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Registered number: 11228630
Hillgate (1234) Ltd
Annual report and financial statements
For the year ended 31 March 2020
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Hillgate (1234) Ltd
Company Information
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Chartered Accountants & Statutory Auditor
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Hillgate (1234) Ltd
Contents
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Directors' responsibilities statement
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Independent auditors' report
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Consolidated statement of comprehensive income
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Consolidated balance sheet
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Consolidated statement of changes in equity
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Company statement of changes in equity
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Consolidated Statement of cash flows
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Notes to the financial statements
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Hillgate (1234) Ltd
Group strategic report
For the year ended 31 March 2020
The Directors present their strategic report together with the audited financial statements for the year ended 31 March 2020.
The Group’s strategy is to achieve sustainable value-creation through the operational enhancement of its subsidiaries.
On 16 July 2018, the Group acquired a majority share of Metro Mechanical Services Limited, a leading provider of commercial drainage services across the UK. The results of Metro Mechanical Services Limited have been included in the group accounts for the 12-month period ended 31 March 2020.
The Company considers its Key Performance Indicators to be gross profit growth, earnings before interest, tax, depreciation and amortisation (EBITDA) margin, and revenue per employee. The Directors are satisfied with the performance against these KPIs, although they believe there is scope for improvement in future periods.
Principal risks and uncertainties
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Health & Safety: the work that the Group carries out frequently presents health and safety hazards to its employees and members of the public. The Directors takes these risks extremely seriously and have in place an accredited safety management system compliant with OHSAS 18001, as well as a formal review of health and safety at each board meeting.
Team: the performance of the Group’s principal holding is driven by the successful recruitment and retention of high-quality engineers and support staff.
Regulatory: failure to comply with existing regulation poses a serious risk. The Group ensures that ISO 9001 audits are carried out and actively monitors potential changes in legislation.
Financial: principal financial risks include credit risk and liquidity risk. The Group ensures that credit checks are carried out on new and existing customers. There is a minimal history of bad debts, although the Group continues to invest in improvements to credit process. Liquidity risk arises from an inability to meet short or long- term financial obligations or to carry out strategic investments. The Group currently has low liquidity risk on account of its financial performance and cash position.
Cyber: The Group’s operations rely on IT infrastructure to carry out its essential service tasks. The risk of a cyber-attack has been mitigated by investment in security infrastructure to ensure that robust protections are in place across its networks.
Key Customers: the loss of key customers could have a material adverse effect on the financial position and future prospects of the Group.
Economic risk: reduced economic activity and business investment as a result of COVID-19 could have an impact on the level on demand for the Group’s services. However, this is likely to be mitigated by the essential nature and compliance requirements for the majority of the work undertaken.
This report was approved by the board on 30 March 2021 and signed on its behalf.
Page 1
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Hillgate (1234) Ltd
Directors' report
For the year ended 31 March 2020
The directors present their report and the financial statements for the year ended 31 March 2020. The comparative information is for the 13 month period ended 31 March 2019.
The loss for the year, after taxation and minority interests, amounted to £865,145 (2019 - profit £401,823).
The adjusted EBITDA (earning before interest, tax, depreciation, amortisation, profit on sale of fixed assets, bad debts and restructuring costs) for the year amounted to £1,242,646 (2019 - £1,977,848).
No dividends were paid or declared during the year. The directors do not recommend the payment of a final dividend for the period ended 31 March 2020.
The directors who served during the year were:
The directors aim to maintain the current levels of activity, seeking new business in the prescribed field of expertise, with a view to future growth of the group.
Disclosure of information to auditors
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Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
Page 2
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Hillgate (1234) Ltd
Directors' report (continued)
For the year ended 31 March 2020
Post balance sheet events
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COVID-19
Substantive information about the COVID-19 disease came to light in early 2020, with the World Health Organisation declaring a pandemic on 11 March 2020. The UK Government have imposed national lockdowns on three occasions since the reporting date.
The directors have carefully considered the impact of the pandemic and its effect on the economic climate and have concluded that as at the approval date of these financial statements, the group's operating profit is expected to be lower than forecast . Due to the decline in revenue, the directors have looked at all the group's overheads and have taken every possible step to reduce operational costs and to mitigate losses. The group have utilised the government support made available specifically the Coronavirus Job Retention Scheme and the Coronavirus Business Interruption Loan Scheme.
The group continues to maintain a strong relationship with its customers, employees and shareholders. The directors will continue to closely monitor the group's operational activities.
