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Registration number: 03301381

Hipkin Holdings Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2023

 

Hipkin Holdings Limited

Contents

Company Information

1

Strategic Report

2

Directors' Report

3

Independent Auditor's Report

4 to 7

Consolidated Profit and Loss Account

8

Consolidated Statement of Comprehensive Income

9

Consolidated Balance Sheet

10

Balance Sheet

11

Consolidated Statement of Changes in Equity

12

Statement of Changes in Equity

13

Consolidated Statement of Cash Flows

14

Notes to the Financial Statements

15 to 29

 

Hipkin Holdings Limited

Company Information







 

Directors

Mr S Lafford-Walker

Mrs R S Lafford-Walker


 

Company secretary

Mrs R S Lafford-Walker


 

Registered office

Acorn House, Coppen Road
Off Selinas Lane
Chadwell Heath
Dagenham
Essex
RM8 1NU



 

Auditors

Landmark Audit Limited
Chartered Accountants
Statutory Auditors
Leavesden Park
5 Hercules Way
Watford
Hertfordshire
WD25 7GS

 

Hipkin Holdings Limited

Strategic Report for the Year Ended 31 December 2023

The directors present their strategic report for the year ended 31 December 2023.

Principal activity

The principal activity of the group is the wholesale supply of plumbing products.

Fair review of the business

The directors are pleased with the financial results for the year, the business continued to grow revenues sustainably while maintaining the gross profit margin.

The number of customers spending with us continues to grow and the systems upgrade carried out in early 2024 will only enhance our processes and offering to the customers, and enable the group to operate more efficiently.

The product range is continually evolving and the directors continue to look for complementary and alternative products in order to improve customer choice.

The immediate outlook is promising, the group is expected to operate at a slightly higher level in 2024. With further investment in staff and systems improvements planned, the group is well positioned to take advantage of growth opportunities. Price inflation continues to be managed.

Overall revenues and gross profit were higher than 2022, increasing by 5.5% to £26.5m and 4.5% to £6.8m respectively.

The group's key financial and other performance indicators during the year were as follows:

 

Unit

2023

2022

Turnover

£

26,451,892

25,076,002

Gross Profit

£

6,752,686

6,464,686

Gross Profit %

%

26

26

Distribution and Administration Expenses

£

4,876,464

4,585,033

Operating Profit

£

1,876,222

1,879,653

Principal risks and uncertainties

The group continues to explore new customer segments and products in line with changing customers’ needs.

In relation to the key financial risks on price, foreign currency, credit, liquidity, cash flow and interest rate risks, the directors have familiarised themselves with the concepts of these risks and have assessed that at this time the most significant exposure to the group is price risk.

The directors remain committed to improving the group's service and offering, and at the same time enhancing all customer facing processes to ensure we deliver unrivalled service in the market. The Directors will continue to monitor the group’s activities to address any significant risks that may arise to ensure these are minimised to the maximum possible extent.

Approved and authorised by the Board on 20 September 2024 and signed on its behalf by:
 

.........................................
Mr S Lafford-Walker
Director

 

Hipkin Holdings Limited

Directors' Report for the Year Ended 31 December 2023

The directors present their report and the for the year ended 31 December 2023.

Directors of the group

The directors who held office during the year were as follows:

Mr F D Lafford (ceased 3 December 2023)

Mr S Lafford-Walker

Mrs R S Lafford-Walker

Mrs S Howieson (ceased 28 March 2023)

Statement of Directors' Responsibilities

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 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; and

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 group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Disclosure of information to the auditor

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Reappointment of auditors

The auditors Landmark Audit Limited are deemed to be reappointed under section 487(2) of the Companies Act 2006.

Approved and authorised by the Board on 20 September 2024 and signed on its behalf by:
 

.........................................
Mr S Lafford-Walker
Director

 

Hipkin Holdings Limited

Independent Auditor's Report to the Members of Hipkin Holdings Limited

Opinion

We have audited the financial statements of Hipkin Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023, which comprise the Consolidated Profit and Loss Account, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated 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 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 the parent company's affairs as at 31 December 2023 and of the group's 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor 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 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 director's 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 original financial statements were authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The 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 auditor’s 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.

