Registered number: 06362844
Pentland Homes (Holdings) Limited
Annual Report and Financial Statements
For the Year Ended 31 January 2024
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Pentland Homes (Holdings) Limited
Company Information
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Canterbury Road, Etchinghill
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Chartered Accountants & Statutory Auditor
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Pentland Homes (Holdings) Limited
Contents
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Independent Auditors' Report
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Consolidated Statement of Comprehensive Income
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Consolidated Balance Sheet
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Notes to the Financial Statements
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Pentland Homes (Holdings) Limited
Group Strategic Report
For the Year Ended 31 January 2024
The directors present their strategic report for the year ended 31 January 2024.
The main activity of the group was the building of new housing in the Southeast of England.
Pentland Homes (Holdings) Limited have traditionally had a large presence in East Kent, and this will continue to be a key area for the group. The new management teams have plans to further expand the group westwards into the wider Kent Market.
Planning delays have had the biggest impact on the results of the group with under resourced local authorities and continuing government tinkering failing to resolve the fundamental shortage of new homes in the country.
The new management team took the decision to standardise the product range and replan 3 consented sites. These consents took far longer than anticipated and site starts were considerably delayed as a result.
The replanned sites have now commenced and should see the group returning to profit in the new financial year with a significant upturn in profitability forecast in the following year.
In addition to planning delays, the weakening of the housing market has also contributed to these losses with slower sales rates and some reductions in prices impacting on margins.
The replanned sites have commenced and will see the business return to profitability in the financial year ended 31st January 2025 with a significant upturn in profitabilty in the year ended 31st January 2026.
There are improvements being seen in the housing market, inflation is heading in the right direction and the expectations of a summer 2024 reduction in interest rate remains.
We have commenced construction on 3 new developments (89 units) in the year with plans to start a further 3 in the second half of 2024 (252 units). These will give a sound base to increase turnover and improve profitability.
Our land bank with associated companies totals 2,956 units. This is an Increase of 206 units in the year.
The Directors are positive about the future growth of the business. There are improvements being seen in the housing market as inflation is getting under control along with the expectation that interest rates will start to fall later in 2024.
Page 1
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Pentland Homes (Holdings) Limited
Group Strategic Report (continued)
For the Year Ended 31 January 2024
Key Financial Performance Indicators
The balance sheet remains strong with Shareholders funds at £29m.
Retention and development of staff is extremely important to the business, We have completed the rollout of a market leading incentive package that will help us retain and attract the best people in our industry. We are also implementing a management development programme for our middle managers.
The Directors are positive about the future growth of the group. There are improvements being seen in the housing market as inflation is getting under control along with the expectation that interest rates will start to fall later in 2024.
Principal risks and uncertainties
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There are signs of improvement in the economy that should see the demand for housing improving in the next year. The biggest impact on the company’s results was the lack of supply brought on by planning delays. The commencement of the new sites will reduce this risk and improve the profitability of the business.
The group builds good quality housing that remains in short supply in the Southeast and we are confident that there will remain a demand for this. There are currently 4 sites in build with 3 new sites due to commence in the next year. The new sites benefit from outline planning permissions but are awaiting reserved matters approvals.
Interest Rate Risk
At the time of writing the group had drawn £14m under its £25m Revolving Credit Facility (RCF) with Lloyds Bank. In June 2022 the directors took the decision to enter into an interest rate cap for £10m at a SONIA rate of 4%. The directors are satisfied that this provides adequate protection against future interest rate rises.
Liquidity Risk
The group is well funded with a strong balance sheet with shareholder funds at £29m and a market leading RCF (Revolving Credit Facility) from Lloyds Bank. This leaves it in a strong capital position to deal with any downturn in the market and sufficient capital to pursue new land opportunities.
Page 2
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Pentland Homes (Holdings) Limited
Group Strategic Report (continued)
For the Year Ended 31 January 2024
Directors' statement of compliance with duty to promote the success of the Group
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Directors have acted and continue to act in the way they consider, in good faith, would be most likely to promote the success of the group for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
a) the likely consequences of any decision in the long term,
b) the interests of the Group's employees,
c) the need to foster the Group's business relationships with suppliers, customers and others,
d) the impact of the Group's operations on the community and the environment,
e) the desirability of the Group maintaining a reputation for high standards of business conduct, and
f) the need to act fairly as between members of the Group.