Closure of Gas division
After the reporting date the decision was made by the directors to close the Gas division of the group. The revenue reported in the 2020 financial statements for the Gas division was £1,305,907 and the operating loss associated with the Gas division was £37,249. As this represents less than 10% of the overall turnover it is not considered material by the directors to the group's operations.
The auditors, Kreston Reeves LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 30 March 2021 and signed on its behalf.
Page 3
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Hillgate (1234) Ltd
Directors' responsibilities statement
For the year ended 31 March 2020
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements 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 Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Page 4
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Hillgate (1234) Ltd
Independent auditors' report to the members of Hillgate (1234) Ltd
We have audited the financial statements of Hillgate (1234) Ltd (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2020, which comprise the Group Statement of comprehensive income, the Group and Company Balance sheets, the Group Statement of cash flows, the Group and Company Statement of changes in equity 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).
In our opinion the financial statements:
∙give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 March 2020 and of the Group's loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group 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.
Conclusions relating to going concern
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We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
∙the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
∙the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
Page 5
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Hillgate (1234) Ltd
Independent auditors' report to the members of Hillgate (1234) Ltd (continued)
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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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 identified material misstatements in the Group 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.
Responsibilities of directors
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As explained more fully in the Directors' responsibilities statement set out on page 4, 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 Group's and 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 Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Page 6
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Hillgate (1234) Ltd
Independent auditors' report to the members of Hillgate (1234) Ltd (continued)
Auditors' responsibilities for the audit of the financial statements
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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 Auditors' 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 Group financial statements.
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
∙Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Page 7
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Hillgate (1234) Ltd
Independent auditors' report to the members of Hillgate (1234) Ltd (continued)
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 Auditors' 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.
Samantha Rouse FCCA DChA (Senior statutory auditor)
for and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
Canterbury
31 March 2021
Page 8
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Hillgate (1234) Ltd
Consolidated statement of comprehensive income
For the year ended 31 March 2020
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13 month period ended
31 March
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Interest receivable and similar income
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Interest payable and expenses
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(Loss)/profit before taxation
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(Loss)/profit for the financial year
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(Loss)/profit for the year attributable to:
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Non-controlling interests
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Owners of the parent Company
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There was no other comprehensive income for 2020 (2019:£NIL).
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The notes on pages 17 to 34 form part of these financial statements.
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Page 9
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Hillgate (1234) Ltd
Registered number: 11228630
Consolidated balance sheet
As at 31 March 2020
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Net current (liabilities)/assets
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Equity attributable to owners of the parent Company
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Non-controlling interests
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 30 March 2021.
The notes on pages 17 to 34 form part of these financial statements.
Page 10
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Hillgate (1234) Ltd
Registered number: 11228630
Company balance sheet
As at 31 March 2020
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Profit and loss account brought forward
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Profit/(loss) for the year
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 30 March 2021.
The notes on pages 17 to 34 form part of these financial statements.
Page 11
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Consolidated statement of changes in equity
For the year ended 31 March 2020
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Equity attributable to owners of parent Company
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Non-controlling interests
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Consolidated statement of changes in equity
For the year ended 31 March 2019
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Equity attributable to owners of parent Company
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Non-controlling interests
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Shares issued during the period
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The notes on pages 17 to 34 form part of these financial statements.
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Page 12
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Hillgate (1234) Ltd
Company statement of changes in equity
For the year ended 31 March 2020
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The notes on pages 17 to 34 form part of these financial statements.
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Company statement of changes in equity
For the year ended 31 March 2019
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Shares issued during the period
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The notes on pages 17 to 34 form part of these financial statements.
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Page 13
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Hillgate (1234) Ltd
Consolidated statement of cash flows
For the year ended 31 March 2020
Cash flows from operating activities
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(Loss)/profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Loss on disposal of tangible assets
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Decrease/(increase) in stocks
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Decrease/(increase) in debtors
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Purchase of subsidiary (net cash acquired)
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Net cash from investing activities
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Cash flows from financing activities
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(Repayment of)/new secured loans
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New unsecured shareholder loan notes
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(Repayment of)/new hire purchases
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Amounts due to non controlling interests
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Net cash used in financing activities
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Page 14
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Hillgate (1234) Ltd
Consolidated statement of cash flows (continued)
For the year ended 31 March 2020
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Net (decrease)/increase in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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The notes on pages 17 to 34 form part of these financial statements.
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Page 15
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Hillgate (1234) Ltd
Consolidated Analysis of Net Debt
For the year ended 31 March 2020
The notes on pages 17 to 34 form part of these financial statements.
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Page 16
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
Hillgate (1234) Ltd is a private company limited by shares and is incorporated in England with registration number 11228630. The address of the registered office is 37 St Margaret's Street, Canterbury, Kent, CT1 2TU. The company was incorporated on 27 February 2018 so the comparative financial statements are prepared for the 13 month period ended 31 March 2019.
