South Midlands Communications Limited - Limited company accounts 18.2

REGISTERED NUMBER: 00603500 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019

FOR

SOUTH MIDLANDS COMMUNICATIONS LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Consolidated Statement of Income and Retained Earnings

8

Consolidated Balance Sheet

9

Company Balance Sheet

10

Consolidated Cash Flow Statement

11

Notes to the Consolidated Cash Flow Statement

12

Notes to the Consolidated Financial Statements

13

DIRECTORS:

B.D Gardner

M. D Gardner

Mrs J. Y Diamond

Mrs S Nutbrown

S Hey

R H Haslett

REGISTERED OFFICE:

S M House

School Close

Chandlers Ford Industrial Estate

Eastleigh

Hampshire

SO53 4BY

REGISTERED NUMBER:

00603500 (England and Wales)

AUDITORS:

Martin and Company Audit Limited

Chartered Accountants

and Statutory Auditors

25 St Thomas Street

Winchester

Hampshire

SO23 9HJ

BANKERS:

National Westminster Bank Plc

123 Winchester Road

Chandlers Ford

Eastleigh

Hampshire

SO53 2UA

The directors present their strategic report of the company and the group for the year ended 30 June 2019.

Review of the business

This year reflects another step forward in the progress of the group.

The group has achieved an excellent turnover of £4,797,505 resulting in a net profit of £17,645.

The balance sheet continues to show a very healthy state of affairs.

The group enters the new financial year with a strong order book and therefore the directors are confident that 2020 will

also see another good set of results.

Discontinued or new business areas

There have been no changes to the principal activities of the group.

Capital investments

The group continues to invest in plant and equipment and research and development.

Funding

The group operates well within its banking arrangements with Natwest Plc.

People

The group employs over 50 staff, most are long term employees, all are critical to the success of the business.

Health and safety

The group recognises that health and safety in the work place is paramount and it is therefore taken very seriously. The

directors believe that they have all the necessary policies in place to safeguard the welfare of the staff.

Key performance indicators

The group monitors financial and non-financial performance measures on a monthly basis. These, combined with

monthly management accounts allow the group to track trading margins, relative to budgets and forecasts.

Business continuity

The group has contingency plans and a comprehensive insurance package in place that would respond in the event of a

major disaster to ensure the group's ability to continue supplying its customers and meeting its financial obligations.

Financial risk management objectives and policies

The directors aim to minimise the financial risk to the group and manage this as follows:

Interest rate risk

The group does not have a significant interest rate exposure.

Credit risk

The group monitors and checks the credit ratings of its customers closely, which together with monitoring payment

performance on a regular basis, the directors consider that this policy meets the objective of managing and minimising

exposure to credit risk.

Liquidity risk

The group controls cashflow by careful budgeting which ensures liquidity is maintained.

Currency risk

The group does have a significant currency risk exposure due to the majority of its turnover coming from overseas. This

is managed by having other currency bank accounts and the hedging of currency.

ON BEHALF OF THE BOARD:

Mrs J. Y Diamond - Director

14 January 2020

The directors present their report with the financial statements of the company and the group for the year ended

30 June 2019.

DIVIDENDS

No dividends will be distributed for the year ended 30 June 2019.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2018 to the date of this report.

B.D Gardner

M. D Gardner

Mrs J. Y Diamond

Mrs S Nutbrown

S Hey

Other changes in directors holding office are as follows:

N StJ Hopkins - resigned 14 October 2018

R H Haslett - appointed 15 October 2018

POLITICAL AND CHARITABLE CONTRIBUTIONS

Neither the company or any of its subsidiaries made any political donations or incurred any political expenditure during

the year.

The company made charitable donations of £2,720 (2018: £1,027) during the year. None were made by the company's

subsidiaries.

POLICY ON PAYMENT OF CREDITORS

The company makes purchases from suppliers according to the terms and conditions agreed in advance between the two

parties. Payments are made to suppliers when goods or services have been received and the terms and conditions of the

agreement have been met.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 the group and of the profit or loss of the group for that period. In preparing these financial statements, the

directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the

company and the group 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 the group and hence for taking reasonable

steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have

taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the

group's auditors are aware of that information.

