The directors present the strategic report for the year ended 31 March 2023.
The principal activities of the Group are housing maintenance, gas servicing and repair, grounds maintenance and street cleaning. The majority of the Company's activities are performed on behalf of Harlow District Council ("the Council") under a ten-year contract which commenced on 1st February 2017.
In addition during 2020 the group commenced housing and regeneration activities. The group is involved in the purchasing of properties for the purpose of residential lettings across Harlow. The types of properties owned and rented out are categorised as Social, Affordable or Market tenure.
The Group has made a loss on ordinary activities before taxation of £226,823 for the year ended 31st March 2023 (2022: profit of £100,431). Margins were significantly impacted by rising material, labour and subcontractor costs caused mainly by high inflation not just in the sector but nationally due to Brexit and other global factors.
In order to deliver against Business Plan objectives to make Business Efficiencies and to assist Business Growth, HTS started to invest resources into Business Development and IT software. A new contract was secured with North Herts delivering FM works to the Councils commercial buildings and a pipeline of opportunities has been developed.
Revenues were slightly higher than anticipated at £29,600,342. Delivery of the Annual Service Charge and the Capital Works Programme was challenging due to factors above, but additionally had the added pressure of recruiting suitably qualified staff to replace staff leaving the business and procuring a supply chain that was also experiencing similar challenges.
The Group measures performance in a number of ways, including contract performance, quality reviews, debt reviews and regular re-forecasting and monitoring reviews.
The Group's aim is to provide a high-quality cost-effective client facing service whilst delivering positive financial returns to its shareholders.
The Group attaches great importance to its corporate responsibility as evidenced by the many community events and conferences supported and attended by the company. This includes providing work experience to students and charitable fundraising events for St Clares Hospice and other local organisations.
The Group recognises the importance of our wider responsibility within the local community and have been involved with a number of local initiatives.
The Group maintain a detailed Risk Management and Internal Control system. This requires the group to:
identify risks and record them in a risk register;
diagnose and quantify the risks as to their likelihood and impact, record the controls established and monitor their effectiveness;
develop a plan to mitigate the likelihood and impact of the identified risks;
regularly review the risk registers and action plans; and
report key issues upwards to Harlow District Council.
The key risks identified for the Group, and the mitigating actions taken, are:
Risk description | Mitigation |
Construction risk | Long-Term contracts in progress are controlled and managed through regular review of forecast revenue and cost to complete. |
People | The Group applies rigorous health and safety policies and procedures aimed at minimising health and safety incidents that may affect the company’s employees, subcontractors and members of the public who come into contact with our business activities. |
Safety. The Group’s health and safety performance has been and will remain a key priority. In the year ended 31st March 2023, the company has had no reportable incidents (2022: no reportable incidents), giving an Accident Incident Rate of 0 (this is calculated from the number of accidents occurring in the period and the total man hours worked and which is lower than our industry standard of 400). The Group will not be complacent on this important issue and remains committed to maintaining a low Accident Incident Rate.
Quality. We seek constantly to improve the quality of the service we deliver to our clients and customers. To this end we encourage all our customers to provide feedback on the service they receive from us. The results for the month of March 2023 show that the Group has achieved an overall success rate of 97% (2022: 93%) against the KPI’s that govern the contract.
Community. HTS employees have been active in raising funds for various charities. These activities are purely down to the commitment of our staff to be involved in fundraising activities at work and during their own time. A number of staff were involved in School visits and assisted in Harlow Council Crucial Crew initiative whereby 1,000 children were trained in life skills.
Employee Development. The Group is committed to employee development and has continued invest on staff training. The company employs nine apprentices and offers work experience to local schools throughout the year. In line with the strategic objectives of our partner, Harlow District Council, HTS became a living wage employer in 2017.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2023.
The Group made a loss after tax of £230,575 (2022: £71,165 ) for the year which has been included within reserves.
No ordinary dividends were paid. The directors do not recommend payment of a final 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 operates a treasury function which is, responsible for managing the liquidity, interest and credit risks associated with the company’s activities.
