Company registration number 04366654 (England and Wales)
HAZLITT HOLLAND-HIBBERT LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
HAZLITT HOLLAND-HIBBERT LIMITED
COMPANY INFORMATION
Directors
The Hon J Holland-Hibbert
J E Morton 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
EC4R 9AN
HAZLITT HOLLAND-HIBBERT LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 23
HAZLITT HOLLAND-HIBBERT LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 1 -
The directors present the strategic report for the year ended 31 October 2023.
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 continues to represent artist’s estates. The business has a continuing 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.
During the year sales decreased by £16.7m to £18.6m, however gross margin increased to 19.8% (2022: 11.5%). Operating profit before exceptional items was £2.4m (2022: £2.5m). Loss before tax was £1.2m (2022: profit £2.5m).
Principal Risks and Uncertainties
The art market as a whole has experienced a more challenging year with uncertainties caused by the outlook for the global economy weighing on demand. Uncertainty over interest rates and inflation has had an impact together with political instability and military conflicts and while the global market remains resilient there been a contraction from previous years. The sense in the market is that value and quality are becoming more important than speculation and therefore the demand for quality work is more pressing.
Inflation and cost increases have affected key operating areas and this adds pressure to businesses in a global market as they look to balance costs and benefits of particular Art Fairs and exhibitions.
The auction market continues to dominate the sector with its dominant market presence and influence, particularly in private sales. This brings additional challenges to businesses who rely on private sales and acquisitions and face increased competition from the major auction houses.
Trends in the market continue to change reflecting changing demands and tastes and, in addition, traditional models of dealing are under pressure not just from the auction houses but direct sales, online and intermediaries.
Nevertheless the contemporary art sector continues to be the largest and most dynamic in the market and the UK remains a key global hub in the market. As previously, the company continues to depend on the ability to source quality works and the availability of work at a fair price remains a risk the directors monitor closely.
Financial Key Performance Indicators
The directors do not consider that, in the context of the art market, 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 and normal business cash flows. The directors have considered the company's exposure to price, foreign exchange, credit, liquidity and cash flow risks. During the year they repaid all bank debt reducing the company’s risk exposure.
Strategy and Future Outlook
The company continues to look for trading opportunities in its main twentieth century and contemporary markets and is continuing to show case work at its gallery while looking for potential acquisitions for improve stock. Attendance at selective art fairs in the UK, Europe and America will continue as part of the company’s strategy to maintain presence in the market. Notwithstanding the current challenges in the global market the directors anticipate that profitability will be maintained in the coming year.
HAZLITT HOLLAND-HIBBERT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 2 -
The Hon J Holland-Hibbert
Director
20 June 2024
HAZLITT HOLLAND-HIBBERT LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 October 2023.
Principal activities
The principal activity of the company continued to be that of fine art dealers.
Results and dividends
The loss for the period, after taxation, amounted to £776,913 (2022: profit £2,002,161).
Ordinary dividends were paid amounting to £500,000. The directors do not recommend payment of a further dividend.
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 Morton Morris
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
The Hon J Holland-Hibbert
Director
20 June 2024
HAZLITT HOLLAND-HIBBERT LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 4 -
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;
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
- 5 -
Opinion
We have audited the financial statements of Hazlitt Holland-Hibbert Limited (the 'company') for the year ended 31 October 2023 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 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 company's affairs as at 31 October 2023 and of its 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
HAZLITT HOLLAND-HIBBERT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HAZLITT HOLLAND-HIBBERT LIMITED
- 6 -
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 identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, 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 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' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
HAZLITT HOLLAND-HIBBERT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HAZLITT HOLLAND-HIBBERT LIMITED
- 7 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we 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. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. 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.
