The directors present the strategic report for the year ended 31 May 2021.
Without doubt, this has been an extraordinary period of time; one in which the industry has been impacted significantly, which has had a direct impact on the operational and financial performance of the Group.
Significant additional costs arose as a result of revised working practices necessary to enable works to continue on sites in line with Government guidance on social distancing. This particularly impacted on high rise developments and the movement of operatives and materials made significantly more challenging and costly, creating associate project delays.
It is not yet clear what element of those costs are contractually recoverable therefore the business has taken the decision to write off all costs in the current year to ensure no risk of impact to following years.
The Group has also taken the decision to restructure during the year with the merger of our two drywall businesses (Horbury Building Systems Limited and Titan Interior Solutions Limited) into one consolidated drywall and flooring business which will continue to trade as Titan Interior Solutions Limited going forward.
This has enabled the Group to continue to reduce its cost base whilst creating a simple drywall offering to customers.
In addition, we have concluded the closure of our facades and cladding business, a process delayed significantly by Covid-19 resulting in significant unforeseen costs arising from delayed completions.
We can now report that all the facades contracts have been complete with all accounts closed.
The below table sets out the impact of the key exceptional items described above, but also indicates a robust underlying performance in line with expectation.
|
2020/21 |
|
£000 |
|
|
Underlying trading - Operating Profit |
1,598.9 |
|
|
Covid related exceptional items |
(854) |
Restructure costs |
(2,682) |
|
|
Reported - Operating Profit |
(1,937.4) |
The asset and trade sale of Magna Plant and Tool Hire Limited to Speedy Asset Services Ltd was also completed in October 2020, which will continue to deliver savings beyond this year through a long-term supply arrangement.
The Group has delivered a key consolidation strategy in the year which will enable the business to focus on its core strengths and core customers moving forward and has delivered an overhead cost reduction of £1.7m, which has resulted in a year-on-year increase to pre-exceptional profit of £1.5m.
The underlying performance of the group remains robust and has continued into 2021/22, the industry has bounced back ahead of expectations in the second half of 2021 and the UK construction output is forecasted to continue to grow.
Looking ahead we have now completed the majority of the contracts that were awarded before the pandemic started, which means our new existing contracts include , where appropriate , allowances for the changed working methods and the inefficiencies created through social distancing, resulting in the Group returning back to profit generation in 2021/22.
Going forward the business strategy is to focus on margin improvement rather than growth. Growth will largely be limited to Horbury Property Services Limite d , which is our FM and Maintenance business , focusing on fire compliance works where there is a very strong market with an extensive pipeline of opportunities.
At the date of this report both the 2021/22 turnover and operating profit are in line with budget and the sales pipeline continues to look healthy and consistent with prior years, with 90% of budget secured for 2021/22 and a healthy order book moving into 2022/23. The Group continues to focus on liquidity and can report year on year improvement in working capital and strong relationships with all funders.
Reflecting on all the above, the board of directors are satisfied with the 2021 performance under such extraordinary circumstances, the newly restructured Group has a strong position in its markets, a sound and diverse customer base, and sound funding.
Although we continue to trade through uncertain times due to Covid-19, the construction industry has continued throughout the majority of lockdowns. Material prices increase and availability have created additional challenges in the second half of 2021, however through strong supplier and customer relationships business has been able to mitigate most of this price pressure and maintain a consistent profit margin.
The Group seeks to manage future revenue streams by focusing on market leading products and services and maintaining strong relationships with its key customers.
The Group’s principal credit risk arises from extending credit to its customers and is managed by credit referencing and robust procedures for the collection of monies due to the subsidiary companies. The Group companies monitor cash flow on a daily basis and cash flow projections are considered on a monthly basis.
The Group is not exposed in any material way to the few main contractors that are currently of concern to the sector and the directors continue to target a broadening of the customer base.
The company has continued to use enhanced KPI’s, both financial and operational, to manage the business and to effectively deliver the long-term strategic goals. The following is a brief outline of the KPIs being used within the company:
Tender margin versus final account margin on a contract by contract basis
Project status against original programme timetable
Overdue final account debts
Retention collection
Average frequency rate for health and safety data
Enquiry levels
Work in hand
Tender conversion monitoring – by sector and client
Cash received vs value taken
Materials wastage vs budget allowance
Engaging with stakeholders
The success of our business is dependent on the support of all our stakeholders. Building positive relationships with stakeholders that share our values is important to us and working together towards shared goals assists us in delivering long-term sustainable success.
Shareholders
We have an open dialogue with our shareholders through monthly board meetings and monthly management meetings, the shareholders play a key role in our decision-making process, financial performance, and strategic outlook.
