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Registered Number:
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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COMPANY INFORMATION
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CONTENTS
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2025
The directors present their report and the financial statements for the year ended 31 March 2025.
The directors who served during the year were:
After the year end Peter Hesketh was appointed on 25 April 2025.
The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
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 judgments and accounting estimates that are reasonable and prudent;
∙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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HFL GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2025
The auditor Sumer Auditco Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
Going concern As reported on pages 8 and 9, the Company incurred a loss in the year of £4,882,715 (2024: £3,003,187) and has net liabilities of £34,028,317 (2024: £29,145,602). The HFL Group of companies was originally set up by the London Borough of Lambeth (“the Council”) to build new homes. The Council has made the strategic decision to cease the operations of the Group. The Company’s ultimate controlling party has therefore agreed with the Board that a process of ceasing operations should proceed. The assets and operations of the Company will be transferred to the Council, at a value and on terms to be jointly agreed, at some point in the future. After making enquiries and receiving an appropriate Letter of Support from the Council, the Board has assessed the forecast cash flows and the funds available to the Company. The Board has a reasonable expectation that the Company has adequate resources and liquidity to continue in operational existence for the foreseeable future, at least up until its future closure. This will commence once the ongoing property development programme currently being run by HFL Build Limited, and homeownership of HFL Living Limited and HFL Homes Limited have ceased or are transferred. Given these circumstances, the Company does not meet the definition of ‘going concern’, which is the usual basis adopted in the preparation of the financial statements. However, having reviewed the carrying value of the assets and liabilities of the Company at the year end the Board does not consider that any further adjustments are necessary to the values disclosed. The full impact of the transaction will be accounted for when it takes place.
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board on
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HFL GROUP LIMITED
We have audited the financial statements of HFL Group Limited (the 'Company') for the year ended 31 March 2025, which comprise the Statement of Comprehensive Income, the Statement of Financial Position 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 forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in note 2.3 to the financial statements regarding the company's ability to continue as a going concern and the basis on which the financial statements have been prepared. As the directors intend to cease the company's operations, the financial statements have not been prepared on a going concern basis.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report
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HFL GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HFL GROUP LIMITED (CONTINUED)
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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Directors' Report has 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 Directors' Report.
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HFL GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HFL GROUP LIMITED (CONTINUED)
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HFL GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HFL GROUP LIMITED (CONTINUED)
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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, through discussion with the directors (as required by auditing standards), inspection of the company's regulatory and legal correspondence and discussed with the directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably. Firstly, the company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation, distributable profits legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. Secondly, the company is subject to many other laws and regulations where the consequences of noncompliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: employment law and GDPR. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: enquiries of management and those charged with governance as to whether the company complies with such regulations; enquiries of management and those charged with governance concerning any actual or potential litigation or claims, inspection of relevant legal documentation, review of board minutes, testing the appropriateness of journal entries and the performance of analytical review procedures to identify any unexpected movements in account balances which may be indicative of fraud.
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HFL GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HFL GROUP LIMITED (CONTINUED)
There are inherent limitations in the audit procedures described above 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. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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
Statutory Auditor
820 The Crescent
Colchester Business Park
Essex
CO4 9YQ
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2025
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STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2025
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STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 MARCH 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 11 to 21 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
HFL Group Limited is a private company, limited by shares, domiciled and incorporated in England and Wales (registered number: 10847929). The registered office address is Lambeth Town Hall, Brixton Hill, London, SW2 1RW.
The Company's functional and presentational currency is GBP.
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 FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006. The disclosure requirements of Section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The comparatives for debtors have been restated to show rental payments receivable and not yet received of £796,408, in relation to finance leases, as receivable within one year. The comparatives have also been restated to provide for impairment against these amounts receivable in full of £796,408, thus the opening reserves have decreased by £796,408.
The following principal accounting policies have been applied:
The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.
The financial statements of the Company are consolidated in the financial statements of London Borough of Lambeth whose registered office is Lambeth Town Hall, Brixton Hill, London, SW2 1RW. The financial statements of London Borough of Lambeth are publicly available at www.lambeth.gov.uk.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
As reported on pages 8 and 9 the Company incurred a loss in the year of £4,882,715 (2024: £3,003,187) and has net liabilities of £34,028,317 (2024: £29,145,602). The HFL Group of companies was originally set up by the London Borough of Lambeth ("the Council") to deliver a programme of building more and better homes for the people of Lambeth. Following an independent review by the late Lord Bob Kerslade, in December 2022, the Council made the strategic decision to cease the operations of the Group. The Company's ultimate controlling party has therefore agreed with the Board that a process of ceasing operations should proceed and the assets and operations of the Company will be transferred to the Council at an unspecified date and at a value and on terms to be jointly agreed. The company will cease operations after this transfer.
After making enquiries and receiving an appropriate Letter of Support from LBL, the Board has assessed the forecast cash flows and the funds available to the Company. The Board has a reasonable expectation that the Company has adequate resources and liquidity to continue in operational existence for the foreseeable future. In light of the intention to cease operations, the Company does not meet the definition of 'going concern', which is the usual basis adopted in the preperation of the financial statements. However, having reviewed the carrying value of the assets and liabilities of the Company at the year end the Board does not consider that any further adjustments are necessary to the values disclosed. The full impact of the transaction will be accounted for when it takes place.
Other operating income represents the recharge of overheads to fellow group companies. The amounts are recognised on a receivable basis.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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.
Assets purchased during the year are not depreciated in the year of acqusition.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Statement of Financial Position when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Basic 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
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
2.Accounting policies (continued)
the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans and other loans are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
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 descretion of the company.
The judgements, estimates and assumptions are evaluated at each reporting date and are based on histrocial experience as adjusted for current market conditions and other factors. Management makes estimates and assumptions concerning the future in preparing the financial statements and the actual results will not always reflect the accounting estimates made. Balances that require judgements and estimation are outlined below: Amounts owed by group undertakings Management consider whether these balances are recoverable and whether an impairment was required. They applied estimation including taking account of various factors and available evidence in arriving at the conclusion. At 31 March 2025, the gross amounts owed by group undertakings totalled £37,471,799 (2024: £35,811,531) and net, after impairments was £8,234,652 (2024: £9,154,396). The amount of intercompany balances impaired in the year was £2,755,906 (2024: £1,043,234). The impairment charge is represented separately on the Statement of Comprehensive Income as impairment of balances due from group companies.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
The ultimate controlling party is the London Borough of Lambeth by virtue of 100% ownership of HFL Group Limited's shares held by The Mayor and Burgesses of the Borough on behalf of the Council.
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