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Registered number: 06304626










Pentland Properties Limited










Annual Report and Financial Statements

For the Year Ended 31 January 2023

 
Pentland Properties Limited
 

Company Information


Directors
P N Tory 
J N Tory 
D J Callister 
P J Rosbrook (appointed 4 October 2022)




Company secretary
P J Rosbrook



Registered number
06304626



Registered office
The Estate Office
Etchinghill Golf Club

Etchinghill

Folkestone

Kent

CT18 BFA




Independent auditors
Kreston Reeves LLP
Chartered Accountants & Statutory Auditor

37 St Margaret's Street

Canterbury

Kent

CT1 2TU




Bankers
Lloyds Bank Plc
Sandgate Road

Folkestone

Kent

United Kingdom

CT20 2AA




Solicitors
Thomson Snell & Passmore
Heathervale House

2-4 Vale Avenue

Tunbridge Wells

Kent

TN1 1DJ





 
Pentland Properties Limited
 

Contents



Page
Strategic Report
 
1 - 2
Directors' Report
 
3 - 4
Independent Auditors' Report
 
5 - 8
Statement of Comprehensive Income
 
9
Balance Sheet
 
10
Statement of Changes in Equity
 
11
Statement of Cash Flows
 
12
Notes to the Financial Statements
 
13 - 24


 
Pentland Properties Limited
 

Strategic Report
For the Year Ended 31 January 2023

Introduction
 
The directors present their strategic report for the year ended 31 January 2023.

Business review
 
The main activities of the business were the purchase and sale of land, and the building of new build housing in the Southeast of England. 
The housing market has undoubtedly slowed following the inflationary pressure in the economy. A number of factors have contributed to this including the war in Ukraine and the recovery from the Covid pandemic. The associated increase in interest rates and the removal of the Help to Buy have reduced the numbers of buyers in the market. 
The directors are reporting a turnover decrease to £20.8m (-51%) but with pre-tax profits up to £1.8m (+89%) from £1.1m in 2022.  Turnover in 2022 contained a large land sale to Barratt Homes for the site at Saxon Place. 
Financial key performance indicators
ole08ff.png
ole5d24.png
 

Principal risks and uncertainties
 
At the time of writing there is considerable uncertainty with rising inflation, increase in interest rates and the war in Ukraine hitting consumer confidence and resulting in a slowdown in the housing market. The company builds good quality housing that remains in short supply in the Southeast and we are confident that there will remain a demand for this. 

Interest Rate Risk
 
The company has no borrowing. Interest rate rises will impact the wider housing market though mortgage rate rises but the company is in a good position with its development sites forward sold and nearing completion.

Page 1

 
Pentland Properties Limited
 

Strategic Report (continued)
For the Year Ended 31 January 2023

Liquidity Risk
 
The company is well funded with no debt, shareholder funds at £13.6m leaving the company well capitalised to explore new land opportunities.


This report was approved by the board and signed on its behalf.



D J Callister
Director
Date: 28 September 2023

Page 2

 
Pentland Properties Limited
 

 
Directors' Report
For the Year Ended 31 January 2023

The directors present their report and the financial statements for the year ended 31 January 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

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


select suitable accounting policies for the Company's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Principal activity

The principal activity of the company is the construction and sale of domestic housing as well as the sale and purchase of land.

Results and dividends

The profit for the year, after taxation, amounted to £1,415,907 (2022 - £750,382).

The company paid dividends of £500,000 (2022: £2,250,000) during the year.

Directors

The directors who served during the year were:

P N Tory 
J N Tory 
D J Callister 
P J Rosbrook (appointed 4 October 2022)
S R Coates (resigned 4 October 2022)

Objectives and policies
The company's objectives are to return consistent profits to shareholders, while maintaining good asset cover to support external funding. The company will work to obtain planning permissions on land that it holds, and to develop and sell homes and other properties.
The company's accounting policies allow for valuation of land at the lower of cost and net realisable value. The directors believe that the market value of land in its possession, both with and without planning permission, is considerably higher than the value shown in the accounts.
 
