Hallmark Group Holdings Limited - Limited company accounts 20.1

REGISTERED NUMBER: 10234159 (England and Wales)

Hallmark Group Holdings Limited

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements

for the Period 1st September 2019 to 31st December 2020

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Consolidated Income Statement

7

Consolidated Other Comprehensive Income

8

Consolidated Balance Sheet

9

Company Balance Sheet

10

Consolidated Statement of Changes in Equity

11

Company Statement of Changes in Equity

12

Consolidated Cash Flow Statement

13

Notes to the Consolidated Cash Flow Statement

14

Notes to the Consolidated Financial Statements

15

DIRECTORS:

B Sonley

S Chapman

V Petraityte

P J Spencer

REGISTERED OFFICE:

Valletta House

Valletta Street

Hedon Road

Hull

East Yorkshire

HU9 5NP

REGISTERED NUMBER:

10234159 (England and Wales)

AUDITORS:

Smailes Goldie

Chartered Accountants

Statutory Auditor

Regent's Court

Princess Street

Hull

East Yorkshire

HU2 8BA

The directors present their strategic report of the company and the group for the period 1st September 2019 to 31st December 2020.

Business

The company was incorporated on 15 June 2016.

The company has four wholly owned trading subsidiaries being Hallmark Group Products Limited, Hallmark Panels Limited, Laminated Supplies Limited and Valletta Surplus Limited.

Hallmark Group Products Limited is a holding company for the four manufacturing companies in the group. Hallmark Panels Limited manufacture laminated products, doors and door panels. Laminated Supplies Limited manufacture laminated products and Valletta Surplus Limited sells surplus goods.

REVIEW OF BUSINESS

The full results for the year are set out on page 5. The directors have paid an interim dividend amounting to £345,370 (2019: £81,000) and do not recommend payment of a final dividend (2019: nil).

The group has had a successful period, achieving an operating profit of £1,056,624 (2019: £383,849). The group is continuing to monitor costs closely to ensure it can continue to trade competitively and successfully in the future. Sufficient working capital is in place to support the group's activities.

The group maintain a number of key performance indicators in respect of sales growth, gross margin and circulation numbers.

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

2020

2019

£

£

Turnover

13,746,503

9,892,827

Profit before taxation

397,914

314,033

Equity shareholders' funds

1,691,905

1,919,971

PRINCIPAL RISKS AND UNCERTAINTIES

The group faces competition risk from other companies in the industry resulting in pressure to keep prices low whilst ensuring quality remains high. Another key risk is the performance of the UK and European economies.

FINANCIAL INSTRUMENTS

The group's principal financial instruments comprise bank balances, invoice discounting, trade debtors, trade creditors and asset finance agreements. The main purpose of these instruments is to raise funds for the group's operations and to finance the group's operations.

Due to the nature of the financial instruments used by the group there is minimal exposure to price risk. The group's approach to managing other risks applicable to the financial instruments is shown below.

In respect of bank balances the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of invoice discounting facilities within the group.

In respect of bank loans, these comprise loans from financial institutions. The interest rates on the loans are variable and the monthly repayments are fixed. The group manages the liquidity risk by ensuring there are sufficient funds to meet the payments.

In respect of asset finance agreements, the interest rate and monthly repayments are fixed. The group manages the liquidity risk by ensuring there are sufficient funds to meet the payments.

Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. This is also managed by the use of invoice discounting, which ensures reduced exposure to bad debts and also offers a funding facility for which interest and charges are made.

Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts as they fall due.

FUTURE OUTLOOK

New products are constantly being added to the group's comprehensive range to meet the demand of its customers.

The board believes that the company's strategy together with its experienced management will be a solid foundation for future successful performance.

IMPACT OF COVID 19

The COVID 19 pandemic has had a significant impact on the global economy which in turn has had an impact on material supply chains.

During the financial period ending 31 December 2020 the group had an eight week period of closure due to the national lockdown. Following the onset of this severe event the directors took immediate action to protect the business and its employees from the effects of the pandemic.

As a consequence of the directors' actions the financial results for the period ending 31 December 2020 have seen a significant improvement on previous period's results.

