Company registration number 02430019 (England and Wales)
PENNYFARTHING CONSTRUCTION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
PENNYFARTHING CONSTRUCTION LIMITED
COMPANY INFORMATION
Directors
Mr M S S Dukes
Mr M Adams
Mr T R Adams
Mr D Adams
Secretary
Mr M Adams
Company number
02430019
Registered office
Pennyfarthing House
South Drive
Ossemsley
New Milton
Hampshire
England
BH25 5TL
Auditor
HJS (Reading) Limited
3 Richfield Place
Richfield Avenue
Reading
Berkshire
RG1 8EQ
PENNYFARTHING CONSTRUCTION LIMITED
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 22
PENNYFARTHING CONSTRUCTION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 1 -

Principal activities

 

The principal activity of the company is the construction of dwellings for group companies and others.

Review of the business

The directors consider the performance of the Group to be in line with expectations for the year ending 31 January 2024. This is considering the significant challenges the industry has faced and continues to face.

 

This has led to reduced financials year on year with the key financial metrics seen below:

 

£’000

2024

2023

Turnover

£25,650

£28,123

Retained Earnings

-£178

£130

Net Assets

£1,597

£1,419

Return on Capital Employed

10.3%

10.5%

Operational Metrics

 

During the year the following metrics were achieved:

 

 

Private plot completions have dropped year on year as the challenging market conditions continue to make buyers cautious. Sales activity remained uncertain owing to a lack of mortgage availability and affordability. However, confidence in the market is returning, although slower than we would like there are certainly signs of improvement given lower cancellation rates than we have seen historically.

 

We also note first time buyer activity has remained low, mainly due to the lack of availability of products in the market place. We are, however, seeing increased levels of customer engagement as we prepare to launch our First Homes product.

Demand amongst existing homeowners remained challenging with those opting to purchase requiring elevated levels of sales incentives and increased use of enablers such as Early Bird, Part exchange or Assisted Move to secure a sale.

During the year, we operated from 5 outlets, albeit 2 are considered as tail end sites. Our larger schemes provide a varied product range, indicating we should appeal to a wide audience, subject to implementation of a good marketing strategy which we continue to do.

Whilst in previous years, having lower brought forward stock, the rate of build and continued challenges in the planning cycle resulted in less plots available to sell we are now mindful to not over stock while demand is sensitive.

 

Supply chain issues endured during the Covid pandemic and more recently with the war in Ukraine have certainly eased in respect of availability of materials. However, the expectation of a reversal of price inflation has not eased off at the same pace which is having negative effects on margins. Our dedicated procurement team work tirelessly with key suppliers to overcome issues, constantly monitoring prices and keeping construction sites operational.

 

PENNYFARTHING CONSTRUCTION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 2 -

Planning consents remain challenging with local authorities struggling with resource constraints. However, we are pleased with the progress that has been made after years of liaison with all stakeholders that a number of our strategic sites are starting to come to fruition. So far, 4 of our strategic sites have now obtained planning permission equating to approximately 1,100 plots providing future certainty to the gorup. This will help hugely with the well documented housing shortages in the United Kingdom and our regional demographic.

 

We welcome the newly elected Labour Governments enthusiasm on housing and support its ambitious pledge to build 1.5m homes in the next 5 years. Fundamentally, in order to achieve these targets we see that radical change is required throughout the whole process to make it more efficient to allow construction activity to start earlier. We will continue to support the industry through engagement with industry bodies in a constructive manner, hopefully playing our part in making positive industry changes to target the continual shortfall of housing across the United Kingdom.

 

Our long-term strategy continues to be that of developing strategic land interests and convert them into consented sites.

 

Following the year end, the successful planning consents achieved on a number of large housing developments allow the continued throughput of stock in a consistent and well managed basis. Of these sites the group has forward sold 106 plots, being the single largest contract ever entered into and construction is well under way. This will allow us to maintain our strong cash position allowing us to be resilient to any adverse macro- economic changes.

