Company registration number SC350707 (Scotland)
HFD CONSTRUCTION GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
HFD CONSTRUCTION GROUP LIMITED
COMPANY INFORMATION
Directors
Mr W D Hill
Mr W K Hill
Company number
SC350707
Registered office
177 Bothwell Street
Glasgow
G2 7ER
Auditor
Johnston Carmichael LLP
227 West George Street
Glasgow
G2 2ND
HFD CONSTRUCTION GROUP LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 7
Group statement of comprehensive income
8
Group balance sheet
9
Company balance sheet
10
Group statement of changes in equity
11
Company statement of changes in equity
12
Group statement of cash flows
13
Notes to the financial statements
14 - 26
HFD CONSTRUCTION GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -

The directors present the strategic report for the year ended 30 June 2023.

Review of the business

The company acts as the holding company of a trading group whose principal activities are that of property construction and development.

 

Construction Group turnover in the period amounted to £12,139,466 (2022: £15,529,928). At the year end the group had shareholders' funds of £29,944,962 (2022: £30,151,432).

 

Construction division turnover has continued to decrease following prior year completion of the division's new build commercial property project, the later stages of which has had its challenges impacting on the construction team's ability to progress onto new projects. Despite this, the latter half of the financial year has focused on fitout and refurbishment projects in line with the board and wider HFD planned strategy.

 

The division has presented a loss in the year which is primarily attributed to static employee and other overhead costs against the reduced turnover. This is in line with the division's strategy to retain quality personnel to manage the upcoming pipeline of work from commercial property developments.

 

Overall, the directors are satisfied with the performance of the division in the period given the quality of service delivered and the focus on upcoming projects.

Principal risks and uncertainties

The group finances its operations through a mixture of retained profits and secure bank deposits. The group does not rely upon any bank debt to finance its current construction activities. The board closely monitors the economic outlook within the construction sector with a view to manage risk to achieve:

 

The principal risks impacting the group are price and delivery risk, these are monitored through a competitive tender process with suppliers and subcontractors and actively monitoring progress on site.

Key performance indicators

The directors use a number of indicators to monitor and improve the position of the business. The directors consider the financial key performance indicators of the group to be profitability, cashflow and return on capital employed. Non-financial key performance indicators include customer satisfaction levels.

On behalf of the board

Mr W D Hill
Director
4 April 2024
HFD CONSTRUCTION GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -

The directors present their annual report and financial statements for the year ended 30 June 2023.

Principal activities

The principal activity of the group continued to be that of property construction and development.

Results and dividends

The results for the year are set out on page 8.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr W D Hill
Mr W K Hill
Future developments

The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch.7 to be contained in the directors' report. It has done so in respect of future developments.

Auditor

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

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
Mr W D Hill
Director
4 April 2024
HFD CONSTRUCTION GROUP LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

HFD CONSTRUCTION GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HFD CONSTRUCTION GROUP LIMITED
- 4 -
Opinion

We have audited the financial statements of HFD Construction Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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:

HFD CONSTRUCTION GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HFD CONSTRUCTION GROUP LIMITED
- 5 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the 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.

 

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.

HFD CONSTRUCTION GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HFD CONSTRUCTION GROUP LIMITED
- 6 -
Extent the audit was considered capabale of detecting irregularities, including fraud

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.

 

We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.

 

All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

 

We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and the parent company and the sector in which they operate, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:

 

 

We gained an understanding of how the group and the parent company are complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies and board meeting minutes.

 

We assumed the susceptibility of the group's and parent company's financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:

 

In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:

 

Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.

HFD CONSTRUCTION GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HFD CONSTRUCTION GROUP LIMITED
- 7 -

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.

