measured at amortised cost, however the Group determined that the difference between the historic cost and amortised cost is not material and so these financial instruments are stated on the balance sheet at historic cost.

Concessionary loans

Concessionary loans are those loans made by mhs homes that are made:

trade receivables

The Group estimates the recoverable value of rental and other receivables and impairs the debtor by appropriate amounts. When assessing the amount to impair it reviews the age profile of the debt, historical collection rates and the class of debt.

Cash and cash equivalents

Cash and cash equivalents in the Statement of Financial Position consists of cash at bank, in hand, deposits and short-term investments with an original maturity of three months or less.

These loans are measured at the amount advanced at the inception of the loan less amounts received and any provisions for impairment.

Provisions

The Group recognises provisions for liabilities of uncertain timing or amounts. Provision is made for specific and quantifiable liabilities, measured at the best estimate of expenditure required to settle a legal or constructive obligation at the balance sheet date.

Reserves

Leasehold sinking funds

Unexpended amounts collected from leaseholders for major repairs on leasehold schemes and any interest received are included in creditors. A review during the year has led to this being classified under creditors greater than one year.

Income received, and expenditure incurred, for restricted purposes is separately accounted for within restricted funds. Realised and unrealised gains and losses on assets held by these funds are also allocated to the fund. The revaluation reserve is created from surpluses on asset revaluation. Unrestricted reserves are subject to specific conditions imposed by the donors and are within the objectives of the Charity. The funds are transferred to the unrestricted when the specific requirements of the income are satisfied.

mhs homes limited

Company Number 10704997

Page 49

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

3 Judgements in applying accounting policies and key sources of estimation uncertainty

In preparing these financial statements, the key judgements have been made in respect of the following:

Other key sources of estimation uncertainty.

Tangible fixed assets (see note 16 and 17)

Tangible fixed assets, other than investment properties, are depreciated over their useful lives taking into account residual values. These are assessed annually and consider issues such as future market conditions, the remaining life of the asset and projected disposal values. For housing property assets, the asset cost is broken down into components based on management’s assessment of the properties. Individual useful economic lives are assigned to these components.

To arrive at an opinion of value, comparable evidence at the micro-market level of similar properties offered for sale and completed transactions for similar properties to the subjects over the last 12 months has been collected

Rental and other trade receivables (debtors) (see note 21)

The estimate for receivables relates to the recoverability of the balances outstanding at year end. A review is performed on an individual debtor basis to consider whether each debt is recoverable.

Valuation of pension scheme (see note 26)

The estimates have been informed by an actuary and are presented in note 26. The note sets out the assumptions used by the actuary in determining the assets and liabilities of the pension scheme. The critical underlying assumptions in relation to the estimate of the pension defined benefit scheme obligation such as standard rates of inflation, mortality, discount rate and anticipated future salary increases. Variations in these assumptions have the ability to significantly influence the value of the liability recorded and annual defined benefit expense.

Investment Properties (see note 18)

The Group’s market rented investment properties are measured at cost on initial recognition and subsequently carried at a value determined by external valuers in March 2025. The valuation has been prepared in accordance with the current UK national supplement (the RICS Red Book) published by the Royal Institution of Chartered.

mhs homes limited

Company Number 10704997

Page 50

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

4 Particulars of turnover, cost of sales, operating costs and operating surplus

mhs homes group Turnover Cost of Operating Other Operating
sales costs operating surplus/
items
(deficit)
2025 2025 2025 2025 2025
£'000 £'000 £'000 £'000 £'000
Social housing lettings (Note 5) 70,442 - (50,237) - 20,205
Other social housing activities
First tranche shared ownership sales 6,128 (4,897) - - 1,231
Development - - (118) - (118)
Supporting people 294 - (403) - (109)
Managedproperties 76 - (129) - (53)
Charitable activities 76,940 (4,897) (50,887) - 21,156
Non-social housing activities
Market rented properties 4,662 - (1,968) - 2,694
Other income 25 - - - 25
Otherproperties & commercial 1,038 - (812) - 226
Non charitable activities 5,725 - (2,780) - 2,945
Surplus on disposal of fixed assets - - - 819 819
82,665 (4,897) (53,667) 819 24,920
mhs homes group Turnover Cost of Operating Other Operating
sales costs operating surplus/
items (deficit)
2024 2024 2024 2024 2024
£'000 £'000 £'000 £'000 £'000
Social housing lettings (Note 5) 61,411 - (41,768) - 19,643
Other social housing activities
First tranche shared ownership sales 3,445 (2,679) - - 766
Development - - (150) - (150)
Supporting people 286 - (668) - (382)
Managedproperties 73 - (128) - (55)
Charitable activities 65,509 (2,679) (43,051) - 19,779
Non-social housing activities
Market rented properties 4,204 - (1,468) - 2,736
Other income 30 - - - 30
Otherproperties & commercial 986 - (619) - 367
Non charitable activities 5,220 - (2,087) - 3,133
Surplus on disposal of fixed assets - - - 402 402
70,729 (2,679) (45,138) 402 23,314

