Company Registration No. 04366654 (England and Wales)
HAZLITT HOLLAND-HIBBERT LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
HAZLITT HOLLAND-HIBBERT LIMITED
COMPANY INFORMATION
Directors
The Hon J Holland-Hibbert
J E M Morris
Secretary
N P Hudson
Company number
04366654
Registered office
38 Bury Street
London
United Kingdom
SW1Y 6BB
Auditor
Azets Audit Services
2nd Floor
Regis House
45 King William Street
London
United Kingdom
EC4R 9AN
HAZLITT HOLLAND-HIBBERT LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 22
HAZLITT HOLLAND-HIBBERT LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2020
- 1 -
The directors present the strategic report for the year ended 31 October 2020.
Review of the Business
The company continues to be one of the leading specialists in Modern and Contemporary British art. The gallery has become synonymous with putting on museum quality exhibitions of work within this area and has recently announced representation of three artist’s estates. The business has a reputation for being successful in sourcing works privately for both stock and sale on consignment but strong demand for examples at the top end of the market continue to make for challenging business. Sales were impacted by the onset of COVID-19 but the company was able to maintain profitability and in October 2020 was able to mount an exhibition at the gallery.
Principal Risks and Uncertainties
Since the start of COVID-19 in March 2020 trading conditions have been difficult. The closure of the gallery due to government restrictions and the cancellation of art fairs worldwide has meant that opportunities for business have diminished. The use of online viewing rooms and sales have been helpful but cannot fully compensate for the loss of face to face contact. The resumption of important art fairs such as ArtBasel and Frieze remain uncertain while international travel is under restriction and it is unclear how the fairs will look in terms of size and scope over the coming year. At the same time the major auction houses have become more active in the market and the art market is adjusting to these new conditions.
At the same time demand for quality works from the twentieth century remains strong and is less vulnerable to price fluctuations due to the ongoing popularity of works by established artists. The company depends on the ability to source works and the availability of work at a fair price remains a risk the directors are monitoring year round.
Financial Key Performance Indicators
The directors do not consider in the context of the art market that there are any consistent key performance indicators which would be truly indicative of the company's underlying performance.
Financial Risk Management
The company is funded by equity, bank loans and normal business cash flows. The directors have considered the company's exposure to price, foreign exchange, credit, liquidity and cash flow risks.
Strategy and Future Outlook
The company continues to look for trading opportunities in its main twentieth century and contemporary markets and is looking to show case work at its gallery while looking for potential acquisitions for improve stock. Continued support from the company’s bank enables purchases to be made when the opportunities arise. In the current market and conditions future sales are difficult to predict but the market remains in good health and signs of activity have been returning. The directors therefore expect that profitability will be maintained in the coming year.
J E M Morris
Director
3 June 2021
HAZLITT HOLLAND-HIBBERT LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2020
- 2 -
The directors present their annual report and financial statements for the year ended 31 October 2020.
Principal activities
The principal activity of the company continued to be that of fine art dealers.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The Hon J Holland-Hibbert
J E M Morris
A F Spink
(Resigned 4 November 2019)
Results and dividends
The profit for the period, after taxation, amounted to £731,988 (2019: £1,049,834).
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Information in the Strategic Report
Both future development and financial risk management and exposure have been included in the Strategic Report instead of Directors' Report under S414C(11).
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
J E M Morris
Director
3 June 2021
HAZLITT HOLLAND-HIBBERT LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2020
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
HAZLITT HOLLAND-HIBBERT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HAZLITT HOLLAND-HIBBERT LIMITED
- 4 -
Opinion
We have audited the financial statements of Hazlitt Holland-Hibbert Limited (the 'company') for the year ended 31 October 2020 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, 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 FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 October 2020 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the financial statements
section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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 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 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. 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors' r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
HAZLITT HOLLAND-HIBBERT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HAZLITT HOLLAND-HIBBERT LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of 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
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
HAZLITT HOLLAND-HIBBERT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HAZLITT HOLLAND-HIBBERT LIMITED
- 6 -
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.