The principal activities of the group are that of commercial drainage and pump maintenance services.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The financial statements are rounded to the nearest pound.
The functional currency of these financial statements is Pounds Sterling.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
Despite the net current liabilities and net liabilities of the group, together with the economic uncertainty caused by covid-19, the directors have prepared the financial statements on a going concern basis as in their opinion there are no material uncertainties that may cast significant doubt on the ability of the group to continue as a going concern.
The directors have implemented strategies to reduce the cost base of the business with the closure of the loss-making gas division (see the Strategic Report for details) and have utilised the support made available by the UK Government, including the Coronavirus Business Interruption Loan Scheme and the Coronavirus Job Retention Scheme. This ensures the group is able to meet its day to day working capital requirements for the foreseeable future.
Page 17
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Where services have been provided to a customer but have not been invoiced at the year end, the Group recognises the proportion of revenue based on the labour hours incurred up to the year end. The associated revenue is recognised in the financial statements as accrued income.
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Operating leases: the Group as lessee
|
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Group in independently administered funds.
Page 18
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
2.Accounting policies (continued)
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Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Consolidated statement of comprehensive income over its useful economic life.
Other intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Page 19
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
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.
Investments in subsidiaries are measured at cost less accumulated impairment.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first outbasis. Work in progress and finished goods include labour and attributable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Page 20
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
2.Accounting policies (continued)
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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Provisions for liabilities
|
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance sheet.
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Investments in non-derivative instruments that are equity to the issuer are measured:
∙at fair value with changes recognised in the Consolidated statement of comprehensive income if the shares are publicly traded or their fair value can otherwise be measured reliably;
∙at cost less impairment for all other investments.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.
Page 21
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
2.Accounting policies (continued)
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Financial instruments (continued)
|
Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an 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.
|
|
Judgements in applying accounting policies and key sources of estimation uncertainty
|
The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that can affect the amounts reported for assets and liabilities, and the results for the year. The nature of estimation is such though that actual outcomes could differ significantly from those estimates.
The following judgements have had the most significant impact on amounts recognised in the financial statements:
Lease commitments
The Group has entered into a range of lease commitments in respect of property, plant and equipment. The classification of these leases as either financial or operating leases requires the directors to consider whether the terms and conditions of each lease are such that the Group has acquired the risks and rewards associated with the ownership of the underlying assets.
Goodwill arising on business combinations
The group has recognised goodwill arising from business combinations with a carrying value of £5,938,276 at the reporting date (see note 12). On acquisition the group determines a reliable estimate of the useful life of goodwill based upon factors such as the expected use of the acquired business, forecasts of expected future results and cash flows, and any legal, regulatory or contractual provisions that can limit useful life. At each subsequent reporting date the directors consider whether there are any factors such as technological advancements or changes in market conditions that indicate a need to reconsider the useful life of goodwill.
Investment in subsidiaries
The company has recognised investments in subsidiaries with a carry value of £9,203,600 at the reporting date (see note 14). These assets are stated at their cost less provision for impairment.
The company considers whether these investments are impaired. Where an indication of impairment is identified the estimation of recoverable value requires the estimation of the recoverable value of the cash generating units (CGUs). This requires estimation of the future cash flows from the CGUs and also selection of appropriate discount rates in order to calculate the net present values of those cash flows.
Tangible fixed assets
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 13 for the carrying amount of the property, plant and equipment, and note 2.11 for the useful economic lives for each class of assets.
Page 22
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
The whole of the turnover is attributable to the business activity of the Group.
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All turnover arose within the United Kingdom.
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The operating (loss)/profit is stated after charging:
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13 month period ended
31 March
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Profit on sale of fixed assets
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13 month period ended
31 March
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Fees payable to the Group's auditor and its associates for the audit of the Group's annual
financial statements
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Fees payable to the Group's auditor and its associates in respect of:
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Audit-related assurance services
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Taxation compliance services
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Page 23
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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13 month period ended
31 March
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13 month period ended
31 March
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13 month period ended
31 March
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During both the current and prior financial years no directors were accruing retirement benefits in respect of defined contribution pension schemes.
