M&GP (No. 2) Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 6 Lancaster Way, Ermine Business Park, Huntingdon, Cambridgeshire, United Kingdom, PE29 6XU.
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 £.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
On the purchase of the site, the company entered into a deferred consideration agreement to pay instalments of the liability as the development proceeds, the quantum of which is linked to the final sales value of the properties, subject to minimum values payable. As the timing and amount of the future payments are uncertain, there are key judgements required in the estimation of the cost of the site and the subsequent liability.
In order to determine the profit that the company is able to recognise on its developments in a specific period, the company has to allocate site-wide development costs between units built in the current year and in future years. It also has to estimate costs to complete on such developments. In making these assessments there is a degree of inherent uncertainty. The company has developed internal controls to assess and review carrying values and the appropriateness of estimates made.
The company’s principal activity is residential property development. The majority of the development activity is not contracted prior to the development commencing. The company’s internal controls are designed to identify where the estimated net realisable value of a site is less than its current carrying value within the Balance Sheet. The key judgements in these reviews were estimating the realisable value of a site, which is determined by forecast sales rates, expected sales prices and estimated costs to complete. If the UK housing market were to change beyond management expectations in the future, in particular with regards to the assumptions around sales prices and estimated costs to complete, further adjustments to the carrying value of land and work in progress may be required.
The average monthly number of persons (including directors) employed by the company during the year was:
The directors did not receive any remuneration (2022: £Nil).
The company has a capital commitment of £14,359,426 (2022: £14,359,426) as part of the design and build contract to develop the site.
A creditor of £5,155,837 (2022: £8,238,200) included within the trade creditor balances represents a deferred consideration agreement on the purchase of the site. The deferred land acquisition costs are payable as the development proceeds, the quantum of which is linked to the final sales values of the properties but is subject to minimum values payable. As this agreement bears no interest, the expected payments have been discounted on inception by a deemed market rate of interest of 8% per annum, the rate being derived based on benchmarking to other finance arrangements of the company. The accrued interest to date of £1,155,031 (2022: £628,190) has been capitalised within work in progress.
The bank loan is secured by fixed charges over the freehold property at Alconbury Weald.
A loan of £5,907,333 (2022: £1,748,890) included within bank loans falling due within one year is secured against the development within work in progress. This loan is repayable on demand and interest accrues on this balance at 6% plus the Bank of England base rate (restricted to at least 0.75%) per annum. Interest accrued on this balance totalled £373,388 (2022: £33,196). This was capitalised against work in progress.
A loan of £1,403,829 (2022: £1,287,917) included in other borrowings greater than one year, is a shareholder loan entered into in 2021. As the loan was interest free over five years repayable on 18 November 2026, the loan was discounted on inception by a deemed market rate of interest of 9% per annum.
A loan of £950,073 (2022: £708,425) included in other borrowings greater than one year, is a shareholder loan entered into in 2021. As the loan was interest free over five years repayable on 18 November 2026, the loan was discounted on inception by a deemed market rate of interest of 9% per annum.
A ordinary shares carry voting rights of one vote per share held while the B ordinary shares carry one third of a vote per share held. Both classes of shares rank pari passu in the right to receive distributions and are not redeemable.
The two shareholder loans are fixed term loans which do not bear any interest. As such, fair value adjustments have been made to these balances to reflect their fair value at drawdown. The balance of the loans which have been drawn down have been discounted over the loan term at a market rate of 9% per annum.
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
At the balance sheet date, included within other creditors due within year, is an amount of £322,110 (2022: £nil) relating to amounts loaned from a company controlled by a director. This loan is repayable on demand.
At the balance sheet date, included within other borrowings due after more than one year, is loan of £1,403,829 (2022: £1,287,917) from a shareholder. This loan is interest free and repayable on 18 November 2026 unless otherwise agreed by the parties.
At the balance sheet date, included within other borrowings due after more than one year, is loan of £950,073 (2022: £708,425) from a shareholder. This loan is interest free and repayable on 18 November 2026 unless otherwise agreed by the parties.