The Group's principal financial instruments include loans (the main purpose of which is to raise finance for the Group's operations). In addition, the Group has various other financial assets and liabilities such as other receivables, amounts due from the Council and trade creditors arising directly from its operations. The Group does not have any ‘derivative' instruments.
The Group does not operate any overdraft facilities and maintains bank balances to meet the ongoing needs of the business.
All loans, lease and hire purchase agreements are on a fixed interest rate and therefore the Group reduces any exposure to changes in interest rates.
Harlow Council is the ultimate shareholder of the Group and also the main customer. As such the credit risk to the Group is very low.
The Group was established to deliver the repairs and maintenance of Harlow District Council’s 9000 Social Housing and 220 public Buildings together with the cleaning and grounds environmental works within the Town.
HTS has also secured a number of FM contracts for Harlow Council including the prestigious Nexus Building in the Science Park and FM works to number of commercial buildings in Harlow.
HTS has also started the process of improving its IT capabilities across the company including the introduction of Field Services Management Software to support the efficient delivery and transparency of the services its delivers.
The Group will also continue to deliver housing related capital works for Harlow District Council over the next 5 years of operation.
Following a successful first five years of trading, the Group is looking to maximize the opportunities available both locally and in the surrounding areas.
The auditor, Ensors Accountants LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of HTS Group Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 March 2023 which comprise the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have given consideration to the control environment (including management's own process for identifying and assessing risks) as well as the nature of the entity, the industry in which it operates and the underlying performance. Consideration was also given to the attitudes and incentives of management to commit fraud. We determined that the greatest potential for fraud existed in the following areas: timing of recognition of income, posting of unusual journals and complex transactions. In line with all audits performed under ISAs (UK), we planned and performed specific procedures to respond to the risk of management override of controls.
We also obtained an understanding of the applicable laws and regulations that the company has to abide by, through discussions with management and those charged with governance, as well as commercial knowledge of the sector and statutory legislation. We paid particular focus to those laws and regulations that had the potential to materially impact the amounts and disclosures within the financial statements. The key laws and regulations we identified were the UK Companies Act, employment law, health and safety, tax legislation and landlord regulations.
After our initial risk assessment, we performed the following procedures to detect material misstatements in respect of irregularities arising due to fraud or error:
- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness
- Reviewing financial statement disclosures and testing these against supporting documentation to assess compliance with applicable laws and regulations
- Assessing of key accounting estimates within the financial statements in order to assess their reasonableness and determining whether there were any indications of management bias in the estimates.
- Reviewing minutes of meetings of those charged with governance
- Enquiring of management as to whether they are aware of any alleged, suspected or actual fraud during the year
- Reviewing information provided by management experts against available market data
We also performed procedures to satisfy ourselves regarding compliance with applicable laws and regulations, including:
- Enquiring of management, those charged with governance and the entity’s solicitors if there were any actual and potential litigation and claims
- Reviewing minutes of meetings of those charged with governance.
- Reviewing legal expenses for any indicators of litigation or claims against the company
All audit team members were made aware of the applicable laws and regulations, as well as potential fraud risks during the planning stage of the audit and this was discussed at the audit team planning meeting. It was therefore determined that team members all had the relevant awareness and competence to identify any instances of non-compliance with relevant laws and regulations or fraud.
There are, however, inherent limitations to our above audit procedures. Auditing standards only require us to enquire of the directors and management regarding non-compliance with laws and regulations, as well as review regulatory and legal correspondence (if there is any). It is therefore possible that instances of non-compliance could be missed, particularly where the law in itself is far removed from any financial transactions.
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.
HTS Group Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Civic Centre, The Water Gardens, College Square, Harlow, CM20 1WG. The company's principal activities and nature of its operations are disclosed in the directors' report.
The group consists of HTS Group Limited and all of its subsidiaries.
The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £.
The consolidated group financial statements consist of the financial statements of the parent company HTS Group Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 March 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.
In the case of capital and planned works performed for customers amounts are invoiced monthly based on certified valuations. Payment is due within 31 days from the date of the invoice.
Rental income is recognised in line with tenancy agreements set in place for investment properties. It is accounted for on a monthly basis at the rate dictated in the tenancy agreement.
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 income statement.