John Howard (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
15 June 2021
Chartered Accountants
Statutory Auditor
2nd Floor
Regis House
45 King William Street
London
United Kingdom
EC4R 9AN
HAZLITT HOLLAND-HIBBERT LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2020
- 7 -
2020
2019
Notes
£
£
Turnover
3
10,379,955
29,528,819
Cost of sales
(8,086,524)
(26,546,738)
Gross profit
2,293,431
2,982,081
Administrative expenses
(1,079,653)
(1,751,734)
Other operating income
5,903
Operating profit
4
1,219,681
1,230,347
Interest payable and similar expenses
7
(409,879)
(509,710)
Gains from future forward exchange contracts
44,398
Profit before taxation
809,802
765,035
Tax on profit
8
(77,814)
284,799
Profit for the financial year
731,988
1,049,834
HAZLITT HOLLAND-HIBBERT LIMITED
BALANCE SHEET
AS AT 31 OCTOBER 2020
31 October 2020
- 8 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
9
60,630
65,147
Current assets
Stocks
11
15,610,117
14,691,980
Debtors
12
13,298,848
13,150,862
Cash at bank and in hand
1,160,889
312,588
30,069,854
28,155,430
Creditors: amounts falling due within one year
14
(7,872,243)
(7,194,324)
Net current assets
22,197,611
20,961,106
Total assets less current liabilities
22,258,241
21,026,253
Creditors: amounts falling due after more than one year
15
(9,500,000)
(9,000,000)
Net assets
12,758,241
12,026,253
Capital and reserves
Called up share capital
18
200,000
200,000
Share premium account
800,000
800,000
Profit and loss reserves
11,758,241
11,026,253
Total equity
12,758,241
12,026,253
The financial statements were approved by the board of directors and authorised for issue on 3 June 2021 and are signed on its behalf by:
J E M Morris
Director
Company Registration No. 04366654
HAZLITT HOLLAND-HIBBERT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2020
- 9 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 November 2018
200,000
800,000
9,976,419
10,976,419
Period ended 31 October 2019:
Profit and total comprehensive income for the period
-
-
1,049,834
1,049,834
Balance at 31 October 2019
200,000
800,000
11,026,253
12,026,253
Year ended 31 October 2020:
Profit and total comprehensive income for the year
-
-
731,988
731,988
Balance at 31 October 2020
200,000
800,000
11,758,241
12,758,241
HAZLITT HOLLAND-HIBBERT LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2020
- 10 -
2020
2019
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
804,127
3,250,909
Interest paid
(409,879)
(509,710)
Income taxes paid
(45,947)
(675,463)
Net cash inflow from operating activities
348,301
2,065,736
Investing activities
Purchase of tangible fixed assets
(7,805)
Net cash used in investing activities
(7,805)
Financing activities
Issue of bank loans
500,000
Net cash generated from/(used in) financing activities
500,000
Net increase in cash and cash equivalents
848,301
2,057,931
Cash and cash equivalents at beginning of year
312,588
(1,745,343)
Cash and cash equivalents at end of year
1,160,889
312,588
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2020
- 11 -
1
Accounting policies
Company information
Hazlitt Holland-Hibbert Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
38 Bury Street, London, United Kingdom, SW1Y 6BB.
1.1
Accounting convention
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 preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 2).
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
1.2
Going concern
The directors have considered the impact of COVID-19 and the resulting closure of the gallery for periods
true
of time on the future viability of the company. The directors are of the opinion that given the positive trading
result for the period, profitability since the year end and the high value of the Company's stock which
provides a secure basis for future trade, the financial statements have been prepared on a going concern
basis.
1.3
Turnover
Turnover
comprises the invoiced value of works of art and commissions charged for advice supplied by the company, exclusive of Value Added Tax. Invoices are raised upon despatch of the works of art or provision of the service to the customer.
1.4
Tangible fixed assets
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 recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
15% reducing balance
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 disposal are determined by comparing the proceeds with the carrying amount and are recognised in the statement of comprehensive income.
1.5
Stocks
Stocks are stated at the lower of cost and
directors' estimation of net realisable value after making due allowance for obsolete and slow-moving stock.
Where stock is jointly held with other parties we only recognise the proportion of stock we hold.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
1
Accounting policies
(Continued)
- 12 -
1.6
Financial instruments
Basic financial assets
The Company's financial assets comprise basic financial instruments, being trade and other receivables and cash and bank balances.
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of no more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the 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 Company's cash management.
Trade and other receivables are measured at transaction price less any impairment. Any impairment loss is recognised in the Statement of Comprehensive Income.
The impairment loss is measured as the difference between an asset's carrying amount and best estimate, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date.
Financial assets are derecognised when contractual rights to the cash flows from the financial asset expire or are settled, or when substantially all the risks and rewards of ownership have been transferred.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
1
Accounting policies
(Continued)
- 13 -
Basic financial liabilities
The Company's financial liabilities comprise basic financial liabilities, being trade and other payables, loans from banks and accruals. Short term creditors are initially recognised at transaction price and are subsequently measured at amortised cost. 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 rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non current liabilities.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.7
Derivatives
The fair value gain or loss on foreign currency forward contracts is recognised in the Statement of Comprehensive Income. The carrying value of the assets and liabilities of the relevant contracts is determined by using the forward rate at the contract end date.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.8
Taxation
Current tax
The charge for current tax is based on the result for the year adjusted for disallowable items. It is calculated using the tax rates that have been enacted or substantially enacted by the reporting date.