Page 3

 
Pentland Properties Limited
 

 
Directors' Report (continued)
For the Year Ended 31 January 2023


Going to concern
The activities of the company and the factors that are likely to affect its future development. financial position and risk management objectives are described in the Strategic Report.
The company has appropriate financial resources and access to further funding, and the directors consider that the company is in a strong position to manage its business risks and to take advantage of the current favourable market conditions in the house-building industry. Consequently they continue to adopt the going concern basis in preparing the annual report and accounts.

Matters covered in the Strategic Report

The Strategic Report includes disclosure of the company's principal risks and exposure. Disclosure in respect of future developments has also been included as part of the Strategic Report.

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Auditors

Under section 487(2) of the Companies Act 2006Kreston Reeves LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

This report was approved by the board and signed on its behalf.
 





D J Callister
Director
Date: 28 September 2023

Page 4

 
Pentland Properties Limited
 

 
Independent Auditors' Report to the Members of Pentland Properties Limited
 

Opinion


We have audited the financial statements of Pentland Properties Limited (the 'Company') for the year ended 31 January 2023, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 January 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual ReportOur opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Page 5

 
Pentland Properties Limited
 

 
Independent Auditors' Report to the Members of Pentland Properties Limited (continued)


Opinion on other matters prescribed by the Companies Act 2006
 

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


the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

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


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:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine 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 directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 6

 
Pentland Properties Limited
 

 
Independent Auditors' Report to the Members of Pentland Properties Limited (continued)


Auditors' responsibilities for the audit of the financial statements
 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


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:

Capability of the audit in detecting irregularities, including fraud:
Based on our understanding of the company and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, management bias in accounting estimates and judgemental areas of the financial statements such as the valuation of work in progress. Audit procedures performed by the company engagement team included:
ole2cbe.png
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.


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 Auditors' Report.


Page 7

 
Pentland Properties Limited
 

 
Independent Auditors' Report to the Members of Pentland Properties Limited (continued)


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' 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 Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.





Mark Attwood FCCA (Senior Statutory Auditor)
  
for and on behalf of
Kreston Reeves LLP
 
Chartered Accountants
Statutory Auditor
  
37 St Margaret's Street
Canterbury
Kent
CT1 2TU

29 September 2023
Page 8

 
Pentland Properties Limited
 

Statement of Comprehensive Income
For the Year Ended 31 January 2023

2023
2022
Note
£
£

  

Turnover
 4 
20,888,895
42,409,860

Cost of sales
  
(18,265,911)
(39,147,187)

Gross profit
  
2,622,984
3,262,673

Administrative expenses
  
(696,791)
(2,275,193)

Other operating income
 5 
-
114,375

Operating profit
  
1,926,193
1,101,855

Interest receivable and similar income
 9 
35,760
-

Interest payable and similar expenses
 10 
(209,490)
(175,458)

Profit before tax
  
1,752,463
926,397

Tax on profit
 11 
(336,556)
(176,015)

Profit for the financial year
  
1,415,907
750,382

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 13 to 24 form part of these financial statements.

Page 9

 
Pentland Properties Limited
Registered number: 06304626

Balance Sheet
As at 31 January 2023

As restated
2023
2022
Note
£
£

  

Current assets
  

Stocks
 13 
11,620,135
9,675,170

Debtors
 14 
6,176,767
7,800,725

Cash at bank and in hand
 15 
1,064,869
4,106,520

  
18,861,771
21,582,415

Creditors: amounts falling due within one year
 16 
(5,093,563)
(8,730,114)

Net current assets
  
 
 
13,768,208
 
 
12,852,301

Total assets less current liabilities
  
13,768,208
12,852,301

Provisions for liabilities
  

Other provisions
 18 
(107,667)
(107,667)

  
 
 
(107,667)
 
 
(107,667)

Net assets
  
13,660,541
12,744,634


Capital and reserves
  

Called up share capital 
  
15,664
15,664

Share premium account
  
4,148,533
4,148,533

Profit and loss account
  
9,496,344
8,580,437

  
13,660,541
12,744,634


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




D J Callister
Director
Date: 28 September 2023

The notes on pages 13 to 24 form part of these financial statements.