 

Hipkin Holdings Limited

Independent Auditor's Report to the Members of Hipkin Holdings Limited

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our 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 Strategic Report and the Directors' Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

the parent company financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the statement of directors' responsibilities [set out on page 3], 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.

Auditor 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

Hipkin Holdings Limited

Independent Auditor's Report to the Members of Hipkin Holdings Limited

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

• the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
• we identified the laws and regulations applicable to the group and parent company through discussions with directors and other management, and from our commercial knowledge and experience of the sector;
• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group and parent company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety legislation;
• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
• identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the group's and parent company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

• performed analytical procedures to identify any unusual or unexpected relationships;
• tested journal entries to identify unusual transactions;
• assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
• investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

• agreeing financial statement disclosures to underlying supporting documentation;
• reading the minutes of meetings of those charged with governance;
• enquiring of management as to actual and potential litigation and claims; and
• reviewing correspondence with HMRC, relevant regulators, and the company’s legal advisors.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

 

Hipkin Holdings Limited

Independent Auditor's Report to the Members of Hipkin Holdings Limited

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

......................................
Philip Cole (Senior Statutory Auditor)
For and on behalf of Landmark Audit Limited
Chartered Accountants
Statutory Auditors
Leavesden Park
5 Hercules Way
Watford
Hertfordshire
WD25 7GS

20 September 2024

 

Hipkin Holdings Limited

Consolidated Profit and Loss Account for the Year Ended 31 December 2023

Note

2023
£

2022
£

Turnover

3

26,451,892

25,076,002

Cost of sales

 

(19,699,206)

(18,611,316)

Gross profit

 

6,752,686

6,464,686

Distribution costs

 

(911,260)

(909,502)

Administrative expenses

 

(3,965,204)

(3,675,531)

Operating profit

4

1,876,222

1,879,653

Other interest receivable and similar income

3,013

351

Interest payable and similar expenses

5

(184,753)

(100,171)

   

(181,740)

(99,820)

Profit before tax

 

1,694,482

1,779,833

Tax on profit

8

(425,807)

(361,670)

Profit for the financial year

 

1,268,675

1,418,163

Profit/(loss) attributable to:

 

Owners of the company

 

1,268,675

1,418,163

The above results were derived from continuing operations.

 

Hipkin Holdings Limited

Consolidated Statement of Comprehensive Income
for the Year Ended 31 December 2023

2023
£

2022
£

Profit for the year

1,268,675

1,418,163

Surplus on property, plant and equipment revaluation

26,000

692,288

Total comprehensive income for the year

1,294,675

2,110,451

Total comprehensive income attributable to:

Owners of the company

1,294,675

2,110,451

 

Hipkin Holdings Limited

(Registration number: 03301381)
Consolidated Balance Sheet as at 31 December 2023

Note

2023

2022

   

£

£

£

£

Fixed assets

   

 

Tangible assets

10

 

4,672,371

 

4,663,058

Current assets

   

 

Stocks

12

4,363,123

 

3,280,049

 

Debtors

13

5,171,271

 

4,726,227

 

Cash at bank and in hand

14

76,686

 

92,114

 

 

9,611,080

 

8,098,390

 

Creditors: Amounts falling due within one year

15

(7,540,065)

 

(5,821,232)

 

Net current assets

   

2,071,015

 

2,277,158

Total assets less current liabilities

   

6,743,386

 

6,940,216

Creditors: Amounts falling due after more than one year

15

 

(520,800)

 

(695,257)

Provisions for liabilities

16

 

(606,467)

 

(603,209)

Net assets

   

5,616,119

 

5,641,750

Capital and reserves

   

 

Called up share capital

18

90

 

90

 

Capital redemption reserve

10

 

10

 

Revaluation reserve

2,735,266

 

2,701,455

 

Retained earnings

2,880,753

 

2,940,195

 

Equity attributable to owners of the company

 

5,616,119

 

5,641,750

 

Shareholders' funds

   

5,616,119

 

5,641,750

Approved and authorised by the Board on 20 September 2024 and signed on its behalf by:
 

.........................................
Mr S Lafford-Walker
Director

 