James Hamilton (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
4 April 2024
Chartered Accountants
Statutory Auditor
227 West George Street
Glasgow
G2 2ND
HFD CONSTRUCTION GROUP LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
Year
Period
ended
ended
30 June
30 June
2023
2022
Notes
£000
£000
Turnover
3
12,139
15,529
Cost of sales
(11,599)
(15,944)
Gross profit/(loss)
540
(415)
Administrative expenses
(1,400)
(2,148)
Operating loss
(860)
(2,563)
Interest receivable and similar income
6
587
1,786
Loss before taxation
(273)
(777)
Tax on loss
7
68
95
Loss for the financial year
17
(205)
(682)
Loss 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.
HFD CONSTRUCTION GROUP LIMITED
GROUP BALANCE SHEET
AS AT
30 JUNE 2023
30 June 2023
- 9 -
2023
2022
Notes
£000
£000
£000
£000
Current assets
Stocks
10
255
285
Debtors
11
64,104
68,982
Cash at bank and in hand
1,957
1,028
66,316
70,295
Creditors: amounts falling due within one year
12
(8,155)
(11,195)
Net current assets
58,161
59,100
Creditors: amounts falling due after more than one year
13
(28,215)
(28,949)
Net assets
29,946
30,151
Capital and reserves
Called up share capital
16
-
0
-
0
Profit and loss reserves
17
29,946
30,151
Total equity
29,946
30,151
The financial statements were approved by the board of directors and authorised for issue on 4 April 2024 and are signed on its behalf by:
04 April 2024
Mr W D Hill
Director
Company registration number SC350707 (Scotland)
HFD CONSTRUCTION GROUP LIMITED
COMPANY BALANCE SHEET
AS AT 30 JUNE 2023
30 June 2023
- 10 -
2023
2022
Notes
£000
£000
£000
£000
Fixed assets
Investments
8
488
488
Current assets
Stocks
10
255
285
Debtors
11
34,148
38,992
Cash at bank and in hand
1,955
1,025
36,358
40,302
Creditors: amounts falling due within one year
12
(7,955)
(10,989)
Net current assets
28,403
29,313
Total assets less current liabilities
28,891
29,801
Creditors: amounts falling due after more than one year
13
-
(734)
Net assets
28,891
29,067
Capital and reserves
Called up share capital
16
-
0
-
0
Profit and loss reserves
17
28,891
29,067
Total equity
28,891
29,067

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £176,381 (2022 - £128,437 loss).

The financial statements were approved by the board of directors and authorised for issue on 4 April 2024 and are signed on its behalf by:
04 April 2024
Mr W D Hill
Director
Company registration number SC350707 (Scotland)
HFD CONSTRUCTION GROUP LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
Share capital
Profit and loss reserves
Total
£000
£000
£000
Balance at 24 June 2021
-
0
30,833
30,833
Period ended 30 June 2022:
Loss and total comprehensive income
-
(682)
(682)
Balance at 30 June 2022
-
0
30,151
30,151
Year ended 30 June 2023:
Loss and total comprehensive income
-
(205)
(205)
Balance at 30 June 2023
-
0
29,946
29,946
HFD CONSTRUCTION GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
Share capital
Profit and loss reserves
Total
£000
£000
£000
Balance at 24 June 2021
-
0
29,195
29,195
Period ended 30 June 2022:
Loss and total comprehensive income for the period
-
(128)
(128)
Balance at 30 June 2022
-
0
29,067
29,067
Year ended 30 June 2023:
Profit and total comprehensive income
-
(176)
(176)
Balance at 30 June 2023
-
0
28,891
28,891
HFD CONSTRUCTION GROUP LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 13 -
2023
2022
Notes
£000
£000
£000
£000
Cash flows from operating activities
Cash generated from/(absorbed by) operations
19
656
(2,558)
Income taxes (paid)/refunded
(314)
259
Net cash inflow/(outflow) from operating activities
342
(2,299)
Investing activities
Interest received
587
Net cash generated from/(used in) investing activities
587
-
Net increase/(decrease) in cash and cash equivalents
929
(2,299)
Cash and cash equivalents at beginning of year
1,028
3,327
Cash and cash equivalents at end of year
1,957
1,028
HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 14 -
1
Accounting policies
Company information

HFD Construction Group Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 177 Bothwell Street, Glasgow, G2 7ER.

 

The group consists of HFD Construction Group Limited and all of its subsidiaries.

1.1
Reporting period

The financial statements for the current period cover the period from 01 July 2022 to 30 June 2023 utilising the 7 day variation to statutory year end for administrative purposes. The prior period accounts are drawn up for the period from 24 June 2021 to 30 June 2022, again utilising the 7 day variation to statutory year end for administrative purposes. Comparative amounts presented in the financial statements (including the related notes) are therefore not entirely comparable.

1.2
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £000.

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

The company is a qualifying entity for the purposes of FRS 102 and has taken advantage of the exemption available from the requirement to present a company only cash flow statement and related notes and disclosures.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company HFD Construction Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 30 June 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.

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
1.4
Going concern

The directors are required to prepare the statutory financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. In satisfaction of this responsibility the directors have considered the group's ability to meet its liabilities as they fall due.