ON BEHALF OF THE BOARD:

Mrs J. Y Diamond - Director

14 January 2020

Opinion

We have audited the financial statements of South Midlands Communications Limited (the 'parent company') and its

subsidiaries (the 'group') for the year ended 30 June 2019 which comprise the Consolidated Statement of Income and

Retained Earnings, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Cash Flow Statement and Notes

to the Consolidated Cash Flow Statement, 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 of the parent company affairs as at 30 June 2019 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 Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the group in accordance with the ethical requirements

that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have

fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we

have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group

Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the

Auditors 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.

Opinions on other matters 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 Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the

course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the

Directors.

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 four, 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 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.

Auditors' 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 a Report of the Auditors that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs

(UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

David Barr FCA (Senior Statutory Auditor)

for and on behalf of Martin and Company Audit Limited

Chartered Accountants

and Statutory Auditors

25 St Thomas Street

Winchester

Hampshire

SO23 9HJ

14 January 2020

TURNOVER

3

4,797,505

5,674,037

Cost of sales

3,450,624

3,992,986

GROSS PROFIT

1,346,881

1,681,051

Distribution costs

362,494

345,568

Administrative expenses

991,969

1,058,153

1,354,463

1,403,721

(7,582

)

277,330

Other operating income

119

-

OPERATING (LOSS)/PROFIT

5

(7,463

)

277,330

Interest receivable and similar income

388

198

(LOSS)/PROFIT BEFORE TAXATION

(7,075

)

277,528

Tax on (loss)/profit

6

(24,720

)

(17,885

)

PROFIT FOR THE FINANCIAL YEAR

17,645

295,413

Retained earnings at beginning of year

4,315,651

4,020,238

RETAINED EARNINGS FOR THE GROUP AT END OF YEAR

4,333,296

4,315,651

Profit attributable to:

Owners of the parent

17,645

295,413

FIXED ASSETS

Intangible assets

8

-

-

Tangible assets

9

2,229,578

2,280,601

Investments

10

-

-

2,229,578

2,280,601

CURRENT ASSETS

Stocks

11

3,681,024

3,478,726

Debtors

12

1,520,309

1,338,341

Cash at bank

813,957

1,291,800

6,015,290

6,108,867

CREDITORS

Amounts falling due within one year

13

865,150

1,027,395

NET CURRENT ASSETS

5,150,140

5,081,472

TOTAL ASSETS LESS CURRENT LIABILITIES

7,379,718

7,362,073

CAPITAL AND RESERVES

Called up share capital

15

1,144,250

1,144,250

Revaluation reserve

16

1,886,574

1,886,574

Capital redemption reserve

16

5,750

5,750

Other reserves

16

9,848

9,848

Retained earnings

16

4,333,296

4,315,651

SHAREHOLDERS' FUNDS

7,379,718

7,362,073

The financial statements were approved by the Board of Directors on 14 January 2020 and were signed on its behalf by:

Mrs J. Y Diamond - Director

FIXED ASSETS

Intangible assets

8

-

-

Tangible assets

9

2,228,151

2,279,083

Investments

10

12,484

12,494

2,240,635

2,291,577

CURRENT ASSETS

Stocks

11

1,117,288

987,235

Debtors

12

3,834,012

3,629,241

Cash at bank

607,733

932,083

5,559,033

5,548,559

CREDITORS

Amounts falling due within one year

13

365,690

479,650

NET CURRENT ASSETS

5,193,343

5,068,909

TOTAL ASSETS LESS CURRENT LIABILITIES

7,433,978

7,360,486

CAPITAL AND RESERVES

Called up share capital

15

1,144,250

1,144,250

Revaluation reserve

16

1,723,778

1,723,778

Capital redemption reserve

16

5,750

5,750

Retained earnings

16

4,560,200

4,486,708

SHAREHOLDERS' FUNDS

7,433,978

7,360,486

Company's profit for the financial year

73,492

571,314

The financial statements were approved by the Board of Directors on 14 January 2020 and were signed on its behalf by:

