Company Registration No. 02316548 (England and Wales)
HHB COMMUNICATIONS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
HHB COMMUNICATIONS LIMITED
COMPANY INFORMATION
Directors
IP Jones
SB Fenby
(Appointed 12 July 2023)
S Lamb
(Appointed 12 July 2023)
Company number
02316548
Registered office
Vinces Road
Diss
Norfolk
IP22 4YT
Auditor
Rickard Luckin Limited
1st Floor
County House
100 New London Road
Chelmsford
Essex
CM2 0RG
HHB COMMUNICATIONS LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 9
Income statement
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 32
HHB COMMUNICATIONS LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 1 -

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

Review of the business

This was another successful period for the company and turnover of £22.7m was achieved (Y/E 31.1.2023: £26.9m).

 

HHB Communications Ltd deftly navigated the challenging socio-economic environment of trading during a period of an unprecedented cost of living crisis brought on by inflationary and interest rate pressures exacerbated by the continuing war in Ukraine, post-pandemic slump impacting the UK economy as well as dealing with the complexities brought on by the US Writers’ and Actors’ strikes affecting the Broadcast and Post-production sector towards the latter part of 2023. The main focus of the company continues to be building on its enviable reputation, maintaining and asserting its position within the marketplace, and ensuring that its core business is sufficiently resourced and profitable across the HHB, Source and Scrub divisions whilst exploring all available opportunities to seek new business.

 

During the accounting period, all the shares in the HHB Communications Ltd were acquired by Midwich Ltd, an AIM listed business, on 12th July 2023 and the year end was changed to 31st December to align with the rest of the group.

Principal risks and uncertainties

Treasury operations and financial instruments

The directors regularly review the financial requirements of the company and the risks associated therewith. The company's operations are primarily financed from its retained earnings.

 

The company uses forward foreign currency contracts to reduce its exposure to foreign currency risks. The company does not use derivative financial instruments for trading purposes.

 

Liquidity risk

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

 

Interest rate risk

The company is exposed to interest rate risk on its borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.

 

Foreign currency risk

The company's principal foreign currency exposure arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.

 

Credit risk

Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the board.

 

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

 

Risks of technological change and product availability

The key business risks and uncertainties affecting the company are related to technological change, product availability and competition, both nationally and internationally. The business environment within which the company operates is subject to frequent technological change, but through close contact with both our customers and suppliers our portfolio of new and innovative brands and products continues to develop and change both organically and through the acquisition of exclusive distribution rights.

HHB COMMUNICATIONS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators

The key financial performance indicators used to monitor the performance of the company are set out below:

 

Taking into account the challenging market conditions as described above and continuing to deal with global supply chain issues, during the 11-month period the turnover decreased by 15.4% to £22.7 million compared to y/e Jan-2023: £26.9m ( the decrease would be 7.7% to £24.8m if extrapolated to a 12-month like for like period) The company continues to trade without incurring any bad debts, which highlights the prestigious position it has cemented within its core markets and customers following years of successful trading.

 

Gross profit decreased by £1.7m in the 11-month period from £8m in y/e Jan-23 to £6.3m (£1.1m reduction to GP £6.9m if extrapolated to a 12-month like for like period. This was partially impacted by a one-off event regarding inventory control in order to align with Group policies, which was responsible for 1.3% of the reduction. Cash generation continued to be positive resulting in bank and cash equivalent balances of £5.3m as at end of the period.

 

The company continued focusing on streamlining its distribution and administrative expenses, however owing to one-off exceptional costs incurred within the period, the company's profit before taxation has seen a decrease from £2.2m in y/e Jan-23 to £0.9m in the period (£1.35m if the effect of exceptional costs was removed for a 12-month like for like period)

Future developments

In 2023 HHB Communications Ltd continued to build on its reputation for being the leading UK supplier of professional audio products and services to the media and entertainment industries. In addition to maintaining its business and creating new opportunities as described below, the company continued focusing on sustainability and reducing its carbon footprint by reviewing all aspects of the impact of its operations.

 

During the 11-month period HHB continued to work with many notable post-production facilities, film and recording studios, and broadcasters including but not limited to: BBC, Abbey Road Studios, University of Greenwich, University of West London, Bubble, Dock 10, Streamland Media, Azimuth, University of York, ITN, ITV, Channel 4 and Maple Street Studios amongst others. Across these customers HHB has facilitated the equipping of several entirely new facilities as well as major upgrades to existing studios.