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
25 July 2024
Chartered Accountants
Statutory Auditor
2nd Floor
Regis House
45 King William Street
London
EC4R 9AN
HAZLITT HOLLAND-HIBBERT LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
4
18,599,703
35,330,839
Cost of sales
(14,921,129)
(31,256,210)
Gross profit
3,678,574
4,074,629
Administrative expenses
(1,456,674)
(1,526,319)
Other operating income
146,665
Exceptional item
3
(3,200,000)
Operating (loss)/profit
5
(831,435)
2,548,310
Interest receivable and similar income
8
494,419
Interest payable and similar expenses
9
(400,330)
(581,639)
(Loss)/profit before taxation
(1,231,765)
2,461,090
Tax on (loss)/profit
10
454,852
(458,929)
(Loss)/profit for the financial year
(776,913)
2,002,161
HAZLITT HOLLAND-HIBBERT LIMITED
BALANCE SHEET
AS AT 31 OCTOBER 2023
31 October 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
48,493
57,051
Current assets
Stocks
13
12,249,501
14,530,240
Debtors
14
6,954,928
14,164,960
Cash at bank and in hand
188,911
1,095,327
19,393,340
29,790,527
Creditors: amounts falling due within one year
15
(4,217,579)
(3,846,411)
Net current assets
15,175,761
25,944,116
Total assets less current liabilities
15,224,254
26,001,167
Creditors: amounts falling due after more than one year
16
(9,500,000)
Net assets
15,224,254
16,501,167
Capital and reserves
Called up share capital
19
200,000
200,000
Share premium account
800,000
800,000
Profit and loss reserves
14,224,254
15,501,167
Total equity
15,224,254
16,501,167
The financial statements were approved by the board of directors and authorised for issue on 20 June 2024 and are signed on its behalf by:
The Hon J Holland-Hibbert
Director
Company Registration No. 04366654
HAZLITT HOLLAND-HIBBERT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 November 2021
200,000
800,000
13,499,006
14,499,006
Year ended 31 October 2022:
Profit and total comprehensive income for the year
-
-
2,002,161
2,002,161
Balance at 31 October 2022
200,000
800,000
15,501,167
16,501,167
Year ended 31 October 2023:
Loss and total comprehensive income for the year
-
-
(776,913)
(776,913)
Dividends
11
-
-
(500,000)
(500,000)
Balance at 31 October 2023
200,000
800,000
14,224,254
15,224,254
HAZLITT HOLLAND-HIBBERT LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
24
8,838,841
(54,520)
Interest paid
(400,330)
(581,639)
Income taxes paid
(52,874)
(83,842)
Net cash inflow/(outflow) from operating activities
8,385,637
(720,001)
Investing activities
Gains on financial instruments
494,419
Net cash (used in)/generated from investing activities
-
494,419
Financing activities
Repayment of bank loans
(9,500,000)
Repayment of derivatives
707,947
(494,419)
Dividends paid
(500,000)
Net cash used in financing activities
(9,292,053)
(494,419)
Net decrease in cash and cash equivalents
(906,416)
(720,001)
Cash and cash equivalents at beginning of year
1,095,327
1,815,328
Cash and cash equivalents at end of year
188,911
1,095,327
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 12 -
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 amounts in these financial statements are rounded to the nearest £.
1.2
Going concern
During the year the company repaid its bank borrowings and thus reduced its exposure to interest going forward. The company has continued to trade positively and profitably backed by a strong inventory. Therefore the financial statements have been prepared on the going concern basis.true
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 2023
1
Accounting policies
(Continued)
- 13 -
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 2023
1
Accounting policies
(Continued)
- 14 -
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 subsequently 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 through 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 2023
1
Accounting policies
(Continued)
- 15 -
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
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.
1.11
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.
1.12
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.
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.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 16 -
3
Exceptional item
2023
2022
£
£
Expenditure
Stock provision
3,200,000
-
A provision has been made to align a number of works to an agreed post year end sale amount.
4
Turnover
2023
2022
£
£
Turnover analysed by class of business
Stock sales
18,126,055
34,775,338
Commissions receivable
366,500
460,825
Other income
107,148
94,676
18,599,703
35,330,839
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.
5
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(28,008)
(14,743)
Fees payable to the company's auditor for the audit of the company's financial statements
24,417
23,263
Depreciation of owned tangible fixed assets
8,558
603
Operating lease charges
151,475
254,936
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Management
1
1
Administration
7
6
Total
8
7
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
6
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
385,055
467,986
Social security costs
58,243
42,072
Pension costs
8,881
7,582
452,179
517,640
There are no individuals other than the directors who are considered to be key management personnel. Directors are remunerated as detailed in Note 7.
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
163,068
162,504
The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 1 (2022 - 1).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
163,068
162,504
8
Interest receivable and similar income
2023
2022
£
£
Other income from investments
Gains on financial instruments measured at fair value through profit or loss
494,419
2023
2022
Investment income includes the following:
£
£
Interest on financial assets measured at fair value through profit or loss
494,419
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 18 -
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
362,657
581,639
Losses on financial instruments held at fair value through profit or loss
37,673
400,330
581,639
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(222,531)
467,607
Adjustments in respect of prior periods
(232,321)
(8,678)
Total current tax
(454,852)
458,929
On 1 April 2023, the main rate of corporation tax increased from 19% to 25% for companies whose taxable profits exceed £250,000. For companies with profits of less than £50,000, the 19% rate will apply. Companies with taxable profits between £50,000 and £250,000 will pay tax at a marginal relief rate.
