Company registration number 03004427 (England and Wales)
PENNYFARTHING HOMES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
PENNYFARTHING HOMES 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
03004427
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 HOMES 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 - 21
PENNYFARTHING HOMES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 1 -

The directors present the strategic report for the year ended 31 January 2024.

Review of the business

The directors are pleased with the performance the company has had for the year ending 31 January 2024. The year was the second consecutive year of breaking performance records with private plot completions at 59 units which is better than the previous record set during the year ending 31 January 2023 of 59 private plots sold. Also, during the year a further 14 units of affordable housing were built and sold.

Surprisingly, these exceptional results all stem off the continued back drop of the Covid 19 pandemic and is largely down to the support and expertise that all staff have demonstrated during these challenging times.

This has led to year-on-year growth and key financial metrics can be seen below.

£’000

2024

2023

Turnover

£21,315

£25,229

Retained Earnings

-£1,927

-£227

Net Assets

£21,786

£23,713

Return on Capital Employed

-8.85%

-0.96%

Issues continue to present themselves with pressures on supply chains leading to increased prices and delivery times, but our dedicated procurement team tirelessly work closely with key suppliers to overcome this and keep construction sites operational.

Planning consents remain challenging with local authorities struggling with resource constraints coupled with demonstrating nutrient neutrality on development sites blocking the approval of planning permissions. These issues continue to be considered and solutions are well underway to mitigate any future problems.

On consented sites, construction activity is at full capacity as the group tries to fulfil the sales demand which are currently outstripping supply which has pushed house prices up not only in the new build sector but across the whole market place. These increased sales prices have mitigated the cost pressures arising from the Covid 19 pandemic but will undoubtedly continue as a result of the war in Ukraine pushing energy prices up amongst other things.

Our long-term strategy is to develop strategic land interests by obtaining planning consents on larger housing developments to allow the continued throughput of stock in a consistent and well managed basis. A number of strategic sites are currently well progressed with planning submissions having been submitted. 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 that the profitability of the group will continue and will adapt to ever changing challenges as they present themselves.

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

 

 

 

 

The decision to change the scheme, bringing in eligibility criteria is now known with regional caps also being placed on house prices that qualify. In addition, it is only available for first time buyers and currently is expected to end in March 2023 which supports a controlled unwind of the scheme.

 

Consideration needs to be given to the pricing strategies, locations and land purchases in which the company operates due to the lending cap differentials in the regions we operate. Our operations border the South East and South West where the caps are £437,600 and £349,000 respectively which could influence consumer demand considering over a third of buyers use Help to Buy.

 

 

 

PENNYFARTHING HOMES 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.

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.

 

It has a proud track record of paying suppliers on time and this has resulted in suppliers offering further credit terms supporting the future growth of the company. 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 and is working towards zero accidents through an improving safety culture.

 

Additional measures have and will continue to be in place following Government advice on Covid-19 best practices.

 

Environment

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 provide Alternative Natural Recreational Greenspace (ANRG) (which is also referred to by some Local Authorities as Suitable Alternative Natural Greenspace (SANG)) which gives lots of open space for our developments to enjoy as well as the local communities where we operate.

PENNYFARTHING HOMES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 4 -
Promoting the success of the company

The Board of Directors confirm that during the year under review, It has acted to promote the long term success of the Company for the benefit of the shareholders, while having due regard to matters set out in section 172 (1) of the Companies Act 2006.

  1. The likely consequences of any decision in the long term;

  2. The interest’s of the Company employees;

  3. The need to foster the Company’s business relationships with suppliers, customers and others;

  4. The impact of the Company’s operations on the community and the environment;

  5. The desirability of the Company maintaining a reputation for high standards of business conduct; and

  6. The need to act fairly as between members of the Company

The Company reviews its approach to corporate governance and decision making, engagement with stakeholders and the Company’s impact on the environment.

