The Directors present the strategic report for the year ended 31 January 2026.
The directors consider the performance of the Group to be in line with expectations for the year ending 31 January 2026, particularly when considered against the ongoing challenges within the UK housebuilding sector including elevated interest rates, affordability constraints, planning delays and continued cost pressures. However, the biggest issue continues to be the weak housing market which has persisted for several years now all contributing to a weak housing market.
This report outlines the strategic direction, performance, and governance of the company operating within the UK housebuilding sector during the period February 2025 to January 2026. The report reflects the company’s response to market conditions, regulatory requirements, and evolving housing demand across the United Kingdom.
The trading environment has remained challenging throughout the period, which has impacted financial performance year on year. Key financial metrics are summarised below:
£’000 | 2026 | 2025 |
Turnover | £47,800 | £33,262 |
Retained Earnings | £24,262 | £23,115 |
Net Assets | £24,262 | £23,115 |
Return on Capital Employed | 75.28% | 76.99% |
Operational Metrics
During the year, the following metrics were achieved:
Plot completions 81 (2025: 36)
Affordable Housing completions 30 (2025: 45)
Build starts 1 equating to 164 plots
Planning permissions 2 equating to 180 plots
Private plot completions were 125% higher than the prior year at 81 versus 36, reflecting the conversion of carried forward stock unsold in the previous year. Market conditions continued to be influenced by affordability pressures, mortgage availability and wider economic uncertainty, resulting in cautious buyer behaviour.
Sales activity remained variable throughout the period and the mixed messaging and lack of Government stimulus to the Housing sector during the summer of 2025 certainly caused further uncertainty. Whilst there were early signs of stabilization in mortgage rates the recent war in Iran and continuing conflicts in the Ukraine have increased pressure on inflation and expectations of Bank of England base rate reductions are not flowing through as a result. Furthermore, affordability remains a key constraint for many purchasers and Consumer confidence continues to require further support to stimulate transaction levels across the housing market.
The Group operated from 5 active selling outlets during the year with an additional 2 fully sold during the year. Developments continue to offer a diverse product mix, enabling the Group to appeal to a broad customer base, supported by a targeted and proactive marketing strategy.
In response to market conditions, the Group has continued to utilise a range of sales incentives including part exchange, assisted move schemes and other tailored solutions to support buyers and maintain sales rates.
The Group remains focused on minimizing completed stock levels to avoid stock holding costs by reviewing build programs versus sales rates. Whilst operating profits have improved as a result of higher plot sales, elevated borrowing costs continue to impact overall profitability. Active management of stock levels and financing arrangements remains a key focus of the Board.
Cost pressures have persisted across the sector, particularly in relation to materials and subcontract labour. Whilst inflationary pressures have moderated compared to prior periods, pricing remains elevated. The Group continues to mitigate these challenges through strong supplier relationships and proactive procurement strategies.
Planning continues to present a significant constraint to growth, with local authorities facing ongoing resource limitations. Despite this, the Group has made good progress in advancing its strategic land portfolio, with a number of sites progressing through the planning system, providing a solid foundation for future delivery.
The Group continues to support the UK Government’s ambitions to increase housing supply. However, achieving these targets will require meaningful reform across the planning system and wider development process to enable more efficient delivery of new homes. Any Government initiatives such as the expired Help to Buy scheme to stimulate demand particularly for first time buyers would be welcome.
The Group’s long-term strategy remains focused on the acquisition and promotion of strategic land, converting this into consented developments to support a sustainable pipeline of future projects.
Following the year end, progress on key developments and planning consents provides increased visibility over future delivery. Forward sales on selected sites have strengthened the Group’s cash position and support resilience against ongoing economic uncertainty.
The Directors remain confident in the long-term prospects of the Group and its ability to adapt to evolving market conditions.
Macroeconomic Environment
The reporting period has been characterised by a number of significant macroeconomic factors which have directly impacted the UK housing market and are expected to continue influencing performance in the year ahead.
Interest rates remained elevated for much of the period as the Bank of England continued its efforts to manage inflation. Although there were glimmers of hope that inflationary pressures were easing the recent conflict in the Middle East has pushed up fuel prices and borrowing costs have remained high relative to historical levels, directly impacting mortgage affordability and buyer demand.
Inflation, whilst moderate compared to prior years is creeping up again which has continued to affect both consumer confidence and build costs. Materials and labour costs are less volatile but remain at heightened levels, placing continued pressure on margins across the sector.
The wider UK economy has experienced low growth, with periods of stagnation impacting consumer sentiment. Affordability constraints, coupled with cost of living pressures, have contributed to cautious purchasing behaviour among prospective homeowners.
As the sector moves into 2026, there were initial signs of cautious recovery and stabilisation following the contraction seen in 2024 and 2025. However, it is our view that Industry output will grow modestly but perhaps at a slower pace than forecasts initially suggested. With this uncertainty, we believe that pursuing our Strategy, aligning our development sites in the right Geographical locations and using a balanced blend of tenure types will stand us in good stead. We will also continue to partner with the right Housing Associations to deliver much needed affordable housing.