Hipkin Holdings Limited

(Registration number: 03301381)
Balance Sheet as at 31 December 2023

Note

2023

2022

   

£

£

£

£

Fixed assets

   

 

Investments

11

 

950,645

 

950,645

Current assets

   

 

Cash at bank and in hand

14

100

 

100

 

Creditors: Amounts falling due within one year

15

(842,832)

 

(842,832)

 

Net current liabilities

   

(842,732)

 

(842,732)

Net assets

   

107,913

 

107,913

Capital and reserves

   

 

Called up share capital

18

90

 

90

 

Capital redemption reserve

10

 

10

 

Retained earnings

107,813

 

107,813

 

Shareholders' funds

   

107,913

 

107,913

The company made a profit after tax for the financial year of £1,320,306 (2022 - profit of £878,022).

Approved and authorised by the Board on 20 September 2024 and signed on its behalf by:
 

.........................................
Mr S Lafford-Walker
Director

 

Hipkin Holdings Limited

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2023
Equity attributable to the parent company

Share capital
£

Capital redemption reserve
£

Revaluation reserve
£

Retained earnings
£

Total
£

At 1 January 2023

90

10

2,701,455

2,940,195

5,641,750

Profit for the year

-

-

-

1,268,675

1,268,675

Other comprehensive income

-

-

26,000

-

26,000

Total comprehensive income

-

-

26,000

1,268,675

1,294,675

Dividends

-

-

-

(1,320,306)

(1,320,306)

Transfers

-

-

7,811

(7,811)

-

At 31 December 2023

90

10

2,735,266

2,880,753

5,616,119

Share capital
£

Capital redemption reserve
£

Revaluation reserve
£

Retained earnings
£

Total
£

At 1 January 2022

90

10

1,995,356

2,413,865

4,409,321

Profit for the year

-

-

-

1,418,163

1,418,163

Other comprehensive income

-

-

692,288

-

692,288

Total comprehensive income

-

-

692,288

1,418,163

2,110,451

Dividends

-

-

-

(878,022)

(878,022)

Transfers

-

-

13,811

(13,811)

-

At 31 December 2022

90

10

2,701,455

2,940,195

5,641,750

 

Hipkin Holdings Limited

Statement of Changes in Equity for the Year Ended 31 December 2023

Share capital
£

Capital redemption reserve
£

Retained earnings
£

Total
£

At 1 January 2023

90

10

107,813

107,913

Profit for the year

-

-

1,320,306

1,320,306

Dividends

-

-

(1,320,306)

(1,320,306)

At 31 December 2023

90

10

107,813

107,913

Share capital
£

Capital redemption reserve
£

Retained earnings
£

Total
£

At 1 January 2022

90

10

107,813

107,913

Profit for the year

-

-

878,022

878,022

Dividends

-

-

(878,022)

(878,022)

At 31 December 2022

90

10

107,813

107,913

 

Hipkin Holdings Limited

Consolidated Statement of Cash Flows for the Year Ended 31 December 2023

Note

2023
£

2022
£

Cash flows from operating activities

Profit for the year

 

1,268,675

1,418,163

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

4

63,125

53,596

Finance income

(3,013)

(351)

Finance costs

5

184,753

100,171

Income tax expense

8

425,807

361,670

 

1,939,347

1,933,249

Working capital adjustments

 

Increase in stocks

12

(1,083,074)

(264,027)

Increase in trade debtors

13

(445,044)

(584,809)

Increase in trade creditors

15

521,976

744,016

Cash generated from operations

 

933,205

1,828,429

Income taxes paid

8

(328,409)

(286,462)

Net cash flow from operating activities

 

604,796

1,541,967

Cash flows from investing activities

 

Interest received

3,013

351

Acquisitions of tangible assets

(46,437)

(39,150)

Net cash flows from investing activities

 

(43,424)

(38,799)

Cash flows from financing activities

 

Interest paid

5

(184,753)

(100,171)

Repayment of bank borrowing

 

(252,430)

(277,970)

Payments to finance lease creditors

 

(13,461)

(12,486)

Dividends paid

(1,320,306)

(878,022)

Net cash flows from financing activities

 

(1,770,950)

(1,268,649)

Net (decrease)/increase in cash and cash equivalents

 

(1,209,578)

234,519

Cash and cash equivalents at 1 January

 

(2,295,040)

(2,529,559)

Cash and cash equivalents at 31 December

 

(3,504,618)

(2,295,040)

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Acorn House, Coppen Road
Off Selinas Lane
Chadwell Heath
Dagenham
Essex
RM8 1NU

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

The functional and presentational currency used in these financial statements is £ sterling.

