Company Registration No. 05011722 (England and Wales)
HL PARTNERSHIP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
HL PARTNERSHIP LIMITED
COMPANY INFORMATION
Directors
Mr C M Tanner
Mr N D Hoare
Mr R J Haselip
Mr S D Almond
Mr P R Cobley
Mrs K Leslie
(Appointed 1 January 2022)
Secretary
Mr C M Tanner
Company number
05011722
Registered office
2nd Floor, Unit 1
Southern Gate Office Village
Chichester
West Sussex
PO19 8GR
Auditor
Carpenter Box
Amelia House
Crescent Road
Worthing
West Sussex
BN11 1RL
HL PARTNERSHIP LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 20
HL PARTNERSHIP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The directors present the strategic report for the year ended 31 December 2021.
Business review and key performance indicators
Revenue for the year was £57.1 million (2020: £42.0 million) and the profit before tax for the year was £4.9 million (2020: £2.2 million).
This 36% increase in revenue (2020: increased by 22%) resulted from the 21% increase in adviser numbers during the period (2020: 21% increase), through the continued absorption during 2021 of the operations and majority of advisers of its fellow subsidiary, Mortgage Support Network Limited, and through organic growth.
Gross profit margin improved to 18% (2020: 16%) as a result of enhancements to product and customer mix. Administrative costs grew by 31% primarily from increased headcount costs in key support areas such as compliance and significant investment in technology.
Principal risks and uncertainties
Market risk
The company is subject to political and economic risks affecting its primary market of mortgage intermediation.
Investment in technology and diversification into related but counter-cyclical markets are the main tools adopted by the company to mitigate market risks.
Regulatory risk
The company operates within the UK financial services market which is regulated by the Financial Conduct Authority (“FCA”).
The company continues to enjoy a strong and professional relationship with the FCA and has strong lines of communication that allow the board to make decisions based on delivering good customer outcomes.
Work continued in 2021 to ensure the company has the governance in place to meet the requirements of the Senior Managers and Certification regime, and the board believes it has the knowledge and experience to continue to meet its regulatory obligations as set out by the FCA now and in the future.
Credit risk
Investments of cash surpluses are made through banks and companies which must fulfil credit rating criteria approved by the board.
All adviser borrowers are subject to due diligence and sign-off at board level and tracking of all loans are reported regularly to the board.
Commission clawback, whereby insurance policies cancel after indemnity commission has been paid out to advisers, is mitigated by robust risk assessment procedures coupled with active monitoring.
Liquidity and cash flow risk
The company holds a certain level of capital in order to meet FCA minimum capital adequacy requirements. This capital resource requirement is met by holding balances in cash. Cash and borrowing requirements are managed to maximise interest income and minimise interest expense, whilst ensuring that the company has sufficient liquid resources to meet the operating needs of the business.
Mr C M Tanner
Director
18 May 2022
HL PARTNERSHIP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company is as a network of authorised mortgage, protection and general insurance brokers. The company is authorised and regulated by the Financial Conduct Authority.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £3,300,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr C M Tanner
Mr G S Earnshaw
(Resigned 30 April 2021)
Mr N D Hoare
Mr R J Haselip
Mr S D Almond
Mr P R Cobley
Mr M Hughes
(Resigned 28 January 2022)
Mrs K Leslie
(Appointed 1 January 2022)
Financial instruments
Liquidity risk
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Credit risk
Investments of cash surpluses are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All adviser borrowers are subject to due diligence and sign-off at board level and the tracking of all loans is reported monthly.
Future developments
The directors believe that there are no future developments that require disclosure.
Auditor
The auditor, Carpenter Box, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
COVID-19 assessment
The directors have undertaken a robust assessment of the company's future trading prospects and have concluded that the company remains a going concern. See note 1.2 to the financial statements for further detail.
HL PARTNERSHIP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
On behalf of the board
Mr C M Tanner
Director
18 May 2022
HL PARTNERSHIP LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
The directors are responsible for preparing the annual 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 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 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 and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable 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 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 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.
HL PARTNERSHIP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HL PARTNERSHIP LIMITED
- 5 -
Opinion
We have audited the financial statements of HL Partnership Limited (the 'company') for the year ended 31 December 2021 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity 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 FRS 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 company's affairs as at 31 December 2021 and of its profit 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 Auditor's 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 UK, including the FRC’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
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 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's 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.
