Previous Derby News’ articles highlighted the extent to which Derventio Housing Trust CIC has generated significant cash surpluses from supporting homeless and vulnerable people.

Derventio Housing’s “cash machine” raises further questions for the Regulator. Will they take legal action?

Derventio Housing Trust: Time for the Council to investigate.

Historically, Managing Director of Derventio, Sarah Hernandez, has taken a significant salary, in excess of £100,000 pa

The Derventio “cash machine” continues to be lucrative as shown in its latest accounts.

In 2023, the turnover of Derventio increased by 10% to £8.7m and the cash in the bank increased by 50% to £1.1m…with no increase in staff numbers.

In the same period the, de facto, Derventio subsidiary, Homes 2 Opportunities Ltd, (H2O) saw a reported increase in its bank balance of 78%, to £484k.

• H20 was originally set up with Sarah Hernandez (Derventio’s Managing Director) as the sole director, and shareholder with the registered Office being at Derventio’s HQ. This company was established to provide all of Derventio’s property maintenance previously managed within Derventio itself; this was done to avoid the transparency obligations of being a Community Interest Company.
• Following the Derby News articles in 2019, Hernandez “resigned” as director to be replaced by Matthew Fletcher, the incumbent maintenance manager of Derventio Housing Trust CIC.
• In July 2019 the number of shareholders was increased to 3 – Hernandez, Matthew Fletcher and Gurkaranjit Johal.
• H20 made £207k profit in its first year of trading in 2017; this initial balance has been eroded away down to £73k in 2023. The retained profit in 2023 was £32k despite making record profits in 2023 of ~ £300k.

• It’s bank balance has consistently increased.

• The bank balance status suggests improved turnover and profitability. This is also reflected in the amount of VAT outstanding and the corporation tax liaibility ( tax on company profits). The increased business has generated a substantial growth in profit ; the number of staff at H20 has reduced from 26 in 2020 to 21 in 2023,

It is interesting to note that the significant increase in the bank balance is funded by a large growth in creditors

Opinion.

The large corporation tax liability suggests that the company is making significant declarable profits however this is not reflected in the level of retained profits. Although not transparent in the accounts, the most likely reason for this is that profits have been distributed to the shareholders – Hernandez, Fletcher and Johal.

H20 has only 1 customer in Derventio (an insignificant online presence – no website, a Facebook page which was last updated in 2022 and which has just 7 followers). The money it makes is only from Derventio which in turn receives the majority of its income from public funds. As Derventio is a CIC any surplus should be channelled back to support its stakeholders – not its shareholders

Ironically, in the Derventio Annual report for 2014, Matthew Fletcher ( Maintenance manager for Derventio and shareholder of H2O) was explaining the improvements that had been made to the maintenance process and concluded by stating:

If only…

Post Script

Derventio Housing Trust has recently recruited a new Trustee to the Board – a Financial Advisor – David Moss. However, a brief search shows that he is a Director of Sidr Properties Ltd, a company incorporated by Sarah Hernandez with herself as the sole shareholder, and registered at her home address. She has since disposed of her shares, being replaced by David Moss and Indira Datta; the registered office has since changed to Moss’s property on Bramble Street.

Sadly it would seem that an opportunity for independent financial oversight has been missed.