mhs homes limited

Company Number 10704997

Page 51

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

4
Particulars of turnover, cost of		 sales, operating costs and operating sales, operating costs and operating sales, operating costs and operating surplus (continued) surplus (continued)
mhs homes limited Turnover Cost of Operating Other Operating
sales costs operating surplus/
items (deficit)
2025 2025 2025 2025 2025
£'000 £'000 £'000 £'000 £'000
Social housing lettings (Note 5) 60,843 - (44,660) - 16,183
Other social housing activities
First tranche shared ownership sales 6,128 (4,897) - - 1,231
Development - - (118) - (118)
Supporting people 102 - (119) - (17)
Managedproperties 76 - (129) - (53)
Charitable activities 67,149 (4,897) (45,026) - 17,226
Non-social housing activities
Market rented properties 4,434 - (1,879) - 2,555
Other income 25 - - - 25
Otherproperties & commercial 882 - (812) - 70
Non charitable activities 5,341 - (2,691) - 2,650
Surplus on disposal of fixed assets - - - 598 598
72,490 (4,897) (47,717) 598 20,474
mhs homes limited Turnover Cost of Operating Other Operating
Sales costs operating surplus/
items (deficit)
2024 2024 2024 2024 2024
£'000 £'000 £'000 £'000 £'000
Social housing lettings (Note 5) 54,099 - (36,351) - 17,748
Other social housing activities
First tranche shared ownership sales 3,445 (2,679) - - 766
Development - - (150) - (150)
Supporting people 94 - (326) - (232)
Managedproperties 73 - (128) - (55)
Charitable activities 57,711 (2,679) (36,955) - 18,077
Non-social housing activities
Market rented properties 3,932 - (1,408) - 2,524
Other income 30 - - - 30
Otherproperties and commercial 783 - (619) - 164
Non charitable activities 4,745 - (2,027) - 2,718
Surplus on disposal of fixed assets - - - 239 239
62,456 (2,679) (38,982) 239 21,034

mhs homes limited

Company Number 10704997

Page 52

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

5
Income and expenditure from social housing lettings
mhs homes group
General
needs
Affordable
Rents
Supported
housing
Foyers
Intermediate
Rent
Shared
ownership
£'000
£'000
£'000
£'000
£'000
£'000		 Total
2025
Total
2024
£’000
£’000
Income
Rents net of identifiable service charges
51,531
6,983
3,253
131
223
3,139
Service charge income
776
622
388
257
3
586
Government grant receivable
1,350
590
-
-
-
-
Other income
438
65
5
-
-
102		 65,260
58,893
2,632
1,629
1,940
799
610
90
Turnover from social housing
lettings
54,095
8,260
3,646
388
226
3,827
Expenditure
Management
(7,463)
(781)
(1,293)
(30)
(17)
(336)
Service charge costs
(3,128)
(388)
(714)
(275)
(3)
(328)
Routine maintenance
(9,419)
(886)
(507)
(103)
(21)
(86)
Planned maintenance
(7,580)
(703)
(739)
(129)
(4)
(40)
Major repairs
(5,328)
(170)
(1,310)
(73)
(9)
(260)
Bad debts
(269)
(56)
(14)
-
-
(75)
Depreciation of housing properties:
- annual charge
(4,811)
(1,013)
(380)
(92)
(38)
(632)
- impairment
-
-
-
-
-
-
- accelerated on disposal of components
(604)
(130)
-
-
-
-		 70,442
61,411
(9,920)
(8,061)
(4,836)
(4,309)
(11,022)
(8,728)
(9,195)
(7,240)
(7,150)
(5,165)
(414)
(515)
(6,966)
(6,548)
-
(742)
(734)
(460)
Operating expenditure on social
housing lettings
(38,602)
(4,127)
(4,957)
(702)
(92)
(1,757)		 (50,237)
(41,768)
Operating surplus on social housing
lettings
15,493
4,133
(1,311)
(314)
134
2,070		 20,205
19,643
Void losses
(689)
(27)
(68)
(118)
-
(32)		 (934)
(581)

mhs homes limited

Company Number 10704997

Page 53

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

5 Income and expenditure from social housing lettings (continued)

5
Income and expenditure from social housing lettings (continued)
mhs homes limited
General
needs
Affordable
Rents
Supported
housing
Foyers
Shared
ownership
£'000
£'000
£'000
£'000
£'000		 Total
2025
Total
2024
£’000
£’000
Income
Rents net of identifiable service charges
49,723
3,011
2,863
17
1,929
Service charge income
622
238
331
27
289
Government grant receivable
1,350
-
-
-
-
Other income
438
1
4
-
-		 57,543
52,951
1,507
1,071
1,350
-
443
77
Turnover from social housing lettings
52,133
3,250
3,198
44
2,218
Expenditure
Management
(7,598)
(343)
(1,229)
(15)
(240)
Service charge costs
(3,015)
(129)
(657)
(45)
(203)
Routine maintenance
(9,188)
(426)
(495)
(4)
(41)
Planned maintenance
(7,519)
(344)
(685)
-
(22)
Major repairs
(5,110)
(24)
(1,273)
-
(32)
Bad debts
(265)
(22)
(14)
-
(28)
Depreciation of housing properties:
- annual charge
(4,214)
(180)
(232)
(92)
(417)
- impairment
-
-
-
-
-
- accelerated on disposal of components
(535)
(24)
-
-
-		 60,843
54,099
(9,425)
(7,856)
(4,049)
(3,646)
(10,154)
(8,296)
(8,570)
(7,040)
(6,439)
(4,047)
(329)
(423)
(5,135)
(4,675)
-
-
(559)
(368)
Operating
expenditure
on
social
housing lettings
(37,444)
(1,492)
(4,585)
(156)
(983)		 (44,660)
(36,351)
Operating surplus on social housing
lettings
14,689
1,758
(1,387)
(112)
1,235		 16,183
17,748
Void losses
(674)
(8)
(68)
(97)
(31)		 (878)
(550)