Summary of disclosure exemptions

The company has taken advantage of the exemption in FRS 102 section 33 Related Party Disclosures from disclosing transactions between wholly owned group companies.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2023.

No Profit and Loss Account is presented for the company as permitted by section 408 of the Companies Act 2006. The company made a profit after tax for the financial year of £1,320,306 (2022 - profit of £878,022).

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the Group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the Company and its subsidiaries, which are related parties, are eliminated in full.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Going concern

The financial statements have been prepared on a going concern basis.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group’s activities. Turnover is shown net of value added tax, returns, rebates and discounts.

The Group recognises revenue when the significant risks and rewards of ownership of the goods has transferred to the buyer. This is usually at the point that the customer has taken delivery of the goods.

Foreign currency transactions and balances

Transactions in currencies other than the functional currency are recognised at the spot rate at the dates of the transactions, or at an average rate where this rate approximates to the actual rate at the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.

Exchange differences are recognised in profit or loss in the period in which they arise.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the group operates and generates taxable income.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the Group. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated in the Balance Sheet at historic cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses, with the exception of property which is held at fair value.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction, over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Long leasehold

2% on cost

Office equipment

15% on reducing balance

Motor vehicles

25% on reducing balance

Plant and machinery

25% on reducing balance

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Goodwill

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.

Investments

Investments in subsidiaries are accounted for at cost less impairment.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are recognised at the transaction price less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the transaction.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the weighted average method.

At each reporting date, stocks are assessed for impairment. If stocks are 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.

Trade creditors

Trade creditors are recognised at the transaction price, and are classified as current liabilities if the Group does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. Assets held under finance leases are included in tangible fixed assets and depreciated and assessed for impairment losses in the same way as owned assets. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share capital

Ordinary shares are classified as equity.

Dividends

Dividend distributions to the group’s shareholders are recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

Contributions to defined contribution plans are recognised as an employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Financial instruments

Classification
Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments.

 Recognition and measurement
Basic financial instruments are recognised at amortised cost. Derivative financial instruments are initially measured at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value through profit or loss.

Derivative financial instruments and hedging

Derivatives
The group uses forward foreign currency contracts to reduce exposure to foreign exchange rates. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. The fair value of the foreign currency forward contracts is calculated by reference to observable forward exchange rates corresponding to the maturity of the contract.
 

3

Turnover

The analysis of the group's Turnover for the year from continuing operations is as follows:

2023
£

2022
£

Sale of goods

26,451,892

25,076,002

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

4

Operating profit

Arrived at after charging/(crediting)

2023
£

2022
£

Depreciation expense

63,125

53,596

Foreign exchange losses

10,078

10,868

Audit of the financial statements

18,500

17,500

5

Interest payable and similar expenses

2023
£

2022
£

Interest on bank overdrafts and borrowings

182,758

97,524

Interest on obligations under finance leases and hire purchase contracts

1,424

2,400

Interest expense on other finance liabilities

571

247

184,753

100,171

6

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2023
£

2022
£

Wages and salaries

2,490,250

2,236,035

Social security costs

279,047

257,223

Pension costs, defined contribution scheme

35,805

36,948

2,805,102

2,530,206

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

2023
No.

2022
No.

Directors

3

3

Sales

13

13

Warehouse and distribution

32

28

Administration and support

18

17

66

61

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

7

Directors' remuneration

The directors' remuneration for the year was as follows:

2023
£

2022
£

Remuneration

170,000

177,435

Contributions paid to money purchase schemes

2,641

2,641

172,641

180,076

During the year the number of directors who were receiving benefits and share incentives was as follows:

2023
No.

2022
No.

Accruing benefits under money purchase pension scheme

1

1

8

Taxation

Tax charged/(credited) in the consolidated profit and loss account

2023
£

2022
£

Current taxation

UK corporation tax

422,549

353,572

Deferred taxation

Arising from origination and reversal of timing differences

3,258

8,098

Tax expense in the income statement

425,807

361,670

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2022 - higher than the standard rate of corporation tax in the UK) of 23.52% (2022 - 19%).

