MULGRAVE DEVELOPMENTS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Company registration number 08433647 (England and Wales)
MULGRAVE DEVELOPMENTS LTD
COMPANY INFORMATION
Directors
C E W Phipps, Marquis of Normanby
J Lloyd
I P Hessay
M R Hills
Secretary
M R Hills
Company number
08433647
Registered office
Unit D Chessingham Park
Common Road
Dunnington
York
YO19 5SE
Auditor
Hunter Gee Holroyd
Club Chambers
Museum Street
York
YO1 7DN
MULGRAVE DEVELOPMENTS LTD
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 21
MULGRAVE DEVELOPMENTS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -
The directors present the strategic report for the year ended 31 March 2024.
Review of the business
The principal activity of the company is the development and sale of residential property.
In the year ended 31 March 2024 the company’s turnover reduced to £9.6 million from £10.8 million in 2023. Gross profit reduced to £1.3 million (2023; £2.4 million) and the company made a loss before tax of £0.4 million (2023; profit £0.9 million) .
The planning process has been particularly difficult in the last two years and the market for land increasingly competitive for the majority of the period. Despite widely reported demand for additional housing stock, the planning problems and challenging market conditions have forced a number of small and medium sized builders out of business. The limited availability of developable land has also meant that national housebuilders and specialist developers are now more willing to consider smaller sites, where the economies of scale mean that they are in a position to outbid the medium sized companies. The company’s results for the year had been significantly impacted by these challenges with acquisitions being delayed and consequently there being a lack of product to sell in the year. We do not anticipate there being a significant improvement in this regard until after the election in July.
Despite these challenges the company continues to secure development opportunities subject to obtaining a satisfactory planning consent. A number of these opportunities are on smaller sites but we have more recently been actively pursuing some larger opportunities which we hope to acquire in the next couple of years. The company has the flexibility to efficiently undertake both small and large sites across a range of price points.
Prior to this year, the market has been very good in our region and sales were generally at prices exceeding expectations at the time leading up to acquisition. Strong selling enabled the company to repay development finance facilities early and there was no bank funding at the start of the year.
Macroeconomic and political volatility, an inflationary environment, increased interest rates and the challenging planning regime have all impacted on the business and activity levels in 2024 have significantly reduced. Positive progress with planning towards the end of the year however means that we look forward with some confidence to a return to profitability in the near future.
Interest rate increases created a challenging market for first time buyers but demand is still generally strong, particularly for larger homes. A slow down at the lower end of the market has made sales completions more challenging and we have been obliged to reintroduce assisted sale and part exchange offers to conclude transactions.
Construction is generally progressing well on our sites although high rainfall has caused some challenges.
The company’s development activities are undertaken by its’ subsidiaries. The choice of company undertaking each development is dependent on the structure and provider of any external development funding. Activity in each company fluctuates depending on site acquisitions and progress through the planning system.
We measure successful development in several ways including the provision of high-quality housing, aesthetically attractive living spaces, integrated affordable housing and environmentally responsible building.
The company is registered with NHBC and the Home Builders Federation and the New Homes Quality Board.
MULGRAVE DEVELOPMENTS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
Business Environment
Demand for housing is still strong and is likely to continue to be so whilst there is a shortage of supply.
The impact of cost-of-living pressure including interest rate rises has mainly been felt at the lower price points, albeit, the energy efficiency of new-build housing does work in favour of the developer.
Material prices have generally stabilised after the recent challenges of BREXIT, COVID and international volatility in both Europe and the Middle East. The company is fortunate to work with a core of loyal subcontractors capable of helping us to deliver a quality product.
The company utilises development funding from specialist development financiers and is now undertaking its third development with Homes England funding. As the business continues to grow, we aspire to broaden our funding network.
Principal risks and uncertainties
Like all businesses, the company faces a range of risks and uncertainties. The principal risks at present are:
1. Macroeconomic Environment and Market Risk - Sales reservations have still held up well but we control expenditure on sites to manage cash flow in line with foreseeable sales. Good mortgage availability and good levels of employment have been helpful in terms of managing volatility in selling price and demand, but interest rate rises have reduced the range of mortgages available in the market.