mhs homes limited

Company Number 10704997

Page 54

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

6 Expenditure on charitable activities

mhs homes group Depreciation and Direct activities Direct activities Support and Support and Total
amortisation governance costs
2025 2024 2025 2024 2025 2024 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000 £’000 £’000
General needs and Foyers (6,797) (6,076) (27,933) (22,704) (8,700) (7,767) (43,430) (36,547)
Intermediate Rent (38) - (38) - (17) - (93) -
Supported housing (380) (1,103) (4,017) (2,370) (560) (539) (4,957) (4,012)
Shared ownership (632) (571) (689) (255) (436) (383) (1,757) (1,209)
Social housing lettings (7,847) (7,750) (32,677) (25,329) (9,713) (8,689) (50,237) (41,768)
Supporting People - - (403) (668) - - (403) (668)
Other expenditure - - (247) (615) - - (247) (615)
Total charitable expenditure
included in operating costs		 (7,847) (7,750) (33,327) (26,612) (9,713) (8,689) (50,887) (43,051)
First Tranche shared ownership sales - - (4,897) (2,679) - - (4,897) (2,679)
Total (7,847) (7,750) (38,224) (29,291) (9,713) (8,689) (55,784) (45,730)

mhs homes limited

Company Number 10704997

Page 55

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

6 Expenditure on charitable activities (continued)

mhs homes limited Depreciation and Direct activities Direct activities Support and Support and Total
amortisation governance costs
2025 2024 2025 2024 2025 2024 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000 £’000 £’000
General needs (4,953) (4,457) (25,359) (20,538) (8,623) (7,693) (38,935) (32,688)
Foyers (92) - (19) - (46) - (157) -
Supported housing (232) (214) (3,793) (2,197) (560) (539) (4,585) (2,950)
Shared ownership (417) (373) (221) (48) (345) (292) (983) (713)
Social housing lettings (5,694) (5,044) (29,392) (22,783) (9,574) (8,524) (44,660) (36,351)
Supporting people - - (119) (326) - - (119) (326)
Other expenditure - (247) (278) - - (247) (278)
Total charitable expenditure
included in operating costs		 (5,694) (5,044) (29,758) (23,387) (9,574) (8,524) (45,026) (36,955)
First tranche shared ownership sales - - (4,897) (2,679) - - (4,897) (2,679)
Total (5,694) (5,044) (34,655) (26,066) (9,574) (8,524) (49,923) (39,634)

mhs homes limited

Company Number 10704997

Page 56

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

7 Units of housing stock

As at 1
April
2024
Purchased
from
registered
provider		 Additions Disposals Transfers
As at 31
March
2025
Social Housing
mhs homes
General needs housing
6,728
-
Sheltered schemes
471
-
Shared ownership
340
-
Social leaseholders
479
-
Foyers
-
-
Heart of Medway
General needs housing
743
-
Sheltered schemes
54
-
Shared ownership
271
-
Intermediate rent
24
-
Foyers
36
-
Social leaseholders
78
10
Lord Kitchener
General needs housing
6
-
Total social housing
9,230
10
Non – social housing
mhs homes
Managed freeholders
180
-
Market rent
362
-
Commercial lettings
45
-
Heart of Medway
Market rent
17
-
Managed freeholders
18
-		 77
-
27
-
30
-
-
-
-
-
-
-
134
-
-
-
-
-		 (3)
(29)
-
-
-
-
-
(2)
-
-
(2)
-
(36)
-
-
-
-
-
-
6,802

-
442

(4)
363

3
482

-
30

6
749

-
54

(2)
267

-
24

-
36

3
89

-
6

6
9,344

1
181

-
362

-
45

-
17

(1)
17
Total non- social
housing
622
-		 - -
-
622
Total owned
9,852
10		 134 (36) 6
9,966
Accommodation managed
for others
84
-
byothers
25
-		 -
-		 -
-		 -
84
(6)
19
Total owned or
managed
9,961
10		 134 (36) -
10,069
Garages
1,310
-		 - - -
1,310

*** Properties leased to Heart of Medway between 1 and 15 years**

mhs homes limited

Company Number 10704997

Page 57

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

7 Units of housing stock (continued)
Group Group mhs mhs
homes homes
2025 2024 2025 2024
Units under construction:
Houses 45 18 45 18
Sheltered 90 74 - 30
Flats 20 114 20 92
Units under development:
Houses - - - -
Sheltered - 46 - -
Flats - - - -
155 252 65 140
8 Operating Surplus
Group Group
mhs		 mhs
homes homes
2025 2024
2025		 2024
£’000 £’000
£’000		 £’000
This is arrived at after charging:
Depreciation of housing properties:
annual charge 7,113 6,548
5,136		 4,675
Depreciation of other fixed assets:
annual charge 451 353
303		 206
Accelerated depreciation on replaced components 735 460
559		 368
Operating leases 1,099 1,000
1,099		 1,000
Auditors’ remuneration (excluding VAT):
- fees payable to the group’s auditor for the audit of
the group’s annual accounts		 61 58
61		 58
- fees for audit of accounts of subsidiary entities 50 47
-		 -
- fees for other audit services 8 6
8		 6

mhs homes limited

Company Number 10704997

Page 58

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

9 Employees

Group Group mhs mhs
homes homes
2025 2024 2025 2024
Number of employees 291 268 291 268
£’000 £’000 £’000 £’000
Wages and salaries 15,002 12,685 15,002 12,685
Social security costs 1,400 1,172 1,400 1,172
Cost of defined contribution scheme 525 448 525 448
Cost of defined benefit scheme(see note 26) 275 258 275 258
17,202 14,563 17,202 14,563

The average number of employees (including Executive Management Team) expressed as full-time equivalents (calculated based on a standard working week of 37 hours) during the year was 291 (2024: 268).

