ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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FOR THE YEAR ENDED 30 NOVEMBER 2019
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CAVANNA HOMES (CORNWALL) LIMITED
COMPANY INFORMATION
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CAVANNA HOMES (CORNWALL) LIMITED
CONTENTS
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CAVANNA HOMES (CORNWALL) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 NOVEMBER 2019
The company’s principal activity is that of builders, developers and dealers in land.
The company’s turnover and gross profit both increased during the year, with turnover rising by 40% and gross profit by 8%. This reflects a forecast increase in the overall level of activity within the company as a number of projects either delivered a full year’s production or came on stream during the year. The gross margin was 21.4%, a reduction on the 27.8% achieved in 2018. The reduced margin reflects the particular mix of sites trading in 2019, and the challenging trading conditions attributable to Brexit uncertainty, which persisted throughout the year.
We continue to focus on meeting our customers’ needs and providing quality homes in desirable locations.
In identifying potential risks the company is able to better prepare to offset the pitfalls they may bring and thus mitigate the risk of occurrence. Day to day operations give rise to the potential for health and safety and environmental risks and both of these are proactively managed. The company prides itself on its exemplary health and safety standards, ensuring our employees, contractors, trades, residents and the general public are not exposed to any adverse risk due to our activities. Our proactive approach to occupational health risks, wellbeing and drug & alcohol screening ensure that we provide a safe and healthy place of work.
The inherent risks associated with speculative development are monitored and controlled throughout the internal processes but due to the nature of the business, activities will naturally retain a level of risk. Although the UK officially left the EU at the end of January 2020, eliminating uncertainty as to whether Brexit would actually happen or not, much still remains to be done to secure a trade deal with the EU before the end of the transition period on the 31st of December 2020. Given statements made to-date, it is not clear that the Government will agree to an extension of the transition period beyond the end of 2020. Therefore the risk of a “no-deal” Brexit remains, which could lead to supply chain disruption. The company has liaised with its suppliers to gain a level of assurance regarding the supply of key materials. The majority of materials are produced in the UK. However, some classes of goods are imported and could experience delays in the event of a no-deal Brexit. Furthermore, the impact of covid-19 and the risk of a “no-deal” Brexit could affect demand as consumers think carefully before committing to what is often one of their most significant purchase decisions. Reduced demand could therefore impact turnover levels. The company has developed strategies to ensure it is prepared for a range of outcomes, and continues to closely monitor the economy and site production to ensure supply meets demand. The global economy had recently shown signs of recovery amid an easing of international trade tensions, but other factors, including the potential effect of the covid-19 coronavirus outbreak that could affect international supply chains, impacting production, appear to be slowing down the recent progress. As noted above, the majority of our raw materials are sourced within the UK although any shortage of electronic components manufactured in Asia could affect the availability of white-goods. The mortgage interest rate environment remains relatively benign. The official Bank Rate is currently set at 0.25%, and was last increased in August 2018. The Monetary Policy Committee (MPC) has noted recent subdued economic growth, a slight increase in spare capacity in the economy, and core CPI inflation running below the MPC’s 2% target. The MPC forecasts inflation will remain below 2% through to the middle of 2021, with a gradual and limited increase in the Bank Rate required as price pressure increases over the ensuing years, although the rate is expected to remain lower than before the financial crisis. However, any fall in the value of sterling due to, for example, a “no-deal” Brexit, which led to cost inflation, could see the Bank of England increase the Base Rate with a flow on impact on mortgage interest rates. In its 2018 Autumn Statement, the government announced the extension of its Help to Buy scheme to 2023. However, from April 2021 it will only be available to first-time buyers. Regional price-caps have also been established. Originally intended to close in 2021, the scheme continues to support the market, and its extension
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CAVANNA HOMES (CORNWALL) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2019
to 2023 is welcomed by both customers and the industry, although limiting the scheme to first-time buyers may affect the size of property purchased using Help to Buy. The regional price-cap is not expected to have a significant impact in our operating region.
The Board remains confident that the company’s financial and brand strength, coupled with our staff’s significant experience and our land bank will continue to provide a strong platform for the future.
The company operates and monitors performance indicators in relation to revenues and costs, throughout the development process, from land acquisition to expiry of customer care, and benchmarks overall performance against its competitors and internal policies.