 

The company meets its day to day working capital requirements through its day to day trading. The company closely monitors and manages its funding position and liquidity risk throughout the year to ensure that it has access to sufficient funds to meet forecast cash requirements. The current and future financial position of the company, its cash flows and liquidity position have been reviewed by the directors and deemed satisfactory for going concern. The financial statements have therefore been prepared on a going concern basis which assumes that the company will continue in operational existence for the foreseeable future. The directors expect the company to achieve profitability in the future.

1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

 

Turnover includes:

 

The group's policy in respect of long term contracts is outlined at note 1.14.

1.6
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

1.7
Stocks

Stocks represent work in progress stated at the lower of acquisition cost and net realisable value.

1.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 16 -
1.9
Financial instruments

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

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.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

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 group after deducting all of its liabilities.

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 17 -
Basic financial liabilities

Basic financial liabilities, including 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. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.10
Equity instruments

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

1.11
Taxation

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing 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 profit and loss account, 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 if, and only if, there is 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.

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 18 -
1.12
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 stock or fixed 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 company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.13
Retirement benefits

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

1.14

Construction contracts

Where the outcome of a construction 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 construction contract cannot be estimated reliably , contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.

 

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.

 

Contracts for which the group is the main contractor recognise profit by each stage within the contract where fixed price contracts have been entered in to and that stage has been completed or substantially completed.

2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 19 -
Key sources of estimation uncertainty

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

Accounting for construction contracts

The group estimates the outcome of its construction contracts. This is normally measured by the proportion that contracts costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion.

 

Estimated total contract costs are based on management's detailed budgets and projections. Where management judge that the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable they will be recoverable.

Impairment provisions against stock and debtors

In application of the Group'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.

3
Turnover and other revenue
2023
2022
£000
£000
Turnover analysed by class of business
Property construction
12,139
15,529
2023
2022
£000
£000
Other revenue
Interest income
587
1,786
4
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£000
£000
For audit services
Audit of the financial statements of the group and company
15
10
Audit of the financial statements of the company's subsidiaries
4
5
19
15
For other services
Taxation compliance services
8
4
HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
5
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
-
21
-
0
15

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£000
£000
£000
£000
Wages and salaries
902
993
902
993
Social security costs
108
73
108
73
Pension costs
32
28
32
28
1,042
1,094
1,042
1,094

Contractually all employees of HFD Group Limited sit within HFD Payroll Limited. However an average of 14 employees were dedicated to providing services on behalf of HFD Construction Group Limited during the year ended 30 June 2023 (2022: 21 employees).

 

Remuneration costs were borne by HFD Payroll Limited and recharged to HFD Construction Group Limited.

6
Interest receivable and similar income
2023
2022
£000
£000
Interest income
Other interest income
587
1,786
7
Taxation
2023
2022
£000
£000
Current tax
UK corporation tax on profits for the current period
1
164
Adjustments in respect of prior periods
-
0
51
Group tax relief
(223)
(310)
Total current tax
(222)
(95)
HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
7
Taxation
2023
2022
£000
£000
(Continued)
- 21 -
Deferred tax
Origination and reversal of timing differences
202
-
0
Adjustment in respect of prior periods
(48)
-
0
Total deferred tax
154
-
0
Total tax credit
(68)
(95)

A change in the future UK Corporation tax rate to 25% with effect from 1 April 2023 was announced in the March 2021 budget and substantively enacted on 24 May 2021. This change will have a consequential affect on the group's future tax charge in the UK and as the 25% tax rate was substantively enacted prior to the reporting date, deferred tax expected to unwind after 1 April 2023 has been calculated at 25% as opposed to the current tax rate of 19%.

The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£000
£000
Loss before taxation
(273)
(777)
Expected tax credit based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
(56)
(148)
Change in unrecognised deferred tax assets
-
0
2
Adjustments in respect of prior years
154
51
Deferred tax adjustments in respect of prior years
(202)
-
0
Remeasurement of Deferred tax
36
-
0
Group relief surrendered/(claimed)
223
310
Payment/(receipt) for group relief
(223)
(310)
Taxation credit
(68)
(95)
8
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£000
£000
£000
£000
Investments in subsidiaries
9
-
0
-
0
488
488

 

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
8
Fixed asset investments
(Continued)
- 22 -
Movements in fixed asset investments
Company
Shares in subsidiaries
£000
Cost or valuation
At 1 July 2022 and 30 June 2023
488
Carrying amount
At 30 June 2023
488
At 30 June 2022
488
9
Subsidiaries

Details of the company's subsidiaries at 30 June 2023 are as follows:

Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
High Blantyre Construction Limited
Property Construction
Ordinary
100.00
Newhouse North Construction Limited
Property Construction
Ordinary
100.00
Strathclyde Business Park (Developments) Limited
Property Construction
Ordinary
100.00
1
177 Bothwell Street, Glasgow, Scotland G2 7ER

High Blantyre Construction Limited, Newhouse North Construction Limited and Strathclyde Business Park (Developments) Limited have taken the exemption from the requirement to have their individual financial statements audited. The exemption is available under section 479A of the Companies Act 2006.