A defined benefit (closed to new members) and a defined contribution pension scheme is operated by the Group on behalf of the employees. The assets of the scheme are held separately from those of the Group in an independently administered fund. Full details are contained in note 26.

10 Trustee remuneration

The trustees are defined as Directors under company law and are defined as the members of the Board of Management as disclosed on page 24.

Trustee Remuneration
£’000		 mhs homes
Board		 Heart of
Medway
Board		 Remuneration
Committee		 Treasury
Committee		 Finance, Risk and
Audit Committee
N Hopkins 25
R Christopher 14
M Miles Lea 14
J Carr 14
I Cain
11


M Mulligan
10
L Heffernan 10
G Taylor 9
E Thomas 6
S Skeete 3
J Chia 2

The articles of association contain the clause “members may receive such reasonable and proper remuneration as the Boards members may from time to time decide having taken advice from an independent remuneration committee”: Expenses paid in 2025 were £2,334 (2024: £1,977).

mhs homes limited

Company Number 10704997

Page 59

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

11 Senior executive remuneration

11 Senior executive remuneration
Group
Group
2025
2024
£'000
£'000
Key Management personnel emoluments 809
726
Amountspaid to non-executive 118
91
927
817

The total amount payable to the Chief Executive, who was also the highest paid director in respect of emoluments, was £223,562 (2024: £191,346). Pension contributions of £54,874 (2024: £46,992) were made to Kent County Council Pension Fund on his behalf. As a member of the Kent County Council Pension Fund, the pension entitlement of the Chief Executive is identical to those of other members.

There were three Executive Directors (2024: three) in the Group's defined contribution pension scheme. Contributions were paid into the scheme on their behalf of £37,987 (2024: £20,845).

Salary banding for all employees earning over £60,000 (includes salary, performance related pay, compensation for loss of office, benefits in kind and pension contributions paid by the Group)

Group Group
2025 2024
No. No.
£60,000 - £69,999 12 8
£70,000 - £79,999 8 5
£80,000 - £89,999 3 -
£90,000 - £99,999 4 3
£100,000 - £109,999 1 -
£130,000 - £139,999 1 2
£140,000 - £149,999 1 -
£150,000 - £159,999 1 1
£180,000 - £189,999 - 1
£190,000 -£199,999 1 -

mhs homes limited

Company Number 10704997

Page 60

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

12 Surplus on disposal of fixed assets

Right to
Buy
Active Asset
Management
GROUP
2025
2025
£’000
£’000		 Staircasing
2025
£’000		 Total
Total
2025
2024
£'000
£’000
Disposal proceeds
293
270
Cost of disposals
(19)
(55)
Grant repayment
-
-
Legal and other fees
(2)
-		 1,681
(1,146)
(156)
(47)		 2,244
1,687
(1,220)
(1,145)
(156)
(135)
(49)
(5)
272
215		 332 819
402
mhs homes
2025
2025
£’000
£’000		 2025
£'000		 2025
2024
£'000
£'000
Disposal proceeds
293
270
Cost of disposals
(19)
(55)
Grant repayment
-
-
Legal & other fees
(2)
-		 885
(627)
(103)
(44)		 1,448
1,298
(701)
(920)
(103)
(135)
(46)
(4)
272
215		 111 598
239

13 Interest receivable and income from investments

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Interest receivable from group undertakings - - 324 394
Interest receivable and similar income 217 208 217 205
217 208 541 599

14 Interest payable and similar charges

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Bank loans and overdrafts 14,548 12,719 12,534 11,478
Other fees 738 825 649 839
15,286 13,544 13,183 12,317
Amortisation of issue costs 251 246 222 221
15,537 13,790 13,405 12,538
Net interest on defined pension liability (note 26) (486) (431) (486) (431)
Interest capitalised on construction ofproperties (570) (391) (340) (259)
14,481 12,968 12,579 11,848

mhs homes limited

Company Number 10704997

Page 61

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

15 Taxation on surplus on ordinary activities

The tax assessed for the year differs from the standard rate of corporation tax in the UK applied to surplus before tax. The differences are explained below:

Group
Group		 mhs
mhs
homes homes
2025
2024		 2025 2024
£'000
£'000		 £'000 £'000
Surplus on ordinaryactivities before tax 16,464
6,300		 14,701 5,534
Surplus on ordinary activities at the standard rate
of corporation tax in the UK of 25% (2024 - 25%)		 4,116
1,575		 3,675 1,384
Effects of:
Net income subject to charitable exemptions (4,046)
(1,777)		 (3,675) (1,384)
Adjustments in respect ofprioryears- deferred tax (70) 202 - -
Total tax charge for period -
-		 - -