We target our site acquisitions based on our understanding of the marketplace and seek lower risk opportunities when market fundamentals dictate.
2. Resources - the availability of materials, import duty and increased supply chain uncertainty will not help cost control or the availability of skilled staff, subcontractors, and materials in a competitive market. The supply of labour is difficult to predict and competition from the larger developers for the finite labour pool is another challenge to the business. When required we do however continue to attract staff from larger developers by offering competitive reward packages and a supportive team environment. We endeavour to identify and work in partnership with a highly skilled and reliable group of subcontractors. We strive to build responsibly on sites with local building trade professionals.
3. Land - the company has been successful in securing development sites both on and off market. We are regularly approached by landowners who appreciate our building style and range of house types who wish to work with us to acquire then develop their land. Our target sites are generally smaller than the major national house builders, but the market is still reasonably competitive and if necessary, we will consider bidding for sites based on a lower required return where we consider the risk profile to justify.
4. Liquidity and Funding - we currently use a small group of flexible and creative funders, including government agencies who offer a variety of routes to funding including joint ventures, deferred land payments and traditional development funding to take the business forward alongside our shareholder support. Development and performance Strategy and Future Outlook The company will continue to purchase well-located sites within sensible travelling distance from our head office near York. Our aim is to offer a high quality, well-specified and value for money new house in a wide range of house types to purchasers across a range of price bands. Energy efficiency and environmental concerns are important to us and their impact on design and procurement and development will increasingly impact on our business in the future
Development and performance
Strategy and Future Outlook
The company will continue to purchase well-located sites within sensible travelling distance from our head office near York. Our aim is to offer a high quality, well-specified and value for money new house in a wide range of house types to purchasers across a range of price bands.
Energy efficiency and environmental concerns are important to us and their impact on design and procurement and development will increasingly impact on our business in the future.
MULGRAVE DEVELOPMENTS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -
Key performance indicators
Key performance indicators (KPls) for the current and preceding year are as follows:
2024 2023
Turnover:
House Sale Turnover £9,409,876 £10,496,764
Part Exchange Sales £245,000 £349,500
Gross Profit on House Sales £1,397,046 £2,530,593
Gross Margin on House Sales 14.8% 24.1%
(Loss)/Profit before taxation (£449,456) £926,840
I P Hessay
Director
30 July 2024
MULGRAVE DEVELOPMENTS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 4 -
The directors present their annual report and financial statements for the year ended 31 March 2024.
Results and dividends
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
C E W Phipps, Marquis of Normanby
J Lloyd
I P Hessay
M R Hills
Auditor
In accordance with the company's articles, a resolution proposing that Hunter Gee Holroyd be reappointed as auditor of the company will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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 and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of the principal activities of the company.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
MULGRAVE DEVELOPMENTS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 5 -
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
I P Hessay
Director
30 July 2024
MULGRAVE DEVELOPMENTS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MULGRAVE DEVELOPMENTS LTD
- 6 -
Opinion
We have audited the financial statements of Mulgrave Developments Ltd (the 'company') for the year ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 March 2024 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 are independent of the 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. 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our 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.
MULGRAVE DEVELOPMENTS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MULGRAVE DEVELOPMENTS LTD (CONTINUED)
- 7 -
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 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, 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.