Page 10

 
Pentland Properties Limited
 

Statement of Changes in Equity
For the Year Ended 31 January 2023


Called up share capital
Share premium account
Profit and loss account
Total equity

£
£
£
£


At 1 February 2021
15,664
4,148,533
10,080,055
14,244,252



Profit for the year
-
-
750,382
750,382


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(2,250,000)
(2,250,000)



At 1 February 2022
15,664
4,148,533
8,580,437
12,744,634



Profit for the year
-
-
1,415,907
1,415,907


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(500,000)
(500,000)


At 31 January 2023
15,664
4,148,533
9,496,344
13,660,541


The notes on pages 13 to 24 form part of these financial statements.

Page 11

 
Pentland Properties Limited
 

Statement of Cash Flows
For the Year Ended 31 January 2023

2023
2022
£
£

Cash flows from operating activities

Profit for the financial year
1,415,907
750,382

Adjustments for:

Interest paid
209,490
175,458

Interest received
(35,760)
-

Taxation charge
336,556
176,015

Decrease in stocks
3,395,344
98,272

Decrease in debtors
1,398,052
4,102,933

(Decrease) in creditors
(504,211)
(2,394,189)

(Decrease)/increase in amounts owed to participating ints
(3,206,394)
4,517,776

(Decrease) in provisions
(5,340,309)
(2,981,621)

Corporation tax (paid)
(36,596)
(1,461,000)

Net cash generated from operating activities

(2,367,921)
2,984,026


Cash flows from investing activities

Interest received
35,760
-

Net cash from investing activities

35,760
-

Cash flows from financing activities

Dividends paid
(500,000)
(2,250,000)

Interest paid
(209,490)
(175,458)

Net cash used in financing activities
(709,490)
(2,425,458)

Net (decrease)/increase in cash and cash equivalents
(3,041,651)
558,568

Cash and cash equivalents at beginning of year
4,106,520
3,547,952

Cash and cash equivalents at the end of year
1,064,869
4,106,520


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
1,064,869
4,106,520

1,064,869
4,106,520


Page 12

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

1.


General information

Pentland Homes Limited is a private company limited by share, incorporated in England and Wales with
registration number 01031651. The address of its registered office is Etchinghill Golf Club, Etchinghill, Folkestone, Kent, CT18 8FA.
The principal activity of the company in the year under review was the purchase and sale of land, and the building of new build housing in the Southeast of England.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The company's functional currency is Pounds Sterling.
The company's financial statements are presented to the nearest £. 

The following principal accounting policies have been applied:

 
2.2

Going concern

The activities of the company and the factors that are likely to affect its future development, financial
position and risk management objectives are described in the Strategic Report.
The company has considerable financial resources and access to further funding, and the directors
consider that the company is in a strong position to manage its business risks and to take advantage
of the continuing market conditions in the house-building industry. Consequently, they continue to adapt the going concern basis in preparing the annual report and accounts. 
 

Page 13

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

2.Accounting policies (continued)

 
2.3

Revenue

Revenue from sale of commercial and residential units is recognised on legal completion which is when title passes to the buyer. 
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

 
2.4

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.5

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Page 14

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

2.Accounting policies (continued)

 
2.6

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

 
2.7

Financial instruments

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.

Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

 
2.8

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Page 15

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

2.Accounting policies (continued)

 
2.9

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.10

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

 
2.11

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.12

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.

 
2.13

Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and 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 balance sheet date in the countries where the Company operates and generates income.

Page 16

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

2.Accounting policies (continued)

 
2.14

Financial liabilities

Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obligations, rather than the financial instrument's legal form.

Financial liabilities within the scope of IAS 39 are initially classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
The company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.
Subsequently, the measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of repurchasing in the near term. Derivatives, including separately embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in profit or loss.