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.
HL PARTNERSHIP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HL PARTNERSHIP LIMITED
- 6 -
Matters on which we are required to report by exception
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 and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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
As explained more fully in the directors' responsibilities statement, 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.
Auditor's responsibilities for the audit of the financial statements
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 auditor's 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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
Obtaining an understanding of the legal and FCA regulatory framework that the company operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;
Obtaining an understanding of the company’s policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud;
Discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud through our knowledge and understanding of the company and our sector-specific experience.
As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: employment law, and compliance with the UK Companies Act.
HL PARTNERSHIP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HL PARTNERSHIP LIMITED
- 7 -
In addition to the above, our procedures to respond to risks identified included the following:
Making enquiries of management, about any known or suspected instances of non-compliance with laws and regulations and fraud;
Reviewing minutes of meetings of the board and senior management;
Reviewing correspondence with regulators;
Challenging assumptions and judgements made by management in their significant accounting estimates; and
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
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.
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 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 company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Robin Evans BA FCA CTA (Senior Statutory Auditor)
For and on behalf of Carpenter Box
23 May 2022
Chartered Accountants
Statutory Auditor
Worthing
Carpenter Box is a trading name of Carpenter Box Limited
HL PARTNERSHIP LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 8 -
2021
2020
as restated
Notes
£
£
Revenue
3
57,112,809
42,031,769
Cost of sales
(46,614,179)
(35,483,160)
Gross profit
10,498,630
6,548,609
Administrative expenses
(5,744,880)
(4,396,089)
Other operating income
5,000
87,721
Exceptional item
4
157,188
Operating profit
5
4,915,938
2,240,241
Investment income
7,181
Profit before taxation
4,915,938
2,247,422
Tax on profit
9
(830,000)
(346,290)
Profit for the financial year
4,085,938
1,901,132
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
HL PARTNERSHIP LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
31 December 2021
- 9 -
2021
2020
as restated
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
11
88,821
66,832
Current assets
Trade and other receivables
12
7,039,224
8,151,787
Cash and cash equivalents
6,930,554
4,752,781
13,969,778
12,904,568
Current liabilities
13
(10,337,874)
(10,204,263)
Net current assets
3,631,904
2,700,305
Total assets less current liabilities
3,720,725
2,767,137
Non-current liabilities
14
(287,469)
(287,469)
Provisions for liabilities
Provisions
15
477,927
310,277
(477,927)
(310,277)
Net assets
2,955,329
2,169,391
Equity
Called up share capital
18
56,500
56,500
Retained earnings
2,898,829
2,112,891
Total equity
2,955,329
2,169,391
The financial statements were approved by the board of directors and authorised for issue on 18 May 2022 and are signed on its behalf by:
Mr C M Tanner
Director
Company Registration No. 05011722
HL PARTNERSHIP LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
Share capital
Retained earnings
Total
Notes
£
£
£
As restated for the period ended 31 December 2020:
Balance at 1 January 2020
56,500
1,511,759
1,568,259
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
1,901,132
1,901,132
Dividends
10
-
(1,300,000)
(1,300,000)
Balance at 31 December 2020
56,500
2,112,891
2,169,391
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
4,085,938
4,085,938
Dividends
10
-
(3,300,000)
(3,300,000)
Balance at 31 December 2021
56,500
2,898,829
2,955,329
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
1
Accounting policies
Company information
HL Partnership Limited is a private company limited by shares incorporated in England and Wales. The registered office is 2nd Floor, Unit 1, Southern Gate Office Village, Chichester, West Sussex, PO19 8GR.
1.1
Accounting convention
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 £1.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
- Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
1.2
Going concern
The financial statements have been prepared on a going concern basis. The directors have considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment. The COVID-19 pandemic and the ensuing economic shutdown has had atruen impact on the company’s operations. In response to the COVID-19 pandemic, the directors have performed a robust analysis of forecast future cash flows taking into account the potential impact on the business of possible future scenarios arising from the impact of COVID-19. This analysis also considers the effectiveness of available measures to assist in mitigating the impact.
Based on these assessments and having regard to the resources available to the entity, the directors have concluded that there is no material uncertainty in relation to the appropriateness of continuing to adopt the going concern basis in preparing the annual report and accounts.