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
(Loss)/profit before taxation
(1,231,765)
2,461,090
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 22.50% (2022: 19.00%)
(277,147)
467,607
Tax effect of expenses that are not deductible in determining taxable profit
11,698
Effect of change in corporation tax rate
40,992
Capital allowances in excess of depreciation
1,926
Adjustments to tax charge in respect of previous periods
(232,321)
(8,678)
Taxation (credit)/charge for the year
(454,852)
458,929
11
Dividends
2023
2022
£
£
Final paid
500,000
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 19 -
12
Tangible fixed assets
Fixtures and fittings
£
Cost
At 1 November 2022 and 31 October 2023
115,829
Depreciation and impairment
At 1 November 2022
58,778
Depreciation charged in the year
8,558
At 31 October 2023
67,336
Carrying amount
At 31 October 2023
48,493
At 31 October 2022
57,051
13
Stocks
2023
2022
£
£
Stocks
12,249,501
14,530,240
Total carrying amount of inventories pledged as charges was £1,653,979 (2022: £1,189,213 ).
Included within stock is £1,218,431 (2022: £1,163,188) of stock jointly held with other parties.
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,429,326
8,815,542
Unpaid share capital
5,000
5,000
Corporation tax recoverable
8,357
Derivative financial instruments
-
707,947
Other debtors
2,439,464
4,600,668
Prepayments and accrued income
72,781
35,803
6,954,928
14,164,960
Included within other debtors are amounts owed by group companies and related parties totalling £2,198,183 (2022: £4,365,481).
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 20 -
15
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
2,161,527
1,282,038
Corporation tax
499,369
Other taxation and social security
33,609
30,886
Other creditors
1,891,288
1,790,744
Accruals and deferred income
131,155
243,374
4,217,579
3,846,411
Included within other creditors and accruals are amounts owed to group companies and related parties totalling £929,193 (2022: £225,425) and £63,033 (2022: £110,632) respectively.
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
9,500,000
Secured loan
The bank loans and overdrafts are secured by fixed and floating charges over the trade and assets of the company.
17
Loans and overdrafts
2023
2022
£
£
Bank loans
9,500,000
Payable after one year
9,500,000
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
8,881
7,582
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.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 21 -
19
Share capital
2023
2022
£
£
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.
20
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
6,682,880
13,366,096
Instruments measured at fair value through profit or loss
-
707,947
Carrying amount of financial liabilities
Measured at amortised cost
4,183,970
12,816,156
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.
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
188,600
64,800
Between two and five years
40,833
369,433
229,433
434,233
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 22 -
22
Related party transactions
At the year end, the company was owed £1,391,291 (2022: £2,602,445) from 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 £61,933 (2022: £126,120) from Hazlitt Fine Art Holdings Limited. This balance arose as a result of financing transactions. There was a salary recharge in the year for £63,033 (2022: £110,632) which is held in accruals. This entity is related by virtue of a common director J. Morton Morris.
At the year end, the company was owed £396,665 (2022: £750,000) from 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 was owed £48,870 (2022: £848,870) from European Master Pictures 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 £299,424 (2022: £nil) from Bury Street Modern Art Limited. This balance arose as a result of financing transactions. This entity is related by virtue of a common director J. Morton Morris.
During the year, the company paid £151,475 (2022: £254,936) of rent in respect of properties to Lydling Properties (St. James's) Limited. This entity is related by virtue of a common director J. Morton Morris. At the year end, £41,659 (2022: £43,804) was owed from Lydling Properties (St. James's) Limited. This balance arose as a result of financing transactions.
At the year end, the company owed £225,425 (2022: £225,425) 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 owed £25,024 (2022: £nil) to Arnold Wiggins & Sons 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 £155,565 (2022: owed from £38,046) 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.
At the year end, the company owed £23,180 (2022: £nil) to a director, J. Morton Morris.
A final dividend of £500,000 (2022: £nil) was recognised at the year end. As a result, £250,000 was owed to Sydney Holdings Limited and £250,000 was owed to Luberon Holdings Limited (Jersey) at the year end.
23
Ultimate controlling party
There is no ultimate controlling party.
HAZLITT HOLLAND-HIBBERT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 23 -
24
Cash generated from/(absorbed by) operations
2023
2022
£
£
(Loss)/profit for the year after tax
(776,913)
2,002,161
Adjustments for:
Taxation (credited)/charged
(454,852)
458,929
Finance costs
400,330
581,639
Investment income
(494,419)
Depreciation and impairment of tangible fixed assets
8,558
603
Movements in working capital:
Decrease/(increase) in stocks
2,280,739
(3,161,984)
Decrease in debtors
6,510,442
761,098
Increase/(decrease) in creditors
870,537
(202,547)
Cash generated from/(absorbed by) operations
8,838,841
(54,520)
25
Analysis of changes in net funds/(debt)
1 November 2022
Cash flows
31 October 2023
£
£
£
Cash at bank and in hand
1,095,327
(906,416)
188,911
Borrowings excluding overdrafts
(9,500,000)
9,500,000
-
(8,404,673)
8,593,584
188,911
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