 

The directors are confident of the prospects of the group will continue and will adapt to ever changing challenges as they present themselves.

Principal risks and uncertainties

As with any business, Pennyfarthing faces risks and uncertainties in the course of its operations. It is only by timely identification and effective management of these risks that we are able to deliver our strategy and grow the business.

 

The board have considered the prospects of the company and have taken into account its current financial position and its principal risks. Fundamentally, these arise from the deterioration of the health of the UK economy, brought about by uncertainty, loss of consumer confidence, higher interest rates and increasing unemployment, leading to decreased affordability, reducing demand for housing and falling house prices.

 

The main activities of the group is that of building and development of private dwelling houses for sale. With this comes the potential risks such as:

 

 

 

 

PENNYFARTHING CONSTRUCTION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 3 -
Description of Principal Risks and Uncertainties continued

 

 

 

 

 

Key performance indicators

Given the straightforward nature of the business, the directors are of the opinion that an analysis using KPI's is not necessary for an understanding of the development, performance or position of the company.

 

PENNYFARTHING CONSTRUCTION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 4 -
Financial Risk Management

The company is funded by a mix of retained earnings and group funding.

 

Long term and short term cashflow forecasts are prepared and monitored ensuring the company has adequate funds in place to meet its working capital requirements.

 

The Group have a proud track record of paying suppliers on time and this has resulted in existing suppliers offering further credit terms supporting the future growth of the company. There is certainly more caution amongst new suppliers with more onerous due diligence undertaken before on-boarding. Payment terms are currently 30 days from the end of the month.

 

In addition, should the business fail to adhere to the stringent demand of the regulatory planning and technical requirements there is the potential for increased costs, disruption and reputational damage which all potentially have financial impacts. Constant review of the planning cycle, keeping up to date with regulatory or technical changes through on-going training as well as planning for at least 3 years ahead help mitigate these impacts.

 

Health and Safety

The company places particular emphasis on the health and safety of its employees, subcontractors, customers and others on its sites during the construction process strives for zero accidents through an improving safety culture.

 

Environment

Evolving environmental regulations with an emphasis on sustainability presents challenges and in many cases leads to increased cost and margin erosion. However, taking Corporate responsibility seriously, all companies and staff within the business and wider group are encouraged to be environmentally aware and committed to environmental improvements. The business continues to focus on environmental improvements in the design of its developments and dealing with waste. In addition, the group's housing developments have to provide Biodiversity Net Gain (BNG) which is a concept proposed in the 25 Year Environmental Plan and mandated as a condition of planning permission in the 2019 Environmental Bill. BNG requires a 10% increase in biodiversity after development, compared to the level of biodiversity prior to development taking place. Also and specific to the geographical area in which we develop some of our developments in the Solent catchment area are required to provide nitrate neutrality and within the Avon River catchment phosphate neutrality. Furthermore, the Company continues to deliver Alternative Natural Recreational Greenspace (ANRG) and Suitable Alternative Natural Greenspace (SANG) as part of our developments. Such new public open spaces are intended to mitigate impacts of additional population on protected habitat sites (including the New Forest and Dorset Heathlands) by providing alternative recreation and dog walking opportunities to reduce pressure on protected sites. They provide a health and wellbeing benefit for our residents, being closely located to our developments and a wider resource and benefit for existing communities where we are delivering new homes. Further funding, towards strategic habitats mitigation infrastructure delivery, is also typically secured from our developments.

 

On behalf of the board

Mr M Adams
Director
29 October 2024
PENNYFARTHING CONSTRUCTION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 5 -

The directors present their annual report and financial statements for the year ended 31 January 2024.

Principal activities
Results and dividends

No dividends will be distributed for the year ended 31 January 2024.

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:

Mr M S S Dukes
Mr M Adams
Mr T R Adams
Mr D Adams
Future developments

The Group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the groups 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 future developments

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.