The aggregate current and deferred tax relating to items recognised in other comprehensive income is a nil charge (2024: nil charge)

mhs homes limited

Company Number 10704997

Page 62

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

16 Tangible fixed assets - housing properties
Completed Under Construction
mhs homes group General needs* Shared
ownership		 General needs* Shared
ownership		 Total
Cost or valuation: £'000 £'000 £'000 £’000 £’000
At 1 April 2024 572,815 70,081 30,017 2,439 675,352
Additions - construction costs - 27,313 3,703 31,016
Additions - works to existing properties 7,896 - - - 7,896
Completed schemes 21,489 4,746 (21,489) (4,746) -
Transfer to current assets (798) - - (798)
Staircasing disposals - (1,199) - - (1,199)
Property Disposals (91) - - - (91)
Disposalof replacedcomponents (1,727) - - - (1,727)
At 31 March 2025 600,382 72,830 35,841 1,396 710,449
Depreciation:
At 1 April 2024 69,912 2,889 - - 72,801
Charge for the year 6,368 598 - - 6,966
Eliminated on staircasing disposals - (53) - - (53)
Eliminated on transfer to current assets - (8) - - (8)
Eliminated on Property Disposals (17) - - - (17)
Disposalof replaced components (993) - - - (993)
At 31 March 2025 75,270 3,426 - - 78,696
Impairment:
At 1 April 2024 2,008 233 742 - 2,983
Charge for theyear - - - - -
At 31 March 2025 2,008 233 742 - 2,983
Net book value at 31 March 2025 523,104 69,171 35,099 1,396 628,770
Net book value at 31 March 2024 500,895 66,959 29,275 2,439 599,568

mhs homes limited

Company Number 10704997

Page 63

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

16 Tangible fixed assets - housing properties (continued)
Completed Under Construction
mhs homes limited General needs* Shared
ownership		 General needs* Shared
ownership		 Total
Cost or valuation: £'000 £'000 £'000 £’000 £’000
At 1 April 2024 448,529 45,955 14,490 2,440 511,414
Additions - construction costs - - 8,364 3,703 12,067
Additions - works to existing properties
7,060		 - - - 7,060
Completed schemes 21,489 4,746 (21,489) (4,746) -
Transfer to current assets - (798) - - (798)
Staircasing disposals - (659) - - (659)
Property Disposals (91) - - - (91)
Disposalof replaced components (1,394) - - - (1,394)
At 31 March 2025 475,593 49,244 1,365 1,397 527,599
Depreciation:
At 1 April 2024 59,647 1,461 - - 61,108
Charge for the year 4,734 402 - - 5,136
Eliminated on staircasing - (32) - - (32)
Eliminated on transfer to current asset - (8) - - (8)
Eliminated on Property Disposal (17) - - - (17)
Disposalof replaced components (835) - - - (835)
At 31 March 2025 63,529 1,823 - - 65,352
Impairment:
At 1 April 2024 1,541 - - - 1,541
Charge for theyear - - - - -
At 31 March 2025 1,541 - - - 1,541
Net book value at 31 March 2025 410,523 47,421 1,365 1,397 460,706
Net book value at 31 March 2024 387,341 44,494 14,490 2,440 448,765

mhs homes limited

Company Number 10704997

Page 64

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

16 Tangible fixed assets - Housing properties (continued)

Impairment

The Group considers schemes to represent separate cash generating units (CGUs) when assessing for impairment in accordance with the requirements of FRS 102 and SORP 2018.

Valuation

The estimated value in use of the social housing stock is estimated as below.

Group
Group
mhs
mhs
homes homes
2025
2024
2025		 2024
£'million
£'million
£'million		 £'million
Estimated total EUV – SH 773
750
643		 624
Estimated EUV- SH value of properties charged 575
612
493		 537

The net book value of housing properties may be further analysed as:

Group Group mhs
mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Freehold 626,197 596,956 459,695 447,740
Longleasehold 2,573 2,612 1,011 1,025
628,770 599,568 460,706 448,765
Interest capitalisation
Interest capitalised in theyear 570 391 340 259
Cumulative interest capitalised 5,770 5,200 3,082 2,742
Works to existing properties
Expenditure capitalised 7,896 8,449 7,060 7,908
Expenditure to income and expenditure account 7,150 5,103 6,439 3,985
15,046 13,552 13,499 11,893

mhs homes limited

Company Number 10704997

Page 65

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

17 Other tangible fixed assets

mhs homes group Head
Office		 Freehold
premises		 Fixtures &
fittings		 Total
£'000 £'000 £'000 £'000
Cost or valuation
At 1 April 2024 7,982 2,120 7,338 17,440
Additions - - 410 410
At 31 March 2025 7,982 2,120 7,748 17,850
Depreciation
At 1 April 2024 2,624 735 6,822 10,181
Charge foryear 148 27 276 451
At 31 March 2025 2,772 762 7,098 10,632
Net book value
At 31 March 2025 5,210 1,358 650 7,218
At 31 March 2024 5,358 1,385 516 7,259
mhs homes limited Freehold
premises		 Fixtures &
fittings