Employees
Business unit managers attend monthly management meeting where we have an open dialogue to discuss the business financial performance, supplier and customer relationships and operational performance, we also review the monthly HS&E reporting for each business which is collated from monthly site audits. We also run quarterly site management forums, which allows an opportunity for our site-based employees to have an open dialogue with business management and play an active role in decision making. More generally we have an open relationship with our employees with open discussion welcomed and have several trained Metal Health First Aiders positioned around the business to support employees if required.
Customers
Our ambition is to deliver best-in-class product and services to our customers. We continue to build strong and lasting relationships with our key customers and invest considerable time with them to understand their needs and listen to how we can improve our service. We attend regular site meeting with our customers to discuss on-going project matters and agree on key project related decisions.
Suppliers
We continue to build strong working relationships with our suppliers to develop long lasting partnerships. We run a central procurement team and one of their key performance targets is to continue to develop and support supplier relationships, this is done through periodic reviews with key accounts and more informally with open dialogue on a day-to-day basis. The Board recognises that relationship with suppliers is important to the Group’s long-term success and are briefed in the monthly management meeting by the Procurement Director on supplier relationships and any open issues.
Communities
We engage with the local communities on several fronts and aim to give something back to the local communities we work in. We partner with a local charity each year to help raise awareness and funds and organise several fund-raising events throughout the year which are keenly supported by employees. The also run The Horbury Academy which is an apprenticeship scheme committed to developing local talent into skilled tradespeople, professionals and managers and have formed a strategic partnership with The Sheffield College.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2021.
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
The auditor, BHP LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
As no single entity within the group is classified as large, it is not required to report on its emissions, energy consumption or energy efficiency activities.
We have audited the financial statements of Horbury Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2021 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 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 :
the information given in the strategic report and the directors' r eport for the financial year for which the financial statements are prepared is consistent with the financial statements ; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identifie d material misstatements in the strategic report and the directors' r eport .
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' r esponsibilities s tatement, 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 company or to cease operations, or have no realistic alternative but to do so.
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 .
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of such regulations, including fraud. We designed audit procedures to respond to the risk, 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.
We focused on laws and regulations relevant to the company which could give rise to a material misstatement in the financial statements. Our testing included discussions with management, directors and those staff with direct responsibility for the compliance of laws and regulations, agreeing financial statement disclosures to underlying supporting documentation, and reviewing legal expenses. There are inherent limitations in the audit procedures described 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.
As part of our audit, we addressed the risk of management override of internal controls, including testing of journals and review of the nominal ledger. We evaluated whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s loss for the year was £787,801 (2020 - £264,433 loss).
Horbury Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales . The registered office is South Grove House, South Grove, Rotherham, South Yorkshire, S60 2AF.
The group consists of Horbury Group Limited and all of its subsidiaries.
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 a mounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
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 : The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
Section 26 ‘Share based Payment’ : Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
Section 33 ‘Related Party Disclosures’ : Compensation for key management personnel .
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s loss for the year was £787,801 (2020 - £264,433 loss).
The consolidated group financial statements consist of the financial statements of the parent company Horbury 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 31 May 2021 . 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 g roup.
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.
The directors have performed an assessment of going concern at a Group level, including a review of the Group's current cash position, available banking facilities and financial forecasts for 2022 and 2023, including the ability to adhere to banking covenants over the going concern window. In doing so the Directors have consulted with key stakeholders including financers and also considered the uncertain nature of the current Covid-19 pandemic, current trading trends in our markets and extensive actions already undertaken to protect profitability and liquidity.
Having considered the above factors, the directors are of the opinion that sufficient resources are in place to enable the business to continue to operate as a going concern for a period of 12 months following the date of this report.
Turnover represents amounts receivable for goods and services net of VAT and trade discounts.
In case of long term contracts, turnover reflects the contract activity during the year and is determined by reference to the proportion of total contract value which costs incurred to date bear to total expected contract costs.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account .
Equity in vest ments 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.
I n 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.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss .
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, 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 m ethod 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, 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.
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.
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.
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.
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 paymen ts 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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.
The tax expense represents the sum of the tax currently payable and deferred 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 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 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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 lease d asset are consumed.
Government grants are recognised at the fair value of the asset receive d or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred . Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
Grants received in relation to the government’s Coronavirus Job Retention Scheme have been recognised within other operating income. The grant is accounted for on the accruals basis once the related payroll return has been submitted.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Turnover is generated from long term contracts. The group recognises contract revenue and contract costs associated with each contract using the percentage of completion method.
The recognition of revenue and profit therefore rely on estimates in relation to the stage of completion and the forecast total costs of each contract.
Margin is presented in the monthly management accounts for each contract as it is earned on the specific tasks undertaken in the period. A margin is used based on the job budget form completed at the outset, with variations requiring individual approval. Each project’s outturn is reforecast on a monthly basis, so any changes to expected final outturn are reflected in the accounts promptly. The profit to be recognised monthly is calculated on a cumulative basis so that the overall expected outturn is reflected in the cumulative position each month.
