Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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HTEC LIMITED
CONTENTS
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HTEC LIMITED
COMPANY INFORMATION
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HTEC LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The Directors present their Strategic Report for the year ended 31 December 2022.
Principal activity Product focus on real-time Retail Management Solutions (“RMS”) The Company specialises in comprehensive, real-time, mission-critical solutions including RMS, card payment terminals and services, customer engagement, forecourt site controllers, outdoor payment terminals, automatic number plate recognition and handheld devices. Key target markets are convenience and forecourt retailers The Company targets businesses in retail, mainly convenience stores, wholesalers and fuel forecourts. The Company designs, develops and supports RMS, payment and loyalty systems for the UK petrol forecourt and convenience markets. These can be provided as a comprehensive, fully managed offering or as discrete products, according to customer needs. The Company’s activities generate four distinct revenue streams from:
∙Data services: Our payments switch and associated services, which accept, process, store and transmit credit card information are accredited at the highest level of the PCI standards.
∙Software licences and hardware: This income stream comes from the sale of products, such as RMS. Our existing customer base brings new revenues but also typically adds additional recurring revenues from support contracts. In addition to securing new customers, there are regular opportunities to refresh the products on existing customer estates.
∙Consultancy, transactional and software maintenance: Our software development teams provide product development, consultancy and transactional services and product support to customers, with the teams focused respectively on products and hosted solutions. Our data centres also maintain and support hosted solutions for our cloud-based products covering management information, loyalty and as an agent for payment processing. They deliver high uptime and excellent transaction processing speeds for our customer base.
∙Service and installations: The sale of our software and hardware products typically leads to an additional recurring revenue stream through the provision of support services and customer installations. We provide industry-leading customer service levels, with 24-hour help desk support, a nationwide field service and a specialised repair and refurbishment team, all of which help to promote close, long-term customer relationships.
Across each of these revenue streams, innovation and high levels of customer care are central to the Company’s success.
The Company’s business is directed by the Board and managed by Brad McGuinness, SVP & GM, POS Solutions. A Senior Management Team, comprising SVP & GM Enterprise Productivity Sales Europe; COO, Enterprise Productivity; CTO, Enterprise Productivity are responsible for sales, operations and development.
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HTEC LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
We aim to be the leading solutions partner to retailers in our chosen verticals, supplying customers with our market-leading, innovative systems for RMS, payment and loyalty operations. These systems are real-time, mission-critical and data rich, and our customers rely on us to keep them trading. Accordingly, professional and timely support from our data centre teams, field engineering force and help desk professionals continue to remain a core part of what we do.
Opportunities to acquire new businesses are reviewed on a regular basis, where they extend penetration within addressable markets, add complementary technology or broaden geographic reach. During 2022, the Board did not consider it appropriate to make any strategic acquisitions.
The Company was acquired by PDI Technologies, Inc. in January 2022. Since the acquisition of the Company, the goal of simplifying the product portfolio, optimizing the investment into profitable go forward products, improving processes and controls around field customer management and most importantly continuing to integrate resources into PDI’s other synergistic business. This will continue in 2024 with PDI exiting the non-profitable business areas to improve the financial condition of the business.
Retail management solutions
The Company plans to continue to work in partnership with its PDI sister companies to broaden the Company’s customer base in the UK and upsell the Group’s enterprise management system to a wide variety of customers in the UK. In addition, the Company will continue the development of retail management systems as complementary products to the SME market.
Payments
The Company provides payment processing services via its Gemini Payment Services (“GPS”) platform, delivered as a highly resilient, scalable platform, backed by the Company’s 24/7 service capability. Our GPS offering has been enhanced for the forecourt market to create our own unique intellectual property. The Company also offers integrated payment solutions for pay-at-pump, in store payment terminals and direct point of sale integration as well as forecourt specific capabilities for unattended sites and next-gen mobile payment. The Company offers these payment services while maintaining the highest level of payment accreditations, being PCI-DSS Level 1, and has been certified since 2008
Customer engagement
The Company provides and hosts the points engine and associated services that underpin one of the world’s largest oil company’s consumer loyalty schemes.