The key financial indicators for the business are the return on capital employed and gross profit percentage on a site by site basis, cash flow fluctuations for each site compared to budget, and return on shareholders’ funds.
IIn addition to direct financial performance indicators, the Company seeks to monitor and control individual project time-lines, and the Company’s development pipe-line through the various project phases from land acquisition to completion.
The company is proud of the quality of the homes we build for our customers. During the period 2013~2018, as part of the Cavanna Group, we were awarded the maximum 5-star Home Builders Federation customer satisfaction rating each year. This award is based on an annual, independent survey of customer feedback. During 2019 we were awarded 4-stars; a creditable outcome when compared with the overall industry, but not where we aspire to be. Therefore, during 2019 we undertook a thorough review of our build completion and customer care processes, and we are proud to say that due to the efforts of our staff, there is every indication that we have regained our 5-star customer satisfaction levels. Cavanna Homes sets the bar for safety standards being a tier one influencer to our trades and contractors in the house building industry. We have an industry benchmark of a minimum of 75% site auditing regime ensuring compliance across all of our sites.
This report was approved by the board and signed on its behalf.
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CAVANNA HOMES (CORNWALL) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 NOVEMBER 2019
The directors present their report and the financial statements for the year ended 30 November 2019.
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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 of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors who served during the year were:
Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
The auditors, Bishop Fleming LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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CAVANNA HOMES (CORNWALL) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2019
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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CAVANNA HOMES (CORNWALL) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CAVANNA HOMES (CORNWALL) LIMITED
We have audited the financial statements of Cavanna Homes (Cornwall) Limited (the 'company') for the year ended 30 November 2019, which comprise the Income Statement, the Statement of Financial Position, the 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:
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 company 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.
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
∙the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
∙the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
The directors are responsible for the other information. The other information comprises the information included in the Annual report and financial statements, other than the financial statements and our Auditors' report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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CAVANNA HOMES (CORNWALL) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CAVANNA HOMES (CORNWALL) LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the 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.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the Directors' responsibilities statement on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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 financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
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CAVANNA HOMES (CORNWALL) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CAVANNA HOMES (CORNWALL) LIMITED (CONTINUED)
This report is made solely to the company's members 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 for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Salt Quay House
4 North East Quay
Sutton Harbour
PL4 0BN
Date:
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CAVANNA HOMES (CORNWALL) LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2019
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CAVANNA HOMES (CORNWALL) LIMITED
REGISTERED NUMBER:04228436
STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 11 to 13 form part of these financial statements.
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CAVANNA HOMES (CORNWALL) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2019
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CAVANNA HOMES (CORNWALL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2019
Cavanna Homes (Cornwall) Limited is a private company, limited by shares, incorporated in the United Kingdom. The address of the registered office is Cavanna House, Riviera Park, Nicholson Road, Torquay, Devon, TQ2 7TD. The principal activity of the company is that of builders, developers and dealers in land.
2.Accounting Policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The following principal accounting policies have been applied:
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Property sales are recognised in the Income Statement on the date of completion, except for contract sales which are recognised when a valuation certificate is issued, exclusive of value added tax and discounts.
Land stocks and work in progress are valued at the lower of cost and net realisable value.
Work in progress is valued on the basis of direct costs (materials and labour) plus attributable overheads. Provision is made for any foreseeable losses. No element of profit is included in the valuation of work in progress.
The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and loans to related parties.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Income Statement.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, less any impairment.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, where applicable, are measured initially at fair value, net of transaction costs.
Finance costs are charged to the Income Statement over the term of the debt.
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CAVANNA HOMES (CORNWALL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2019
2.Accounting Policies (continued)
Dividends are recognised when they become legally payable. Interim dividends are recognised when paid. Final dividends are recognised when approved by the shareholders at an annual general meeting.
Tax is recognised in the Income Statement. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted in the UK by the reporting date.
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CAVANNA HOMES (CORNWALL) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2019
The company has entered into cross guarantees in respect of bank borrowings of other group companies.
The holding company is Cavanna Group Limited, a company incorporated in England and Wales. Copies of the group financial statements can be obtained from the holding company's registered office, Cavanna House, Riviera Park, Nicholson Road, Torquay, Devon, TQ2 7TD.
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