In doing so, the directors have encouraged good relationships with all of its stakeholders, and in particular:
∙with local communities during the planning stages of new developments, holding meetings to encourage contributions from local authorities, parish councils and the public;
∙with local charities both directly and through the associated charitable foundation, to contribute to their valuable work;
∙with contractors on sites to ensure that the works have as little impact on local residents as practicable, with favourable responses both from the residents and the Considerate Contractors Scheme inspectors. Quarterly newsletters and information boards are provided for the larger sites;
∙with the local environment, maintaining "exceptional environmental policies, procedures and ecology measures" during pre-commencement, development and after the sites have been occupied, through the various site management companies;
∙with customers, as the Group strives for excellence during the purchase process, at the time of occupation and afterwards through its customer care relationships.
The Group is very aware of the valued contribution made by all of its staff and its contractors, and the directors ensure the highest levels of management commitment to encourage health, safety, skill and enthusiasm throughout the workforce.
This report was approved by the board and signed on its behalf.
Page 3
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Pentland Homes (Holdings) Limited
Directors' Report
For the Year Ended 31 January 2024
The directors present their report and the financial statements for the year ended 31 January 2024.
Directors' responsibilities statement
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The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The principal activity of the Group in the year under review was that of the development and sale of residential property.
The loss for the year, after taxation, amounted to £2,631,832 (2023 - loss £1,601,925).
The directors did not recommend a final dividend for the year (2023: £500,000).
The directors who served during the year were:
The Group made no political donations in the period.
The Group has built up a land bank that will provide an increasing number of house sales in the future. Planning permission has been achieved for many existing owned sites, but the directors will consider purchasing new parcels of land for prompt development.
Page 4
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Pentland Homes (Holdings) Limited
Directors' Report (continued)
For the Year Ended 31 January 2024
The Group has the benefit of an interest rate hedge contract to protect against significant interest rate increases.
Research and development activities
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The Group continues to investigate alternative methods of construction, for improved build quality and efficiency
of construction processes.
Going concern
The activities of the Group and the factors that are likely to affect its future development, financial position and
risk management objectives are described in the Strategic Report.
The Group has considerable financial resources and access to further funding, and the directors consider that the Group is in a strong position to manage its business risks and to take advantage of the market conditions in the house building industry. Consequently they continue to adopt the going concern basis in preparing the annual report and accounts.
The directors have reviewed the Group's business and consider that there are no liabilities that have not been
shown in the balance sheet.
Engagement with suppliers, customers and others
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Engagement with suppliers, customers and other other stakeholders is explained in the strategic report.
Matters covered in the Group Strategic Report
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Items required under Sch. 7 to be disclosed in the directors' report are set out in the strategic report in accordance with s.414C(11) CA 2006.
Greenhouse gas emissions, energy consumption and energy efficiency action
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The Group's greenhouse gas emissions and energy consumption are as follows:
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Associated greenhouse gas emissions (in tonnes of CO2 equivalent)
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The GHG Reporting Protocol - Corporate Standard Methodology was used to calculate the group's emissions and energy consumption.
Intesity ratio: Emissions per £ of sales revenue - 612.
During the year the group took action to replace the majority of our diesel company vehicles with fully electric and hybrid vehicles.
Disclosure of information to auditors
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
Page 5
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Pentland Homes (Holdings) Limited
Directors' Report (continued)
For the Year Ended 31 January 2024
The auditors, Kreston Reeves LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Page 6
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Pentland Homes (Holdings) Limited
Independent Auditors' Report to the Members of Pentland Homes (Holdings) Limited
We have audited the financial statements of Pentland Homes (Holdings) Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 January 2024, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of 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 Group's and of the parent Company's affairs as at 31 January 2024 and of the Group's 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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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 Group's or the parent 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.