In relation to small tools it is the company's policy to expense tools with an individual of less than £1,000 as consumables as these are likely to have an estimated useful life of less that 12 months.
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially measured at cost and subsequently measured using the fair value model and stated at its fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
The fair value of investment property reflects market conditions at the balance sheet date. This means that a periodic revaluation approach may only be used where the carrying amount does not differ materially from that which would be determined using the fair value at the balance sheet date. An investment property held at fair value is not depreciated.
Investment properties are reviewed annually to determine impairment or other material changes in value.
Recognition and Derecognition
Expenditure on the acquisition, creation or enhancement of property is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the asset will flow to the Group and the cost of the asset can be measured reliably. Expenditure that maintains but does not add to the asset’s potential to deliver future economic benefits or service potential, i.e. repairs and maintenance, is charged as an expense when it is incurred.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of investment property, is recognised in the income statement in the period of derecognition.
Transfers are made to or from investment property only when there is a change in use.
Interests in subsidiaries 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 parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Intangible assets do not have indefinite useful lives so are tested for impairment annually, unless there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the group’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'. The group only has 'other financial liabilities'
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.
The tax expense represents the sum of the tax currently payable and deferred tax.
At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
When the group acts as a lessor, leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees, over the major part of the economic life of the asset. All other leases are classified as operating leases. If an arrangement contains lease and non-lease components, the group applies IFRS 15 to allocate the consideration in the contract. When the group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately, classifying the sub-lease with reference to the right-of-use asset arising from the head lease instead of the underlying asset. As there is no consideration for the head lease, no right to use asset has been accounted for under IFRS 16, therefore sub-leases are classified for as operating leases. Rental income from sub-leases is credited to the profit and loss account on a straight line basis over the period of the lease.
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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
There has been significant judgement made on whether the head lease between the company and Harlow District Council in relation to Mead Park should be accounted for as a right to use asset. As there is no consideration for the head lease then the conclusion is that no accounting for a right to use asset is required under IFRS 16 and therefore sub-leases are accounting for as operating leases.
The Investment Properties held by the Group have been revalued to reflect the significant change in value during the year, the movement being recognised in the Income Statement.
The Group engaged independent valuation specialists to determine the fair value of Investment Properties as at 31 March 2023. The carrying amount of Investment Properties at the 31 March 2023 was £1,506,600. As investment properties are few in number, the valuation specialists valued each one individually in arriving at their fair value, this being defined as the existing use value. They also referred to comparable market data to support the valuation of each property.
All revenue was from the UK market. All of the rental income included within revenue is from investment property.
The average monthly number of persons (including directors) employed by the group during the year was:
Their aggregate remuneration comprised:
The charge for the year can be reconciled to the loss per the income statement as follows:
Property, plant and equipment includes right-of-use assets, recognised within computers and office equipment and motor vehicles with a carrying value of £610,543 (2022: £215,066). Depreciation of £233,249 (2022: £328,999) was charged in respect of right-of-use assets.
The net carrying value of tangible fixed assets includes £104,767 (2022: £Nil) in respect of assets held under finance lease or hire purchase contracts. The depreciation charge in respect of these assets amounted to £7,483 (2022: £Nil) for the year.
Investment property comprises properties which have been purchased for the purpose of generating rental income and/or capital appreciation.
The fair value of the investment properties has been arrived at on the basis of a valuation carried out by Phillip Smith BSc (Hons) MRICS, a RICS Registered Valuer of Wilks Head and Eve LLP, who are not connected with the company.
The valuation was made on an open market value and in accordance with RICS standards. It was arrived at by reference to market evidence of transactions for similar properties. The valuation performed by the valuer was reviewed internally by Senior Management and other relevant people within the business. This process included discussions of the assumptions used by the valuer, as well as a review of the resulting valuations.
The company is not aware of any events or circumstances which indicate that the amount stated in the Statement of Financial Position for Investment Properties may not be realisable, as at 31/03/2023.
The directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
Details of the company's subsidiaries at 31 March 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting end date.
Customers purchasing goods and services are allocated individual credit limits assessed taking into account their financial position, past experience and other parameters set by the group and its respective departments.