The method applies ensures that profit is recognised equally across the life of the project. The calculation of expected outturn is based on the following factors:
- Variations to overall contract value (expected turnover) which have been agreed with the client
- Costs incurred to date allocated to the project. These allocated costs are reviewed monthly by site managers and matched to site material lists and expected spend
- Budgeted overall costs as calculated at the beginning of the project during the tender process which are used to calculate the expected costs to complete
The degree of estimation uncertainty centres around the expected costs to complete the contract which, combined with the contract turnover, are used to calculate the expected margin outturn on each project.
When contract losses are anticipated these are recognised in full at the time of identification in so far as they can be measured reliably.
Turnover relates wholly to operations in the United Kingdom and arises from the classes of business described in the Directors' Report.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
Of the other interest on financial liabilities £ 245,515 (2020: £230,000) is in respect of accrued redemption premium which is repayable in 2022.
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:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
More information on impairment movements in the year is given in note 11.
Investment property comprises a commercial property held at fair value. The fair value of the investment property has been arrived at on the basis of a valuation carried out in February 2020 by Eddisons Taylors Chartered Surveyors, who are not connected with the company. The valuation was in accordance with the Royal Institute of Chartered Surveyors Appraisal and Valuation manual . The directors do not consider there to have been a material change in the fair value of the property since the formal valuation.
The historical cost of Investment property held at fair value is £1,300,081.
Details of the company's subsidiaries at 31 May 2021 are as follows:
All debt instruments, financial liabilities and equity instruments are held at either amortised cost or cost less impairment.
Included in trade debtors is an amount of £139,747 which are debts older than twelve months (2020: £454,664).
Included in trade debtors is an amount of £2,636,383 which are debts due in over twelve months.
Included in amounts due from fellow group undertakings are balances owed to companies previously in the group but which are now classified as related parties.
Included in other debtors are amounts due from the directors of the subsidiaries totalling £35,448 (2020: £35,448).
Debtors due after one year in relation to related party balances have no set repayment date or interest terms and in the opinion of the directors there would be no benefit in calculating a theoretical carrying value at amortised cost as required by FRS102. Amounts continue therefore to be carried at transaction value.
Included in amounts due to group undertakings are balances owed to companies previously in the group but which are now classified as related parties.
Bank loans and overdrafts are secured by a fixed and floating charge over the assets of the group. Bank overdrafts are repayable on demand.
Other borrowings include loan notes of £3.114m, which carry a coupon rate of 10% per annum. The loan notes are redeemable in 2022, £2m of which carry a redemption premium of 50% and £1.114m a redemption premium of 20%.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Group
The additional provisions in the year reflect the directors' best estimate as to a potential VAT liability arising from an ongoing enquiry.
Company
As explained in Note 31, following the transfer of trade and assets of Horbury Building Systems Limited to other group entities, Horbury Group Limited have recognised a provision against the potentially irrecoverable intercompany debtor remaining from Horbury Building Systems Limited.
Deferred tax assets and liabilities are offset where the group or 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:
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.
The Company's bankers hold an unlimited Composite Company Limited Multilateral Guarantee and debenture between the following group companies: Horbury Group Limited, Horbury Joinery Limited, Tubular Scaffolding Services Limited, Titan Interior Solutions Limited, T.I.S. Services Limited, South Grove House Limited, Millstone Building Limited, Magna Plant and Tool Hire Limited, Horbury Building Systems Limited, Horbury Support Services Limited (formerly known as G.B.W. (Tool Hire) Limited) , Horbury Property Services Limited and Environ Safety Management Limited.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Amounts contracted for but not provided in the financial statements:
In the financial year to 31 May 2022, the trade and related assets of Horbury Building Systems Limited were transferred over to Titan Interior Solutions Limited, a fellow group company. At the same time the remaining assets (excluding cash held) were transferred to other companies within the Horbury Group at their carrying net book value.
Horbury Building Systems Limited is not seeking new business and is in the process of running down existing contracts.
During the year the following transactions took place with companies in which the directors have interests:
Horbury Estates Limited
Management charges receivable £6,000 (2020: £12,000)
The group also paid and received monies on behalf of the above during the year, the balances outstanding at the year end are set out below. Where the associated companies traded with one another on normal commercial terms the balances owed/due have been shown as Trade Debtors/Trade Creditors respectively:
Horbury Estates Limited
Amounts owed from related party undertakings £1,081,651 (2020: £1,081,651)
Amounts owed to related party undertakings £141,155 (2020: £171,236)
The directors regard Mr T Wragg as the ultimate controlling party by virtue of his majority shareholding.