Company registration number 03491492 (England and Wales)
HARLAXTON ENGINEERING SERVICES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2024
HARLAXTON ENGINEERING SERVICES LIMITED
COMPANY INFORMATION
Directors
Mr R C Hibbert
Mrs J E Hibbert
Mrs L J Mair
Secretary
Mrs J E Hibbert
Company number
03491492
Registered office
Toll Bar Road
Marston
Grantham
Lincolnshire
NG32 2HT
Auditor
Mayfield & Co.
2 Merus Court
Meridian Business Park
Leicester
LE19 1RJ
HARLAXTON ENGINEERING SERVICES LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of income and retained earnings
8
Balance sheet
9
Notes to the financial statements
10 - 19
HARLAXTON ENGINEERING SERVICES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2024
- 1 -
The directors present the strategic report for the year ended 31 May 2024.
Review of the business
2024 has been a challenging year for the company. The company continues to remain successful within a competitive market and continues to build on customer relationships and efficient operational delivery of its contracts.
The senior management team continue to focus on reputation and value for money, as well as attracting new colleagues by being a responsible and attractive employer.
Accreditation to ISO9001 and 14001 has been retained, as has all of the LRQA requirements (NERS, GIRS, WIRS and MURS) needed to operate the business; we continue to review business opportunities against accreditation needs so that we remain aligned with client expectation and potential delivery scopes.
The annual turnover has decreased by 32.19% in the year to £12.5m (2023: £18.5m). This has been driven by a shift in deferred income assessments.
Direct costs such as materials and finished goods have decreased by 32.64% which is in line with the drop in recorded turnover. Although material costs continued to rise throughout the year, impacted by global crises and the ability to pass-through these costs onto existing customer contracts. There is a natural lag of enabling pass-through of these costs however these are being better captured and implemented.
Wages and salary costs remain in line with last year as the company continues to focus on acquiring and retaining skilled staff, the company has now commenced with establishing an internal training department and updating their apprenticeship programme ready for the next financial year. Subcontract labour has decreased by 27.18%. This is mainly due to the size of the new developments, the distances required for the offsite works and also the location of these developments. This level of subcontractors is required to efficiently deliver our contracts, on time and to the expectations of our customers. Gross margins have dropped from 29.36% to 18.59% in the year. This reflects a stabilisation of the revenue recognition policy following last year’s change to earlier recognition of profit on contracts. The 5-year rolling average remains stable at approximately 31.92%. The directors feel the margin reflects the efforts of the company to manage costs better and also the completion of a number of key contracts which have seen profits crystalised in the year. The Directors continue to focus business to more specialist connections works and contracts in keeping with the skills and experience of the team.
Administrative expenses have remained consistent in 2024. A drop in pension costs and one-off expenditure to continue with the development of our site at our Head Office have decreased the costs in the year however the repairs at our Head Office have seen an increase in costs up to £568k (2023: £466k).
At the year-end date the balance sheet still reflects the strong trading performance experienced during the year, only having decreased the balance sheet by £1.79m to show total equity of £2.082m (2023: £4.02m). Whilst the company has excellent cash reserves a large proportion of these are earmarked to be spent on the completion of ongoing projects to crystalise the deferred income retained within current liabilities.
HARLAXTON ENGINEERING SERVICES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 2 -
Principal risks and uncertainties
The directors recognise that the degree of exposure to certain risks will influence how successful the business is. The principal risks recognised by the directors are:
The health and safety of employees and others on construction sites for which the company is responsible.
The company recognises that if it is unable to continue to obtain contracts there will be a negative impact on turnover and profitability. In view of this the company strives to maintain its reputation for efficient and reliable service.
The company is always at risk of potential claims being made against it by its customers. This is a general risk within this trade.
Risks associated with current inflation levels, cost of living increases and a potential recession are factors that are currently being monitored by the Directors.
A healthy supply chain for long lead times of equipment however the Directors have a healthy stock available at the head office to be able to manage the contracts accordingly.
Risks associated with lack of skilled people within the industry continue to remain in place however the Directors have a strategic and developed apprenticeship plan in place which is an investment for the future.
Key performance indicators
Key performance indicators (KPI’s) are set for all departments throughout the business for various activities, and these are reviewed at monthly meetings to ensure compliance along with suggestions for improvement which are discussed at the Senior Management monthly meetings. The principal financial KPI’s of the business are turnover, profitability and net assets. These show the company remains strong, as discussed above and is reflected throughout the financial statements.
