Risks

Risk and descriptionPotential impactStrategy/mitigation
LandThe Group would not be able to generate profit and cash flow for the longer term
May have a detrimental effect on the financial position of the Group
The Group has an experienced management team with a strong track record in the industry which mitigates this risk
The inability to source, acquire, promote and dispose of land
PlanningMay impede sales and thus affect the rate of growth of the business
May have a detrimental effect on the supply and pricing of land being marketed by landowners
The Group undertakes extensive pre-acquisition due diligence on planning, technical and environmental issues together with acquiring housing sites identified in councils' Local Plans
Increased complexity and delay in the planning process
The adoption of the community infrastructure levy by local authorities
MarketInability to realise maximum value in a timely fashion
Adverse effect on land values
Adverse effect on the timing of sales
The Group ensures that its sites are in good locations thus providing some protection against any downturn in the market
A severe fall in the housing market in the regions in which the group chooses to operate
PersonnelThe Group would have difficulty growing the business in the highly competitive markets in which it operatesThe Group maintains good morale in the workplace and sets remuneration packages at attractive levels
Loss of/inability to source high calibre, experienced staff
Interest ratesMay affect residential land prices as a result of the demand or prices achieved for homes, which may in turn result in impairment of the Group's inventories
Would lead to increased borrowing costs and thus have a detrimental effect on profit
The Group mitigates any adverse exposure to interest rate changes by controlling its gearing and, if necessary, by using hedging instruments
The Group offers a high level of sales support to customers and this includes assistance with obtaining mortgages at a suitable interest rate
Significant upward changes in interest rates
EnvironmentalUnexpected liabilities in respect of decontamination works or fines for environmental pollution could affect the financial outcome of a project and reputation of the GroupThe assessment of environmental risk is an important element of the due diligence undertaken when buying land. The Group uses reputable environmental consultancy firms to assist in this area
Unexpected contamination being found on a site
RegulationMay have a detrimental effect on the Group's businessThe Group keeps abreast of potential changes in these areas and wherever possible allows for these in appraising its projects
Changes in legislation, government regulations, planning policies and guidelines
ConstructionMay adversely impact margins on housebuilding and working capital of the GroupThe Group tries to build strong relationships with principal contractors and projects are reviewed frequently in order to mitigate these risks
  • Cost overruns
  • Material shortages
  • Delays
FinanceMay have an adverse effect on the Group's progressThe Group continues to seek finance from alternative lending sources to improve its liquidity
The availability of loan finance for land acquisition

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