Interest bearing loans and borrowings

Obligations for loans and borrowings are recognised when the Group becomes party to the related contracts and are measured initially at the fair value of consideration received less directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised respectively in finance revenue and finance cost.

Derecognition of financial liabilities

A liability is derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such as an exchange or modification, this is treated as a derecognition of the original liability, such that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in profit or loss.

Page 17

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

3.


Judgments in applying accounting policies and key sources of estimation uncertainty

Estimates and judgements are continually evaluated and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below: 
(i) Valuation of inventories 
The Company values inventories at the lower of cost and net realisable value. The net realisable value is based on the judgement of the probability that planning consent will be granted for each site. The Company believes that based on directors' experience, planning consent will be given. If planning consent was not achieved, then a provision may be required against inventories. 
In applying the Company's accounting policy for the valuation of inventories the directors are required to assess the expected selling price and costs to sell each of the plots or units that constitute the Company's work in progress. Cost includes the cost of acquisition sites, the cost or infrastructure and construction works, and legal and professional fees incurred during development prior to sale. Estimation of selling price is subject to significant inherent uncertainties, in particular the prediction of future trends in the market value of land. 
Whilst the directors exercise due care and attention to make reasonable estimates, taking into account all available information in estimating the future selling price, the estimates will, in all likelihood, differ from actual selling prices achieved in future periods and these differences may, in certain circumstances, be very significant. The critical judgement in respect of receipt of planning consent further increases the level of estimation uncertainty. 


4.


Turnover

An analysis of turnover by class of business is as follows:


2023
2022
£
£

Property sale and rental
20,888,895
42,409,860

20,888,895
42,409,860


All turnover arose within the United Kingdom.


5.


Other operating income

2023
2022
£
£

Other operating income
-
114,375

-
114,375


Page 18

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

6.


Auditors' remuneration



2023
2022
£
£



Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements
16,500
8,000


7.


Employees

Staff costs, including directors' remuneration, were as follows:


2023
2022
£
£

Wages and salaries
603,582
322,737

603,582
322,737


The average monthly number of employees, including the directors, during the year was as follows:


        2023
        2022
            No.
            No.







Average number of employees
4
5


8.


Directors' remuneration

2023
2022
£
£



Directors' emoluments
159,953
229,376

159,953
229,376


9.


Interest receivable

2023
2022
£
£


Other interest receivable
35,760
-

35,760
-

Page 19

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

10.


Interest payable and similar expenses

2023
2022
£
£


Other loan interest payable
209,490
175,458

209,490
175,458


11.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
336,556
176,015


336,556
176,015


Total current tax
336,556
176,015


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - the same as) the standard rate of corporation tax in the UK of 19% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit on ordinary activities before tax
1,752,463
926,397


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
340,979
176,015

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
(4,423)
-

Total tax charge for the year
336,556
176,015


Factors that may affect future tax charges

The main rate of corporation tax increased on 1 April 2023 to 25%, for companies with taxable profits above £250,000. Companies with taxable profits below £50,000 will continue to pay at 19%, and marginal relief will apply between these thresholds. This charge formed part of the Finance Bill 2021, which was substantively enacted on 24 May 2021, and is applicable at the reporting date. 

Page 20

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

12.


Dividends

2023
2022
£
£


Dividends on equity capital
500,000
2,250,000

500,000
2,250,000


13.


Stocks

As restated
2023
2022
£
£

Work in progress
11,620,135
9,675,170

11,620,135
9,675,170



14.


Debtors

2023
2022
£
£

Due after more than one year

Other debtors
6,139,185
7,372,830

6,139,185
7,372,830

Due within one year

Trade Creditors
466
199,889

Other debtors
11,908
225,906

Prepayments and accrued income
25,208
2,100

6,176,767
7,800,725



15.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
1,064,869
4,106,520

1,064,869
4,106,520


Page 21

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

16.


Creditors: Amounts falling due within one year

As restated
2023
2022
£
£

Trade creditors
76
11,076

Amounts owed to associates
3,000,000
3,000,000

Amounts owed to other participating interests
100,664
3,307,058

Corporation tax
92,556
-

Other taxation and social security
562,039
66,784

Other creditors
1,228,024
2,237,546

Accruals and deferred income
110,204
107,650

5,093,563
8,730,114



17.


