Sound Technology Limited - Limited company accounts 20.1
Sound Technology Limited - Limited company accounts 20.1
| REGISTERED NUMBER: |
| SOUND TECHNOLOGY LIMITED |
| STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
| FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| CONTENTS OF THE FINANCIAL STATEMENTS |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| Page |
| Company Information | 1 |
| Strategic Report | 2 |
| Report of the Directors | 3 | to | 4 |
| Report of the Independent Auditors | 5 | to | 7 |
| Income Statement | 8 |
| Other Comprehensive Income | 9 |
| Statement of Financial Position | 10 | to | 11 |
| Statement of Changes in Equity | 12 |
| Notes to the Financial Statements | 13 | to | 29 |
| SOUND TECHNOLOGY LIMITED |
| COMPANY INFORMATION |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| DIRECTORS: |
| REGISTERED OFFICE: |
| REGISTERED NUMBER: |
| AUDITORS: |
| Chartered Accountants and Statutory Auditors |
| Richmond House |
| Walkern Road |
| Stevenage |
| Hertfordshire |
| SG1 3QP |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| STRATEGIC REPORT |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| The directors present their Strategic Report for the year ended 31st December 2020 |
| REVIEW OF BUSINESS |
| Sound Technology is the exclusive distributor for a select number of high-profile brands of professional audio |
| equipment, musical instruments and professional lighting product in the UK and ROI. We operate in multiple |
| market sectors including the supply of products for music retail, e-commerce, studio/broadcast, entertainment, installed audio, cinema and rental markets. |
| 2020 was a year like no other. The arrival of the Covid pandemic in early 2020 altered the scope and practises of the business like nothing before. The closure of all theatres, sporting events and live concerts, both indoors and at festivals, devastated our ability to trade lighting and pro audio product and greatly reduced our business in the installation of audio product in retail, leisure and corporate environments. |
| However, the "stay at home" message also produced opportunities. We saw growth in sales of product that could be used in home working, zoom calls and home recording situations, meaning strong performance from microphone, headphone and audio interface brands such as AKG and SSL. |
| The company's overheads were realigned to reflect the company's activity levels. |
| Sound Technology staff tackled the upheaval caused by the pandemic with incredible resilience and ingenuity. The company ensured that their safety and well-being were at the top of our priorities, maintaining working from home practices for all but those who could only work from the offices. |
| PRINCIPAL RISKS AND UNCERTAINTIES |
| 2021 will see the company looking to open up those channels closed by the pandemic. The success of this will depend on how quickly theatres and other entertainment venues are able to re-open and how quickly those venues and the touring industries look to replenish or update their stock of lighting and audio product. The company is also facing the challenges around the UK's departure from the EU. |
| FUTURE DEVELOPMENTS |
| Sound Technology will be setting up a European base in 2021 in order to maintain and develop business in mainland Europe. Further expansion of brands being offered to the e-commerce sector should help improve turnover in the UK. As part of a Midwich Group project, we will be switching our ERP system to improve our business operations and group wide communication. |
| ON BEHALF OF THE BOARD: |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| REPORT OF THE DIRECTORS |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| The directors present their report with the financial statements of the company for the year ended 31st December 2020. |
| DIVIDENDS |
| The loss for the year, after taxation, amounted to £1,045,258 (2019: profit £1,304,290) in which no dividends were paid in the year. |
| EVENTS SINCE THE END OF THE YEAR |
| DIRECTORS |
| The directors shown below have held office during the whole of the period from 1st January 2020 to the date of this report. |
| Other changes in directors holding office are as follows: |
| FINANCIAL INSTRUMENTS |
| The company's operations expose it to a variety of financial risks that include the effects of changes in debt market prices, credit risk, liquidity risk and interest rate risk. The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring all levels of debt finance and the related finance costs. |
| Given the size of the company, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board. The policies set by the board of directors are implemented by the company's finance department. |
| DISCLOSURE IN THE 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 the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the Directors' Report. It has done so in respect of future developments. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| REPORT OF THE DIRECTORS |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| STATEMENT OF DIRECTORS' RESPONSIBILITIES |