10
Stocks
Group
Company
2023
2022
2023
2022
£000
£000
£000
£000
Work in progress
255
285
255
285
HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 23 -
11
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£000
£000
£000
£000
Trade debtors
1,473
3
1,472
3
Corporation tax recoverable
219
-
0
219
-
0
Amounts owed by group undertakings
53,051
59,800
17,121
29,810
Other debtors
1,241
2,556
1,241
2,556
Prepayments and accrued income
7,953
5,393
13,928
5,393
63,937
67,752
33,981
37,762
Amounts falling due after more than one year:
Other debtors
167
1,230
167
1,230
Total debtors
64,104
68,982
34,148
38,992

Amounts owed by group undertakings are repayable on demand and are interest free.

12
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
£000
£000
£000
£000
Trade creditors
3,649
1,883
3,644
1,869
Amounts owed to group undertakings
1,062
7,295
447
7,110
Corporation tax payable
1
164
-
0
157
Other taxation and social security
578
22
577
22
Other creditors
1,078
28
1,072
28
Accruals and deferred income
1,787
1,803
2,215
1,803
8,155
11,195
7,955
10,989

Amounts owed to group undertakings are repayable on demand and attract no interest.

 

Other creditors include £120k of amounts payable to related parties. These amounts are also repayable on demand and attract no interest.

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 24 -
13
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£000
£000
£000
£000
Trade creditors
-
0
734
-
0
734
Deferred income
14
28,215
28,215
-
0
-
0
28,215
28,949
-
734

Amounts included within Accruals & Deferred Income relate to amounts received in advance from a customer for contracted works not performed.

14
Deferred income
Group
Company
2023
2022
2023
2022
£000
£000
£000
£000
Other deferred income
28,215
28,215
-
-
15
Retirement benefit schemes
2023
2022
Defined contribution schemes
£000
£000
Charge to profit or loss in respect of defined contribution schemes
32
28

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

16
Share capital
Group and company
2023
2022
2023
2022
Ordinary shares of £1 each
1
1
-
-

The company has one class of Ordinary shares. There are no restrictions in respect to distribution of dividends and the repayment of capital.

17
Reserves
Profit and loss reserves

The profit and loss reserves represents cumulative profit and losses, less any dividends paid.

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 25 -
18
Related party transactions
Transactions with related parties

During the year the group entered into the following transactions with related parties:

Sales
Sales
Purchases
Purchases
2023
2022
2023
2022
£000
£000
£000
£000
Group
Other related parties
3,026
15,124
557
-
Company
Other related parties
3,026
15,124
557
-

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2023
2022
£000
£000
Group
Other related parties
126
25
Company
Other related parties
120
28

The following amounts were outstanding at the reporting end date:

Amounts due from related parties
2023
2022
Balance
Balance
£000
£000
Group
Other related parties
-
916
Company
Other related parties
-
916
Other information

As permitted by exemption of FRS 102, no intra group transactions have been disclosed with wholly owned group companies that are consolidated within HFD Group Limited, the group's ultimate parent company.

 

All transactions noted above were carried out at normal commercial rates and amounts owed by/to related undertakings are interest free (except a stated) and have no fixed terms of repayment.

HFD CONSTRUCTION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 26 -
19
Cash generated from/(absorbed by) group operations
2023
2022
£000
£000
Loss for the year after tax
(205)
(682)
Adjustments for:
Taxation credited
(68)
(95)
Investment income
(587)
(1,786)
Movements in working capital:
Decrease/(increase) in stocks
30
(148)
Decrease in debtors
5,097
7,370
Decrease in creditors
(3,611)
(7,273)
Increase in deferred income
-
57
Cash generated from/(absorbed by) operations
656
(2,557)
20
Analysis of changes in net funds - group
1 July 2022
Cash flows
30 June 2023
£000
£000
£000
Cash at bank and in hand
1,028
929
1,957
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