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HTEC LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The management team is responsible for the operations of the business and uses a number of financial and non-financial KPIs in order to manage and develop the business to achieve the Company's strategic objectives. The directors monitor customer pipelines, revenue, expenses, cash balance outstanding and other relevant KPIs as key performance indicators of the company.
Key Performance indicators The company's key KPI is adjusted EBITDA margin Definition Adjusted EBITDA margin is defined as earnings before interest, taxes, depreciation, amortisation, administration expenses resulting from acquisition costs and share-based payments as a percentage of revenue. Each business area is monitored each month and business performance is reviewed at Executive team meetings and at Board meetings. 2022 Performance Adjusted EBITDA margin was positive 5.4% for 2022 (2021: negative 4.0%). The improvement in adjusted EBITDA margin was achieved by payroll cost reductions from operating efficiencies and procurement initiatives, plus lower impairment and dilapidations costs. Profit and loss
∙Company revenues increased 1.8% to £21.41 million (2021: £21.03 million).
∙Data services revenue totalled £4.07 million (2021: £5.06 million).
∙Consultancy, transactional and licence maintenance revenues totalled £6.41 million (2021: £2.63 million) including significant growth in transactional.
∙Service and installation revenues totalled £5.63 million (2021: £7.02 million) where 2021 included fuel installations for a major supermarket.
∙Software licence and hardware revenues continued strongly at £5.29 million (2021: £6.32 million) reflecting a continuing catch-up of systems updates deferred by customers during the early phase of the pandemic.
∙Operating expenses decreased 7.4% to £22.47 million (2021 restated: £23.89 million) largely driven by payroll savings and a lower impact from the impairment of development costs, lease dilapidations and inventory provisions.
∙Loss before tax was £1.07 million (2021: £2.96 million loss).
Balance sheet
∙Net cash totalled £0.83 million (2021: £0.70 million) at the year end.
∙Fixed assets decreased to £1.74 million (2021 restated: 3.47 million) mainly from ongoing depreciation and the write off of assets no longer in use but that were not fully depreciated.
∙Current assets in 2021 included the advance billing of a major hardware sale fulfilled in 2022 and decreased by £6.90 million.
∙Correspondingly, current liabilities decreased by £7.70 million to £5.95 million (2021 restated: £13.63 million) due to lower deferred revenue on the advance billing.
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HTEC LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Concentration of customers
Three customers accounted for 64% of sales in 2022 (71% in 2021). Given this concentration, the loss of a major customer would result in a material reduction in turnover. We act to mitigate the risk by securing long-term contracts with customers wherever possible. We also seek to provide high service levels and innovate new products. In addition, we are focused on business 'initiates' designed to broaden the customer base. Competition The market demands continual improvements in functionality, and competition from other suppliers exists. To offset these risks, the Company continues to invest significantly in improving the quality and functionality of its products. The objective is to increase the value of the Compan'ys offering to its customers and to ensure that we continue to provide market-leading products and services. Maintaining the bank and other approvals to allow the company to operate as a payment service provider Attaining these approvals requires considerable committed resources and continuous product renewal. The Company achieves the highest standard of PCI compliance by its annual certification process and continued monitoring of platform performance and changes in regulations and standards. Dependence on technology We are heavily dependent on technology for the smooth running of our business. A cybersecurity incident could lead to a loss of data integrity within our systems or loss of financial assets through fraud. A cyber-attack or serious failure in our systems could result in us being unable to deliver service to our customers. As a result, we could suffer reputational loss, financial loss and penalties. The Company operates robust and well-protected data centres with multiple data links to protect against the risk of failure. The Company also maintains near-live-back-up data centres which are designed to be able to provide the necessary services in the event of a failure at a primary site. The use of antivirus and malware software, firewalls, email scanning and internet monitoring are also an integral part of our security plan. Market changes Significant ownership changes could occur within the Company's target markets of petrol forecourts and convenience stores. Major oil companies have withdrawn from retailing operations and both market sectors are seeing a degree of consolidation activity. This provides both an opportunity and a threat. The Company's response is to continue to develop market-leading products and to ensure they can be integrated as widely as possible within the other technologies used in petrol retailing and the convenience store sectors. FINANCIAL RISK MANAGEMENT The Company’s operations expose it to a variety of risks including the effect of changes in foreign currency exchange rates, credit risk and liquidity risk. The Company does not have material exposures in any of the areas identified above. The Company’s principal financial instruments comprise obligations under finance leases together with trade debtors and trade creditors that arise from operations.