| The directors are responsible for preparing the 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), including Financial Reporting Standard 101 'Reduced Disclosure Framework'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: |
| - | select suitable accounting policies and then apply them consistently; |
| - | make judgements and accounting estimates that are reasonable and prudent; |
| - | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
| The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
| 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 company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
| AUDITORS |
| The auditors, Wags LLP t/a Wagstaffs, are deemed to be reappointed in accordance with Section 487 (2) of the Companies Acts 2006. |
| ON BEHALF OF THE BOARD: |
| REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
| SOUND TECHNOLOGY LIMITED |
| Opinion |
| We have audited the financial statements of Sound Technology Limited (the 'company') for the year ended 31st December 2020 which comprise the Income Statement, Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 'Reduced Disclosure Framework' (United Kingdom Generally Accepted Accounting Practice). |
| In our opinion the financial statements: |
| - | give a true and fair view of the state of the company's affairs as at 31st December 2020 and of its loss for the year then ended; |
| - | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
| - | have been prepared in accordance with the requirements of the Companies Act 2006. |
| 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 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. |
| REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
| SOUND TECHNOLOGY LIMITED |
| Other information |
| The directors are responsible for the other information. The other information comprises the information in the 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 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 the audit: |
| - | the information given in the 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 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, or returns adequate for our audit have not been received from branches not visited by us; or |
| - | the financial statements are not in agreement with the accounting records and returns; or |
| - | certain disclosures of 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 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. |
| REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
| SOUND TECHNOLOGY LIMITED |
| 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. |
| 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 have discussed with management specific laws and regulations that may apply yo both the entity and group as a whole. In reviewing there significance we have considered the impact of non compliance on the entity and adjusted our risk assessment accordingly. |
| - Consideration has been given to the staff allocated to the assignment to ensure that they are experienced enough to recognise a potential non compliance with any laws and regulations. |
| - We have reviewed and documented the entity's control environment and determined whether key controls have been implemented during the year and are robust enough to prevent and detect fraud. |
| - Audit staff were briefed on the assessment of the susceptibility of the entity's financial statements to material misstatement, including how fraud risk might occur. |
| 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. |
| for and on behalf of |
| Chartered Accountants and Statutory Auditors |
| Richmond House |
| Walkern Road |
| Stevenage |
| Hertfordshire |
| SG1 3QP |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| INCOME STATEMENT |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2020 | 2019 |
| Notes | £ | £ |
| REVENUE | 3 |
| Cost of sales | ( |
) | ( |
) |
| GROSS PROFIT |
| Distribution costs | ( |
) | ( |
) |
| Administrative expenses | ( |
) | ( |
) |
| (1,691,876 | ) | 1,694,613 |
| Other operating income |
| OPERATING (LOSS)/PROFIT | ( |
) |
| Interest receivable and similar income |
| (1,284,536 | ) | 1,696,895 |
| Interest payable and similar expenses | 6 | ( |
) | ( |
) |
| (LOSS)/PROFIT BEFORE TAXATION | 7 | ( |
) |
| Tax on (loss)/profit | 8 | ( |
) |
| (LOSS)/PROFIT FOR THE FINANCIAL YEAR |
( |
) |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| OTHER COMPREHENSIVE INCOME |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2020 | 2019 |
| Notes | £ | £ |
| (LOSS)/PROFIT FOR THE YEAR | ( |
) |
| OTHER COMPREHENSIVE INCOME |
| Item that will not be reclassified to profit or loss: |
| Share based payments |
| Income tax relating to item that will not be reclassified to profit or loss |
(7,107 |
) |
1,041 |
| OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| STATEMENT OF FINANCIAL POSITION |
| 31ST DECEMBER 2020 |
| 2020 | 2019 |
| Notes | £ | £ |
| FIXED ASSETS |
| Owned |