 

 

 

 

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
Mr M Adams
Director
29 October 2024
PENNYFARTHING CONSTRUCTION LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JANUARY 2024
- 6 -

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:

 

 

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.

PENNYFARTHING CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENNYFARTHING CONSTRUCTION LIMITED
- 7 -
Opinion

In our opinion the financial statements:

· give a true and fair view of the state of the company's affairs as at 31 January 2024 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.

We have audited the financial statements of Pennyfarthing Construction Limited for the year ended 31 January 2024 which comprise the statement of comprehensive income, the balance sheet 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).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We 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.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.

Opinions on other matters prescribed by the Companies Act 2006

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

PENNYFARTHING CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENNYFARTHING CONSTRUCTION LIMITED (CONTINUED)
- 8 -
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:

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.

 

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK regulatory principles, such as those governed by the relevant construction authorities. We also considered the laws and regulations which have a direct impact on the financial statements such as the Companies Act 2006.

 

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 management bias in accounting estimates and judgmental areas of the financial statements.


Audit procedures performed by the audit engagement team included:

 

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or though collusion.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

PENNYFARTHING CONSTRUCTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENNYFARTHING CONSTRUCTION LIMITED (CONTINUED)
- 9 -

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.

We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant frameworks which are directly relevant so specific assertions in the financial statements are those that relate to the reporting framework (UK GAAP and the Companies Act 2006) and the relevant tax compliance regulations in the UK.

We understood how the company is complying with those frameworks by making enquiries of management and those responsible for legal and compliance procedures. We corroborated our enquiries through review of board minutes and discussions with those charged with governance.

 

We assess the susceptibility of the company's financial statements to material misstatement, including how fraud might occur, by discussion with management from various parts of the business to understand where they considered there was a susceptibility to fraud. We considered the procedures and controls that the company has established to prevent and detect fraud, and how these are monitored by management, and also any enhanced risk factors such as performance targets.

Based on our understanding, we designed our audit procedures to identify any non-compliance with laws and regulations identified in the paragraphs above.

 

We also performed audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the 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.

Mark H Rogers FCCA
Senior Statutory Auditor
For and on behalf of HJS (Reading) Limited
29 October 2024
Chartered Accountants and Statutory Auditor
3 Richfield Place
Richfield Avenue
Reading
Berkshire
RG1 8EQ
PENNYFARTHING CONSTRUCTION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2024
- 10 -
2024
2023
Notes
£
£
Turnover
3
25,650,359
28,122,767
Cost of sales
(23,236,194)
(25,597,212)
Gross profit
2,414,165
2,525,555
Administrative expenses
(2,225,308)
(2,395,101)
Operating profit
4
188,857
130,454
Interest receivable and similar income
6
-
0
2
Interest payable and similar expenses
7
(12,127)
(294)
Profit before taxation
176,730
130,162
Tax on profit
8
1,285
-
0
Profit for the financial year
178,015
130,162

The profit and loss account has been prepared on the basis that all operations are continuing operations.

PENNYFARTHING CONSTRUCTION LIMITED
BALANCE SHEET
AS AT
31 JANUARY 2024
31 January 2024
- 11 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
9
341,295
197,041
Current assets
Debtors
10
5,689,179
4,929,758
Cash at bank and in hand
44,191
469,189
5,733,370
5,398,947
Creditors: amounts falling due within one year
11
(4,340,328)
(4,156,376)
Net current assets
1,393,042
1,242,571
Total assets less current liabilities
1,734,337
1,439,612
Creditors: amounts falling due after more than one year
12
(116,710)
-
0
Provisions for liabilities
Deferred tax liability
15
20,130
20,130
(20,130)
(20,130)
Net assets
1,597,497
1,419,482
Capital and reserves
Called up share capital
17
4,100
4,100
Profit and loss reserves
1,593,397
1,415,382
Total equity
1,597,497
1,419,482
The financial statements were approved by the board of directors and authorised for issue on 29 October 2024 and are signed on its behalf by:
Mr M  Adams
Director
Company Registration No. 02430019
PENNYFARTHING CONSTRUCTION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024
- 12 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 February 2022
4,100
1,285,220
1,289,320
Year ended 31 January 2023:
Profit and total comprehensive income
-
130,162
130,162
Balance at 31 January 2023
4,100
1,415,382
1,419,482
Year ended 31 January 2024:
Profit and total comprehensive income
-
178,015
178,015
Balance at 31 January 2024
4,100
1,593,397
1,597,497
PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
- 13 -
1
Accounting policies
Company information