 

HHB has continually focused on growing its existing core product partnerships, with the recently appointed distribution brand Source Elements. In addition, HHB was chosen as the sole Dante Connect reseller for the UK – with the first UK customer being Sky quickly followed by Lego. After years of predominately focusing on Pro Tools and mixing consoles, HHB worked closely with Avid and Harbour Post Production to initially test then onboard the Nexis as their audio storage solution.

 

New brands for Source Distribution in 2024 include Bose Professional loudspeakers, Buchla synthesisers, Dreadbox synthesiser modules and the VegaTrem guitar tremolo system.

During the 11-month period Source Distribution was featured frequently in industry news with a number of distributed products being awarded Specialist Press Awards highlighting Source Distribution’s influence and reputation within the industry such as but not limited to:

 

 

 

 

 

Additionally, during the period Source Distribution worked with a selected group of key influencers resulting in generating 520,000 views of Mogami content further enhancing the reputation and visibility of this iconic Japanese cable brand.

HHB COMMUNICATIONS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 3 -
Section 172 (1) statement

From the perspective of the Board of the Company, as a result of the Group (Midwich Group plc) governance structure, the matters that it is responsible for considering under Section 172 (1) of the Companies Act 2006 (‘s172’) have been considered to an appropriate extent by the Board at HHB Communications Ltd in relation both to the Group and to the Company. The Board has also considered all relevant matters where appropriate. To the extent necessary for an understanding of the development, performance and position of the entity, the Board have considered that they have acted in the way they consider would be most likely to promote the success of the Company for the benefit of all its stakeholders whilst taking into account the impact of business decisions on the stakeholders. Positive communication and engagement with key stakeholder groups such as but not limited to employees, customers, and suppliers is of paramount importance for the success of the Company and is carefully considered within the implementation of the Company’s strategy. In addition, an explanation of how the Group Board has considered the matters set out in s172 (for the Group and for the Company) is set out in the Group’s annual report, which does not form part of this report.

On behalf of the board

IP Jones
Director
18 September 2024
HHB COMMUNICATIONS LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 4 -

The directors present their annual report and financial statements for the period ended 31 December 2023.

Principal activities

The principal activity during the year was the importing, distribution and resale of professional audio, video and music technology products.

Results and dividends

The results for the period are set out on page 10.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the period and up to the date of signature of the financial statements were as follows:

IP Jones
SR Angel
(Resigned 12 July 2023)
P Christensen
(Resigned 12 July 2023)
SB Fenby
(Appointed 12 July 2023)
S Lamb
(Appointed 12 July 2023)
Auditor

In accordance with the company's articles, a resolution proposing that Rickard Luckin Limited be reappointed as auditor of the company will be put at a General Meeting.

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:

 

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.

Strategic report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.

HHB COMMUNICATIONS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 5 -
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
IP Jones
Director
18 September 2024
HHB COMMUNICATIONS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HHB COMMUNICATIONS LIMITED
- 6 -
Opinion

We have audited the financial statements of HHB Communications Limited (the 'company') for the period ended 31 December 2023 which comprise the income statement, the statement of financial position, the statement of changes in equity 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 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

HHB COMMUNICATIONS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HHB COMMUNICATIONS LIMITED
- 7 -
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:

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.

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

Capability of the audit in detecting irregularity, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management; and via inspection of the company’s regulatory and legal correspondence.

We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.

We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the company.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the company is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution, relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

HHB COMMUNICATIONS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HHB COMMUNICATIONS LIMITED
- 8 -

Secondly the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; trade and import and export legislation; the waste electronic and electronic equipment (WEEE) regulations; data protection legislation; anti-bribery and anti-corruption legislation.

ISAs (UK) limit the required procedures to identify non-compliance with these laws and regulations and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance with laws and regulations that could have a material impact on the financial statements.

In relation to fraud, we performed the following specific procedures in addition to those already noted:

These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.

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.

HHB COMMUNICATIONS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HHB COMMUNICATIONS LIMITED
- 9 -

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.