| Property, plant and equipment | 10 | 236,285 | 293,550 |
| Right-of-use |
| Property, plant and equipment | 10, 16 | 374,581 | 542,531 |
| CURRENT ASSETS |
| Inventories | 11 |
| Debtors | 12 |
| Cash at bank and in hand |
| CREDITORS |
| Amounts falling due within one year | 13 | ( |
) | ( |
) |
| NET CURRENT ASSETS |
| TOTAL ASSETS LESS CURRENT LIABILITIES |
| CREDITORS |
| Amounts falling due after more than one year |
14 |
( |
) |
( |
) |
| NET ASSETS |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| STATEMENT OF FINANCIAL POSITION - continued |
| 31ST DECEMBER 2020 |
| 2020 | 2019 |
| Notes | £ | £ |
| CAPITAL AND RESERVES |
| Called up share capital | 19 |
| Capital contribution reserve | 20 |
| Share based payment reserve | 20 | ( |
) |
| Retained earnings | 20 |
| SHAREHOLDERS' FUNDS |
| The financial statements were approved by the Board of Directors and authorised for issue on |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| STATEMENT OF CHANGES IN EQUITY |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| Share |
| Called up | Capital | based |
| share | Retained | contribution | payment | Total |
| capital | earnings | reserve | reserve | equity |
| £ | £ | £ | £ | £ |
| Balance at 1st January 2019 |
| Changes in equity |
| Profit for the year | - | 1,304,290 | - | - | 1,304,290 |
| Other comprehensive income | - | - | 79,852 |
| Total comprehensive income | - |
| Dividends | - | ( |
) | - | - | ( |
) |
| Balance at 31st December 2019 | 4,069,848 |
| Changes in equity |
| Deficit for the year | - | (1,045,258 | ) | - | - | (1,045,258 | ) |
| Other comprehensive income | - | - | 93,269 | (7,107 | ) | 86,162 |
| Total comprehensive income | - | ( |
) | 93,269 | (7,107 | ) | ( |
) |
| Balance at 31st December 2020 | ( |
) |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 1. | STATUTORY INFORMATION |
| Sound Technology Limited is a |
| The presentation currency of the financial statements is the Pound Sterling (£). |
| 2. | ACCOUNTING POLICIES |
| Basis of preparation |
| The financial statements have been prepared in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' and the Companies Act 2006. The financial statements have been prepared under the historical cost convention. |
| The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 101 "Reduced Disclosure Framework": |
| • | the requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payment; |
| • | the requirements of paragraph 24(6) of IFRS 6 Exploration for and Evaluation of Mineral Resources; |
| • | the requirements of paragraph 52 the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases; |
| the requirements of paragraph 58 of IFRS 16; |
| • | the requirements of the second sentence of paragraph 110 and paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15 Revenue from Contracts with Customers; |
| • | the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of: |
| - | paragraph 73(e) of IAS 16 Property, Plant and Equipment; |
| • | the requirements of IAS 7 Statement of Cash Flows; |
| • | the requirements of paragraphs 17 and 18A of IAS 24 Related Party Disclosures; |
| • | the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2. | ACCOUNTING POLICIES - continued |
| Critical accounting judgements and key sources of estimation uncertainty |
| Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
| The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. |
| Useful economic life of tangible assets |
| The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and physical condition of the assets. |
| Inventory provisioning |
| The company distributes audio equipment, musical instruments and lighting equipment and is subject to changing consumer demands and fashion trends. As a result it is necessary to consider the recoverability of the cost of inventory and the associated provisioning required. When calculating the inventory provision, management considers the nature and condition of the inventory, as well as applying assumptions around the anticipated saleability of finished goods. |
| Impairment of debtors |
| The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. |
| Warranty provision |
| The company makes an estimate of the future cost of warranty repairs for goods sold. When calculating the warranty provision management considers factors including the length of warranty offered, the history of costs incurred relating to warranty claims and the sales levels. |
| Revenue |
| Revenue represents the total invoice value, excluding value added tax, trade discounts and all other taxes of sales made during the year. |
| Revenue recognition |
| Revenue comprises amounts recognised in respect of goods and services supplied during the period, exclusive of Value Added Tax and trade discounts. |
| Revenue from the sale of goods is recognised when goods are despatched. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2. | ACCOUNTING POLICIES - continued |
| Tangible fixed assets |
| Short leasehold | - |
| Plant and machinery | - |
| Motor vehicles | - |