The Company has demonstrated this by their strategic approach underpinned by the operational and functional business plans in their duty to fulfil Section 172.

The Company has a clear Purpose underpinned by its core values in its approach to its multi stakeholder model, to include Employees, Consumers, Customers, Suppliers and Distributors, and in its approach to Environmental sustainability, The wider society, and its shareholders.

This has been managed through Employee development and reward initiatives supported by employee engagement reviews and employee metrics including robust Health and Safety operating procedures.

The Company’s ethos is to embed long term partnership agreements, with all parties within the supply chain who are expected to uphold the same high standards of business ethics and agreement charters to ensure adherence to modern slavery, human rights and corruption policies.

Corporate social responsibility, environmental sustainability, and charitable endeavours around the globe is at the very core of the Cultures and Values of the organisation and will continue to be so.

On behalf of the board

Mr M Adams
Director
29 October 2024
PENNYFARTHING HOMES 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

The principal activity of the company in the year under review was that of building and development of private dwelling houses for sale.

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:

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

Auditor

The auditors, HJS (Reading) Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

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.

On behalf of the board
Mr M Adams
Director
29 October 2024
PENNYFARTHING HOMES 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 HOMES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENNYFARTHING HOMES 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 Homes 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.

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:

PENNYFARTHING HOMES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENNYFARTHING HOMES 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.

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

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

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 HOMES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2024
- 10 -
2024
2023
as restated
Notes
£
£
Turnover
3
21,315,308
25,228,727
Cost of sales
(20,415,967)
(23,121,227)
Gross profit
899,341
2,107,500
Administrative expenses
(1,875,407)
(2,149,931)
Other operating income
2,100
7,321
Operating loss
4
(973,966)
(35,110)
Interest receivable and similar income
52,605
108
Interest payable and similar expenses
6
(1,647,670)
(770,744)
Loss before taxation
(2,569,031)
(805,746)
Tax on loss
7
642,258
578,091
Loss for the financial year
(1,926,773)
(227,655)

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

PENNYFARTHING HOMES LIMITED
BALANCE SHEET
AS AT
31 JANUARY 2024
31 January 2024
- 11 -
2024
2023
as restated
Notes
£
£
£
£
Current assets
Stocks
9
50,343,161
43,098,957
Debtors
10
3,207,450
1,952,808
Cash at bank and in hand
2,230,078
2,740,937
55,780,689
47,792,702
Creditors: amounts falling due within one year
11
(18,736,756)
(20,829,060)
Net current assets
37,043,933
26,963,642
Creditors: amounts falling due after more than one year
12
(15,257,969)
(3,250,905)
Net assets
21,785,964
23,712,737
Capital and reserves
Called up share capital
15
100
100
Profit and loss reserves
21,785,864
23,712,637
Total equity
21,785,964
23,712,737
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. 03004427
PENNYFARTHING HOMES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 January 2023:
Balance at 1 February 2022
100
27,213,194
27,213,294
Effect of change in accounting policy
-
(2,597,902)
(2,597,902)
As restated
100
24,615,292
24,615,392
Year ended 31 January 2023:
Loss and total comprehensive income
-
(227,655)
(227,655)
Dividends
8
-
(675,000)
(675,000)
Balance at 31 January 2023
100
23,712,637
23,712,737
Year ended 31 January 2024:
Loss and total comprehensive income
-
(1,926,773)
(1,926,773)
Balance at 31 January 2024
100
21,785,864
21,785,964
PENNYFARTHING HOMES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
- 13 -
1
Accounting policies
Company information

Pennyfarthing Homes 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. 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 years 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 HOMES 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. In particular:

1.4
Stocks

Stock and work in progress is initially stated at cost and then held at the lower of this initial amount and net realisable value. Costs comprise direct materials and, where applicable, direct labour and those overheads that have been incurred in bringing the stocks to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs to completion and costs incurred in marketing and selling. Land is recognised at the time contracts become unconditional.