Deferred tax
Deferred tax is provided in full on timing differences which result in an obligation at the reporting period end to pay more tax, or a right to pay less tax, at a future date, at rates that are expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in the taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely that not that they will be recovered.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
1
Accounting policies
(Continued)
- 14 -
1.9
Retirement benefits
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Comprehensive Income 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 Company in independently administered funds.
1.10
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.11
Foreign exchange
The functional currency is determined to be pound sterling.
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
1.12
Finance costs are charged to the Statement of Comprehensive Income 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.
1.13
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when they are paid. Final equity dividends are recognised when approved by the shareholders at the annual general meeting.
2
Judgements and key sources of estimation uncertainty
Estimate and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstance.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
2
Judgements and key sources of estimation uncertainty
(Continued)
- 15 -
Key sources of estimation uncertainty
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimate and assumption that has a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are: -
Stock valuation - Stock is valued at the lower of cost and directors' estimation of net realisable value after making due allowance for obsolete and slow-moving stock. This requires an assessment of any stock impairment required based on current market conditions and the historical experience of selling works of a similar nature. A change in market conditions may have a material impact on the estimation of the valuation.
3
Turnover and other revenue
2020
2019
£
£
Turnover analysed by class of business
Stock sales
9,504,929
28,295,896
Commissions receivable
421,600
582,500
Other income
453,426
650,423
10,379,955
29,528,819
2020
2019
£
£
Other operating income
Grants received
5,903
The Company has made sales worldwide during the year however turnover has not been split between these markets as, in the opinions of the directors, the markets do not differ substantially.
Grants received represents amounts receivable from the job retention
s
cheme claimed by the company for
staff that were furloughed due to COVID-19.
4
Operating profit
2020
2019
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
64,414
Government grants
(5,903)
Fees payable to the company's auditor for the audit of the company's financial statements
14,800
14,750
Depreciation of owned tangible fixed assets
4,517
10,652
Operating lease charges
53,700
132,510
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
- 16 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Management
1
1
Administration
6
6
7
7
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
434,454
556,764
Social security costs
49,096
64,090
Pension costs
20,002
11,751
503,552
632,605
There are no individuals other than the directors who are considered to be key management personnel. Directors are remunerated as detailed in Note 6.
6
Directors' remuneration
2020
2019
£
£
Remuneration for qualifying services
219,378
367,252
The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 1 (2019 - 1).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2020
2019
£
£
Remuneration for qualifying services
219,378
367,252
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
- 17 -
7
Interest payable and similar expenses
2020
2019
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
409,879
509,710
8
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
31,315
37,886
Adjustments in respect of prior periods
46,499
(322,685)
Total current tax
77,814
(284,799)
The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2020
2019
£
£
Profit before taxation
809,802
765,035
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
153,862
145,357
Tax effect of expenses that are not deductible in determining taxable profit
5,699
Group relief
(123,362)
(113,657)
Capital allowances in excess of depreciation
815
487
Adjustments to tax charge in respect of previous periods
46,499
(322,685)
Taxation charge/(credit) for the year
77,814
(284,799)
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
- 18 -
9
Tangible fixed assets
Fixtures and fittings
£
Cost
At 1 November 2019 and 31 October 2020
115,829
Depreciation and impairment
At 1 November 2019
50,682
Depreciation charged in the year
4,517
At 31 October 2020
55,199
Carrying amount
At 31 October 2020
60,630
At 31 October 2019
65,147
10
Financial instruments
2020
2019
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
13,260,907
12,468,304
Instruments measured at fair value through profit or loss
-
44,398
Carrying amount of financial liabilities
Measured at amortised cost
17,232,072
16,125,538
Financial assets measured at fair value through profit or loss comprises of a forward rate contract as detailed in note 13.
Financial assets that are debt instruments measured at amortised cost comprise trade debtors and other debtors, excluding VAT.
Financial liabilities measured at amortised cost comprise trade creditors, bank loans and other creditors.
11
Stocks
2020
2019
£
£
Stocks
15,610,117
14,691,980
Total carrying amount of inventories pledged as charges was £3,655,285 (2019: £2,989,041).