| At each reporting date, fixed assets are reviewed to determine whether there is any indiction that those assets have suffered impairment in the recoverable amount. If there is an indication of possible impairment, the recoverable amount of the asset is estimated and compared with its carrying amount. If estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit and loss. |
| If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but not in excess of the amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2. | ACCOUNTING POLICIES - continued |
| Financial instruments |
| Financial assets and financial liabilities are recognised when the company becomes party to the contractual provisions of the financial instrument. |
| Derivative financial instruments are accounted for at Fair Value Through Profit or Loss. All changes in an instruments fair value are included in finance costs or finance income. The fair values are determined by reference to active markets. |
| Financial assets |
| The company classifies its financial assets as 'loans and receivables' and assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. |
| Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. |
| Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. |
| A provision for impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulty, high probability of bankruptcy or default are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. The loss is recognised in the income statement. When a trade receivable is uncollectible, it is written-off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written-off are credited to the income statement. |
| Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. |
| Financial liabilities |
| The company's financial liabilities include trade and other payables, borrowings and derivative financial instruments. |
| Borrowings include amounts advanced under invoice discounting facilities. 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. |
| Trade and other payables and borrowings are recognised at fair value less transaction costs and subsequently measured at amortised costs using the effective interest method ("EIR" method). |
| Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2. | ACCOUNTING POLICIES - continued |
| Loans and borrowings are classified as current liabilities unless the company has an unconditional right to defer the settlement of the liability for at least 12 months after the date of the Statement of Financial Position. |
| A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. |
| Stocks |
| Stocks comprise consumable items and goods held for resale. Stocks are valued at the lower of cost and net realisable value, after making due allowances for obsolete and slow moving items, on receipt of the stock. Costs are based on the method most appropriate to the type of inventory class, but usually on a first-in-first-out basis. Net realisable value is based on the estimated selling price less any estimated completion or selling costs. |
| When stocks are sold, the carrying amount of those stocks is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of stocks to net realisable value and all losses of stocks are recognised as an expense in the period in which the write-down or loss occurs. |
| At the end of each reporting period stocks are assessed for impairment. If an item of stock is impaired, the identified stock is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the profit and loss account. Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the profit and loss account. |
| Loans and receivables |
| Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest rate method less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases the receivables are stated at cost less impairment losses for bad and doubtful debts. |
| Cash and cash equivalents |
| Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the Statement of Financial Position, bank overdrafts (where applicable) are shown within borrowings or current liabilities. |
| Trade and other payables |
| Trade and other payables are initial recognised at fair value and thereafter at amortised cost using the effect interest method, unless the effect of discounting would be immaterial, in which case they are stated at cost. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2. | ACCOUNTING POLICIES - continued |
| Taxation |
| Tax for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
| Current or deferred tax 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 Statement of Financial Position date. |
| Deferred tax |
| Deferred tax is recognised in respect of all material timing differences that have originated but not reversed at the Statement of Financial Position 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. |
| Foreign currencies |
| The financial statements are presented in Pound Sterling, which is also the functional currency of the company. |
| Transactions in foreign currencies are initially recorded in the entity's functional currency by applying the spot exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the Statement of Financial Position date. All differences are taken to the Income Statement. |