Page 7
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Pentland Homes (Holdings) Limited
Independent Auditors' Report to the Members of Pentland Homes (Holdings) Limited (continued)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual 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.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent Company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
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As explained more fully in the Directors' Responsibilities Statement set out on page 4, 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 Group's and the parent 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 Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Page 8
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Pentland Homes (Holdings) Limited
Independent Auditors' Report to the Members of Pentland Homes (Holdings) Limited (continued)
Auditors' responsibilities for the audit of the financial statements
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Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• Discussions with management and assessment of known or suspected instances of non-compliance
with laws and regulations and fraud; and
• Assessment of identified fraud risk factors; and
• Challenging assumptions and judgements made by management in its significant accounting estimates;
and
• Performing analytical procedures to identify any unusual or unexpected relationships, including related
party transactions, that may indicate risks of material misstatement due to fraud; and
• Confirmation of related parties with management, and review of transactions throughout the period to
identify any previously undisclosed transactions with related parties outside the normal course of business;
and
• Reading minutes of meetings of those charged with governance, reviewing internal audit reports
and reviewing correspondence with relevant tax and regulatory authorities; and
• Review of internal controls and physical inspection of tangible assets susceptible to fraud or irregularity;
and
• Review of significant and unusual transactions and evaluation of the underlying financial
rationale supporting the transactions; and
• Identifying and testing journal entries, in particular any manual entries made at the year end for
financial statement preparation.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
Page 9
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Pentland Homes (Holdings) Limited
Independent Auditors' Report to the Members of Pentland Homes (Holdings) Limited (continued)
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' Report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' Report. However, future events or conditions may cause the Company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
∙Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Mark Attwood FCCA (Senior Statutory Auditor)
for and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
Canterbury
12 July 2024
Page 10
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Pentland Homes (Holdings) Limited
Consolidated Statement of Comprehensive Income
For the Year Ended 31 January 2024
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Exceptional administrative expenses
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Interest receivable and similar income
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Interest payable and similar expenses
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Loss for the financial year
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Total comprehensive income for the year
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(Loss) for the year attributable to:
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Owners of the parent Company
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There were no recognised gains and losses for 2024 or 2023 other than those included in the consolidated statement of comprehensive income.
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The notes on pages 17 to 38 form part of these financial statements.
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Page 11
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Pentland Homes (Holdings) Limited
Registered number: 06362844
Consolidated Balance Sheet
As at 31 January 2024
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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Equity attributable to owners of the parent Company
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 38 form part of these financial statements.
Page 12
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Pentland Homes (Holdings) Limited
Registered number: 06362844
Company Balance Sheet
As at 31 January 2024
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Profit and loss account brought forward
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Other changes in the profit and loss account
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 38 form part of these financial statements.
Page 13
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Pentland Homes (Holdings) Limited
Consolidated Statement of Changes in Equity
For the Year Ended 31 January 2024
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Equity attributable to owners of parent Company
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Dividends: Equity capital
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The notes on pages 17 to 38 form part of these financial statements.
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Page 14
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Pentland Homes (Holdings) Limited
Company Statement of Changes in Equity
For the Year Ended 31 January 2024
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Dividends: Equity capital
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The notes on pages 17 to 38 form part of these financial statements.
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Page 15
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Pentland Homes (Holdings) Limited
Consolidated Statement of Cash Flows
For the Year Ended 31 January 2024
Cash flows from operating activities
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Loss for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Loss on disposal of tangible assets
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(Increase)/decrease in stocks
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Decrease/(increase) in debtors
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Increase/(decrease) in creditors
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Net cash from investing activities
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Cash flows from financing activities
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Net cash used in financing activities
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Net (decrease) in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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Page 16
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
Pentland Homes (Holdings) Limited is a limited liability company incorporated in England and Wales with the registration number 06362844. The address of the registered office is The Estate Office, Canterbury Road, Etchinghill, Folkestone, Kent, CT18 8FA.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with UK GAAP, the company annually assesses whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the ability of the group to
continue as a going concern and meets its obligation as they become due for one year after the date
that the financial statements are issued. This evaluation is based on relevant conditions and events
that are known or reasonably knowable at this date. If substantial doubt exists, management will also
assess whether there are effective plans in place to alleviate these conditions.
Management has performed this evaluation through to the date of signing of the accounts and determined that there are no conditions or events, considered in the aggregate, that raise substantial doubt about the company’s ability to continue as a going concern for one year after signing.
Page 17
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
Page 18
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Sale of residential units
In respect of sales of residential units, a contract is established through a formal purchase process that involves the exchange of contracts via solicitors. Revenue from the sale of residential units is recognised at a point in time on legal completion where the group has transferred to the buyer the control of the units.
Contract revenue
The group acts as a main contractor on certain building projects, primarily on behalf of the housing associations where the group must provide social housing units as part of its obligations under the planning consent or has sold the land to the housing association and entered into a construction contract to provide the completed units.