Included within stock is £3,679,927 (2019: £2,098,338) of stock jointly held with other parties.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
- 19 -
12
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
11,039,547
12,193,692
Unpaid share capital
5,000
5,000
Derivative financial instruments
-
44,398
Other debtors
2,219,575
886,610
Prepayments and accrued income
34,726
21,162
13,298,848
13,150,862
Included within other
debtors
are amounts owed
by
group companies and related parties totalling
£2,202,980
(201
9
: £
272,637
).
Derivative financial instruments is detailed in note 13.
13
Forward contracts
A
s at
31 October 2019
the company was committed to purchasing a total of $4,400,000 under a forward rate contract maturing on 08/01/2020 to settle debtors arising in the normal course of trade.
The company recognised an exchange loss of £64,414 and
profit
on derivative of £44,398 arising on the forward contract in these financial statements.
There are no forward rate contracts as at 31 October 2020.
14
Creditors: amounts falling due within one year
2020
2019
£
£
Trade creditors
6,309,484
5,926,809
Corporation tax
69,468
37,601
Other taxation and social security
70,703
31,185
Other creditors
1,309,794
1,101,351
Accruals and deferred income
112,794
97,378
7,872,243
7,194,324
Included within
trade creditors and
other
creditors
are amounts owed to group companies and related parties totalling
£600,000 (2019: £276,411) and
£
850,968
(201
9
: £
661,101
)
respectively
.
15
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Bank loans and overdrafts
16
9,500,000
9,000,000
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
15
Creditors: amounts falling due after more than one year
(Continued)
- 20 -
Secured loan
The bank loans and overdrafts are secured by fixed and floating charges over the trade and assets of the company.
16
Loans and overdrafts
2020
2019
£
£
Bank loans
9,500,000
9,000,000
Payable after one year
9,500,000
9,000,000
17
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
20,002
11,751
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
18
Share capital
2020
2019
£
£
Ordinary share capital
Issued and not fully paid
200,000 Ordinary shares of £1 each
200,000
200,000
All shares rank in pari passu in all aspects.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
- 21 -
19
Related party transactions
During the year, the company incurred sales to James Holland-Hibbert Limited of £216,872 and purchases of £nil (2019: £235,000). At the year end, the company owed £222,975 (2019: £276,411) to James Holland-Hibbert Limited. This balance arose as a result of financing transactions. This entity is related by virtue of a common director J. Holland-Hibbert.
During the year, the company incurred purchases from Arnold Wiggins and Sons Limited of £nil (2019: £550). At the year end, the company owed £2,568 (2019: £5,676) to Arnold Wiggins and Sons Limited. This balance arose as a result of financing transactions. This entity is related by virtue of a common ownership.
During the year, the company incurred purchases from to Hazlitt Gooden & Fox Limited of £20,000 (2019: £nil). At the year end, the company owed £225,425 (2019: £205,425) to Hazlitt Gooden & Fox Limited. This balance arose as a result of financing transactions. This entity is related by virtue of a common director J. Morton Morris.
At the year end, the company was owed £2,152,980 (2019: £222,637) by Hazlitt Limited. This balance arose as a result of financing transactions. This entity is related by virtue of a common director J. Morton Morris.
At the year end, the company was owed £50,000 (2019: £50,000) by Hazlitt Fine Art Holdings Limited. This balance arose as a result of financing transactions. This entity is related by virtue of a common director J. Morton Morris.
At the year end, the company owed £600,000 (2019: £nil) to Modern Masters Limited. This balance arose as a result of financing transactions. This entity is related by virtue of a common director J. Morton Morris.
At the year end, the company owed £400,000 (2019: £450,000) to James Holland-Hibbert, a director of the company.
20
Ultimate controlling party
There is no ultimate controlling party.
21
Cash generated from operations
2020
2019
£
£
Profit for the year after tax
731,988
1,049,834
Adjustments for:
Taxation charged/(credited)
77,814
(284,799)
Finance costs
409,879
509,710
Depreciation and impairment of tangible fixed assets
4,517
10,652
Gains from future forward contracts
-
(44,398)
Movements in working capital:
(Increase)/decrease in stocks
(918,137)
5,080,199
Increase in debtors
(147,986)
(8,622,507)
Increase in creditors
646,052
5,552,218
Cash generated from operations
804,127
3,250,909
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2020
- 22 -
22
Analysis of changes in net debt
1 November 2019
Cash flows
31 October 2020
£
£
£
Cash at bank and in hand
312,588
848,301
1,160,889
Borrowings excluding overdrafts
(9,000,000)
(500,000)
(9,500,000)
(8,687,412)
348,301
(8,339,111)
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