| The company enters into a number of forward exchange contracts, any deemed losses are provided in the year. |
| As at 31st December 2020, the company were committed to buying $9,000,000 in the coming financial year. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2. | ACCOUNTING POLICIES - continued |
| Leases |
| Leases are recognised as finance leases. The lease liability is initially recognised at the present value of the lease payments which have not yet been made and subsequently measured under the amortised cost method. The initial cost of the right-of-use asset comprises the amount of the initial measurement of the lease liability, lease payments made prior to the lease commencement date, initial direct costs and the estimated costs of removing or dismantling the underlying asset per the conditions of the contract. |
| Where ownership of the right-of-use asset transfers to the lessee at the end of the lease term, the right-of-use asset is depreciated over the asset’s remaining useful life. If ownership of the right-of-use asset does not transfer to the lessee at the end of the lease term, depreciation is charged over the shorter of the useful life of the right-of-use asset and the lease term. |
| Employee benefits |
| The company provides a range of benefits to employees, including paid holiday arrangements, a share option scheme and defined contribution pensions plans. |
| Short term benefits, including holiday pay and similar non-monetary benefits, are recognised as an expense in the period in which the service is received. |
| Details of the share option scheme are included in the policy entitled 'share-based payments'. |
| The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the income statement in the period to which they relate. The assets of the scheme are held separately from those of the company in an independently administered fund. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 2. | ACCOUNTING POLICIES - continued |
| Share-based payments |
| Equity-settled share-based payments to employees and directors are measured at the fair value of the equity instrument. The fair value of the equity-settled transactions with employees and directors is recognised as an expense over the vesting period. The fair value of the equity instruments are determined at the date of grant, taking into account market-based vesting conditions. The fair value of goods and services received are measured by reference to the fair value of the options. |
| The fair value of the share options are measured using the Black-Scholes model. The expected life used in the models is adjusted based on management's best estimate of the effects of non-transferability, exercise restrictions and behavioural considerations. |
| The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees (or other beneficiaries) become fully entitled to the award ("the vesting date"). |
| The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. |
| The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. |
| No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or no the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not been modified. An additional expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification. |
| Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. |
| Where an equity-settled award is forfeited, the cumulative charge is expensed up to the date of forfeiture is credited to the income statement. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 3. | REVENUE |
| The revenue and loss (2019 - profit) before taxation are attributable to the one principal activity of the company. |
| An analysis of revenue by geographical market is given below: |
| 2020 | 2019 |
| £ | £ |
| United Kingdom |
| Europe |
| 4. | EMPLOYEES AND DIRECTORS |
| 2020 | 2019 |
| £ | £ |
| Wages and salaries | 2,401,783 | 2,614,133 |
| Social security costs |
| Other pension costs |
| The average number of employees during the year was as follows: |
| 2020 | 2019 |
| Warehouse, office and management | 53 | 58 |
| Directors | 4 | 4 |
| 5. | DIRECTORS' EMOLUMENTS |
| 2020 | 2019 |
| £ | £ |
| Directors' remuneration |
| Directors' long term incentive schemes |
| Directors' pension contributions to money purchase schemes |
| The number of directors to whom retirement benefits were accruing was as follows: |
| Money purchase schemes |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 5. | DIRECTORS' EMOLUMENTS - continued |
| Information regarding the highest paid director is as follows: |
| 2020 | 2019 |
| £ | £ |
| Emoluments etc | 170,348 | 175,267 |
| Pension contributions to money purchase schemes | 22,125 | 22,125 |
| The directors manage the company and as such are the only key management personnel of the company. Key management personnel compensation is therefore equal to directors remuneration shown above. |
| 6. | INTEREST PAYABLE AND SIMILAR EXPENSES |
| 2020 | 2019 |
| £ | £ |
| Bank interest |
| Bank and finance charges | 22,503 | 35,115 |