Total
£'000 £'000
£'000
Cost or valuation
At 1 April 2024 2,120 7,337
9,457
Additions - 410
410
At 31 March 2025 2,120 7,747
9,867
Depreciation
At 1 April 2024 735 6,823
7,558
Charge foryear 28 276
304
At 31 March 2025 763 7,099
7,862
Net book value
At 31 March 2025 1,357 648
2,005
At 31 March 2024 1,385 514
1,899

mhs homes limited

Company Number 10704997

Page 66

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

18 Investment Properties

Head Market Market Total
Office Rent Rent
Buildings completed under
construction
mhs homes group £’000 £'000 £'000 £'000
At 1 April 2024 2,554 78,236 - 80,790
Construction costs - (17) - (17)
Fair value adjustment - 5,809 - 5,809
At 31 March 2025 2,554 84,028 - 86,582
mhs homes limited £'000 £'000 £'000
At 1 April 2024 74,592 - 74,592
Construction costs (17) - (17)
Fair value adjustment 6,265 - 6,265
At 31 March 2025 80,840 - 80,840

The Group’s market rented investment properties are measured at cost on initial recognition, then remeasured to fair value at each balance sheet date. Changes in fair value are recognised in the statement of comprehensive income. The gain on revaluation of investment property arising of £5,809m (2024 – a loss of £4,262m) has been charged to the Statement of Comprehensive Income for the year. Further details on the valuation methodology are provided in the accounting policy.

If investment property had been accounted for under the historic cost accounting rules, the properties would have been measured as follows:

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Historic cost 54,040 54,031 50,633 50,624
Accumulated depreciation (8,112) (7,416) (7,550) (6,846)
45,928 46,615 43,083 43,778

mhs homes limited

Company Number 10704997

Page 67

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

19 Fixed asset investments

mhs homes group Investments Listed
Other		 Total
Investments
Investments
£’000 £'000
£'000		 £'000
At 1 April 2024 185 92
5		 282
Revaluation - (1) - (1)
At 31 March 2025 185 91
5		 281
mhs homes limited Total Total
2025 2024
£ £
Heart of Medway Housing Association Limited 1 1
mhs Commercial Services Limited 1,500,000 1,500,000
Chatham Maritime K1 Developments Limited 1 1
Chatham Maritime K1 Construction Limited 1 1
Provision against mhs Commercial Services Limited
(1,500,000)		 (1,500,000)
3 3

Details of subsidiary undertakings, associated undertakings and other investments

The group comprises of the following entities all incorporated in England.

Registered Number
Subsidiary undertaking Nature of business Company *charity*
society
Nature of Entities: Company
Proportion of ordinary share capital 100%
Chatham Maritime K1 Developments Limited Ownership of Head Office 03254705 -
Chatham Maritime K1 Construction Limited Development Activity 03254689 -
mhs Commercial Services Limited Not Active 02751669 -
Nature of Entity: Community Benefit Society
Proportion of voting rights 14%
Heart of Medway Housing Association Limted1 Social Housing - 31076R
Nature of Entity: Charity
mhs Community Charity Limited2 Not Active 03714658 1080067
Nature of Entity: Trust
Lord Kitchener Memorial Homes Trust3 Social Housing - 209751

1 mhs homes controls Heart of Medway through an inter group agreement.

2 mhs community charity is a company limited by guarantee with mhs homes defined as the parent charitable company.

3 Lord Kitchener is administered by mhs homes who are appointed as corporate trustee.

mhs homes limited

Company Number 10704997

Page 68

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

20 Stock and Work in Progress

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£’000 £'000 £'000 £'000
Materials 35 32 35 32
Shared ownership : completed properties 391 2,551 391 2,551
Shared ownership: under construction 546 913 546 913
972 3,496 972 3,496

21 Debtors

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Due within one year
Rent and service charge arrears 4,430 3,525 3,700 2,994
Less:provision for doubtful debts (1,391) (1,417) (1,072) (1,140)
3,039 2,108 2,628 1,854
Prepayments 799 707 799 707
Other debtors 416 314 123 35
Loans to employees 1 1 1 1
4,255 3,130 3,551 2,597
Due after one year
Loan to Heart of Medway Housing Association Limited - - 18,373 4,134
Loan to Chatham Maritime K1 Development Limited - 10,397 10,809
- - 28,770 14,943

mhs homes has provided an intercompany loan to Heart of Medway Housing Association Limited that stands at £18.4 million at 31 March 2025 (2024 : £4.1 million). The loan is provided to further its public benefit objectives, at nil rate, unsecured and is repayable by 2038 and is therefore treated as a concessionary loan.

mhs homes limited

Company Number 10704997

Page 69

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

22 Creditors: amounts falling due within one year

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Trade creditors 1,975 706 1,965 697
Rent in advance 1,236 1,318 1,100 1,194
Taxation and social security 2 5 53 56
Other creditors 668 544 631 537
Amounts due to subsidiaries - - 2,022 3,766
Accruals 9,738 8,416 8,080 4,465
Loan interest and fees due 3,998 3,645 3,517 3,364
Sinkingfund balances - 2,884 - 1,949
17,617 17,518 17,368 16,028

23 Creditors: amounts falling due after more than one year

Group
2025
£’000		 Group
mhs
homes
mhs
homes
2024
2025
2024
£'000
£000
£'000
Loans (Note 24)
Less issue costs
Sinkingfund balances		 310,000
(2,755)
3,243		 292,250
260,000
242,250
(2,966)
(2,103)
(2,324)
-
2,186
-
310,488 289,284
260,083
239,926

24 Loans and borrowings: Maturity of Debt

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Less than one year - - - -
Between two and five years 10,000 10,000 10,000 10,000
In fiveyears or more 300,000 282,250 250,000 232,250
Loans and borrowings 310,000 292,250 260,000 242,250

Liquidity is strong with £80 million of fully charged undrawn revolving credit facilities in place and a £10m private placement arranged and due to be received in January 2026.

mhs homes limited

Company Number 10704997

Page 70

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

24 Loans and borrowings: Maturity of Debt (continued)

The debt is comprised of £60 million of bank debt in mhs homes, due for repayment between 2027 and 2042 along with the private placements noted below.