 

Non-refundable land option payments are initially recognised in stock. They are reviewed regularly

for any impairment adjustment or when it is probable that the option will not be exercised. Any such adjustment is recognised in the income statement.

1.5
Financial instruments

Classification

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

 

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 HOMES 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 HOMES 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
Leases

Rental income is recognised on a straight line basis over the life of the lease.

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:

 

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
52,605
108
4
Operating loss
2024
2023
Operating loss for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
10,745
10,000
Fees payable to the company's auditor for tax compliance
-
500
PENNYFARTHING HOMES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 17 -
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
10,745
10,000
6
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
1,647,670
770,744
7
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
-
0
109,070
Adjustments in respect of prior periods
-
0
(493,601)
Total current tax
-
0
(384,531)
Deferred tax
Origination and reversal of timing differences
(642,258)
(193,560)
Total tax credit
(642,258)
(578,091)

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

2024
2023
£
£
Loss before taxation
(2,569,031)
(805,746)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2023: 25.00%)
(642,258)
(201,437)
Under/(over) provided in prior years
-
0
(70,961)
Deferred tax adjustments in respect of prior years
-
0
(193,560)
Restatement to Corporation Tax Charge
-
0
(112,133)
Taxation credit for the year
(642,258)
(578,091)
PENNYFARTHING HOMES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 18 -
8
Dividends
2024
2023
£
£
Interim paid
-
0
675,000
9
Stocks
2024
2023
£
£
Work in progress
50,343,161
43,098,957
10
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
150,690
158,220
Corporation tax recoverable
1,283,296
1,283,296
Amounts owed by group undertakings
820,693
-
0
Other debtors
91,588
110,935
Prepayments and accrued income
49,058
206,797
2,395,325
1,759,248
Deferred tax asset (note 14)
812,125
193,560
3,207,450
1,952,808
11
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Bank loans
13
4,321,043
6,999,327
Trade creditors
58,906
128,525
Amounts owed to group undertakings
11,091,453
9,776,347
Accruals and deferred income
3,265,354
3,924,861
18,736,756
20,829,060
12
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Bank loans and overdrafts
13
15,257,969
3,250,905
PENNYFARTHING HOMES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 19 -
13
Loans and overdrafts
2024
2023
£
£
Bank loans
19,579,012
10,250,232
Payable within one year
4,321,043
6,999,327
Payable after one year
15,257,969
3,250,905

The bank loans are secured by first charges over certain land and properties included in work in progress.

 

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
812,125
193,560
2024
Movements in the year:
£
Asset at 1 February 2023
(193,560)
Credit to profit or loss
(618,565)
Asset at 31 January 2024
(812,125)

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
of £1 each
100
100
100
100
PENNYFARTHING HOMES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 20 -
16
Financial commitments, guarantees and contingent liabilities

The company is registered with the NHBC and Premier Guarantee. As such, it guarantees to make structural repairs to the properties built where such defects manifest themselves within the first two years after the sale. The guarantee may be claimed up to ten years after the sale of the property.

 

The company has acquired land on terms which may require an addition to the purchase consideration if the gross development value of units on that land exceeds a certain amount. Any increase in land purchase consideration is a function of the increase in gross development value, usually a fixed percentage, and any increase in land cost will be outweighed by the increase in gross development value.

 

In the normal course of business the company has given counter indemnities in respect of performance bonds and financial guarantees amounting to £432,308 (2022 - £451,659).

PENNYFARTHING HOMES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 21 -
17
Related party transactions
Transactions with related parties

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

2024
2023
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
7,675,435
8,006,293
18
Ultimate controlling party

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

19
Prior period adjustment

The directors’ have carried out an assessment of work in progress balance recoverability and as such have undertaken to adjust the prior period reserves by £2,004,301 in 2022 and £1,664,278 in 2023, these balances are inclusive of corporation tax and deferred tax movements.

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