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HTEC LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The main risks arising from the Company’s financial instruments can be analysed as follows:
Foreign exchange rate risk The Company transacts business in Euros with approximately 7% (2021: 10%) of turnover denominated in that currency. The Company is not exposed significantly to foreign exchange risk due to a short working capital cycle in Euros. Credit risk The Company’s principal financial assets are bank balances, cash, and trade debtors, which represent the Company’s maximum exposure to credit risk in relation to financial assets. The Company’s credit risk is primarily attributable to its trade debtors. Credit risk is managed by monitoring the amount and duration of exposure to any one customer depending upon their credit rating. The amounts presented in the balance sheet are net of allowances for doubtful debts estimated by the Company’s management based on prior experience. The Company has a significant concentration of credit risk, with 59% (2021: 71%) of its turnover spread over three large blue chip customers. The Company carefully monitors the creditworthiness of these three customers and is satisfied no significant exposure to default exists. Liquidity risk The Company’s policy has been to ensure continuity of funding through acquiring an element of the Company’s fixed assets under finance leases and arranging funding for operations via intercompany advances. Cash flow interest rate risk The directors monitor the overall level of borrowings and interest costs to limit any adverse effects on the financial performance of the company. ENVIRONMENT The Company’s policy with regards to the environment is to understand and effectively manage the actual and potential environmental impact of its activities. Operations are conducted such to comply with all the legal requirements relating to the environment in all areas where business is carried out. During the period covered by this report, the Company has not incurred any fines or penalties or been investigated for any breach of environmental regulations. It is Company policy to continually carry out research and development of new products and processes to minimise the impact of its operations on the environment.
This report was approved by the board and signed on its behalf.
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HTEC LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The loss for the year, after taxation, amounted to £820,293 (2021 - loss £2,249,518).
The directors do not recommend a dividend.
The directors who served during the year were:
As permitted by S414c (11) of the Companies Act 2006, the directors have elected to disclose information,
required to be in the Directors' Report by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.
There have been no significant events affecting the company since the year end.
This report was approved by the board and signed on its behalf.
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HTEC LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent; 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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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HTEC LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HTEC LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2022
We have audited the financial statements of HTEC Limited (the 'company') for the year ended 31 December 2022, which comprise the profit and loss account, the balance sheet, the statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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.
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HTEC LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HTEC LIMITED (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
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HTEC LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HTEC LIMITED (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
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:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including Payment Card Industry Data Security Standard ("PCI DSS"), the Companies Act 2006 and taxation legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested a sample of journal entries to identify unusual transactions;
∙reviewed a sample of revenue transactions and reviewed the income recognition policy;
∙assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙reading the minutes of meetings of those charged with governance; and
∙enquiring of management as to actual and potential litigation and claims.
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HTEC LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HTEC LIMITED (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
16 Great Queen Street
Covent Garden
WC2B 5AH
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HTEC LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2022
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HTEC LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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HTEC LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
HTEC Limited specialises in comprehensive, real-time, mission-critical solutions including RMS, card payment terminals and services, customer engagement, forecourt site controllers, outdoor payment terminals, automatic number plate recognition and handheld devices.
The company is a private company limited by shares and incorporated in England and Wales. The address of its registered office 5 New Street Square, London, United Kingdom, EC4A 3TW. The financial statements are presented in Sterling (£), which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The company has taken advantage of the following disclosure exemptions in preparing these
financial statements, as permitted by FRS 102:
∙Section 3 Financial Statement Presentation paragraph 3.17(d) (inclusion of statement of cash
flows);
∙Section 7 Statement of Cash Flows (inclusion of statement of cash flows);
∙Section 11 Financial Instruments paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv),11.48(b) and 11.48(c) (disclosures relating to financial instruments);
∙Section 26 Share based payments (disclosure of share based payments); and
∙Section 33 Related Party Disclosures paragraph 33.7 (disclosures of key management personnel compensation).