The group's maximum exposure to credit risk in relation to its investments in banks cannot be assessed generally as the risk of any institution failing to make interest payments or repay the principal sum will be specific to the institution. Recent experience has shown that it is rare for such entities to be unable to meet their commitments. A risk of non recoverability applies to all of the group deposits, but there was no evidence at the 31 March 2023 that this was likely to arise.
Borrowings are secured on the Investment Properties of the group.
Borrowings include £921,206 (2022:£934,889) payable by instalments, which fall due in more than five years.
The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.
The following table details the remaining contractual maturity for the group's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the group may be required to pay.
Responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the company's funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The interest rate on group borrowings is fixed and therefore it is unlikely the group will need to refinance.
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is less than 31 days. The company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
The directors consider that the carrying amount of trade payables approximates to their fair value.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The fair value of the company's lease obligations is approximately equal to their carrying amount.
The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.
The total costs charged to income in respect of defined contribution plans is £28,943 (2022: £22,423).
Defined benefit scheme
Qualifying employees belonged to the Local Government Pension Scheme (LGPS), which is managed by Essex County Council. This is a funded defined-benefit scheme, with the assets held in separate trustee-administered funds.
Harlow District Council entered into an agreement with the company which has the effect of capping the employer pension contributions payable by the company to the Essex Local Government Pension Scheme.
Due to the capping of the contributions the defined benefit scheme will be treated as a defined contribution scheme for the purposes of the preparation of the accounts and the contributions will be recognised as they fall due.
Included within the pension charge are contributions of £1,998,714 (2022: £1,801,582) payable by the company to the fund less £728,724 (2022: £666,223) reimbursed by Harlow District Council under the capping contribution arrangement.
The Net Pension Liability is guaranteed by the Local Authority and not the company, therefore the Net Pension Liability is treated as contingent liability which has an equal contingent asset being the fair value of the guarantee.
Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. The pension scheme's liabilities have been assessed by Barnett Waddingham, an independent firm of actuaries, estimates for the Company being based on the latest full valuation of the scheme as at 31 March 2023. The key assumptions (expressed as weighted averages) at the period end were as follows:
| 2023 | 2022 |
CPI | 2.90% | 3.85% |
Discount rate | 4.80% | 2.60% |
Salary increase rate | 3.90% | 4.25% |
Pension increase rate | 2.90% | 3.25% |
In valuing the liabilities of the pension fund at 31 March 2023, mortality assumptions have been made as indicated below.
The assumptions relating to longevity underlying the pension liabilities at the balance sheet date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting a 65 year old to live for a number of years as follows:
Retiring today: Male 21.1 years (2022: 21.6 years), female 23.5 years (2022: 23.7 years)
Retiring in 20 years : Male 22.3 years (2022 23.0 years), female 25.0 years (2022: 25.1years)
The contingent amounts arising from the company’s obligations in respect of this defined benefit pension plan are as follows:
| 2023 £’000 | 2022 £’000 |
Present value of defined benefit obligations | (48,478) | (70,453) |
Fair value of plan assets | 58,637 | 56,597 |
Fair value of local authority guarantee | 10,159 | 13,956 |
| - | - |
At the year end, there were 450,000 (2022: 450,000) shares issued which were fully paid and 1 (2022: 1) share issued which was not fully paid.
During the year key management personnel received remuneration of £311,008 (2022: £320,234 ).
Non-cash transactions
The cash flow statement excludes purchases of property, plant and equipment purchased by means of lease or hire purchase contracts of £749,804 (2022:£92,728) as these are non-cash transactions.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the year was £328,665 (2022 - £0 profit).
HTS Group Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Civic Centre, The Water Gardens, College Square, Harlow, CM20 1WG. The company's principal activities and nature of its operations are disclosed in the directors' report.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.
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 company applies accounting policies consistent with those applied by the group. To the extent that an accounting policy is relevant to both group and parent company financial statements, please refer to the group financial statements for disclosure of the relevant accounting policy.
The directors have at the time of approving the financial statements, 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.
The average monthly number of persons (including directors) employed by the company during the year was:
The directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
Details of the company's principal operating subsidiaries are included in note 14.