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 that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
MULGRAVE DEVELOPMENTS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MULGRAVE DEVELOPMENTS LTD (CONTINUED)
- 8 -
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
•the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
•we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the construction sector;
•we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery and employment legislation;
•we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
•identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
•making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
•considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations;
To address the risk of fraud through management bias and override of controls, we:
•performed analytical procedures to identify any unusual or unexpected relationships;
•tested journal entries to identify unusual transactions;
•assessed whether judgements and assumptions made in determining accounting estimates were indicative of potential bias; and
•investigated the rationale behind significant or unusual transactions;
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
•agreeing financial statement disclosures to underlying supporting documentation;
•reading the minutes of meetings of those charged with governance; and
•enquiring of management as to actual and potential litigation and claims;
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
MULGRAVE DEVELOPMENTS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MULGRAVE DEVELOPMENTS LTD (CONTINUED)
- 9 -
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in 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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Nigel Everard
Senior Statutory Auditor
For and on behalf of Hunter Gee Holroyd
5 August 2024
Chartered Accountants
Statutory Auditor
Club Chambers
Museum Street
York
YO1 7DN
MULGRAVE DEVELOPMENTS LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
- 10 -
2024
2023
Notes
£
£
Turnover
3
9,654,876
10,846,264
Cost of sales
(8,281,505)
(8,358,400)
Gross profit
1,373,371
2,487,864
Administrative expenses
(1,692,579)
(1,516,509)
Other operating income
1,690
420
Operating (loss)/profit
4
(317,518)
971,775
Interest receivable and similar income
6
3,700
Interest payable and similar expenses
7
(135,638)
(44,935)
(Loss)/profit before taxation
(449,456)
926,840
Tax on (loss)/profit
8
112,364
(176,100)
(Loss)/profit for the financial year
(337,092)
750,740
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MULGRAVE DEVELOPMENTS LTD
BALANCE SHEET
AS AT 31 MARCH 2024
31 March 2024
- 11 -
2024
2023
Notes
£
£
£
£
Current assets
Stocks
9
11,209,391
8,211,739
Debtors
10
203,704
165,412
Cash at bank and in hand
530,945
571,117
11,944,040
8,948,268
Creditors: amounts falling due within one year
11
(10,358,200)
(7,026,780)
Net current assets
1,585,840
1,921,488
Creditors: amounts falling due after more than one year
12
(1,444)
Net assets
1,584,396
1,921,488
Capital and reserves
Called up share capital
15
1,500,000
1,500,000
Profit and loss reserves
84,396
421,488
Total equity
1,584,396
1,921,488
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 30 July 2024 and are signed on its behalf by:
I P Hessay
Director
Company registration number 08433647 (England and Wales)
MULGRAVE DEVELOPMENTS LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 12 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 April 2022
1,500,000
(329,252)
1,170,748
Year ended 31 March 2023:
Profit and total comprehensive income
-
750,740
750,740
Balance at 31 March 2023
1,500,000
421,488
1,921,488
Year ended 31 March 2024:
Loss and total comprehensive income
-
(337,092)
(337,092)
Balance at 31 March 2024
1,500,000
84,396
1,584,396
MULGRAVE DEVELOPMENTS LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
- 13 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
17
(2,952,942)
430,559
Interest paid
(135,638)
(44,935)
Income taxes paid
(176,101)
(22,889)
Net cash (outflow)/inflow from operating activities
(3,264,681)
362,735
Investing activities
Interest received
3,700
Net cash generated from/(used in) investing activities
3,700
-
Financing activities
Proceeds from new bank loans
3,220,809
Net cash generated from/(used in) financing activities
3,220,809
-
Net (decrease)/increase in cash and cash equivalents
(40,172)
362,735
Cash and cash equivalents at beginning of year
571,117
208,382
Cash and cash equivalents at end of year
530,945
571,117
MULGRAVE DEVELOPMENTS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 14 -
1
Accounting policies
Company information
Mulgrave Developments Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Unit D Chessingham Park, Common Road, Dunnington, York, YO19 5SE.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable on legal completion of a newly built residential property sale. Profit is recognised taking account of estimated costs to complete based on valuations prepared by the commercial team.
Revenue from the sale of part exchange properties is recognised when the sale completes at the sale price.
Revenue from contracts for the provision of building work is recognised by reference to interim payment certificates verified by an independent consultant.
1.4
Stocks
Stocks are stated at the lower of cost and net realisable value. Land being developed and undeveloped land with planning consent is measured at cost including associated costs of acquisition. Work in progress is reviewed on a regular basis and comprises direct building materials, sub contract services, professional fees, directly attributable labour, site expenses and marketing costs. Net realisable value is the estimated selling price of completed houses less the estimated costs to complete. the company carries out regular reviews to identify any indications of impairment. Irrecoverable planning costs are written off immediately.
1.5
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.6
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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.