Entity Private placement Repayment terms Interest rate
mhs homes £40 million
£30 million
£50 million
£40 million		 Amortising from 2030 to 2056
Bullet repayment 2044
Amortising between 2049 and 2058
Bullet repayment 2051		 2.36%
5.50%
6.19%
3.92%
£40 million Bullet repayment 2054 3.53%
Heart of
Medway		 £10 million
£20 million
£20 million		 Bullet repayment 2038
Bullet repayment 2055
Bullet repayment 2044		 3.68%
2.67%
6.01%

Interest rates are fixed for more than one year on 87% of the debt in mhs homes and 100% in Heart of Medway.

25 Financial instruments

Information regarding the group’s exposure to and management of credit risk, liquidity risk, market risk, cashflow and interest rate risk is included in Strategic review. The carrying values of the Group and Association’s financial assets and liabilities measured at fair value through profit or loss are summarised by category below:

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Financial assets measured at fair value: Investments 281 281 - -
Total financial assets 281 281 - -

mhs homes limited

Company Number 10704997

Page 71

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

26 Pensions

Defined benefit pension scheme

mhs homes limited is a community admission body in the Kent County Council Local Government Superannuation Scheme. It provides benefits based on final pensionable pay with contributions being charged to the income and expenditure account so as to spread the cost of pensions over employees working lives with mhs homes limited. The employer contributions are determined by a qualified actuary whilst the employee contributions are fixed by regulations governing the scheme. The most recently completed full actuarial valuation was in 2022 with the next formal valuation due in 2025. The contribution rate for the Group was 25.7% (2024: 25.7%) for employer contributions and 5.5% to 11.4% (2024:5.5% to 11.4%) for employee contributions. The most recent actuarial valuation confirmed that the employer contribution would stay at 25.7% till 2025. The pension contribution for the year for the Kent County Council Local Government Superannuation Scheme amounted to £275,818 (2024: £257,587). The scheme was withdrawn from new staff in 2005, and a defined contribution scheme offered in its place.

Reconciliation of present value of plan liabilities 31 March 31 March
2025 2024
£'000 £'000
At the beginning of the year 38,049 38,677
Current service cost 217 212
Interest cost 1,817 1,816
Change in financial assumptions (3,943) (510)
Change in demographic assumptions (101) (553)
Experience loss (88) 120
Benefits paid net of transfers in (2,013) (1,753)
Contributions by scheme participants 92 80
Unfundedpensionpayments (42) (40)
At the end of the year 33,988 38,677
Reconciliation of fair value of plan assets 31 March 31 March
2025 2024
£'000 £'000
At the beginning of the year 47,808 47,503
Interest on assets 2,303 2,247
Return on assets less interest (742) (489)
Other actuarial gains - -
Administration expenses (45) (43)
Contributions by employer excluding unfunded 322 303
Contributions by members 92 80
Benefitspaid (2,055) (1,793)
At the end of the year 47,683 47,808

mhs homes limited

Company Number 10704997

Page 72

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

26 Pensions (continued)

31 March 31 March 31 March
2025 2024
£’000 £’000
Fair value of plan assets 47,683 47,808
Application of asset ceiling (13,695) (9,759)
Present value ofplan liabilities (33,575) (37,584)
Surplus 413 465
Present value of unfunded obligation (413) (465)
Net pension scheme liability - -
Amounts recognised in other comprehensive income are as 31 March 31 March
follows: 2025 2024
£’000 £’000
Included in administrative expenses:
Service cost 217 212
Net interest on the defined liability (486) (431)
Administration expenses 45 43
(224) (176)
Analysis of actuarial gain recognised in other comprehensive 31 March 31 March
income 2025 2024
£’000 £’000
Actual return less expected return on fund assets (742) (489)
Other actuarial gains on assets - -
Experience losses on defined benefit obligation 88 (120)
Change in demographic assumptions 101 553
Changes in financial assumptions 3,943 510
Application of asset ceiling (2,844) 25
546 479
Composition of plan assets 31 March 2025
31		 March 2024
£’000 %
£’000		 %
Equities 27,153 57
27,812
58
Gilts 2,826 6
3,503
7
Other bonds 7,088 15
6,884
14
Property 3,905 8
4,289
9
Cash 1,886 4
761
2
Target return portfolio 2,435 5
2,416
5
Infrastructure 2,390 5
2,143
5
Totalplan assets 47,683 100
47,808		 100
Return onplan assets 3.32% 3.76%

mhs homes limited

Company Number 10704997

Page 73

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

26 Pensions (continued)

Principal actuarial assumptions used at the balance sheet 31 March 2025 31 March 2024
Discount rates 5.75% 4.90%
Future salary increases 3.90% 3.90%
Future pension increases (CPI) 2.90% 2.90%
Life expectancy from age 65 years: Males (years) 20.7 20.8
Life expectancy from age 65 years: Females (years) 23.3 23.3

Defined Contribution Scheme

mhs homes limited also operates a defined contribution scheme administered by Aviva. The employer’s contributions, at a rate of between 1% to 10%, were £488,449 (2024: £448,258). At 31 March 2025, the number of staff participating in the scheme was 261 (2024: 291). There were £85,086 contributions outstanding as at 31 March 2025 .