Future developments
Since the year-end the company has continued to trade well and the financial performance remains strong. The potential of a recession in the forthcoming months may have an impact on the next financial year if new housing developments begin to decrease due to the cost of living rises and material costs continuing to increase. The directors continue to steer the company through the uncertainties of inflation, cost of living increases including energy prices with a view to ensuring that the business remains well set to face the challenges of tomorrow.
Mrs L J Mair
Director
12 February 2025
HARLAXTON ENGINEERING SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2024
- 3 -
The directors present their annual report and financial statements for the year ended 31 May 2024.
Principal activities
The principal activity of the company continues to be the provision of engineering services.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £500,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr R C Hibbert
Mrs J E Hibbert
Mrs L J Mair
Auditor
The auditor, Mayfield & Co., is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mrs L J Mair
Director
12 February 2025
HARLAXTON ENGINEERING SERVICES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2024
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
HARLAXTON ENGINEERING SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HARLAXTON ENGINEERING SERVICES LIMITED
- 5 -
Opinion
We have audited the financial statements of Harlaxton Engineering Services Limited (the 'company') for the year ended 31 May 2024 which comprise the statement of income and retained earnings, the balance sheet 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:
give a true and fair view of the state of the company's affairs as at 31 May 2024 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
HARLAXTON ENGINEERING SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HARLAXTON ENGINEERING SERVICES LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report 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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
HARLAXTON ENGINEERING SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HARLAXTON ENGINEERING SERVICES LIMITED (CONTINUED)
- 7 -
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation (ie. gives a true and fair view).
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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.
Thomas Mayfield BA FCA (Senior Statutory Auditor)
For and on behalf of Mayfield & Co., Statutory Auditor
Chartered Accountants
2 Merus Court
Meridian Business Park
Leicester
LE19 1RJ
12 February 2025
HARLAXTON ENGINEERING SERVICES LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 MAY 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
12,512,791
18,453,184
Cost of sales
(10,186,363)
(13,035,149)
Gross profit
2,326,428
5,418,035
Administrative expenses
(3,869,564)
(3,872,761)
Operating (loss)/profit
4
(1,543,136)
1,545,274
Interest receivable and similar income
7
127,000
29,329
(Loss)/profit before taxation
(1,416,136)
1,574,603
Tax on (loss)/profit
8
(24,075)
(131,254)
(Loss)/profit for the financial year
(1,440,211)
1,443,349
Retained earnings brought forward
4,022,388
3,579,039
Dividends
9
(500,000)
(1,000,000)
Retained earnings carried forward
2,082,177
4,022,388
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HARLAXTON ENGINEERING SERVICES LIMITED
BALANCE SHEET
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Investments
10
2,000,000
Current assets
Stocks
11
3,745,787
3,491,344
Debtors
13
5,736,497
4,250,893
Investments
14
1,000,000
3,000,000
Cash at bank and in hand
4,109,982
4,928,457
14,592,266
15,670,694
Creditors: amounts falling due within one year
15
(14,509,989)
(11,648,206)
Net current assets
82,277
4,022,488
Net assets
2,082,277
4,022,488
Capital and reserves
Called up share capital
19
100
100
Profit and loss reserves
2,082,177
4,022,388
Total equity
2,082,277
4,022,488
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 12 February 2025 and are signed on its behalf by:
Mrs L J Mair
Director
Company registration number 03491492 (England and Wales)
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2024
- 10 -
1
Accounting policies
Company information
Harlaxton Engineering Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is Toll Bar Road, Marston, Grantham, Lincolnshire, NG32 2HT.
1.1
Accounting convention
These financial statements have been prepared in accordance with 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 £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Harlaxton Holdings Limited. These consolidated financial statements are available from its registered office, Toll Bar Road, Marston, Grantham, Lincs, NG31 2HT.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have 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.
1.3
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. 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.
Revenue from contracts for the provision of engineering services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is determined by the companies' directors.
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 11 -
1.4
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities 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 company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.5
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
1.6
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 determined by the company's directors.
1.7
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.
1.8
Financial instruments
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Debtors and creditors with no stated interest rate and receivable or payable within one year are measured at transaction price. Any losses arising from impairment are recognised in the profit and loss account.
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 12 -
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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
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 company 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 company after deducting all of its liabilities.