MULGRAVE DEVELOPMENTS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 15 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
MULGRAVE DEVELOPMENTS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 16 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.7
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.8
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
MULGRAVE DEVELOPMENTS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 17 -
2
Judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The commercial department carries out regular valuations of the degree of completion of each site and estimates the costs to complete each development based on their assessment of factors that affect the financial outcome. Development costs are allocated between the individual house units constructed and those to be built. Estimated profit is allocated evenly across each unit, including affordable houses.
These assessments include a degree of estimation uncertainty which is mitigated in part of the fixed price contracts for certain services or known construction quantities for each house type. However, profitability remains an estimate which depends on provisions for future costs which in turn are based on estimates of site conditions. Profitability also relies on the selling price of property being stable and predictable. The directors have satisfied themselves that site margins have remained stable over a two-year period.
The cost of land is included in work in progress at cost and reviewed periodically for indications of impairment with all the other components of work in progress.
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Property sales
9,654,876
10,846,264
2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
9,654,876
10,846,264
2024
2023
£
£
Other revenue
Interest income
3,700
-
4
Operating (loss)/profit
2024
2023
Operating (loss)/profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
8,820
8,760
MULGRAVE DEVELOPMENTS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 18 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
4
4
6
Interest receivable and similar income
2024
2023
£
£
Interest income
Other interest income
3,700
7
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
79,795
-
Interest payable to group undertakings
55,843
44,935
135,638
44,935
8
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
176,100
Deferred tax
Origination and reversal of timing differences
(112,364)
Total tax (credit)/charge
(112,364)
176,100
MULGRAVE DEVELOPMENTS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
8
Taxation
(Continued)
- 19 -
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
(Loss)/profit before taxation
(449,456)
926,840
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
(112,364)
176,100
Taxation (credit)/charge in the financial statements
(112,364)
176,100
9
Stocks
2024
2023
£
£
Work in progress
11,209,391
8,211,739
10
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
2
4,101
Other debtors
91,338
161,311
91,340
165,412
Deferred tax asset (note 14)
112,364
203,704
165,412
11
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Bank loans
13
3,220,809
Trade creditors
1,168,297
1,102,619
Amounts owed to group undertakings
5,689,661
5,440,384
Corporation tax
176,101
Other creditors
120,127
45,632
Accruals and deferred income
159,306
262,044
10,358,200
7,026,780
MULGRAVE DEVELOPMENTS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 20 -
12
Creditors: amounts falling due after more than one year
2024
2023
£
£
Other creditors
1,444
13
Loans and overdrafts
2024
2023
£
£
Bank loans
3,220,809
Payable within one year
3,220,809
The bank loan is secured by a debenture over all the property, assets and undertaking owned by the company.
14
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2024
2023
Balances:
£
£
Tax losses
112,364
-
2024
Movements in the year:
£
Liability at 1 April 2023
-
Credit to profit or loss
(112,364)
Asset at 31 March 2024
(112,364)
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
15
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,500,000
1,500,000
1,500,000
1,500,000
MULGRAVE DEVELOPMENTS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 21 -
16
Ultimate controlling party
The company is a wholly owned subsidiary of Mulgrave Property Group Limited. The address of that company's registered office is Unit D, Chessingham Park, Common Road, Dunnington, York, YO19 5SE.
17
Cash (absorbed by)/generated from operations
2024
2023
£
£
(Loss)/profit for the year after tax
(337,092)
750,740
Adjustments for:
Taxation (credited)/charged
(112,364)
176,100
Finance costs
135,638
44,935
Investment income
(3,700)
Movements in working capital:
Increase in stocks
(2,997,652)
(2,075,974)
Decrease/(increase) in debtors
74,072
(41,373)
Increase in creditors
288,156
1,576,131
Cash (absorbed by)/generated from operations
(2,952,942)
430,559
18
Analysis of changes in net funds/(debt)
1 April 2023
Cash flows
31 March 2024
£
£
£
Cash at bank and in hand
571,117
(40,172)
530,945
Borrowings excluding overdrafts
-
(3,220,809)
(3,220,809)
571,117
(3,260,981)
(2,689,864)
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