Mrs J. Y Diamond - Director

Cash flows from operating activities

Cash generated from operations

1

(482,182

)

(424,602

)

Tax paid

24,720

(3,264

)

Net cash from operating activities

(457,462

)

(427,866

)

Cash flows from investing activities

Purchase of tangible fixed assets

(20,759

)

(48,425

)

Sale of fixed asset investments

(10

)

(10

)

Interest received

388

198

Net cash from investing activities

(20,381

)

(48,237

)

Decrease in cash and cash equivalents

(477,843

)

(476,103

)

Cash and cash equivalents at beginning of year

2

1,291,800

1,767,903

Cash and cash equivalents at end of year

2

813,957

1,291,800

1.	RECONCILIATION OF (LOSS)/PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

30.6.19

30.6.18

£

£

(Loss)/profit before taxation

(7,075

)

277,528

Depreciation charges

71,536

74,975

Loss on disposal of fixed assets

255

547

Finance income

(388

)

(198

)

64,328

352,852

(Increase)/decrease in stocks

(202,298

)

24,801

Increase in trade and other debtors

(181,967

)

(363,633

)

Decrease in trade and other creditors

(162,245

)

(438,622

)

Cash generated from operations

(482,182

)

(424,602

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these

Balance Sheet amounts:

Year ended 30 June 2019

30.6.19

1.7.18

£

£

Cash and cash equivalents

813,957

1,291,800

Year ended 30 June 2018

30.6.18

1.7.17

£

£

Cash and cash equivalents

1,291,800

1,767,903

1.	STATUTORY INFORMATION

South Midlands Communications Limited is a private company, limited by shares , registered in England and

Wales. The company's registered number and registered office address can be found on the General Information

page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Turnover

Turnover represents net invoiced sales of goods, excluding value added tax. The group has one main source of

income which comprises of the sale of commercial radio communications equipment and systems.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost

less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any

accumulated impairment losses.

Depreciation is provided on the following basis:

Freehold property - 2% on cost

Fixtures and fittings - 15-25% on reducing balance

Motor vehicles - 25% on reducing balance

Plant and machinery - 15% on reducing balance

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if

appropriate, or if there is an indication of a significant change since the last reporting date.

Stocks

Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance

for obsolete and slow moving items.

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in

bringing stocks to their present location and condition.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of

Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or

directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that

have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the

timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at

the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Pension costs and other post-retirement benefits

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme

are charged to profit or loss in the period to which they relate.

Financial instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual

arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of

the entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar

debt instrument, those financial instruments are classified as financial liabilities. Financial liabilities are

presented as such in the balance sheet. Financial costs and gains or losses relating to financial liabilities are

included in the profit and loss account. Financial costs are calculated so as to produce a constant rate of return

on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability

then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited

direct to equity.

Judgements and estimation uncertainty

The directors have made judgements in relation to whether there are any indicators of impairment of the

company's tangible fixed assets.

Estimation uncertainty relates to tangible fixed assets, turnover, stock and work in progress.

3.

TURNOVER

The turnover and loss (2018 - profit) before taxation are attributable to the principal activities of the group.

An analysis of turnover by geographical market is given below:

30.6.19

30.6.18

£

£

Rest of World

3,769,531

4,531,178

United Kingdom

559,528

603,921

Europe

468,446

538,938

4,797,505

5,674,037

4.	EMPLOYEES AND DIRECTORS

30.6.19

30.6.18

£

£

Wages and salaries

1,759,013

1,740,743

Social security costs

119,572

121,617

Other pension costs

48,969

44,334

1,927,554

1,906,694

The average number of employees during the year was as follows:

30.6.19

30.6.18

Selling and distribution

15

14

Production and design

34

34

Administration

11

11

60

59

The average number of employees by undertakings that were proportionately consolidated during the year was

NIL (2018 - NIL).

30.6.19

30.6.18

£

£

Directors' remuneration

157,091

199,066

Directors' pension contributions to money purchase schemes

13,155

13,426

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

5

5