Amit Popat (Senior Statutory Auditor)
For and on behalf of Rickard Luckin Limited
24 September 2024
Chartered Accountants
Statutory Auditor
1st Floor
County House
100 New London Road
Chelmsford
Essex
CM2 0RG
HHB COMMUNICATIONS LIMITED
INCOME STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 10 -
Period
Year
ended
ended
31 December
31 January
2023
2023
Notes
£
£
Revenue
3
22,710,087
26,854,747
Cost of sales
(16,385,176)
(18,784,490)
Gross profit
6,324,911
8,070,257
Distribution costs
(2,629,488)
(2,619,158)
Administrative expenses
(2,766,107)
(3,207,008)
Operating profit
4
929,316
2,244,091
Investment income
7
30,802
9,701
Finance costs
8
(55,732)
(8,999)
Profit before taxation
904,386
2,244,793
Tax on profit
9
(237,769)
(408,101)
Profit and total comprehensive income for the financial period
25
666,617
1,836,692
HHB COMMUNICATIONS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 11 -
31 December
31 January
2023
2023
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
11
1,547,886
227,989
Investments
12
28,929
28,929
Deferred tax asset
19
101,245
72,039
1,678,060
328,957
Current assets
Inventories
14
3,508,108
5,997,135
Trade and other receivables
15
1,781,954
2,717,439
Cash and cash equivalents
5,281,392
3,106,283
10,571,454
11,820,857
Current liabilities
16
(2,687,844)
(4,145,003)
Net current assets
7,883,610
7,675,854
Total assets less current liabilities
9,561,670
8,004,811
Non-current liabilities
16
(1,476,693)
(422,797)
Provisions for liabilities
Other provisions
20
(277,661)
(441,315)
Net assets
7,807,316
7,140,699
Equity
Called up share capital
22
320,460
320,460
Share premium account
23
287,792
287,792
Capital redemption reserve
24
419,582
419,582
Retained earnings
25
6,779,482
6,112,865
Total equity
7,807,316
7,140,699
Under Section 454 of the Companies Act 2006, on a voluntary basis, the directors can amend these financial statements if they are subsequently proved to be defective.
The financial statements were approved by the board of directors and authorised for issue on 18 September 2024 and are signed on its behalf by:
IP Jones
Director
Company registration number 02316548 (England and Wales)
HHB COMMUNICATIONS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 12 -
Share capital
Share premium account
Capital redemption reserve
Retained earnings
Total
Notes
£
£
£
£
£
As restated for the period ended 31 January 2023:
Balance at 1 February 2022
320,460
287,792
419,582
4,496,173
5,524,007
As restated
320,460
287,792
419,582
4,496,173
5,524,007
Year ended 31 January 2023:
Profit and total comprehensive income
-
-
-
1,836,692
1,836,692
Transactions with owners:
Dividends
10
-
-
-
(220,000)
(220,000)
Balance at 31 January 2023
320,460
287,792
419,582
6,112,865
7,140,699
Period ended 31 December 2023:
Profit and total comprehensive income
-
-
-
666,617
666,617
Balance at 31 December 2023
320,460
287,792
419,582
6,779,482
7,807,316
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information

HHB Communications Limited is a company limited by shares incorporated in England and Wales. The registered office is Vinces Road, Diss, Norfolk, IP22 4YT.

1.1
Reporting period

The financial statements are presented for an 11 month period to bring the period end date in line with its new parent company, Midwich Limited and the Midwich Group. Comparative amounts presented in the financial statements (including the related notes) are therefore not entirely comparable.

1.2
Accounting convention

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The company meets the definition of a qualifying entity under FRS 101 Reduced Disclosure Framework. These financial statements for the period ended 31 December 2023 are the first financial statements of HHB Communications Limited prepared in accordance with FRS 101. The company transitioned from UK GAAP to FRS 101 for all periods presented and the date of transition to FRS 101 was 1 February 2022.

 

The reported financial position and financial performance for the previous period are affected by the transition to FRS 101 and this is disclosed in note 29.

 

As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:

Where required, equivalent disclosures are given in the consolidated financial statements of Midwich Group plc.

HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

 

HHB Communications Limited is a wholly owned subsidiary of Midwich Group plc and the results of HHB Communications Limited are included in the consolidated financial statements of Midwich Group plc which are available from Vinces Road, Diss, Norfolk, United Kingdom, IP22 4YT.