The differences are reconciled below:

2023
£

2022
£

Profit before tax

1,694,482

1,779,833

Corporation tax at standard rate

398,542

338,168

Tax increase from effect of capital allowances and depreciation

6,172

1,882

Effect of expense not deductible in determining taxable profit (tax loss)

20,891

14,562

Deferred tax expense relating to changes in tax rates or laws

202

7,058

Total tax charge

425,807

361,670

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Deferred tax

Group

Deferred tax assets and liabilities

2023

Liability
£

Accelerated capital allowances

32,667

Revaluation of property

573,800

606,467

2022

Liability
£

Accelerated capital allowances

29,409

Revaluation of property

573,800

603,209

9

Intangible assets

Group

Goodwill
 £

Total
£

Cost or valuation

At 1 January 2023

505,718

505,718

At 31 December 2023

505,718

505,718

Amortisation

At 1 January 2023

505,718

505,718

At 31 December 2023

505,718

505,718

Carrying amount

At 31 December 2023

-

-

At 31 December 2022

-

-

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

10

Tangible assets

Group

Long leasehold land and buildings
£

Office equipment
£

Plant and machinery
£

Motor vehicles
 £

Total
£

Cost or valuation

At 1 January 2023

4,500,000

208,966

186,199

40,140

4,935,305

Additions

-

28,350

18,087

-

46,437

At 31 December 2023

4,500,000

237,316

204,286

40,140

4,981,742

Depreciation

At 1 January 2023

-

119,108

141,850

11,289

272,247

Charge for the year

26,000

14,955

14,957

7,212

63,124

Revaluation adjustment

(26,000)

-

-

-

(26,000)

At 31 December 2023

-

134,063

156,807

18,501

309,371

Carrying amount

At 31 December 2023

4,500,000

103,253

47,479

21,639

4,672,371

At 31 December 2022

4,500,000

89,858

44,349

28,851

4,663,058

Revaluation

The fair value of the group's long leasehold property was revalued on 24 March 2023 by an independent valuer.
The fair values are calculated on an open market value basis.
Had this class of asset been measured on a historical cost basis, their carrying amount would have been £1,190,932 (2022 - £1,224,743).
 

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

2023
£

2022
£

Motor vehicles

21,639

28,851

   

Restriction on title and pledged as security

Tangible fixed assets with a carrying amount of £4,672,371 (2022 - £4,663,058) have been pledged as security for the group's bank overdrafts, bank borrowings, and finance lease liabilities.

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

11

Investments

Company

2023
£

2022
£

Investments in subsidiaries

950,645

950,645

Subsidiaries

£

Cost or valuation

At 1 January 2023

950,645

At 31 December 2023

950,645

Carrying amount

At 31 December 2023

950,645

At 31 December 2022

950,645

Details of undertakings

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Country of incorporation

Holding

Proportion of voting rights and shares held

     

2023

2022

Subsidiary undertakings

F.W. Hipkin Limited

England and Wales

Ordinary and preference shares

100%

100%

Subsidiary undertakings

F.W. Hipkin Limited

The principal activity of F.W. Hipkin Limited is the wholesale supply of plumbing products.

12

Stocks

 

Group

2023
£

2022
£

Finished goods and goods for resale

4,363,123

3,280,049

Group

The carrying amount of stocks pledged as security for liabilities amounted to £4,363,123 (2022 - £3,280,049).