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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 13 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
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 company’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. 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.
1.11
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. Company contributions to defined contribution plans for the benefit of employee's are expensed as they become payable.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 14 -
3
Turnover and other revenue
The whole of the turnover is attributable to the company's principal activity.
2024
2023
£
£
Other significant revenue
Interest income
127,000
29,329
4
Operating (loss)/profit
2024
2023
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
17,655
25,813
Profit on disposal of asset
-
(2,000)
Operating lease charges
120,000
120,000
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Directors
3
3
Cost of sales
44
44
Office staff
37
35
Total
84
82
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
3,025,423
3,174,529
Social security costs
331,907
368,617
Pension costs
244,360
249,854
3,601,690
3,793,000
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 15 -
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
89,612
83,482
Company pension contributions to defined contribution schemes
180,000
180,143
269,612
263,625
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023: 3).
7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
123,761
21,108
Other interest income
3,239
8,221
Total income
127,000
29,329
8
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
175,099
Adjustments in respect of prior periods
23,223
(44,883)
Total current tax
23,223
130,216
Deferred tax
Origination and reversal of timing differences
852
1,038
Total tax charge
24,075
131,254
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
8
Taxation
(Continued)
- 16 -
The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
(Loss)/profit before taxation
(1,416,136)
1,574,603
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 20.00%)
(354,034)
314,921
Tax effect of expenses that are not deductible in determining taxable profit
10,026
4,581
Unutilised tax losses carried forward
65,108
Adjustments in respect of prior years
23,223
(44,883)
Group relief
279,752
(143,172)
Permanent capital allowances in excess of depreciation
(852)
(1,231)
Provision for deferred tax asset
852
1,038
Taxation charge for the year
24,075
131,254
9
Dividends
2024
2023
£
£
Interim paid
500,000
1,000,000
10
Fixed asset investments
2024
2023
£
£
Unlisted investments
2,000,000
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
10
Fixed asset investments
(Continued)
- 17 -
Movements in fixed asset investments
Investments
£
Cost or valuation
At 1 June 2023
-
Additions
2,000,000
At 31 May 2024
2,000,000
Carrying amount
At 31 May 2024
2,000,000
At 31 May 2023
-
11
Stocks
2024
2023
£
£
Finished goods and goods for resale
3,745,787
3,491,344
12
Construction contracts
2024
2023
£
£
Contract revenues recognised
Contract costs incurred plus recognised profits less recognised losses to date
12,569,146
18,453,743
Included in creditors: amounts falling due within one year, is deferred contract income of £13,234,062 (2023: £9,515,092).
13
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
3,639,038
1,986,795
Corporation tax recoverable
375,503
266,487
Amounts owed by group undertakings
1,363,433
1,287,160
Other debtors
210,542
339,382
Prepayments and accrued income
144,102
366,338
5,732,618
4,246,162
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
13
Debtors
(Continued)
- 18 -
2024
2023
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 16)
3,879
4,731
Total debtors
5,736,497
4,250,893
14
Current asset investments
2024
2023
£
£
Unlisted investments
1,000,000
3,000,000
15
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Trade creditors
845,966
1,229,364
Taxation and social security
88,490
144,688
Deferred income
17
13,234,062
9,515,092
Other creditors
161,570
160,460
Accruals
179,901
598,602
14,509,989
11,648,206
16
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Assets
Assets
2024
2023
Balances:
£
£
Depreciation in excess of capital allowances
3,879
4,731
HARLAXTON ENGINEERING SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
16
Deferred taxation
(Continued)
- 19 -
2024
Movements in the year:
£
Asset at 1 June 2023
(4,731)
Charge to profit or loss
852
Asset at 31 May 2024
(3,879)
The deferred tax asset set out above is expected to reverse out over a number of years as the tax written down values of the assets catches up with their net book value.
17
Deferred income
2024
2023
£
£
Other deferred income
13,234,062
9,515,092
18
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
244,360
249,854
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
20
Ultimate controlling party
The parent company of Harlaxton Engineering Services Ltd is Harlaxton Holdings Limited. The registered office of the parent company is Toll Bar Road, Marston, Grantham, Lincs, NG32 2HT. The financial statements of the company are consolidated in the financial statements of Harlaxton Holdings Limited. These consolidated financial statements are available from its registered office.
The ultimate controlling party is Mr R & Mrs J Hibbert who own 100% of the parent company's issued share capital.
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