Revenue on construction contracts is recognised over time as the performance obligations are satisfied. The output method is used to measure the progress of the group's performance over the duration of the contract. This is done through valuation surveys conducted by the group and by the customer respectively who then agree the value of work completed. The agreed valuation is used to determine the revenue to be recognised for the period. Where the outcome of a contract on which revenue is recognised over time cannot be estimated reliably, revenue is recognised to the extent of contract costs incurred.
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Operating leases: the Group as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Page 19
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
2.Accounting policies (continued)
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Leased assets: the Group as lessee
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Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.
Page 20
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Amortisation is provided on the following bases:
Page 21
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
At each reporting date the Group assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Long-term leasehold property
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Page 22
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
2.Accounting policies (continued)
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.
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Provisions for liabilities
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Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Increases in provisions are generally charged as an expense to profit or loss.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
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.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as
Page 23
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
2.Accounting policies (continued)
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Financial instruments (continued)
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subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
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 Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Page 24
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Judgements in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires the Directors to make judgements, estimates and
assumptions that can affect the amounts reported for assets and liabilities, and the results for the year.
The nature of estimation is such that actual outcomes could differ significantly from those estimates.
The following judgements have had the most significant impact on amounts recognised in the financial
statements:
i) Valuation of inventories
The group values inventories at the lower of cost and net realisable value. The net realisable value is based on the judgement of the probability that planning consent will be granted for each site. The group believes that based on directors' experience, planning consent will be given. If planning consent was not achieved than a provision may be required against inventories.
In applying the group's accounting policy for the valuation of inventories the directors are required to assess the expected selling price and costs to sell each of the plots or units that constitute the group's work in progress. Cost includes the cost of acquisition of sites, the cost of infrastructure and construction works, and legal and professional fees incurred during development prior to sale. Estimation of selling price is subject to significant inherent uncertainties, in particular the prediction of future trends in the market value of land.
Whilst the directors exercise due care and attention to make reasonable estimates, taking into account all available information in estimating the future selling price, the estimates will, in all likelihood, differ from actual selling prices achieved in future periods and these differences may, in certain circumstances, be very significant. The critical judgement in respect of receipt of planning consent further increases the level of estimation uncertainty.
ii) Useful economic lives of tangible fixed assets
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and physical condition of the assets.
Page 25
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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An analysis of turnover by class of business is as follows:
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Property development and sale
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Analysis of turnover by country of destination:
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The operating loss is stated after charging:
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Other operating lease rentals
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During the year, the Group obtained the following services from the Company's auditors and their associates:
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Fees payable to the Company's auditors and their associates for the audit of the consolidated and parent Company's financial statements
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Page 26
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Administration and support
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During the year retirement benefits were accruing to 1 director (2023 - 8) in respect of defined contribution pension schemes.
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The highest paid director received remuneration of £332,557 (2023 - £2,078,840).
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The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £19,333 (2023 - £NIL).
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Other interest receivable
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Page 27
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Interest payable and similar expenses
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Other loan interest payable
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Page 28
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
12.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2023 - higher than) the standard rate of corporation tax in the UK of 25% (2023 - 19%). The differences are explained below:
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Loss on ordinary activities before tax
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Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 19%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for year in excess of depreciation
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Utilisation of tax losses
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Adjustments to tax charge in respect of prior periods
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Short-term timing difference leading to an increase (decrease) in taxation
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Unrelieved tax losses carried forward
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Total tax charge for the year
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Factors that may affect future tax charges
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There were no factors that may affect future tax charges.
Page 29
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Charge for the year on owned assets
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Page 30
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Long-term leasehold property
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Charge for the year on owned assets
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Page 31
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Investments in subsidiary companies
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The following were subsidiary undertakings of the Company:
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The Estate Office Canterbury Road, Etchinghill, Folkestone, Kent, CT18 8FA
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Montague Place Quayside, Chatham Maritime, Chatham, Kent, ME4 4QU
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The aggregate of the share capital and reserves as at 31 January 2024 and the profit or loss for the year ended on that date for the subsidiary undertakings was as follows:
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Page 32
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Amounts owed by group undertakings
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Amounts owed by companies under common control
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to companies under common control
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Other taxation and social security
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Accruals and deferred income
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Page 33
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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The company's bank, Lloyds Bank PLC, has legal charges over portions of land owned by the company as listed below:
i) A fixed charge and negative pledge dated 25 July 2016 over properties of the company.