1.3
Going concern

These financial statements have been prepared under the going concern basis. true

 

The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.4
Revenue

Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:

Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.5
Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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:

Leasehold property
Over 5 year lease term
Fixtures, fittings & equipment
10% - 33.33% Straight Line
Plant and machinery
20% - 33.33% Straight Line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to or .

1.6
Non-current investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.7
Impairment of tangible and intangible assets

At each reporting end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.8
Inventories

Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct costs that have been incurred in bringing the inventories to their present location and condition.

 

Inventories held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

1.9
Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.10
Financial assets

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

 

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Financial assets at fair value through profit or loss

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial assets held at amortised cost

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Financial assets at fair value through other comprehensive income

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

Impairment of financial assets

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

 

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

1.11
Financial liabilities

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Financial liabilities at fair value through profit or loss
Other financial liabilities

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

1.12
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.13
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.14
Provisions

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event and it is probable that the company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
1.15
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.16
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.17
Leases

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
1.18
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.

2
Critical accounting estimates and judgements

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Key sources of estimation uncertainty
Warranty provision

Warranties are provided on products sold by the company. Where the company is liable for these warranties, a provision is made for this. This provision requires management's best estimation of the costs that will be incurred in meeting its warranty obligations. In addition the timing of the cashflows and therefore the net present value of the obligation require management's judgement. At the period end, the warranty provision amounted to £277,661.

Stock provision

Stock is provided for where items are identified as slow moving or obsolete based on the ageing of the stock. The calculation of the provision involves management's best estimate of the timing and the percentages to be used in arriving at the level of the provision required to ensure stock is held at the lower of cost and net realisable value. At the period end, the stock provision amounted to £572,557.

Leases

In accordance with IFRS 16, material leases for right of use assets are capitalised with a corresponding liability. There is estimation uncertainty involved in arriving at the interest rate to be used in arriving at the present value of the lease payments unpaid at the commencement date of the lease. See note 18 for details.

3
Revenue
2023
2023
£
£
Revenue analysed by class of business
Sale of goods
22,388,183
26,578,324
Sale of services and repairs
321,904
276,423
22,710,087
26,854,747
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
3
Revenue
(Continued)
- 20 -
2023
2023
£
£
Geographical segment
UK
19,184,417
22,708,868
Europe
3,120,425
3,460,910
USA & Canada
-
6,066
Rest of the World
405,245
678,903
22,710,087
26,854,747
4
Operating profit
2023
2023
Operating profit for the period is stated after charging/(crediting):
£
£
Exchange losses/(gains)
40,418
(117,056)
Hedging instrument (gains)/losses
(4,899)
24,490
Fees payable to the company's auditor for the audit of the company's financial statements
34,000
20,800
Depreciation of property, plant and equipment
329,881
140,634
Loss on disposal of property, plant and equipment
529
17,213
Cost of inventories recognised as an expense
16,385,176
18,784,490
5
Employees

The average monthly number of persons (including directors) employed by the company during the period was:

2023
2023
Number
Number
Sales and Service
46
45
Admin
11
12
Total
57
57

Their aggregate remuneration comprised:

2023
2023
£
£
Wages and salaries
3,217,361
3,229,745
Social security costs
398,609
566,455
Pension costs
108,986
148,296
3,724,956
3,944,496
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 21 -
6
Directors' remuneration
2023
2023
£
£
Remuneration for qualifying services
416,373
1,081,801
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2023
£
£
Remuneration for qualifying services
238,249
450,723
7
Investment income
2023
2023
£
£
Interest income
Interest on bank deposits
30,802
9,701
8
Finance costs
2023
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on lease liabilities
55,732
8,999
9
Taxation
2023
2023
£
£
Current tax
UK corporation tax on profits for the current period
265,367
458,929
Adjustments in respect of prior periods
1,608
-
Total UK current tax
266,975
458,929
Deferred tax
Origination and reversal of temporary differences
(29,206)
(50,828)
Total tax charge
237,769
408,101
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
9
Taxation
(Continued)
- 22 -

The charge for the period can be reconciled to the profit per the income statement as follows:

2023
2023
£
£
Profit before taxation
904,386
2,244,793
Expected tax charge based on a corporation tax rate of 23.94% (2023: 19.00%)
216,510
426,511
Effect of expenses not deductible in determining taxable profit
20,888
25,674
Change in unrecognised deferred tax assets
(16,890)
(34,688)
Effect of change in UK corporation tax rate
(1,238)
(9,388)
Other permanent differences
16,891
(593)
Under/(over) provided in prior years
1,608
585
Taxation charge for the period
237,769
408,101

The rate of corporation tax changed from 19% to 25% on 1 April 2023 and has resulted in an increase in the liability to corporation tax from this period.