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

13

Debtors

 

Group

2023
£

2022
£

Trade debtors

4,158,494

4,074,394

Other debtors

134,394

134,406

Prepayments

878,383

517,427

5,171,271

4,726,227

14

Cash and cash equivalents

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Cash on hand

121

1,108

100

100

Cash at bank

76,565

91,006

-

-

76,686

92,114

100

100

Bank overdrafts

(3,581,304)

(2,387,154)

-

-

Cash and cash equivalents in statement of cash flows

(3,504,618)

(2,295,040)

100

100

15

Creditors

   

Group

Company

Note

2023
£

2022
£

2023
£

2022
£

Due within one year

 

Loans and borrowings

19

3,755,652

2,652,936

-

-

Trade creditors

 

2,321,683

1,952,048

-

-

Amounts owed to group undertakings

22

-

-

830,362

830,362

Social security and other taxes

 

808,946

665,901

-

-

Outstanding defined contribution pension costs

 

10,940

9,555

-

-

Other creditors

 

6,904

6,698

-

-

Accruals

 

212,956

205,250

12,470

12,470

Corporation tax

8

422,984

328,844

-

-

 

7,540,065

5,821,232

842,832

842,832

Due after one year

 

Loans and borrowings

19

520,800

695,257

-

-

Included in loans and borrowings are bank overdrafts, bank borrowings, and finance lease liabilities which are secured against assets of the group.

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

16

Deferred tax and other provisions

Group

Deferred tax
£

Total
£

At 1 January 2023

603,209

603,209

Increase (decrease) in existing provisions

3,258

3,258

At 31 December 2023

606,467

606,467

17

Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £35,805 (2022 - £36,948).

Contributions totalling £10,940 (2022 - £9,555) were payable to the scheme at the end of the year and are included in creditors.

18

Share capital

Allotted, called up and fully paid shares

2023

2022

No.

£

No.

£

Ordinary of £1 each

90

90

90

90

       
 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

19

Loans and borrowings

Non-current loans and borrowings

 

Group

2023
£

2022
£

Bank borrowings

520,800

682,060

Finance lease liabilities

-

13,197

520,800

695,257

Current loans and borrowings

 

Group

2023
£

2022
£

Bank borrowings

161,151

252,321

Bank overdrafts

3,581,304

2,387,154

Finance lease liabilities

13,197

13,461

3,755,652

2,652,936

The bank overdrafts and bank borrowings are secured against all assets of the group.

The finance lease liabilities are secured on the assets concerned.

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

20

Obligations under leases and hire purchase contracts

Group

Finance leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

13,197

14,885

Later than one year and not later than five years

-

13,745

13,197

28,630

Operating leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

223,714

199,296

Later than one year and not later than five years

224,801

217,532

448,515

416,828

The amount of non-cancellable operating lease payments recognised as an expense during the year was £235,595 (2022 - £226,024).

21

Dividends

   

2023

 

2022

   

£

 

£

Interim dividend of £14,670.07 (2022 - £9,755.80) per ordinary share

 

1,320,306

 

878,022

         
 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

22

Related party transactions

Group

Transactions with directors

2023

At 1 January 2023
£

Advances to directors
£

Repayments by directors
£

At 31 December 2023
£

Loans to directors (interest free and repayable on demand)

12

399,063

(399,075)

-

2022

At 1 January 2022
£

Advances to directors
£

Repayments by directors
£

At 31 December 2022
£

Loans to directors (interest free and repayable on demand)

54,268

595,141

(649,397)

12

Key management personnel

Key management personnel is considered to consist of the group's directors.

Key management compensation

2023
£

2022
£

Salaries and other short term employee benefits

172,642

180,076

Summary of transactions with key management

Loans to key management personnel are on an interest free basis.
 

Summary of transactions with other related parties

Other related parties consist of companies under common control, and key management of companies with significant influence.
 Loans to other related parties are on an interest free basis.
 

Income and receivables from related parties

2023

Other related parties
£

Amounts receivable from related party

134,094

2022

Other related parties
£

Amounts receivable from related party

134,094

 

Hipkin Holdings Limited

Notes to the Financial Statements for the Year Ended 31 December 2023

Loans to related parties

2022

Key management
£

At start of period

22,989

Repaid

(22,989)

At end of period

-

Company

Transactions with directors

   

2023
£

 

2022
£

       

Dividends paid to directors

 

1,258,471

 

878,022

         

Expenditure with and payables to related parties

2023

Subsidiary
£

Amounts payable to related party

830,362

2022

Subsidiary
£

Amounts payable to related party

830,362