ii) A fixed and floating charge covering all property or undertaking of Pentland Homes Limited dated 2 August 2016. The charge contains a negative pledge.
iii) A floating charge and negative pledge over land adjoining to New Street Farm, Great Chart, Ashford registered at the Land Registry under title number TT42532 was created on 23 August 2016.
iv) A fixed and floating charge on land lying to the North of Canterbury Road, Lydden, Dover. The charge was created on 26/11/2018. The charge contains a negative pledge.
v) A fixed and floating charge on land on the North-West side of Elvington Lane, Hawkinge. The charge was created on 10/08/2022. The charge contains a negative pledge.
vi) A fixed and floating charge on land lying to the North-East of Canterbury Road, Etchinghill. The charge was created on 07/09/2022. The charge contains a negative pledge.
vii) A fixed and floating charge on land lying to the South East side of Cockering Lane, New Romney. The charge was created on 13/12/2022. The charge contains a negative pledge.
iix) A fixed and floating charge on land lying to the East side of Broad Street, Lyminge. The charge was created on 21/02/2023. The charge contains a negative pledge.
x) A fixed and floating charge on land known as land at Brook, Ashford and land on the south side of Brook, Ashford. The charge was created on 20/09/2023. The charge contains a negative pledge.
Other charges:
Westerley Investments Limited have registered a legal charge on 14 May 2004 on freehold property Pound Farm, Kingsnorth, Ashford, Kent on all initial overage payments and further overage payments which may become due at any time within the Perpetuity Period.
G H Dean & Co Limited have registered a legal charge dated 11 May 2023 on freehold property at Grovehurst Road, Sittingbourne. The charge contains a negative pledge.
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Page 34
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Financial assets measured at fair value through profit or loss
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Charged to profit or loss
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Accelerated capital allowances
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Customer care and cost to complete provisions
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Charged to profit or loss
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Allotted, called up and fully paid
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15,664 (2023 - 15,664) Ordinary shares of £1.00 each
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The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the scheme and amounted to £87,599 (2023: £50,793) Contributions totaling £20,992 (2023: £9,808) were payable to the scheme at the balance sheet date.
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Commitments under operating leases
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At 31 January 2024 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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30.Transactions with directors
Following balances were outstanding at the year end:
Loans payable to directors totalled £3k (2023: £3k). During the year the company paid interest of £Nil (2023: £Nil) on the loan.
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Pentland Homes (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 31 January 2024
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Related party transactions
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The company is exempt from disclosing related party transactions between companies that are wholly
owned within the group.
Transactions with associated companies:
1) 1) Etchinghill Golf is owned by a charitable trust set up by the Tory Family Foundation, controlled by P N Tory and J N Tory who are Directors of the company. During the year following transactions occurred with the above businesses:
Etchinghill Golf charged costs of £26.2k (2023: £29k) to Pentland Homes Ltd. At the year end the company owed £1.2k (2023 £Nil) to Etchinghill Golf.
2) JN Tory is director of Pentland Homes Limited and also controls Cave Hotels (UK) Ltd and Boughton Golf. During the year following transactions occurred with above entities:
Costs of £46.8k (2023: £22k) recharged to Cave Hotels UK Ltd and costs of £74.5k (2023: £120k) recharged by Cave Hotels (UK) Ltd.
At the year end Cave Hotels (UK) Ltd owed £49k (2023: £10k - owed to Cave Hotels) to the company.
3) P N Tory and J N Tory are both directors and shareholders of Pentland Properties Ltd and also
directors of Pentland Homes Ltd.
During the year the company provided £3.310m (2023: £22.587m) worth of goods and services to Pentland Properties Ltd. A management charge of £340k (2023: £340k) was also charged by Pentland Homes Limited to Pentland Properties Limited.
At the year end, the company was owed £91.6k from Pentland Properties Ltd. (2023: £101k - owed by Pentland Properties).
Key management personnel throughout the group include all of the directors and they are responsible for planning, directing and controlling the activities of the group. The total compensation paid to key management personnel for services provided to the group including directors remuneration is £1,898,624 (2023: £3,346,993)
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Pentland Homes (Holdings) Limited is the ultimate parent company. P N Tory and J N Tory are the ultimate controlling parties by virtue of their majority shareholding in the parent company.
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