10
Dividends
2023
2023
Amounts recognised as distributions:
Total
Total
£
£
Ordinary of £1 each
Final dividend paid
-
220,000
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
10
Dividends
(Continued)
- 23 -
11
Property, plant and equipment
Leasehold property
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
Cost
At 1 February 2023
466,924
399,006
162,836
1,028,766
Additions
1,491,845
9,034
-
0
1,500,879
Transfer from inventories
-
0
149,429
-
0
149,429
Disposals
-
0
(3,343)
-
0
(3,343)
At 31 December 2023
1,958,769
554,126
162,836
2,675,731
Accumulated depreciation and impairment
At 1 February 2023
280,154
362,910
157,713
800,777
Charge for the period
242,569
83,920
3,392
329,881
Eliminated on disposal
-
0
(2,813)
-
0
(2,813)
At 31 December 2023
522,723
444,017
161,105
1,127,845
Carrying amount
At 31 December 2023
1,436,046
110,109
1,731
1,547,886
At 31 January 2023
186,770
36,096
5,123
227,989

Property, plant and equipment includes right-of-use assets, as follows:

Right-of-use assets
2023
2023
£
£
Net values at the period end
Property
1,436,046
186,770
Total additions in the period
1,491,845
-
Depreciation charge for the period
Property
242,569
93,384
The carrying value of land and buildings comprises:
2023
2023
£
£
Short leasehold
1,436,046
186,770

HSBC Corporate Trustee Company (UK) Limited has a fixed and floating charge over all the property or undertaking of the company.

HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 24 -
12
Investments
Current
Non-current
2023
2023
2023
2023
£
£
£
£
Investments in subsidiaries
-
-
28,929
28,929
Fair value of financial assets carried at amortised cost

The directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

13
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Country of incorporation
Class of
% Held
shares held
Direct
H H B Limited
England and Wales
Ordinary
100.00
Source Distribution Ltd
England and Wales
Ordinary
100.00

Registered office addresses (all UK unless otherwise indicated):

Vinces Road, Diss, IP22 4YT
14
Inventories
2023
2023
£
£
Finished goods
3,508,108
5,997,135

At the period end the directors made a provision for old and damaged stock. During the period there was a net debit to the income statement in respect of this totalling £104,864.

15
Trade and other receivables
2023
2023
£
£
Trade receivables
1,398,152
2,315,720
Amounts owed by fellow group undertakings
148,250
148,250
Other receivables
5,447
4,897
Prepayments and accrued income
230,105
248,572
1,781,954
2,717,439
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 25 -
16
Liabilities
Current
Non-current
2023
2023
2023
2023
Notes
£
£
£
£
Trade and other payables
17
1,834,613
3,138,502
28,929
28,929
Corporation tax
146,439
260,000
-
-
Other taxation and social security
338,957
644,597
-
-
Lease liabilities
18
367,835
101,904
1,447,764
393,868
2,687,844
4,145,003
1,476,693
422,797
17
Trade and other payables
Current
Non-current
2023
2023
2023
2023
£
£
£
£
Trade payables
1,301,147
1,834,614
-
0
-
0
Amount owed to parent undertaking
5,238
-
0
-
0
-
0
Amounts owed to subsidiary undertakings
-
0
-
0
28,929
28,929
Amounts owed to fellow group undertakings
2,928
-
-
-
Amounts owed to related parties
96,258
-
0
-
0
-
0
Accruals and deferred income
409,928
553,431
-
0
-
0
Other payables
19,114
750,457
-
-
1,834,613
3,138,502
28,929
28,929
18
Lease liabilities
2023
2023
Maturity analysis
£
£
Within one year
455,500
105,500
In two to five years
1,594,250
395,080
Total undiscounted liabilities
2,049,750
500,580
Future finance charges and other adjustments
(234,151)
(4,808)
Lease liabilities in the financial statements
1,815,599
495,772
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
18
Lease liabilities
(Continued)
- 26 -