These financial statements, for the year ended 31 December 2022, are the first the company has
prepared in accordance with UK GAAP. For periods up to and including the year ended 31 December 2021, the company prepared its financial statements in accordance with IFRS.
Accordingly, the Company has prepared financial statements that comply with UK GAAP applicable
as at 31 December 2022 together with the comparative period data for the year ended 31 December
2021. In preparing the financial statements, the company's opening statement of financial position
was prepared as at 1 January 2021, the Company's date of transition to UK GAAP.
The adjustments required to restate the financial statements, including the statement of financial
position as at 1 January 2021 and the financial statements as of, and for, the year ended 31
December 2021 are set out in note 26.
The preparation of financial statements in compliance with FRS 102 requires the use of certain
critical accounting estimates. It also requires management to exercise judgement in applying the
company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The company has restated its comparative figures for the year ended 31 December 2021. An explanation of the adjustment, together with the financial impact is set out in note 26.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The company was, at the end of the year, a wholly-owned subsidiary of Inform Information Systems Limited, whose registered address is 5 New Street Square, London, EC4A 3TW.
Inform Information Systems Limited prepares consolidated financial statements, in which the company is included. In accordance with the exemption given in Section 400 of the Companies Act 2006, the company is not required to produce, and has not published, consolidated accounts.
After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date these financial statements were approved. This assessment is based on the financial support of the ultimate parent company, which has been confirmed in writing. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
The company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred.
Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic life of five years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Research and development costs are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account.
For research and development costs measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Page 20
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the company becomes party to the contractual provisions of the instrument.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
The company’s policies for its major classes of financial assets and financial liabilities are set out below.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Financial assets
Basic financial assets, including trade and other debtors, cash and bank balances, intercompany working capital balances, and intercompany financing are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment.
Financial liabilities
Basic financial liabilities, including trade and other creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Impairment of financial assets
Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Derecognition of financial assets and financial liabilities
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Offsetting of financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an 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.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Analysis of turnover by country of destination:
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 25
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 26
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 27
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
10.Taxation (continued)
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
10.Taxation (continued)
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at
19%. From this date companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 30
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 31
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 32
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 33
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Profit and loss account
The profit and loss account includes all current and prior period retained profits and losses.
The company has taken advantage of the exemption contained in FRS 102 section 33 "Related Party Disclosures" from disclosing transactions with entities which are a wholly owned part of the group.
The immediate parent undertaking is HTEC Group Limited.
The parent undertaking of the smallest group of undertakings for which group financial statements are drawn up and of which the company is a member is Inform Information Systems Limited, whose registered office is 5 New Street Square, London, EC4A 3TW. Copies of these group financial statements are available to the public from Companies House.
The ultimate parent company is PDS Parent Inc, a company incorporated in the United States.
In the opinion of the director the ultimate controlling party is PDS Parent Inc.
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Prior year errors
During the year, a review of goodwill balances was performed which identified an impairment in the goodwill balance which should have been recognised in a prior year. The companies that the goodwill related to were dormant in the prior years, and remain dormant in the current year. Therefore, an adjustment has been made to recognise the impairment of these balances. Transition adjustments from IFRS to FRS 102 These financial statements, for the period ended 31 December 2022, are the first the Company has prepared in accordance with UK GAAP. For periods up to and including the year ended 31 December 2021, the Company prepared its financial statements in accordance with IFRS. Accordingly, the Company has prepared financial statements that comply with UK GAAP applicable as at 31 December 2022 together with the comparative period data for the year ended 30 December 2021. In preparing the financial statements, the Company's opening statement of financial position was prepared as at 1 January 2021, the Company's date of transition to UK GAAP. The impact of the transition to FRS 102 on the company is summarised below. The extent of the transition was due to the derecgonition of right of use assets and corresponding lease liabilities and amortisation of goodwill. Please refer to the note below for the adjustments required to restate the financial statements, including the statement of financial position as at 1 January 2021 and the financial statements as of, and for, the year ended 31 December 2021. Additionally, a prior period adjustment was posted to reverse the IFRS 16 Leases balances which were included within the prior year accounts and recognise goodwill amortisation. The adjustment posted brings the comparatives in line with UK GAAP treatment. The impact of these prior year adjustments are separately summarised below:
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HTEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Change in opening net assets
Page 36
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