Pennyfarthing Construction Limited is a private company limited by shares incorporated in England and Wales. The registered office is Pennyfarthing House, South Drive, Ossemsley, New Milton, Hampshire, England, BH25 5TL.

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, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Pennyfarthing Developments Limited. These consolidated financial statements are available from its registered office,

1.2
Going concern

The company is a member of the Pennyfarthing Developments Limited group of companies. Its business activities, current financial position and the risks which the directors consider may impact the business in the future are set out in the Strategic Report and Directors Report.true

 

The resources available to the company are monitored as a part of the overall group process. Plans and forecasts are made 3 year's in advance. These plans are periodically reviewed with sensitivities applied to stress test the outcomes. Input from all departments is sought so the best possible insight is provided.

 

These plans allow for cash forecasts to be considered in the short, medium and long term. Weekly cashflows considering the next six to twelve months ensure that short term cash is always readily available.

 

 

On this basis the directors consider it is appropriate to prepare financial statements on a going concern basis. The financial statements do not include any adjustments that might be necessary if the going concern basis was no longer appropriate.

PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 14 -
1.3
Turnover

Turnover comprises the fair value of the consideration received or receivable, net of value added tax, in respect of property development and after eliminating sales within the group. In particular:

 

1.4
Tangible fixed assets

Tangible fixed assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent impairment losses.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Plant and equipment
25% on cost
Fixtures and fittings
25% on cost
Motor vehicles
25% on cost
1.5
Financial instruments

Classification

The company holds the following financial instruments, all of which are considered to be basic.

Recognition and measurement

Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument.

 

Short term debtors and creditors

Basic financial assets includes short term trade and other debtors. Basic financial liabilities includes short term trade and other creditors. Such instruments are initially measured at transaction price including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be received or paid.

 

Cash at bank and in hand

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings within current liabilities.

 

Loans and borrowings (including bank overdrafts)

Loans which meet the criteria under FRS102 to be classed as basic financial instruments.

 

Bank loans are initially measured at transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method.

 

Other loans are initially measured at transaction price, including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be paid or received.

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.

PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 15 -
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.

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.

1.6
Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

 

Current or deferred taxation assets and liabilities are not discounted.

Current tax

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 16 -
Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

 

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

 

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

1.7
Retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

1.8
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

1.9

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

 

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 17 -
2
Judgements and key sources of estimation uncertainty

Preparation of the financial statements requires the directors to make significant judgements, estimates and assumptions. 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 associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in that period and future periods where the revision affect both the current and future periods.

 

The main accounting estimates are:

 

Depreciation - the group establishes a reliable estimate of the useful lives of tangible fixed assets.

 

Investment property valuation - The group establishes a reliable estimate of the market value of investment properties based on internal valuations and the directors expertise in this area.

 

Land stock values - The company establishes a reliable estimate of the market value of the land which it holds in stock for future development and provides for any loss in value based on internal valuations and the directors expertise in this area.

 

Assessment of costs to complete - This involves estimating final development costs and selling prices and impacts profit recognised in allocating costs to sales completions before and after the year end.

 

Accrued costs - involving a degree of estimation uncertainty in respect of final account settlement.