Loans


Analysis of the maturity of loans is given below:




The bank loans above are secured on company's properties. Details of security provided is as follows: 
1. Lloyds Bank PLC has registered the following fixed and floating charges on 29 April 2019: 
a) Fixed and floating charge and negative pledge on land on the South side of Cockering Road, Canterbury and land lying on the South East side of Cockering Road, Canterbury. 
b) Floating charge on all property or undertaking of the company. 
c) Fixed charge and negative pledge on all property or undertaking of the company. 
2. BDW Trading Limited has registered the following charge on 29 January 2021: 
a) Fixed charge and negative pledge on land on the South East side of Cockering Road, Canterbury. 
3. Aspire Ltd has registered the following charge on 7 July 2023:
'a) Fixed charge and negative pledge at Saxon Fields, Thanington. 

Page 22

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

18.


Provisions





As restated
 
Customer care and cost to complete provision

£





At 1 February 2022
107,667



At 31 January 2023
107,667


19.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



15,664 (2022 - 15,664) Ordinary Shares shares of £1.00 each
15,664
15,664


20.


Analysis of net debt




At 1 February 2022
Cash flows
At 31 January 2023
£

£

£

Cash at bank and in hand

4,106,520

(3,041,651)

1,064,869

Debt due within 1 year

-

-

-


4,106,520
(3,041,651)
1,064,869


21.


Prior year adjustment

During the year the directors reviewed the position relating to associated company debt and directors loans.  As the loans have been provided by associated entities and the directors without formal loan agreements it is deemed that these are therefore repayable on demand.  As such, these balances have been moved to creditors less than one year.
In addition, the prior year work in progress was reviewed by management and they noted that the financial statements had incorrectly overstated it by an amount of £5.34m which had been included within provisions rather than forming part of stock. The prior year adjustment has been included within these financial statements reducing the stock balance from £15,015,479 to £9,675,170.

Page 23

 
Pentland Properties Limited
 

 
Notes to the Financial Statements
For the Year Ended 31 January 2023

22.


Related party transactions

1) P N Tory and JN Tory are both directors and shareholders of Pentland Properties Limited and also
directors and shareholders of Pentland Homes Limited. During the year Pentland Homes Limited provided £22,586,728 (2022: £37,620,510) worth of goods and services to the company. A management charge of £339,968 was also charged by Pentland Homes Limited to Pentland Properties Limited. At the year end, the company owed £100,664 (2022: £3,307,058) to Pentland Homes Limited.
2) The following loans have been made to the company and remained outstanding at the year end:
i) P N Tory: The company owed P N Tory the sum of £3,970,931 (2022: £3,832,352) at the year end. During the year the interest of £157,822 (2022. £132,281) was charged in respect of this loan.
ii) C Tory: The company was owed £Nil (2022: £18,502 owed by the company) to C Tory at the year end.  During the year the interest of £Nil (2022: £35,555) was charged in respect of this loan. C Tory is a close family member of directors.
iii) J Callister: During the year the company received a loan of £1,000,000 from J Callister. The balance of £250,000 was outstanding in respect of this loan. During the year the interest of £46,365 was charged in respect of this loan.
Interest is paid at 4% per annum on the above loans. The loans are repayable in next few years. PN Tory and J N Tory are both directors of Pentland Properties Limited and also control Cave Hotels UK Limited and Etchinghill Golf. During the year Etchinghill Golf recharged costs of £Nil (2022: £74,333) to the company.
At the year end the company owed £Nil (2022: £Nil) to Pentland Golf.
During the year, the company recharged costs of £86,673 to Cave Hotels UK Ltd. At the year end, Cave Hotels UK Ltd owed £37,661 (2022: £2,265,444) to the company.


23.


Controlling party

P N Tory and J N Tory are the ultimate controlling parties by virtue of their majority shareholding in the company. 


Page 24