House prices are expected to see modest growth over the year, with increases generally forecast between 1.5% and 4%. Mortgage rates had begun to stabilize but have become a little more fragile more recently, but affordability remains a key constraint, particularly for first-time buyers, due to lending criteria and deposit requirements.
The change in UK Government has introduced renewed focus on housing delivery, including proposed planning reforms and infrastructure legislation aimed at unlocking development sites. Whilst these measures are welcomed by the industry, their effectiveness will depend on implementation, the capacity of local planning authorities and how quickly changes take to filter through the planning process. Furthermore, it will depend on how the sector can stimulate demand as Consumer confidence, given such uncertainty in the market place is making buyers very cautious.
Additional regulatory pressures are emerging, including the introduction of the Building Safety Levy, which is expected to increase costs for developers putting even further strain on the industry.
Labour shortages continue to present challenges to the construction sector albeit less so in the areas we operate which could limit the pace at which developments can be delivered. This is compounded by an ageing workforce and ongoing skills shortages. This is mitigated via recruitment, training and retention strategies.
Sustainability requirements are also increasing, with greater emphasis on energy efficiency and environmental performance of new homes. This presents both a challenge in terms of cost and an opportunity to differentiate through high-quality, future-proofed developments.
Looking ahead, the outlook for the remainder of 2026 is one of cautious optimism. Recovery is expected to be gradual rather than rapid, with demand anticipated to improve should mortgage conditions stabilise. Increased use of partnership models, including collaborations with housing associations and institutional investors, is expected to play a greater role in delivery.
From a regional perspective, the South Coast market continues to experience many of the national trends but with additional localised pressures. Affordability constraints remain particularly acute due to comparatively higher house prices relative to earnings. Demand from both local purchasers and inward migration remains supportive; however, transaction levels continue to be influenced by mortgage availability and pricing.
Planning constraints remain especially pronounced across South Coast locations, with environmental considerations such as nutrient neutrality continuing to restrict the release of developable land. Phosphate neutrality requirements impacting the River Avon catchment and nitrate neutrality requirements affecting the Solent region have created significant barriers to development. These constraints have required developers to secure mitigation solutions adding both cost and complexity to the planning process. Whilst challenging to date, we have managed to navigate through these constraints to continue to develop. Local authority resourcing challenges have further contributed to delays in securing planning consents, but we continue to pursue good working relationship with planning departments.
Despite these challenges, the South Coast remains an attractive long-term market, supported by strong underlying demand, desirable locations, and limited housing supply. The Group continues to focus on progressing its strategic land interests in the region, working closely with stakeholders to unlock sites and deliver sustainable developments.
We would welcome further government support measures, potentially including revised equity loan schemes, to provide additional stimulus to the housing market and support transaction volumes.
The Group continues to monitor these macroeconomic factors closely and will adapt its strategy accordingly to mitigate risks and capitalise on emerging opportunities.
As with any business, the Group faces risks and uncertainties in the course of its operations. It is only by timely identification and effective management of these risks that we can deliver our strategy and grow the business.
The board have considered the prospects of the company and have considered 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 are that of building and development of private dwelling houses for sale. With this comes the potential risks such as:
The adverse effects on consumer confidence could significantly impact the demand for new homes resulting in lower revenues and profits. Pricing reviews and continually monitoring supply and demand trends as well as forward looking forecast will allow the Group to navigate any challenges it may face.
Economic and political uncertainty is always going to present challenges. Whether that is at a global or local level it will always be difficult to plan ahead. The ambitions of the Labour Government which was set out in their manifesto intended to benefit the industry by increasing numbers of housing being built. It is well documented that this, to date, has been exceptionally challenging and thus far this ambition is falling short. The Group remains optimistic that some hard hitting Government decisions will be made and quickly to stimulate activity to achieve the overall target. Furthermore, government policy on taxes, inflation and spending will all play its part on the sector.
Mortgage servicing costs remain a key risk for homeowners, particularly amid ongoing interest rate volatility and persistent inflationary pressures. This makes affordability one of the fundamentals of buying houses difficult, particularly for first time buyers. Most house sales are bought using mortgages to finance the purchase. Mortgage rates are higher than the last decade and whilst we saw some settling down for a period, we are starting to see some slight creep up in rates considering the recent conflict in Iran. The impact of Government policy and the Bank of England rate charges in the coming months and years will play a key role in consumer confidence.
Since 2022, borrowing rates have been rising markedly and have a significant impact on the group as funding costs become more expensive making development project less profitable or in some cases unviable. The Group continually manages this by working with its funders to obtain the best cost effective funding available.
Liquidity and the availability of cash is a constraint to any business. The Group monitors cash availability and constraints periodically. During the year the Group also entered into a Revolving Credit Facility of £70 million which demonstrates the supportive nature its lending partners.