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2023
2023
£
£
Current liabilities
367,835
101,904
Non-current liabilities
1,447,764
393,868
1,815,599
495,772
2023
2023
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
55,732
8,999
Other leasing information is included in note 26.
19
Deferred taxation
2023
2023
£
£
Deferred tax assets
(101,245)
(72,039)

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

Accelerated capital allowances
£
Asset at 1 February 2022
(21,211)
Deferred tax movements in prior year
Charge/(credit) to profit or loss
(50,828)
Asset at 1 February 2023
(72,039)
Deferred tax movements in current year
Charge/(credit) to profit or loss
(29,206)
Asset at 31 December 2023
(101,245)
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
19
Deferred taxation
(Continued)
- 27 -

The deferred tax asset set out above is expected to reverse after 12 months and is considered recoverable as the company is profitable and is expected to be for the foreseeable future.

20
Provisions for liabilities
2023
2023
£
£
Warranty provision
277,661
441,315
Movements on provisions:
Warranty provision
£
At 1 February 2023
441,315
Utilisation of provision
(163,654)
At 31 December 2023
277,661

The warranty provision relates to the estimated future cost of product repairs discounted to present value. £104,030 (2023: £175,838) of the provision is expected to be utilised in the next 12 months, with the balance expected to be utilised after 12 months.

21
Retirement benefit schemes
2023
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
108,986
148,296

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.

22
Share capital
2023
2023
2023
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
320,460
320,460
320,460
320,460
23
Share premium account
2023
2023
£
£
At the beginning and end of the period
287,792
287,792
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 28 -
24
Capital redemption reserve
2023
2023
£
£
At the beginning and end of the period
419,582
419,582
25
Retained earnings

The retained earning are wholly distributable,

26
Other leasing information
Lessee

Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:

2023
2023
£
£
Expense relating to leases of low-value assets
30,695
35,802

The lease commitments outstanding at the period end totalled £36,866 (2023: £26,959)

Information relating to lease liabilities is included in note 18.
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 29 -
27
Related party transactions

At the period end the company owed its subsidiaries £28,929 (2023 - £28,929). These balances are shown in creditors amounts falling due in more than one year.

 

Amounts owed from the immediate parent company at the period end totalled £148,250 (2023: £148,250).

 

Amounts owed to group companies at the period end totalled £8,166 (2023: £Nil).

 

Amounts owed to a related company at the period end totalled £96,258 (2023: Nil). This company is related by virtue of having the same director.

Total remuneration, including pension contributions, paid to directors' family members amounted to £6,264 (2023 - £53,500).

 

The following transactions took place during the period from related companies at an arms length basis:

 

Purchases from companies with at least one director in common £Nil (2023: £49,998).

 

The company leased two premises from a related company and details of these leases are included in the lease liabilities note.

28
Controlling party

For the current year, the immediate parent company was HHB Communications Holdings Limited. During the year the immediate parent company was acquired by Midwich Group and the ultimate parent company at the period end is Midwich Group plc, a company registered in England and Wales. The registered office of the ultimate parent company is Vinces Road, Diss, Norfolk, United Kingdom, IP22 4YT.

 

Midwich Group plc is the parent undertaking of the largest and smallest group which prepares group financial statements and copies can be obtained from the Registrar of Companies, Companies House, Maindy, Cardiff, CF14 3UZ.

 

For the current period there is no ultimate controlling party. For the prior year, the ultimate controlling party was Mr Jones, a director of the company.

HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
- 30 -
29
Transition adjustments
Reconciliation of equity
At 1 February 2022
At 31 January 2023
Previously reported
Effect of transition
As restated
Previously reported
Effect of transition
As restated
Notes
£
£
£
£
£
£
Non-current assets
Property, plant and equipment
96,155
280,154
376,309
41,219
186,770
227,989
Investments
28,929
-
28,929
28,929
-
28,929
Deferred tax
-
21,211
21,211
-
72,039
72,039
125,084
301,365
426,449
70,148
258,809
328,957
Current assets
Inventories
6,331,028
-
6,331,028
5,997,135
-
5,997,135
Trade and other receivables
3,625,443
-
3,625,443
2,717,439
-
2,717,439
Bank and cash
2,376,845
-
2,376,845
3,106,283
-
3,106,283
12,333,316
-
12,333,316
11,820,857
-
11,820,857
Creditors due within one year
Finance leases
-
(592,273)
(592,273)
-
(101,904)
(101,904)
Taxation
(257,915)
-
(257,915)
(260,000)
-
(260,000)
Other payables
(5,886,595)
-
(5,886,595)
(3,783,099)
-
(3,783,099)
(6,144,510)
(592,273)
(6,736,783)
(4,043,099)
(101,904)
(4,145,003)
Net current assets
6,188,806
(592,273)
5,596,533
7,777,758
(101,904)
7,675,854
Total assets less current liabilities
6,313,890
(290,908)
6,022,982
7,847,906
156,905
8,004,811
Creditors due after one year
Finance leases
-
-
-
-
(393,868)
(393,868)
Other payables
(28,929)
-
(28,929)
(28,929)
-
(28,929)
(28,929)
-
(28,929)
(28,929)
(393,868)
(422,797)
Provisions for liabilities
Deferred tax
(32,389)
32,389
-
(5,212)
5,212
-
Other provisions
(470,046)
-
(470,046)
(441,315)
-
(441,315)
(502,435)
32,389
(470,046)
(446,527)
5,212
(441,315)
Net assets
5,782,526
(258,519)
5,524,007
7,372,450
(231,751)
7,140,699
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
29
Transition adjustments
At 1 February 2022
At 31 January 2023
Previously reported
Effect of transition
As restated
Previously reported
Effect of transition
As restated
Notes
£
£
£
£
£
£
(Continued)
- 31 -
Equity
Share capital
320,460
-
320,460
320,460
-
320,460
Share premium
287,792
-
287,792
287,792
-
287,792
Capital redemption
419,582
-
419,582
419,582
-
419,582
Profit and loss
4,754,692
(258,519)
4,496,173
6,344,616
(231,751)
6,112,865
Total equity
5,782,526
(258,519)
5,524,007
7,372,450
(231,751)
7,140,699
Reconciliation of profit for the financial period
Period ended 31 January 2023
Previously reported
Effect of transition
As restated
Notes
£
£
£
Revenue
26,854,747
-
26,854,747
Cost of sales
(18,784,490)
-
(18,784,490)
Gross profit
8,070,257
-
8,070,257
Distribution costs
(228,762)
(2,390,396)
(2,619,158)
Administrative expenses
(5,609,520)
2,402,512
(3,207,008)
Operating profit
2,231,975
12,116
2,244,091
Interest receivable and similar income
9,701
-
9,701
Finance costs
-
(8,999)
(8,999)
Profit before taxation
2,241,676
3,117
2,244,793
Taxation
(431,752)
23,651
(408,101)
Profit for the financial period
1,809,924
26,768
1,836,692
HHB COMMUNICATIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023
29
Transition adjustments
(Continued)
- 32 -
Notes to reconciliations
Right of use asset and liability

FRS 102 did not require significant operating leases to be capitalised with a corresponding liability to be included on the balance sheet. On transition to FRS 101, the company has calculated the present value of the lease payments and capitalised this, together with a corresponding liability being included on the balance sheet, from inception of the lease.

 

As at 31 January 2023, this resulted in a right of use asset for a leasehold property with a net book value of £186,770 and a corresponding liability carried forward at that date of £495,772.

 

During the year ended 31 January 2023, the unwinding of the lease liability resulted in an interest charge to the profit and loss account of £8,999. A depreciation charge has been made on the asset capitalised of £93,384.

Deferred tax

As a result of the transition to FRS 101 from FRS 102, the adjustments arising as set out in this note have led to an adjustment to the deferred tax liability which resulted in the recognition of a deferred tax asset of £72,039 as at 31 January 2023 with an adjustment to the movement in deferred tax for that year of £23,651.

Distribution wages and salaries

On transition to FRS 101, for the year ended 31 January 2023, wage costs totalling £2,390,396 have been reclassified from administrative expenses to distribution expenses to more accurately reflect the nature of these expenses.

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