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Page 24
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
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13 month period ended
31 March
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Interest payable and similar expenses
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13 month period ended
31 March
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Shareholder loan interest
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13 month period ended
31 March
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Taxation on (loss)/profit on ordinary activities
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Page 25
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
11.Taxation (continued)
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Factors affecting tax charge for the year/period
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The tax assessed for the year/period is lower than (2019 - lower than) the standard rate of corporation tax in the UK of 19% (2019 - 19%). The differences are explained below:
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13 month period ended
31 March
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(Loss)/profit on ordinary activities before tax
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(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019 - 19%)
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Non-tax deductible amortisation of goodwill and impairment
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
|
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Adjustments to tax charge in respect of prior periods
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Other differences leading to an increase (decrease) in the tax charge
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Total tax charge for the year/period
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Factors that may affect future tax charges
|
In the Spring 2021 budget it was announced that the main rate for corporation tax would be increased to 25% from April 2023 onwards. This will have an impact on future current and deferred tax charges.
Page 26
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
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Charge for the year on owned assets
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Page 27
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
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Charge for the year on owned assets
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Charge for the year on financed assets
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The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
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Page 28
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
|
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Investments in subsidiary companies
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The following was a subsidiary undertaking of the Company:
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Metro Mechanical Services Limited
|
Unit A3, Lion Business Park, Dering Way, Gravesend, Kent, DA12 2DN
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The aggregate of the share capital and reserves as at 31 March 2020 and the profit or loss for the year ended on that date for the subsidiary undertaking were as follows:
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Aggregate of share capital and reserves
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Metro Mechanical Services Limited
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Page 29
|
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
|
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Raw materials and consumables
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Amounts owed by group undertakings
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Cash and cash equivalents
|
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Page 30
|
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
|
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Creditors: Amounts falling due within one year
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Other taxation and social security
|
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Obligations under finance lease and hire purchase contracts
|
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Creditors: Amounts falling due after more than one year
|
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Net obligations under finance leases and hire purchase contracts
|
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All loans and hire purchase agreements are repayable within 5 years of the balance sheet date.
HSBC Plc has a fixed and floating charge over all assets of the Group.
Mark David White and Julie Ann White have a fixed and floating charge over the property of Metro Mechanical Services Limited, a subsidiary undertaking of the Group.
Page 31
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|
Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
|
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Charged to profit or loss
|
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Charged to profit or loss
|
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Accelerated capital allowances
|
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Tax losses carried forward
|
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Allotted, called up and fully paid
|
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99,999 (2019 - 99,999) Ordinary shares of £0.01 each
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Page 32
|
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
Share premium account
This reserve represents the excess of the fair value of the consideration receivable on the issue of ordinary share capital, net of the direct costs incurred in their issue, over the nominal value of those shares (which is recognised as called up share capital). Share premium may only be utilised to write-off any expenses incurred or commissions paid on the issue of those shares, or to pay up new shares to be allotted to members as fully paid bonus shares.
Profit and loss account
The profit and loss reserve represents accumulated comprehensive income for the current and prior periods.
The group pays into defined pension contribution personal pension plans held by certain employees and the contributions payable during the year amounts to £139,440 (2019: £87,233). At the year end there were contributions outstanding of £53,302 (2019: £47,018).
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Commitments under operating leases
|
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At 31 March 2020 the Group had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Page 33
|
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Hillgate (1234) Ltd
Notes to the financial statements
For the year ended 31 March 2020
|
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Related party transactions
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Interest accrued to directors
|
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Salary paid to close family of key management personnel
|
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Dividends received from subsidiary
|
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Intercompany loan write off
|
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Purchases from close family of key management personnel
|
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Amounts due to close family of key management personnel
|
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Dividends paid to key management personnel
|
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Loans to key management personnel
|
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The total compensation paid to key management personnel of the group amounted to £650,385 (2019: £411,054).
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|
Post balance sheet events
|
COVID-19
Substantive information about the COVID-19 disease came to light in early 2020, with the World Health Organisation declaring a pandemic on 11 March 2020. The UK Government have imposed national lockdowns on three occasions since the reporting date.
The directors have carefully considered the impact of the pandemic and its effect on the economic climate and have concluded that as at the approval date of these financial statements, the group's operating profit is expected to be lower than forecast . Due to the decline in revenue, the directors have looked at all the group's overheads and have taken every possible step to reduce operational costs and to mitigate losses. The group have utilised the government support made available specifically the Coronavirus Job Retention Scheme and the Coronavirus Business Interruption Loan Scheme.
The group continues to maintain a strong relationship with its customers, employees and shareholders. The directors will continue to closely monitor the group's operational activities.
Closure of Gas division
After the reporting date the decision was made by the directors to close the Gas division of the group. The revenue reported in the 2020 financial statements for the Gas division was £1,305,907 and the operating loss associated with the Gas division was £37,249. As this represents less than 10% of the overall turnover it is not considered material by the directors to the group's operations.
In the opinion of the directors there is no overall controlling party.
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