The group's first quarter of 2021 continues to see increased profitable growth and the future outlook is considered to be positive.

ON BEHALF OF THE BOARD:

B Sonley - Director

31st March 2021

The directors present their report with the financial statements of the company and the group for the period 1st September 2019 to 31st December 2020.

DIVIDENDS

Interim dividends per share were paid as follows:

Class A Shares 1 shares

£0.30

- 31st December 2020

Class B1 Shares 1 shares

£226.85

- 31st December 2020

Class B2 Shares 1 shares

£226.85

- 31st December 2020

The directors recommend that no final dividends be paid.

The total distribution of dividends for the period ended 31st December 2020 will be £ 345,370 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1st September 2019 to the date of this report.

B Sonley

S Chapman

V Petraityte

P J Spencer

Other changes in directors holding office are as follows:

L Snell - resigned 18th December 2020

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.

AUDITORS

The auditors, Smailes Goldie, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

B Sonley - Director

31st March 2021

Opinion

We have audited the financial statements of Hallmark Group Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31st December 2020 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, 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 31st December 2020 and of the group's profit for the period 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.

Michael Stocks ACA (Senior Statutory Auditor)

for and on behalf of Smailes Goldie

Chartered Accountants

Statutory Auditor

Regent's Court

Princess Street

Hull

East Yorkshire

HU2 8BA

31st March 2021

TURNOVER

13,746,503

9,892,827

Cost of sales

9,814,549

7,011,265

GROSS PROFIT

3,931,954

2,881,562

Administrative expenses

3,040,634

2,533,227

891,320

348,335

Other operating income

165,304

35,514

OPERATING PROFIT

4

1,056,624

383,849

Loss on sale of asset

5

610,605

-

446,019

383,849

Interest payable and similar expenses

6

48,105

69,816

PROFIT BEFORE TAXATION

397,914

314,033

Tax on profit

7

122,707

29,847

PROFIT FOR THE FINANCIAL PERIOD

275,207

284,186

Profit attributable to:

Owners of the parent

275,207

284,186

PROFIT FOR THE PERIOD

275,207

284,186

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

275,207

284,186

Total comprehensive income attributable to:

Owners of the parent

275,207

284,186

FIXED ASSETS

Intangible assets

10

57,275

17,522

Tangible assets

11

2,480,382

3,572,837

Investments

12

-

-

2,537,657

3,590,359

CURRENT ASSETS

Stocks

13

1,312,837

973,962

Debtors

14

1,547,194

1,707,233

Cash at bank and in hand

801,120

477,877

3,661,151

3,159,072

CREDITORS

Amounts falling due within one year

15

2,998,205

3,628,072

NET CURRENT ASSETS/(LIABILITIES)

662,946

(469,000

)

TOTAL ASSETS LESS CURRENT LIABILITIES

3,200,603

3,121,359

CREDITORS

Amounts falling due after more than one year

16

(1,107,148

)

(922,545

)

PROVISIONS FOR LIABILITIES

19

(401,550

)

(278,843

)

NET ASSETS

1,691,905

1,919,971

CAPITAL AND RESERVES

Called up share capital

20

1,000,200

1,000,000

Revaluation reserve

21

-

180,000

Capital redemption reserve

21

79,052

237,155

Retained earnings

21

612,653

502,816

SHAREHOLDERS' FUNDS

1,691,905

1,919,971

The financial statements were approved by the Board of Directors and authorised for issue on 31st March 2021 and were signed on its behalf by:

B Sonley - Director

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

-

-

Investments

12

2,065,301

2,065,301

2,065,301

2,065,301

CURRENT ASSETS

Debtors

14

200

-

Cash at bank and in hand

11,635

79

11,835

79

CREDITORS

Amounts falling due within one year

15

1,061,019

964,213

NET CURRENT LIABILITIES

(1,049,184

)

(964,134

)

TOTAL ASSETS LESS CURRENT LIABILITIES

1,016,117

1,101,167

CREDITORS

Amounts falling due after more than one year

16

-

50,000

NET ASSETS

1,016,117

1,051,167

CAPITAL AND RESERVES

Called up share capital

20

1,000,200

1,000,000

Retained earnings

15,917

51,167

SHAREHOLDERS' FUNDS

1,016,117

1,051,167

Company's profit for the financial year

310,120

127,405

The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the Board of Directors and authorised for issue on 31st March 2021 and were signed on its behalf by:

B Sonley - Director

Called up

Capital

share

Retained

Revaluation

redemption

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1st September 2018

1,000,000

299,630

180,000

355,732

1,835,362

Changes in equity

Dividends

-

(81,000

)

-

-

(81,000

)

Total comprehensive income

-

284,186

-

-

284,186

Transfers

-

-

-

(118,577

)

(118,577

)

Balance at 31st August 2019

1,000,000

502,816

180,000

237,155

1,919,971

Changes in equity

Issue of share capital

200

-

-

-

200

Dividends

-

(345,370

)

-

-

(345,370

)

Total comprehensive income

-

455,207

(180,000

)

-

275,207

Transfers

-

-

-

(158,103

)

(158,103

)

Balance at 31st December 2020

1,000,200

612,653

-

79,052

1,691,905

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1st September 2018

1,000,000

4,762

1,004,762

Changes in equity

Dividends

-

(81,000

)

(81,000

)

Total comprehensive income

-

127,405

127,405

Balance at 31st August 2019

1,000,000

51,167

1,051,167

Changes in equity

Issue of share capital

200

-

200

Dividends

-

(345,370

)

(345,370

)

Total comprehensive income

-

310,120

310,120

Balance at 31st December 2020

1,000,200

15,917

1,016,117

Cash flows from operating activities

Cash generated from operations

1

171,307

1,045,858

Interest paid

(19,216

)

(43,464

)

Interest element of hire purchase payments paid

(28,889

)

(17,190

)

Finance costs paid

-

(9,162

)

Tax paid

2,908

6,048

Net cash from operating activities

126,110

982,090

Cash flows from investing activities

Purchase of intangible fixed assets

(45,594

)

(21,903

)

Purchase of tangible fixed assets

(922,553

)

(699,077

)

Sale of tangible fixed assets

1,023,171

97,877

-

(49,842

)

Net cash from investing activities

55,024

(672,945

)

Cash flows from financing activities

New loans in year

559,810

325,981

Loan repayments in year

(99,881

)

(217,500

)

Capital repayments in year

(272,650

)

(113,320

)

Amount introduced by directors

300,000

-

Share issue

200

-

-

(230,206

)

Equity dividends paid

(345,370

)

(81,000

)

Net cash from financing activities

142,109

(316,045

)

Increase/(decrease) in cash and cash equivalents

323,243

(6,900

)

Cash and cash equivalents at beginning of period

2

477,877

484,777

Cash and cash equivalents at end of period

2

801,120

477,877

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

Period

1.9.19

to

Year ended

31.12.20

31.8.19

£

£

Profit before taxation

397,914

314,033

Depreciation charges

372,259

282,546

Loss on disposal of fixed assets

625,419

5,595

Release of capital reserve

(158,103

)

(114,196

)

Finance costs

48,105

69,816

1,285,594

557,794

(Increase)/decrease in stocks

(338,875

)

55,192

(Increase)/decrease in trade and other debtors

(139,960

)

121,067

(Decrease)/increase in trade and other creditors

(635,452

)

311,805

Cash generated from operations

171,307

1,045,858

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:

Period ended 31st December 2020

31.12.20

1.9.19

£

£

Cash and cash equivalents

801,120

477,877

Year ended 31st August 2019

31.8.19

1.9.18

£

£

Cash and cash equivalents

477,877

484,777

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.9.19

Cash flow

At 31.12.20

£

£

£

Net cash

Cash at bank and in hand

477,877

323,243

801,120

477,877

323,243

801,120

Debt

Finance leases

(406,174

)

(287,160

)

(693,334

)

Debts falling due within 1 year

(233,320

)

93,500

(139,820

)

Debts falling due after 1 year

(623,360

)

(6,010

)

(629,370

)

(1,262,854

)

(199,670

)

(1,462,524

)

Total

(784,977

)

123,573

(661,404

)