27 Provision

Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Health and Safety Executive Provision - 534 - 534

The Health and safety executive (HSE) provision represents a fine due to a reportable incident that occurred in January 2023 which was confirmed in April 2024 and was provided for in the accounts at 31 March 2024 and paid in the current year.

28 Contingent liabilities

Social Housing Grant : The Group receives grant from Homes England, which is used to fund the acquisition and development of housing properties and their components. The Group has a future obligation to recycle such grant once the properties are disposed of. At 31 March 2025, the value of grant received in respect of these properties that had not been disposed of was £49,263,000 (2024: £50,207,000). As the timing of any future disposal is uncertain, no provision has been recognised in these financial statements.

Total Social Housing Grant received or Group Group mhs mhs
receivable to date is as follows: homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Recycled Capital Grant 156 81 -
Capital Grant 49,107 50,126 16,574 16,511
Total Grant 49,263 50,207 16,574 16,511

Parent Guarantees

mhs homes has guaranteed construction contracts for Heart of Medway and K1 Construction. At the year end the liabilities covered by these guarantees are £1,129,000 (2023: £12,835,000).

mhs homes limited

Company Number 10704997

Page 74

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

29 Operating Lease

The Group and the Association had minimum lease payments under non-cancellable operating leases as set out below:

Amounts payable as Lessee Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Not later than one year 124 49 124 49
Later than oneyear not later than fiveyears 975 951 975 951
1,099 1,000 1,099 1,000
Amounts receivable under operating Group Group mhs mhs
leases as lessor homes homes
2025 2024 2025 2024
£’000 £’000 £’000 £’000
Not later than one year 194 73 194 73
Later than oneyear not later than fiveyears 624 6 624 6
818 79 818 79
30 Capital Commitments
Group Group mhs mhs
homes homes
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Commitments contracted
New build developments 22,368 26,928 13,617 12,645
Commitments approved by the board but not contracted
New build developments - 11,144 - -
22,368 38,072 13,617 12,645
Capital commitments forthe Groupand mhs homes will be funded as follows:
Group
Group
mhs
mhs
homes
homes
2025
2024
2025
2024
£'000
£'000
£'000
£'000
Social Housing Grant 495
1,941
-
1,250
New loans 5,000
10,000
5,000
-
Sales of properties 2,774
12,765
2,774
5,803
Existingreserves 14,099
13,366
5,843
5,592
22,368
38,072
13,617
12,645

mhs homes limited

Company Number 10704997

Page 75

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

31 Related party disclosures

The Board includes two tenant members who hold a tenancy agreement on normal terms and cannot use their position to their advantage. The rent charged for the year was £13,161 (2024: £12,326) and the tenants had arrears balances of £1,325 at the 31 March 2025 (31 March 2024: £132.72). The Association provides management services, other services and loans to its subsidiaries. The Association also receives charges from its subsidiaries. The charges are set out below.

Management charges Interest charges Interest charges
Payable to mhs homes by subsidiaries: 2025 2024 2025 2024
£'000 £'000 £'000 £'000
Heart of Medway Housing Association Limited 805 605 - -
Chatham Maritime K1 Development Limited - - 332 394
805 605 332 394

Intra-group management fees are receivable by the Association from subsidiaries to cover the running costs that the Association incurs on behalf of managing its subsidiaries.

Entity
granting
loan		 Entity
receiving
loan		 Repayable
by		 Interest
Rate		 Restated
At
1 April		 Movement At
31 March
2025
2024
£’000		 £'000 £'000
Heart of
mhs homes
limited		 Medway
Housing
Association		 2038 - 4,134 14,239 18,373
Limited
Chatham
mhs homes
limited		 Maritime K1
Development		 2040 4.36% 10,809 (412) 10,397
Limited
14,943 13,827 28,770

mhs homes provided parent guarantees as disclosed in note 28.

Kent County Council Pension Scheme is a related party, refer to note 26 for transactions during the year.

L&Q Housing Trust made a settlement refund of rents to Heart of Medway Limited in the amount of £88,007 relating to rents received by L&Q on properties owned by Heart of Medway. Nigel Hopkins is the Chair of the Audit and Risk Committee of L&Q and Chair of mhs homes, the parent of Heart of Medway.

32 Capital and reserves

The revaluation reserve contains unrealised gains of £210.5 million (2024: £210.6 million) in respect of fixed assets for which the deemed cost option was taken.

mhs homes limited

Company Number 10704997

Page 76

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Notes forming part of the Financial Statements (Continued)

33 Net debt reconciliation

Group At
Cash flows
Non-cash
At
1 April movement
31 March
2024 2025
£'000
£'000		 £'000
£'000
Short term deposits 2,884
359
-
3,243
Cash at bank 4,719
2,776
-
7,495
Cash and cash equivalents 7,603
3,135
-
10,738
Loans and borrowings (292,250) (17,750) -
(310,000)
Net debt (284,647)
(14,615)
-
(299,262)

mhs homes limited

Company Number 10704997

Page 77