 

3
Turnover and other revenue
2024
2023
£
£
Other revenue
Interest income
-
2
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
7,797
7,200
Fees payable to the company's auditor for tax compliance
-
500
Depreciation of owned tangible fixed assets
116,761
68,841
Depreciation of tangible fixed assets held under finance leases
-
8,142
Profit on disposal of tangible fixed assets
(81,197)
(6,420)
PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 18 -
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2024
2023
Number
Number
Administrative staff
40
38
Site operatives
30
30
Total
70
68

Directors' remuneration is borne by the another group entity and disclosed in those financial statements.

2024
2023
£
£
Wages and salaries
3,285,390
3,800,036
Social security costs
441,531
463,283
Pension costs
274,481
95,746
4,001,402
4,359,065
6
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
-
0
2
7
Interest payable and similar expenses
2024
2023
£
£
Interest on finance leases and hire purchase contracts
12,127
294
PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 19 -
8
Taxation
2024
2023
£
£
Deferred tax
Origination and reversal of timing differences
(1,285)
-
0

The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2024
2023
£
£
Profit before taxation
176,730
130,162
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
44,183
24,731
Tax effect of expenses that are not deductible in determining taxable profit
(29,190)
(21,354)
Tax effect of income not taxable in determining taxable profit
20,299
-
0
Group relief
-
0
(3,377)
Capital Allowances
(35,292)
-
0
Deferred Tax Asset
(1,285)
-
0
Taxation credit for the year
(1,285)
-
9
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 1 February 2023
812,581
91,806
293,186
1,197,573
Additions
172,100
4,432
96,286
272,818
Disposals
(104,990)
-
0
(40,465)
(145,455)
At 31 January 2024
879,691
96,238
349,007
1,324,936
Depreciation and impairment
At 1 February 2023
676,710
79,634
244,188
1,000,532
Depreciation charged in the year
82,841
4,394
29,526
116,761
Eliminated in respect of disposals
(104,990)
-
0
(28,662)
(133,652)
At 31 January 2024
654,561
84,028
245,052
983,641
Carrying amount
At 31 January 2024
225,130
12,210
103,955
341,295
At 31 January 2023
135,871
12,172
48,998
197,041
PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
9
Tangible fixed assets
(Continued)
- 20 -

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2024
2023
£
£
Motor vehicles
223,520
2,701
10
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
2,909
35,929
Amounts owed by group undertakings
5,384,859
4,812,450
Other debtors
268,128
64,068
Prepayments and accrued income
31,998
17,311
5,687,894
4,929,758
Deferred tax asset (note 15)
1,285
-
0
5,689,179
4,929,758
11
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Obligations under finance leases
13
77,657
4,758
Trade creditors
3,305,219
3,212,490
Amounts owed to group undertakings
450,273
273,849
Taxation and social security
149,433
132,336
Other creditors
474
474
Accruals and deferred income
357,272
532,469
4,340,328
4,156,376
12
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Obligations under finance leases
13
116,710
-
0
PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 21 -
13
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
77,657
4,758
In two to five years
116,710
-
0
194,367
4,758

 

14
Secured debts

Hire purchase contracts, which are secured debts, are included within creditors at £194,367 (2023: £4,758).

15
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
Assets
Assets
2024
2023
2024
2023
Balances:
£
£
£
£
Accelerated capital allowances
20,130
20,130
-
-
Tax losses
-
-
1,285
-
20,130
20,130
1,285
-
2024
Movements in the year:
£
Liability at 1 February 2023
20,130
Credit to profit or loss
(1,285)
Liability at 31 January 2024
18,845

 

16
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
274,481
95,746

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

PENNYFARTHING CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 22 -
17
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
4,100
4,100
4,100
4,100
18
Related party transactions
Transactions with related parties

During the year the company entered into the following transactions with related parties:

Sales
Sales
Purchases
Purchases
2024
2023
2024
2023
£
£
£
£
Entities over which the entity has control, joint control or significant influence
240,525
154,919
-
-
Key management personnel
96,461
38,061
38,900
45,017
Other related parties
607
816
-
-

 

19
Ultimate controlling party

Pennyfarthing Developments Limited is regarded by the directors as being the company's ultimate parent company.

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