1.3
Revenue
Revenue is recognised in respect of commission receivable, and services rendered, to the company's network and is shown net of VAT and other sales related taxes. Commission receivable is recognised on approval of a broker's loan application.
1.4
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
25% per annum on diminishing balance basis
Fixtures and fittings
25% per annum on diminishing balance basis
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 12 -
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 credited or charged to profit or loss.
1.5
Impairment of non-current assets
At each reporting period end date, the company 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.
1.6
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include deposits held at call with banks.
1.7
Financial assets and liabilities
The company 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 company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
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.
The company enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other receivables and payables and loans from fellow group undertakings.
Debt instruments like loans from fellow group undertakings and other receivables and payables 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 receipts discounted at a market rate of interest. Debt instruments that are payable or receivable within one year are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.
1.8
Equity instruments
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.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and is based on taxable profit for the year.
1.10
Provision for commission clawbacks
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
The provision for the clawback of commission represents a modelled estimate of the value of commissions reclaimable by product providers in respect of policies cancelled either from outset or which lapsed, based on the past experience of such claims.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.15
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
2
Judgements and key sources of estimation uncertainty
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.
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
2
Judgements and key sources of estimation uncertainty
(Continued)
- 14 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Provision for indemnity commission
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
The provision for the clawback of indemnity commission represents a modelled estimate of the value of commissions reclaimable by product providers in respect of policies cancelled during the indemnity period, based on the past experience of such claims.
Bad debt provision
Provisions of bad debt primarily relate to management's estimate on the recovery of commission claw backs on older balances.
Accrued income
Accrued income is recognised for all commissions received after the year end that relate to commissions approved by lenders before the year end. The approval date is based on entries by brokers into the company's internal systems.
3
Revenue
The company operates in one principal area of activity, that of the rendering of services, which is undertaken wholly in the United Kingdom. Revenue is therefore made up 100% by the fees receivable in relation to the rendering of these services.
4
Exceptional item
2021
2020
£
£
Income
Amounts due to group undertakings written back
157,188
-
5
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(5,000)
(87,721)
Fees payable to the company's auditor for the audit of the company's financial statements
11,500
11,000
Depreciation of owned property, plant and equipment
24,904
19,443
Operating lease charges
110,245
48,926
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 15 -
6
Auditor's remuneration
2021
2020
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
11,500
11,000
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Directors
6
7
Compliance
26
28
Finance and commissions
7
7
Training
2
2
Support
6
5
Membership
5
6
Recruitment
3
3
Marketing
3
3
IT
4
1
Total
62
62
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
2,746,692
2,336,458
Social security costs
348,334
248,257
Pension costs
66,172
47,036
3,161,198
2,631,751
8
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
691,042
744,508
Company pension contributions to defined contribution schemes
13,239
13,234
704,281
757,742
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2020 - 5).
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
8
Directors' remuneration
(Continued)
- 16 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2021
2020
£
£
Remuneration for qualifying services
210,000
180,000
Company pension contributions to defined contribution schemes
1,319
1,314
9
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
830,000
345,000
Adjustments in respect of prior periods
1,290
Total current tax
830,000
346,290
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
£
£
Profit before taxation
4,915,938
2,247,422
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
934,028
427,010
Tax effect of expenses that are not deductible in determining taxable profit
1,171
4,323
Tax effect of income not taxable in determining taxable profit
(29,866)
Adjustments in respect of prior years
1,290
Group relief
(59,491)
(65,964)
Permanent capital allowances in excess of depreciation
(11,197)
(5,557)
Depreciation on assets not qualifying for tax allowances
4,732
3,694
Other non-reversing timing differences
1,453
(3,306)
Timing differences
(10,830)
(15,200)
Taxation charge for the year
830,000
346,290
10
Dividends
2021
2020
£
£
Interim paid
3,300,000
1,300,000
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 17 -
11
Property, plant and equipment
Leasehold land and buildings
Fixtures and fittings
Total
£
£
£
Cost
At 1 January 2021
4,122
165,029
169,151
Additions
46,893
46,893
At 31 December 2021
4,122
211,922
216,044
Depreciation and impairment
At 1 January 2021
102,319
102,319
Depreciation charged in the year
24,904
24,904
At 31 December 2021
127,223
127,223
Carrying amount
At 31 December 2021
4,122
84,699
88,821
At 31 December 2020
4,122
62,710
66,832
12
Trade and other receivables
2021
2020
Amounts falling due within one year:
as restated
£
£
Trade receivables
130,013
108,936
Amounts owed by group undertakings
634,718
1,564,416
Other receivables
179,207
387,831
Prepayments and accrued income
5,995,286
6,040,604
6,939,224
8,101,787
2021
2020
Amounts falling due after more than one year:
£
£
Other receivables
100,000
50,000
Total debtors
7,039,224
8,151,787
Amounts owed by group undertakings have no terms and are therefore repayable on demand. Whilst the classification as current debtors reflect the contractual nature of the loans, the company does not seek repayment of these loans until the group undertaking is financially able to do so. This may be more than 12 months from the reporting date, as part of the company's ongoing financial support of its group.
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 18 -
13
Current liabilities
2021
2020
as restated
£
£
Trade payables
1,302,294
1,307,494
Amounts owed to group undertakings
3,212
Corporation tax
390,763
185,000
Other taxation and social security
83,834
105,601
Other payables
10,541
18,297
Accruals and deferred income
8,547,230
8,587,871
10,337,874
10,204,263
14
Non-current liabilities
2021
2020
£
£
Amounts owed to group undertakings
287,469
287,469
15
Provisions for liabilities
2021
2020
£
£
Clawback provision
477,927
310,277
The provision for clawbacks on indemnified commissions has been estimated by applying an industry average rate of clawback to the value of commissions potentially reclaimable by product providers during the remaining indemnity period.
Movements on provisions:
Clawback provision
£
At 1 January 2021
310,277
Additional provisions in the year
167,650
At 31 December 2021
477,927
16
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
66,172
47,036
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
16
Retirement benefit schemes
(Continued)
- 19 -
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.
17
Share-based payment transactions
During the year to 31 December 2021, the company's parent company had a share option plan in operation.
During prior years 2,818 options were granted to employees within the company, of these options, 2,208 £1 ordinary share options were still in place as at 31 December 2021. These options were granted in two tranches of 2,208 and 610 each, at an exercise price of £39.50 and £344.50 respectively. The amounts included within the second tranche have lapsed during the year.
During the year, 750 options were granted to employees within the company. These options were all granted at an exercise price of £252.00.
The options can only be exercised if a share or asset sale occurs in the parent company. If the options remain unexercised after a period of ten years from the date of the grant or if the option holder ceases employment the options expire. The directors have recorded no charge within the income statement on the grounds of immateriality.
18
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
500
500
500
500
Ordinary shares of £1 each
56,000
56,000
56,000
56,000
56,500
56,500
56,500
56,500
Ordinary shares and Ordinary A shares have attached to them full voting, dividend and capital distribution (including on winding up) rights.
19
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2021
2020
£
£
Within one year
99,295
64,295
Between two and five years
333,708
188,003
In over five years
35,000
468,003
252,298
HL PARTNERSHIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
20
Related party transactions
During the year, Custom Mortgage Solutions Limited became a related party of the company after the ultimate controlling party became the majority shareholder. Since this date, commission totalling £1,082,967 has been paid to the company and at the statement of financial position date no balance was due to or from the company. The company was not considered a related party in the prior period and so no comparative information is disclosed.
21
Ultimate controlling party
The immediate and ultimate parent company is Josewin Limited, a company incorporated in England and Wales. The registered office is 2nd Floor, Unit 1, Southern Gate Office Village, Chichester, West Sussex, PO19 8GR.
Josewin Limited prepares consolidated financial statements and copies can be obtained from Companies House.
22
Prior period adjustment
The comparative period has been restated to update accrued income and accrued cost commission liabilities for services rendered and received immediately prior to the last reporting period end. The net impact on the prior period reported profit is nil, however revenue and cost of sales expenditure for the comparative period have both increased by £1,314,955. Additionally, other assets and liabilities have both also increased by £1,314,955.
Changes to the statement of financial position
As previously reported
Adjustment
As restated at 31 Dec 2020
£
£
£
Current assets
Debtors due within one year
6,836,832
1,314,955
8,151,787
Creditors due within one year
Other payables
(8,598,707)
(1,314,955)
(9,913,662)
Net assets
2,169,391
-
2,169,391
Capital and reserves
Total equity
2,169,391
-
2,169,391
Changes to the income statement
As previously reported
Adjustment
As restated
Period ended 31 December 2020
£
£
£
Revenue
40,716,814
1,314,955
42,031,769
Cost of sales
(34,168,205)
(1,314,955)
(35,483,160)
Profit for the financial period
1,901,132
-
1,901,132
2021-12-312021-01-01falseCCH SoftwareCCH Accounts Production 2022.200Mr C TannerMr G S EarnshawMr G S EarnshawMr N D HoareMr S D AlmondMr R J HaselipMr S D AlmondMr P R CobleyMr C M Tanner050117222021-01-012021-12-3105011722bus:CompanySecretaryDirector12021-01-012021-12-3105011722bus:Director42021-01-012021-12-3105011722bus:Director62021-01-012021-12-3105011722bus:Director72021-01-012021-12-3105011722bus:Director82021-01-012021-12-3105011722bus:Director102021-01-012021-12-3105011722bus:CompanySecretary12021-01-012021-12-3105011722bus:Director32021-01-012021-12-3105011722bus:Director92021-01-012021-12-3105011722bus:Director12021-01-012021-12-3105011722bus:Director22021-01-012021-12-3105011722bus:Director52021-01-012021-12-3105011722bus:RegisteredOffice2021-01-012021-12-31050117222021-12-31050117222020-01-012020-12-3105011722core:ContinuingOperations2020-01-012020-12-3105011722core:Exceptional12020-01-012020-12-3105011722core:RetainedEarningsAccumulatedLosses2020-01-012020-12-3105011722core:RetainedEarningsAccumulatedLosses2021-01-012021-12-31050117222020-12-3105011722core:LandBuildingscore:LeasedAssetsHeldAsLessee2021-12-3105011722core:FurnitureFittings2021-12-3105011722core:LandBuildingscore:LeasedAssetsHeldAsLessee2020-12-3105011722core:FurnitureFittings2020-12-3105011722core:CurrentFinancialInstrumentscore:WithinOneYear2021-12-3105011722core:CurrentFinancialInstrumentscore:WithinOneYear2020-12-3105011722core:Non-currentFinancialInstrumentscore:AfterOneYear2021-12-3105011722core:Non-currentFinancialInstrumentscore:AfterOneYear2020-12-3105011722core:ShareCapital2021-12-3105011722core:ShareCapital2020-12-3105011722core:RetainedEarningsAccumulatedLosses2021-12-3105011722core:RetainedEarningsAccumulatedLosses2020-12-3105011722core:ShareCapital2019-12-3105011722core:RetainedEarningsAccumulatedLosses2019-12-31050117222019-12-3105011722core:ShareCapitalOrdinaryShares2021-12-3105011722core:ShareCapitalOrdinaryShares2020-12-3105011722core:LandBuildingscore:LeasedAssetsHeldAsLessee2021-01-012021-12-3105011722core:FurnitureFittings2021-01-012021-12-3105011722core:UKTax2021-01-012021-12-3105011722core:UKTax2020-01-012020-12-310501172212021-01-012021-12-310501172212020-01-012020-12-310501172222021-01-012021-12-310501172222020-01-012020-12-3105011722core:LandBuildingscore:LeasedAssetsHeldAsLessee2020-12-3105011722core:FurnitureFittings2020-12-31050117222020-12-3105011722core:CurrentFinancialInstruments2021-12-3105011722core:CurrentFinancialInstruments2020-12-3105011722core:Non-currentFinancialInstruments2021-12-3105011722core:Non-currentFinancialInstruments2020-12-3105011722core:WithinOneYear2021-12-3105011722core:WithinOneYear2020-12-3105011722core:BetweenTwoFiveYears2021-12-3105011722core:BetweenTwoFiveYears2020-12-3105011722core:MoreThanFiveYears2021-12-3105011722core:MoreThanFiveYears2020-12-3105011722bus:PrivateLimitedCompanyLtd2021-01-012021-12-3105011722bus:FRS1022021-01-012021-12-3105011722bus:Audited2021-01-012021-12-3105011722bus:FullAccounts2021-01-012021-12-31xbrli:purexbrli:sharesiso4217:GBP