Continuing to operate best practice with our Health and Safety to best protect those on potentially dangerous construction sites is of paramount importance to us. Any legislative changes to these practices would filter through our external advisors to all relevant personnel via tool box talks, site inductions, and formal training sessions. Employee wellbeing and mental health is particularly important in the construction sector and is regarded as one of the highest sectors of sufferers. Employee wellbeing is integral to ensuring the workforce have a safe, enjoyable environment to work in and the intangible benefit of this is a more effective workforce.
Material cost inflation and supply have seen prices escalate in recent years with the advent of a number of global factors causing economic volatility and demand. Prices are starting to stabilize although we are not seeing any evidence yet of a reduction in prices. Locking in prices on a long-term basis is proving difficult as the overall supply chain itself wrestles with uncertainty. This uncertainty is also leading to a worsening of credit terms when exploring new suppliers so continuing and leveraging existing relationships are paramount.
An aging construction workforce, coupled with decreasing apprenticeship intake and the Brexit leakages, are potentially leading to skills shortages of workers. This will be a major concern over the next decade and will have a detrimental impact on meeting demand. The tight labour market, cost of living crisis and increases in National Minimum Wage are all driving higher wages in the sector. Being able to attract and retain high calibre employees to meet the demands of the business as it grows is of paramount importance. As the business grows, the demands and skillsets of individuals need to change to cater for ever changing dynamics of the house building industry. Training and recruitment alongside other factors such as remuneration are constantly reviewed and monitored to ensure the group remains competitive when attracting and retaining staff. Employee engagement and feedback sit alongside our recruitment and retention processes.
Planning consents remain challenging with local authorities struggling with resource constraints coupled with demonstrating nutrient neutrality on development sites. Issues surrounding Nitrates flowing into the Solent and Phosphates into the River Avon has been a challenge for all development areas affected, practically grinding planning permissions to a halt. Buying into third party schemes has provided a much needed solution in relation to Nitrates. We have resolved the Phosphates problem by being one of the first in the UK to create a strategic Phosphate mitigation scheme.
Local Authorities often insist on Property Developer entering into bond agreements to de-risk their exposure for any unfinished construction activity if a developer defaults. Unfortunately, this is becoming increasingly onerous particularly for SME developers. The cost of bonds, the cash tie up, and the shrinking surety market is making the position untenable with limited options available which potentially delays site delivery. All options continually get reviewed and solution are being explored.
On behalf of the board
The Directors present their annual report and financial statements for the year ended 31 January 2026.
The results for the year are set out on page 11.
No ordinary dividends were paid. The Directors do not recommend payment of a further dividend.
The Directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditors, HJS (Reading) Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.
The energy and carbon reporting at group level only needs to include subsidiaries which are obligated to report the energy and carbon in their own financial statements. In this group there are no individual subsidiaries which are obligated to disclosure this information and therefore there is nothing to disclose.
United Kingdom company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the group and parent company 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 group and parent company, 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 and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent 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 group and parent company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of Pennyfarthing Developments Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2026 which comprise 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
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 group's and 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.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
The information given in the strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
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 extend to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK and overseas regulatory principles. 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 judgemental areas of the financial statements.
Audit procedures performed by the audit engagement team included:
Discussions with senior management, including consideration of known or suspected instances of non compliance with laws and regulation or instances of fraud;
Identifying and testing journal entries based on risk criteria;
Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;
Testing transactions entered into outside of the normal course of the Group's business;
Reviewing any potential litigation or claims against the entity which indicate any potential non compliance issues.
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.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by section 408 of the Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £880,156 (2025 - £630,552 profit).
Pennyfarthing Developments Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .
The group consists of Pennyfarthing Developments Limited and all of its subsidiaries.
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.
The consolidated group financial statements consist of the financial statements of the parent company Pennyfarthing Developments Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 January 2026. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the Directors have a reasonable expectation that the group and parent company have 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.
Revenue comprises sales of goods or services provided to customers net of value added tax and other sales taxes, less an appropriate deduction for actual and expected returns and discounts. Revenue is recognised when performance obligations are satisfied and the control of goods or services is transferred to the buyer. Where the performance obligation is satisfied over time, revenue is recognised in accordance with its progress towards complete satisfaction of that performance obligation.
When cash inflows are deferred and represent a financing arrangement, the promised consideration is adjusted for the effects of the time value of money, which is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
When the group acts as a lessor, a lease is classified as a finance lease whenever it transfers substantially all the risks and rewards of ownership of the underlying asset to the lessee, either at the end of the lease term or for the major part of the economic life of the asset. All other leases are classified as operating leases. If an arrangement contains both lease and non-lease components, the group allocates the consideration in the contract to the two elements.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual (credit)/charge 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:
Investment property was valued on an open market basis on 31 January 2026 by the directors.
Details of the company's subsidiaries at 31 January 2026 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Details of joint ventures at 31 January 2026 are as follows:
The bank loans are secured by first charges over certain land and properties included in work in progress.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company:
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The following amounts were outstanding at the reporting end date: