Company registration number 09929960 (England and Wales)
HTS GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
HTS GROUP LIMITED
COMPANY INFORMATION
Directors
Mr M A Harrowven
Mr A Townshend
(Appointed 20 June 2023)
Councillor R V Davis
Councillor E C Johnson
Councillor S Seales
(Appointed 16 June 2022)
Secretary
Mrs Christina Roach
Company number
09929960
Registered office
The Civic Centre
The Water Gardens
College Square
Harlow
CM20 1WG
Auditor
Ensors Accountants LLP
Connexions
159 Princes Street
Ipswich
IP1 1QJ
Business address
Mead Park Industrial Estate
River Way
Harlow
CM20 2SE
HTS GROUP LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Group statement of comprehensive income
9
Group statement of financial position
10 - 11
Group statement of changes in equity
12
Group statement of cash flows
13
Notes to the group financial statements
14 - 35
Parent company statement of financial position
36
Parent company statement of changes in equity
37
Notes to the parent company financial statements
38 - 39
HTS GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

The directors present the strategic report for the year ended 31 March 2023.

Review of the business

The principal activities of the Group are housing maintenance, gas servicing and repair, grounds maintenance and street cleaning. The majority of the Company's activities are performed on behalf of Harlow District Council ("the Council") under a ten-year contract which commenced on 1st February 2017.

 

In addition during 2020 the group commenced housing and regeneration activities. The group is involved in the purchasing of properties for the purpose of residential lettings across Harlow. The types of properties owned and rented out are categorised as Social, Affordable or Market tenure.

 

The Group has made a loss on ordinary activities before taxation of £226,823 for the year ended 31st March 2023 (2022: profit of £100,431). Margins were significantly impacted by rising material, labour and subcontractor costs caused mainly by high inflation not just in the sector but nationally due to Brexit and other global factors.

In order to deliver against Business Plan objectives to make Business Efficiencies and to assist Business Growth, HTS started to invest resources into Business Development and IT software. A new contract was secured with North Herts delivering FM works to the Councils commercial buildings and a pipeline of opportunities has been developed.

Revenues were slightly higher than anticipated at £29,600,342. Delivery of the Annual Service Charge and the Capital Works Programme was challenging due to factors above, but additionally had the added pressure of recruiting suitably qualified staff to replace staff leaving the business and procuring a supply chain that was also experiencing similar challenges.

 

The Group measures performance in a number of ways, including contract performance, quality reviews, debt reviews and regular re-forecasting and monitoring reviews.

 

The Group's aim is to provide a high-quality cost-effective client facing service whilst delivering positive financial returns to its shareholders.

 

The Group attaches great importance to its corporate responsibility as evidenced by the many community events and conferences supported and attended by the company. This includes providing work experience to students and charitable fundraising events for St Clares Hospice and other local organisations.

 

The Group recognises the importance of our wider responsibility within the local community and have been involved with a number of local initiatives.

Principal risks and uncertainties

The Group maintain a detailed Risk Management and Internal Control system. This requires the group to:

 

 

The key risks identified for the Group, and the mitigating actions taken, are:

 

Risk description

Mitigation

Construction risk

Long-Term contracts in progress are controlled and managed through regular review of forecast revenue and cost to complete.

People

The Group applies rigorous health and safety policies and procedures aimed at minimising health and safety incidents that may affect the company’s employees, subcontractors and members of the public who come into contact with our business activities.

 

HTS GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
Development and performance

Safety. The Group’s health and safety performance has been and will remain a key priority. In the year ended 31st March 2023, the company has had no reportable incidents (2022: no reportable incidents), giving an Accident Incident Rate of 0 (this is calculated from the number of accidents occurring in the period and the total man hours worked and which is lower than our industry standard of 400). The Group will not be complacent on this important issue and remains committed to maintaining a low Accident Incident Rate.

 

Quality. We seek constantly to improve the quality of the service we deliver to our clients and customers. To this end we encourage all our customers to provide feedback on the service they receive from us. The results for the month of March 2023 show that the Group has achieved an overall success rate of 97% (2022: 93%) against the KPI’s that govern the contract.

 

Community. HTS employees have been active in raising funds for various charities. These activities are purely down to the commitment of our staff to be involved in fundraising activities at work and during their own time. A number of staff were involved in School visits and assisted in Harlow Council Crucial Crew initiative whereby 1,000 children were trained in life skills.

 

Employee Development. The Group is committed to employee development and has continued invest on staff training. The company employs nine apprentices and offers work experience to local schools throughout the year. In line with the strategic objectives of our partner, Harlow District Council, HTS became a living wage employer in 2017.

On behalf of the board

Mrs Christina Roach
20 June 2023
HTS GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 March 2023.

Principal activities

The principal activities of the Group are housing maintenance, gas servicing and repair, grounds maintenance and street cleaning. The majority of the Company's activities are performed on behalf of Harlow District Council ("the Council") under a ten-year contract which commenced on 1st February 2017.

 

In addition during 2020 the Group commenced housing and regeneration activities. The Group is involved in the purchasing of properties for the purpose of residential lettings across Harlow. The types of properties owned and rented out are categorised as Social, Affordable or Market tenure.

 

Results and dividends

The Group made a loss after tax of £230,575 (2022: £71,165 ) for the year which has been included within reserves.

No ordinary dividends were paid. The directors do not recommend payment of a final 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 M A Harrowven
Mr J E C Phillips
(Resigned 31 May 2023)
Mr A Townshend
(Appointed 20 June 2023)
Councillor R V Davis
Councillor E C Johnson
Councillor S Seales
(Appointed 16 June 2022)
Political and charitable donations

The Group has made £1,210 (2022:£4,307 ) of charitable donations in the year and no political donations.

Financial instruments
Treasury operations and Financial Instruments

The Group operates a treasury function which is, responsible for managing the liquidity, interest and credit risks associated with the company’s activities.

 

The Group's principal financial instruments include loans (the main purpose of which is to raise finance for the Group's operations). In addition, the Group has various other financial assets and liabilities such as other receivables, amounts due from the Council and trade creditors arising directly from its operations. The Group does not have any ‘derivative' instruments.

Liquidity risk

The Group does not operate any overdraft facilities and maintains bank balances to meet the ongoing needs of the business.

Interest rate risk

All loans, lease and hire purchase agreements are on a fixed interest rate and therefore the Group reduces any exposure to changes in interest rates.

Credit risk

Harlow Council is the ultimate shareholder of the Group and also the main customer. As such the credit risk to the Group is very low.

HTS GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -
Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the Group continues and that the appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees. To this end the Group is recognised as a Disability Confident Employer.

Employee involvement

The Group's policy is to consult and discuss with employees, through its recognition of trade unions, staff councils and at meetings, matters likely to affect employees' interests.

 

Information of matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the Group’s performance.

Future developments

The Group was established to deliver the repairs and maintenance of Harlow District Council’s 9000 Social Housing and 220 public Buildings together with the cleaning and grounds environmental works within the Town.

 

HTS has also secured a number of FM contracts for Harlow Council including the prestigious Nexus Building in the Science Park and FM works to number of commercial buildings in Harlow.

 

HTS has also started the process of improving its IT capabilities across the company including the introduction of Field Services Management Software to support the efficient delivery and transparency of the services its delivers.

 

The Group will also continue to deliver housing related capital works for Harlow District Council over the next 5 years of operation.

 

Following a successful first five years of trading, the Group is looking to maximize the opportunities available both locally and in the surrounding areas.

Auditor

The auditor, Ensors Accountants LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditor

Each director in office at the date of approval of this annual report confirms that:

On behalf of the board
Mrs Christina Roach
20 June 2023
HTS GROUP LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
- 5 -

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 group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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, International Accounting Standard 1 requires that directors:

 

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.

HTS GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HTS GROUP LIMITED
- 6 -
Opinion

We have audited the financial statements of HTS Group Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 March 2023 which comprise the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.

 

The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

In our opinion the financial statements:

Basis for opinion

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 group and parent 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 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

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:

HTS GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HTS GROUP LIMITED
- 7 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and parent company and their 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:

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 parent 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 parent 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.

 

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 extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have given consideration to the control environment (including management's own process for identifying and assessing risks) as well as the nature of the entity, the industry in which it operates and the underlying performance. Consideration was also given to the attitudes and incentives of management to commit fraud. We determined that the greatest potential for fraud existed in the following areas: timing of recognition of income, posting of unusual journals and complex transactions. In line with all audits performed under ISAs (UK), we planned and performed specific procedures to respond to the risk of management override of controls.

 

HTS GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HTS GROUP LIMITED
- 8 -

We also obtained an understanding of the applicable laws and regulations that the company has to abide by, through discussions with management and those charged with governance, as well as commercial knowledge of the sector and statutory legislation. We paid particular focus to those laws and regulations that had the potential to materially impact the amounts and disclosures within the financial statements. The key laws and regulations we identified were the UK Companies Act, employment law, health and safety, tax legislation and landlord regulations.

 

After our initial risk assessment, we performed the following procedures to detect material misstatements in respect of irregularities arising due to fraud or error:

 

- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness

- Reviewing financial statement disclosures and testing these against supporting documentation to assess compliance with applicable laws and regulations

- Assessing of key accounting estimates within the financial statements in order to assess their reasonableness and determining whether there were any indications of management bias in the estimates.

- Reviewing minutes of meetings of those charged with governance

- Enquiring of management as to whether they are aware of any alleged, suspected or actual fraud during the year

- Reviewing information provided by management experts against available market data

 

We also performed procedures to satisfy ourselves regarding compliance with applicable laws and regulations, including:

 

- Enquiring of management, those charged with governance and the entity’s solicitors if there were any actual and potential litigation and claims

- Reviewing minutes of meetings of those charged with governance.

- Reviewing legal expenses for any indicators of litigation or claims against the company

 

All audit team members were made aware of the applicable laws and regulations, as well as potential fraud risks during the planning stage of the audit and this was discussed at the audit team planning meeting. It was therefore determined that team members all had the relevant awareness and competence to identify any instances of non-compliance with relevant laws and regulations or fraud.

 

There are, however, inherent limitations to our above audit procedures. Auditing standards only require us to enquire of the directors and management regarding non-compliance with laws and regulations, as well as review regulatory and legal correspondence (if there is any). It is therefore possible that instances of non-compliance could be missed, particularly where the law in itself is far removed from any financial transactions.

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 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.

Barry Gostling (Senior Statutory Auditor)
For and on behalf of Ensors Accountants LLP
19 July 2023
Chartered Accountants
Statutory Auditor
Connexions
159 Princes Street
Ipswich
IP1 1QJ
HTS GROUP LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 9 -
2023
2022
Notes
£
£
Revenue
3
29,600,342
29,159,975
Cost of sales
(26,741,119)
(26,059,043)
Gross profit
2,859,223
3,100,932
Other operating income
119,880
150,763
Administrative expenses
(3,194,922)
(3,165,162)
Operating (loss)/profit
4
(215,819)
86,533
Investment revenues
7
12,325
1,236
Finance costs
8
(66,429)
(69,213)
Other gains and losses
9
43,100
81,875
(Loss)/profit before taxation
(226,823)
100,431
Income tax expense
10
(3,752)
(29,266)
(Loss)/profit and total comprehensive income for the year
(230,575)
71,165
Profit for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
HTS GROUP LIMITED
GROUP STATEMENT OF FINANCIAL POSITION
AS AT
31 MARCH 2023
31 March 2023
- 10 -
2023
2022
Notes
£
£
Non-current assets
Property, plant and equipment
11
1,392,154
1,119,747
Investment property
12
1,506,600
1,463,500
2,898,754
2,583,247
Current assets
Inventories
15
121,570
87,272
Investments
13
523,747
513,078
Trade and other receivables
16
3,096,594
4,387,871
Current tax recoverable
1,925
56,780
Cash and cash equivalents
606,769
750,917
4,350,605
5,795,918
Current liabilities
Trade and other payables
21
3,359,339
4,746,047
Borrowings
18
277,605
142,885
Lease liabilities
22
256,296
202,588
Deferred revenue
24
40,396
47,935
3,933,636
5,139,455
Net current assets
416,969
656,463
Non-current liabilities
Borrowings
18
1,232,378
1,378,346
Lease liabilities
22
431,270
14,726
Deferred tax liabilities
23
115,129
79,117
1,778,777
1,472,189
Net assets
1,536,946
1,767,521
Equity
Called up share capital
26
450,001
450,001
Retained earnings
1,086,945
1,317,520
Total equity
1,536,946
1,767,521
HTS GROUP LIMITED
GROUP STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT
31 MARCH 2023
31 March 2023
- 11 -
The financial statements were approved by the board of directors and authorised for issue on 20 June 2023 and are signed on its behalf by:
Mr M A Harrowven
Director
Company registration number 09929960 (England and Wales)
HTS GROUP LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 April 2021
450,001
1,246,355
1,696,356
Year ended 31 March 2022:
Profit and total comprehensive income
-
71,165
71,165
Balance at 31 March 2022
450,001
1,317,520
1,767,521
Year ended 31 March 2023:
Profit and total comprehensive income
-
(230,575)
(230,575)
Balance at 31 March 2023
450,001
1,086,945
1,536,946
HTS GROUP LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
30
229,664
(1,756,142)
Interest paid
(66,429)
(69,213)
Income taxes refunded
87,115
-
0
Net cash inflow/(outflow) from operating activities
250,350
(1,825,355)
Investing activities
Purchase of property, plant and equipment
(105,354)
(18,851)
Proceeds from disposal of investment property
-
0
375
Purchase of investments
(10,669)
(1,123)
Interest received
12,325
1,236
Net cash used in investing activities
(103,698)
(18,363)
Financing activities
Repayment of borrowings
(11,248)
(378,191)
Payment of lease liabilities
(279,552)
(339,793)
Net cash used in financing activities
(290,800)
(717,984)
Net decrease in cash and cash equivalents
(144,148)
(2,561,702)
Cash and cash equivalents at beginning of year
750,917
3,312,619
Cash and cash equivalents at end of year
606,769
750,917
HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 14 -
1
Accounting policies
Company information

HTS Group Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Civic Centre, The Water Gardens, College Square, Harlow, CM20 1WG. The company's principal activities and nature of its operations are disclosed in the directors' report.

 

The group consists of HTS Group Limited and all of its subsidiaries.

1.1
Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, except for the revaluation of . The principal accounting policies adopted are set out below.

1.2
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company HTS Group Limited together with all entities controlled by the parent company (its subsidiaries).

 

All financial statements are made up to 31 March 2023. 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.

1.3
Going concern

The directors have at the time of approving the financial statements, a reasonable expectation that the truegroup has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
1.4
Revenue

Revenue arises from the provisions of goods and services provided in line with the principal activities set out in the Directors' report and excludes value added tax.

 

Where the outcome of a contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

 

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.

 

Where the outcome of a contract cannot be estimated reliably, contract costs are recognised as expenses in the period in which they are incurred and contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable.

 

In the case of the annual service charge (building maintenance, street cleaning and environmental services) which is a fixed-price contract, governed by KPI's the customer pays the fixed amount based on a payment schedule, normally paid in the same month as the service is rendered.

The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.

 

In the case of capital and planned works performed for customers amounts are invoiced monthly based on certified valuations. Payment is due within 31 days from the date of the invoice.

 

Rental income is recognised in line with tenancy agreements set in place for investment properties. It is accounted for on a monthly basis at the rate dictated in the tenancy agreement.

1.5
Intangible assets other than goodwill

Costs arising on the acquisition of the contract with Harlow District Council were capitalised as intangible assets and were charged over the life of the initial term of the contract with Harlow District Council. The rates of amortisation are as follows:-

 

Capitalised contract costs - 20% per annum.

1.6
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 improvements
20% of cost
Computers and office equipment
20%-33.33% of cost
Plant and equipment
20% of cost
Motor vehicles
20%-30% of cost

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 income statement.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -

In relation to small tools it is the company's policy to expense tools with an individual of less than £1,000 as consumables as these are likely to have an estimated useful life of less that 12 months.

1.7
Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially measured at cost and subsequently measured using the fair value model and stated at its fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

 

The fair value of investment property reflects market conditions at the balance sheet date. This means that a periodic revaluation approach may only be used where the carrying amount does not differ materially from that which would be determined using the fair value at the balance sheet date. An investment property held at fair value is not depreciated.

 

Investment properties are reviewed annually to determine impairment or other material changes in value.

 

Recognition and Derecognition

 

Expenditure on the acquisition, creation or enhancement of property is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the asset will flow to the Group and the cost of the asset can be measured reliably. Expenditure that maintains but does not add to the asset’s potential to deliver future economic benefits or service potential, i.e. repairs and maintenance, is charged as an expense when it is incurred.

 

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of investment property, is recognised in the income statement in the period of derecognition.

 

Transfers are made to or from investment property only when there is a change in use.

1.8
Non-current investments

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.9
Impairment of tangible and intangible assets

At each reporting 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 group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets do not have indefinite useful lives so are tested for impairment annually, unless there is an indication that the asset may be impaired.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 17 -

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.

 

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.

1.10
Inventories

Inventories are stated at cost and relate to fuel and vehicle parts being used in the business.

1.11
Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, bank deposits with original maturities of over three months are shown in current investments.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 18 -
1.12
Financial assets

Financial assets are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

 

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

 

Fair value is defined in terms of a price agreed by a willing buyer and a willing seller in an arm’s length transaction. The objective of determining fair value for a financial instrument that is traded in an active market is to arrive at the price at which a transaction would occur at the end of the reporting period in that instrument (i.e; without modifying or repackaging the instrument) in the most advantageous active market to which the entity has immediate access. The existence of published price quotations in an active market is the best evidence of fair value and when they exist they are used to measure the financial asset or financial liability.

 

If the market for a financial instrument is not active, an entity establishes fair value by using a valuation technique. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same.

 

Inputs to the valuation techniques in respect of assets and liabilities for which fair value is measured or disclosed in the Group’s financial statements are categorised within the fair value hierarchy, as follows:

 

•    Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the authority can access at the measurement date.

 

•    Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

 

•    Level 3 – unobservable inputs for the asset or liability.

 

Financial assets at fair value through profit or loss

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognised initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial assets held at amortised cost

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 19 -
Financial assets at fair value through other comprehensive income

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the group’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

Impairment of financial assets

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

 

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

1.13
Financial liabilities

The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'. The group only has 'other financial liabilities'

Other financial liabilities

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.

1.14
Equity instruments

Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.

1.15
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 20 -
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, 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 when the group has 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.

1.16
Employee benefits

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 inventories or non-current 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 group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 21 -
1.17
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

 

The Group’s employees are members the Essex pension fund which is a defined benefit pension plan and a part of the Local Government Pension Fund.

 

The assets of the scheme are held separately from those of the company in an independently administered fund. Pension scheme assets are measured using fair values. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability.

 

It has been agreed with Harlow District Council that contributions payable by the Group will be capped at either 10.6% or 14.1%.

 

To the extent that the Group has a liability to pay any additional amounts to the scheme such liabilities are negated by an equal contingent asset arising from the capping agreement with Harlow District Council.

 

Accordingly, the contributions paid by the Group are set in relation to the current service period only and as such the company has accounted for the contributions to this scheme as if they were a defined contribution scheme.

 

Harlow District Councils’ Indemnity of the pension deficits supports the preparation of the financial statements on a going concern basis.

1.18
Leases

At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 22 -

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

When the group acts as a lessor, leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees, over the major part of the economic life of the asset. All other leases are classified as operating leases. If an arrangement contains lease and non-lease components, the group applies IFRS 15 to allocate the consideration in the contract. When the group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately, classifying the sub-lease with reference to the right-of-use asset arising from the head lease instead of the underlying asset. As there is no consideration for the head lease, no right to use asset has been accounted for under IFRS 16, therefore sub-leases are classified for as operating leases. Rental income from sub-leases is credited to the profit and loss account on a straight line basis over the period of the lease.

2
Critical accounting estimates and judgements

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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Critical judgements
Accounting for the defined benefit scheme deficit

There has been significant judgement involved when reviewing the agreement with the Harlow District Council and concluding that all the actuarial risks associated with the scheme remain with Harlow District Council and therefore the deficit of the scheme relating to the Group has not been accounted for within these accounts.

Accounting for leases with no consideration

There has been significant judgement made on whether the head lease between the company and Harlow District Council in relation to Mead Park should be accounted for as a right to use asset. As there is no consideration for the head lease then the conclusion is that no accounting for a right to use asset is required under IFRS 16 and therefore sub-leases are accounting for as operating leases.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
2
Critical accounting estimates and judgements
(Continued)
- 23 -
Key sources of estimation uncertainty
Valuation of Investment Properties

The Investment Properties held by the Group have been revalued to reflect the significant change in value during the year, the movement being recognised in the Income Statement.

 

The Group engaged independent valuation specialists to determine the fair value of Investment Properties as at 31 March 2023. The carrying amount of Investment Properties at the 31 March 2023 was £1,506,600. As investment properties are few in number, the valuation specialists valued each one individually in arriving at their fair value, this being defined as the existing use value. They also referred to comparable market data to support the valuation of each property.

3
Revenue
2023
2022
£
£
Revenue analysed by class of business
Building maintenance, street cleaning and environmental services
29,543,116
29,106,591
Rental income
57,226
53,384
29,600,342
29,159,975
2023
2022
£
£
Other income
Rental other income
100,540
96,373

All revenue was from the UK market. All of the rental income included within revenue is from investment property.

4
Operating profit
2023
2022
£
£
Operating (loss)/profit for the year is stated after charging/(crediting):
Fees payable to the company's auditor for the audit of the company's financial statements
17,658
15,510
Depreciation of property, plant and equipment
582,751
836,397
Amortisation of intangible assets
-
89,637
HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 24 -
5
Employees

The average monthly number of persons (including directors) employed by the group during the year was:

2023
2022
Number
Number
Administration and Support
255
251
Production
102
95
Total
357
346

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
10,999,840
10,070,651
Social security costs
1,121,559
950,214
Pension costs
1,298,933
1,157,782
13,420,332
12,178,647
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
202,860
206,071
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
170,089
178,680
7
Investment income
2023
2022
£
£
Interest income
Bank deposits
12,325
1,236
HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 25 -
8
Finance costs
2023
2022
£
£
Interest on lease liabilities
16,087
9,712
Other interest payable
50,342
59,501
Total interest expense
66,429
69,213
9
Other gains and losses
2023
2022
£
£
Changes in the fair value of investment properties
43,100
81,875
10
Income tax expense
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
81,054
Adjustments in respect of prior periods
(32,260)
(26,014)
Total UK current tax
(32,260)
55,040
Deferred tax
Origination and reversal of temporary differences
36,012
(25,774)
Total tax charge
3,752
29,266
HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
10
Income tax expense
(Continued)
- 26 -

The charge for the year can be reconciled to the loss per the income statement as follows:

2023
2022
£
£
(Loss)/profit before taxation
(226,823)
100,431
Expected tax (credit)/charge based on a corporation tax rate of 19.00% (2022: 19.00%)
(43,096)
19,082
Effect of expenses not deductible in determining taxable profit
53,683
788
Income not taxable
(8,189)
(15,556)
Depreciation on assets not qualifying for tax allowances
592
1,175
Under/(over) provided in prior years
(32,260)
(26,014)
Deferred tax adjustments in respect of prior years
38,028
27,380
Chargeable gains/(losses)
8,189
15,485
Remeasurement of deferred tax for changes in tax rates
(484)
18,988
Movement in deferred tax not recognised
-
(12,003)
Transfer pricing adjustment
-
904
Super-deduction expenditure adjustment
(12,711)
(963)
Taxation charge for the year
3,752
29,266
11
Property, plant and equipment
Leasehold improvements
Plant and equipment
Computers and office equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 April 2021
70,771
981,235
313,883
2,278,902
3,644,791
Additions
6,507
7,869
4,475
92,728
111,579
At 31 March 2022
77,278
989,104
318,358
2,371,630
3,756,370
Additions
19,797
138,692
31,202
665,467
855,158
Disposals
-
0
-
0
(29,443)
(373,303)
(402,746)
At 31 March 2023
97,075
1,127,796
320,117
2,663,794
4,208,782
Accumulated depreciation and impairment
At 1 April 2021
30,730
598,859
224,649
945,988
1,800,226
Charge for the year
14,815
194,794
67,802
558,986
836,397
At 31 March 2022
45,545
793,653
292,451
1,504,974
2,636,623
Charge for the year
14,205
96,059
16,781
455,706
582,751
Eliminated on disposal
-
0
-
0
(29,443)
(373,303)
(402,746)
At 31 March 2023
59,750
889,712
279,789
1,587,377
2,816,628
HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
11
Property, plant and equipment
Leasehold improvements
Plant and equipment
Computers and office equipment
Motor vehicles
Total
£
£
£
£
£
(Continued)
- 27 -
Carrying amount
At 31 March 2023
37,325
238,084
40,328
1,076,417
1,392,154
At 31 March 2022
31,733
195,451
25,907
866,656
1,119,747

Property, plant and equipment includes right-of-use assets, recognised within computers and office equipment and motor vehicles with a carrying value of £610,543 (2022: £215,066). Depreciation of £233,249 (2022: £328,999) was charged in respect of right-of-use assets.

 

The net carrying value of tangible fixed assets includes £104,767 (2022: £Nil) in respect of assets held under finance lease or hire purchase contracts. The depreciation charge in respect of these assets amounted to £7,483 (2022: £Nil) for the year.

12
Investment property
2023
2022
£
£
Fair value
At 1 April 2022
1,463,500
1,382,000
Disposals
-
0
(375)
Fair value adjustment
43,100
81,875
At 31 March 2023
1,506,600
1,463,500

Investment property comprises properties which have been purchased for the purpose of generating rental income and/or capital appreciation.

 

The fair value of the investment properties has been arrived at on the basis of a valuation carried out by Phillip Smith BSc (Hons) MRICS, a RICS Registered Valuer of Wilks Head and Eve LLP, who are not connected with the company.

 

The valuation was made on an open market value and in accordance with RICS standards. It was arrived at by reference to market evidence of transactions for similar properties. The valuation performed by the valuer was reviewed internally by Senior Management and other relevant people within the business. This process included discussions of the assumptions used by the valuer, as well as a review of the resulting valuations.

 

The company is not aware of any events or circumstances which indicate that the amount stated in the Statement of Financial Position for Investment Properties may not be realisable, as at 31/03/2023.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 28 -
13
Investments
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Investments held at fair value through profit or loss
523,747
513,078
-
0
-
0
Fair value of financial assets carried at amortised cost

The directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

14
Subsidiaries

Details of the company's subsidiaries at 31 March 2023 are as follows:

Name of undertaking
Address
Principal activities
Class of
% Held
shares held
Direct
HTS (Property and Environment) Ltd
Note 1
Housing maintenance, gas servicing and repair, grounds maintenance and street cleaning.
Ordinary
100.00
HTS (Housing and Regeneration) Ltd
Note 1
Property investment and lettings
Ordinary
100.00
HTS P&E Services Ltd
Note 1
Dormant
Ordinary
100.00

Registered office addresses (all UK unless otherwise indicated):

1
The Civic Centre, The Water Gardens, College Square, Harlow, Essex, CM20 1WG
15
Inventories
2023
2022
£
£
Tools, fuel and vehicle repairs stock
121,570
87,272
16
Trade and other receivables
2023
2022
£
£
Trade receivables
22,592
10,780
Unpaid share capital
1
1
Amounts owed by fellow group undertakings
261,603
603,658
Other receivables
39,435
67,966
Prepayments and accrued income
2,772,963
3,705,466
3,096,594
4,387,871
HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
16
Trade and other receivables
(Continued)
- 29 -

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

17
Trade receivables and credit risk
Fair value of trade receivables

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

No significant receivable balances are impaired at the reporting end date.

 

Customers purchasing goods and services are allocated individual credit limits assessed taking into account their financial position, past experience and other parameters set by the group and its respective departments.

 

The group's maximum exposure to credit risk in relation to its investments in banks cannot be assessed generally as the risk of any institution failing to make interest payments or repay the principal sum will be specific to the institution. Recent experience has shown that it is rare for such entities to be unable to meet their commitments. A risk of non recoverability applies to all of the group deposits, but there was no evidence at the 31 March 2023 that this was likely to arise.

18
Borrowings
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Borrowings held at amortised cost:
Loans from parent undertaking
277,605
142,885
1,232,378
1,378,346
2023
2022
£
£
Secured borrowings included above:
Loans from parent undertaking
984,560
995,807

Borrowings are secured on the Investment Properties of the group.

Borrowings include £921,206 (2022:£934,889) payable by instalments, which fall due in more than five years.

19
Fair value of financial liabilities

The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 30 -
20
Liquidity risk

The following table details the remaining contractual maturity for the group's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the group may be required to pay.

Less than 1 month
1 – 3 months
3 months to 1 year
1 – 5 years
5+ years
Total
£
£
£
£
£
£
At 31 March 2022
11,907
23,814
107,163
443,456
934,889
1,521,229
11,907
23,814
107,163
443,456
934,889
1,521,229
At 31 March 2023
12,164
24,328
109,475
311,172
921,206
1,378,345
12,164
24,328
109,475
311,172
921,206
1,378,345
Liquidity risk management

Responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the company's funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

 

The interest rate on group borrowings is fixed and therefore it is unlikely the group will need to refinance.

21
Trade and other payables
2023
2022
£
£
Trade payables
1,092,799
1,048,342
Accruals
2,138,753
3,116,812
Social security and other taxation
121,581
575,115
Other payables
6,206
5,778
3,359,339
4,746,047

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is less than 31 days. The company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

 

The directors consider that the carrying amount of trade payables approximates to their fair value.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 31 -
22
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
272,003
205,625
In two to five years
460,622
15,037
Total undiscounted liabilities
732,625
220,662
Future finance charges and other adjustments
(45,059)
(3,348)
Lease liabilities in the financial statements
687,566
217,314

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2023
2022
£
£
Current liabilities
256,296
202,588
Non-current liabilities
431,270
14,726
687,566
217,314
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
16,087
9,712

The fair value of the company's lease obligations is approximately equal to their carrying amount.

23
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
23
Deferred taxation
(Continued)
- 32 -
Accelerated capital allowances
Tax losses
Revaluations
Other
Total
£
£
£
£
£
Liability at 1 April 2021
141,596
-
-
(36,705)
104,891
Deferred tax movements in prior year
Charge/(credit) to profit or loss
(18,775)
(980)
12,513
(18,532)
(25,774)
Liability at 1 April 2022
122,821
(980)
12,513
(55,237)
79,117
Deferred tax movements in current year
Charge/(credit) to profit or loss
(13,493)
521
10,868
38,116
36,012
Liability at 31 March 2023
109,328
(459)
23,381
(17,121)
115,129
24
Deferred revenue
2023
2022
£
£
Arising from the annual service charge and rent
40,396
47,935
All deferred revenues are expected to be settled within 12 months from the reporting date.
25
Retirement benefit schemes
Defined contribution schemes

The group operates a defined contribution pension scheme for all qualifying employees with Smart pension. The assets of the scheme are held separately from those of the group in an independently administered fund.

The total costs charged to income in respect of defined contribution plans is £28,943 (2022: £22,423).

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
25
Retirement benefit schemes
(Continued)
- 33 -

Defined benefit scheme

Qualifying employees belonged to the Local Government Pension Scheme (LGPS), which is managed by Essex County Council. This is a funded defined-benefit scheme, with the assets held in separate trustee-administered funds.

 

Harlow District Council entered into an agreement with the company which has the effect of capping the employer pension contributions payable by the company to the Essex Local Government Pension Scheme.

 

Due to the capping of the contributions the defined benefit scheme will be treated as a defined contribution scheme for the purposes of the preparation of the accounts and the contributions will be recognised as they fall due.

 

Included within the pension charge are contributions of £1,998,714 (2022: £1,801,582) payable by the company to the fund less £728,724 (2022: £666,223) reimbursed by Harlow District Council under the capping contribution arrangement.

 

The Net Pension Liability is guaranteed by the Local Authority and not the company, therefore the Net Pension Liability is treated as contingent liability which has an equal contingent asset being the fair value of the guarantee.

 

Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. The pension scheme's liabilities have been assessed by Barnett Waddingham, an independent firm of actuaries, estimates for the Company being based on the latest full valuation of the scheme as at 31 March 2023. The key assumptions (expressed as weighted averages) at the period end were as follows:

 

2023

2022

CPI

2.90%

3.85%

Discount rate

4.80%

2.60%

Salary increase rate

3.90%

4.25%

Pension increase rate

2.90%

3.25%

In valuing the liabilities of the pension fund at 31 March 2023, mortality assumptions have been made as indicated below.

The assumptions relating to longevity underlying the pension liabilities at the balance sheet date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting a 65 year old to live for a number of years as follows:

 

The contingent amounts arising from the company’s obligations in respect of this defined benefit pension plan are as follows:

 

2023

£’000

2022

£’000

Present value of defined benefit obligations

(48,478)

(70,453)

Fair value of plan assets

58,637

56,597

Fair value of local authority guarantee

10,159

13,956

 

-

-

 

HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 34 -
26
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Authorised
of £1 each
450,001
450,001
450,001
450,001
Issued and not fully paid
of £1 each
450,001
450,001
450,001
450,001

At the year end, there were 450,000 (2022: 450,000) shares issued which were fully paid and 1 (2022: 1) share issued which was not fully paid.

27
Capital risk management

The group is not subject to any externally imposed capital requirements.

28
Related party transactions
Remuneration of key management personnel

During the year key management personnel received remuneration of £311,008 (2022: £320,234 ).

29
Controlling party

Parent undertaking and controlling party is Harlow District Council.

The consolidated financial statements of Harlow District Council are available from The Civic Centre, The Water Gardens, College Square, Harlow. Essex. CM20 1WG.

30
Cash generated from/(absorbed by) operations
2023
2022
£
£
(Loss)/profit for the year before income tax
(226,823)
100,431
Adjustments for:
Finance costs
66,429
69,213
Investment income
(12,325)
(1,236)
Fair value gain on investment properties
(43,100)
(81,875)
Amortisation and impairment of intangible assets
-
89,637
Depreciation and impairment of property, plant and equipment
582,751
836,397
Movements in working capital:
Increase in inventories
(34,298)
(7,387)
Decrease/(increase) in trade and other receivables
1,291,277
(2,625,221)
(Decrease)/increase in trade and other payables
(1,386,708)
327,378
Decrease in deferred revenue outstanding
(7,539)
(463,479)
Cash generated from/(absorbed by) operations
229,664
(1,756,142)
HTS GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
30
Cash generated from/(absorbed by) operations
(Continued)
- 35 -

Non-cash transactions

The cash flow statement excludes purchases of property, plant and equipment purchased by means of lease or hire purchase contracts of £749,804 (2022:£92,728) as these are non-cash transactions.

HTS GROUP LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
31 March 2023
- 36 -
2023
2022
Notes
£
£
Non-current assets
Investments
33
450,102
450,002
Current assets
Trade and other receivables
34
1
1
Cash and cash equivalents
25,000
25,000
25,001
25,001
Current liabilities
Trade and other payables
35
353,767
25,002
Net current liabilities
(328,766)
(1)
Net assets
121,336
450,001
Equity
Called up share capital
36
450,001
450,001
Retained earnings
(328,665)
-
0
Total equity
121,336
450,001

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the year was £328,665 (2022 - £0 profit).

The financial statements were approved by the board of directors and authorised for issue on 20 June 2023 and are signed on its behalf by:
20 June 2023
Mr M A Harrowven
Director
Company registration number 09929960 (England and Wales)
HTS GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 37 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 April 2021
450,001
-
0
450,001
Year ended 31 March 2022:
Balance at 31 March 2022
450,001
-
0
450,001
Year ended 31 March 2023:
Loss and total comprehensive income
-
(328,665)
(328,665)
Balance at 31 March 2023
450,001
(328,665)
121,336
HTS GROUP LIMITED
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 38 -
31
Accounting policies
Company information

HTS Group Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Civic Centre, The Water Gardens, College Square, Harlow, CM20 1WG. The company's principal activities and nature of its operations are disclosed in the directors' report.

31.1
Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

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 company applies accounting policies consistent with those applied by the group. To the extent that an accounting policy is relevant to both group and parent company financial statements, please refer to the group financial statements for disclosure of the relevant accounting policy.

31.2
Going concern

The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

32
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Total
-
-
33
Investments
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Investments in subsidiaries
-
0
-
0
450,102
450,002
Fair value of financial assets carried at amortised cost

The directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

Investment in subsidiary undertakings

Details of the company's principal operating subsidiaries are included in note 14.

HTS GROUP LIMITED
NOTES TO THE COMPANY FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 39 -
34
Trade and other receivables
2023
2022
£
£
Unpaid share capital
1
1
35
Trade and other payables
2023
2022
£
£
Amounts owed to subsidiary undertakings
353,767
25,002
36
Share capital
Refer to note 26 of the group financial statements.
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