| Leasing |
| 7. | (LOSS)/PROFIT BEFORE TAXATION |
| The loss before taxation (2019 - profit before taxation) is stated after charging/(crediting): |
| 2020 | 2019 |
| £ | £ |
| Cost of inventories recognised as expense |
| Depreciation - owned assets |
| Depreciation - assets on hire purchase contracts |
| Profit on disposal of fixed assets | ( |
) |
| Auditors' remuneration |
| Foreign exchange losses / (gains) | 417,674 | 29,236 |
| Fair value movement on financial instruments | 139,168 | 104,037 |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 8. | TAXATION |
| Analysis of tax (income)/expense |
| 2020 | 2019 |
| £ | £ |
| Current tax: |
| Tax | ( |
) |
| Amendment to prior years | (17,888 | ) | 6,155 |
| Total current tax | (262,445 | ) | 343,603 |
| Deferred tax | ( |
) | ( |
) |
| Total tax (income)/expense in income statement | ( |
) |
| Factors affecting the tax expense |
| The tax assessed for the year is lower (2019 - higher) than the standard rate of corporation tax in the UK. The difference is explained below: |
| 2020 | 2019 |
| £ | £ |
| (Loss)/profit before income tax | ( |
) |
| (Loss)/profit multiplied by the standard rate of corporation tax in the UK of |
(252,753 |
) |
309,752 |
| Effects of: |
| Expenses not deductible for tax purposes | 7,925 | 28,819 |
| Depreciation in excess of capital allowances | 271 | (1,123 | ) |
| Amendment to prior years | (17,888 | ) | 6,155 |
| Deferred tax | (22,577 | ) | (17,618 | ) |
| Tax (income)/expense | (285,022 | ) | 325,985 |
| Tax effects relating to effects of other comprehensive income |
| 2020 |
| Gross | Tax | Net |
| £ | £ | £ |
| Share based payments | (7,107 | ) | 86,162 |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 8. | TAXATION - continued |
| 2019 |
| Gross | Tax | Net |
| £ | £ | £ |
| Share based payments | 1,041 | 79,852 |
| 9. | DIVIDENDS |
| 2020 | 2019 |
| £ | £ |
| Ordinary shares of £1 each |
| Interim | - | 254,100 |
| The directors propose no payment of a final dividend for the year (2019: £Nil). |
| 10. | PROPERTY, PLANT AND EQUIPMENT |
| Short | Plant and | Motor |
| leasehold | machinery | vehicles | Totals |
| £ | £ | £ | £ |
| Cost |
| At 1st January 2020 |
| Additions |
| Disposals | ( |
) | ( |
) | ( |
) |
| At 31st December 2020 |
| Depreciation |
| At 1st January 2020 |
| Charge for year |
| Eliminated on disposal | ( |
) | ( |
) |
| At 31st December 2020 |
| Net book value |
| At 31st December 2020 |
| At 31st December 2019 |
| 11. | INVENTORIES |
| 2020 | 2019 |
| £ | £ |
| Stocks |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 12. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
| 2020 | 2019 |
| £ | £ |
| Trade debtors |
| Amounts owed by group undertakings |
| Other debtors |
| Corporation tax | 348,511 | - |
| Deferred tax asset |
| Prepayments and accrued income |
| 13. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
| 2020 | 2019 |
| £ | £ |
| Leases (see note 15) |
| Trade creditors |
| Corporation tax |
| Social security |
| VAT | 1,307,348 | 738,984 |
| Other creditors |
| Accruals |
| 14. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
| 2020 | 2019 |
| £ | £ |
| Leases (see note 15) |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 15. | FINANCIAL LIABILITIES - BORROWINGS |
| 2020 | 2019 |
| £ | £ |
| Current: |
| Hire purchase | 10,025 | - |
| Leases | 217,451 | 204,570 |
| Non-current: |
| Hire purchase | 835 |
| Leases | 190,164 | 375,214 |
| Terms and debt repayment schedule |
| 1 year or less |
1-2 years |
2-5 years |
Totals |
| £ | £ | £ | £ |
| Leases | 227,476 | 190,999 | - | 418,475 |
| 16. | LEASING |
| Right-of-use assets |
| Property, plant and equipment |
| 2020 | 2019 |
| £ | £ |
| Cost |
| At 1st January 2020 | 988,720 | 917,033 |
| Additions | 55,849 | 86,993 |
| Disposals | (68,063 | ) | (15,306 | ) |
| 976,506 | 988,720 |
| Depreciation |
| At 1st January 2020 | 446,189 | 225,307 |
| Charge for year | 223,799 | 236,188 |
| Eliminated on disposal | (68,063 | ) | (15,306 | ) |
| 601,925 | 446,189 |
| Net book value | 374,581 | 542,531 |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 16. | LEASING - continued |
| Lease liabilities |
| Minimum lease payments fall due as follows: |
| 2020 | 2019 |
| £ | £ |
| Gross obligations repayable: |
| Within one year | 235,986 | 225,215 |
| Between one and five years | 199,018 | 391,389 |
| 435,004 | 616,604 |
| Finance charges repayable: |
| Within one year | 12,631 | 20,645 |
| Between one and five years | 3,899 | 16,175 |
| 16,530 | 36,820 |
| Net obligations repayable: |
| Within one year | 223,355 | 204,570 |
| Between one and five years | 195,119 | 375,214 |
| 418,474 | 579,784 |
| 17. | SECURED DEBTS |
| The following secured debts are included within creditors: |
| 2020 | 2019 |
| £ | £ |
| Other creditors | 1,502,180 | 2,742,086 |
| The creditor is secured by way of a fixed and floating charge over the undertaking and all property and assets present and future. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 18. | DEFERRED TAX |
| £ |
| Balance at 1st January 2020 | ( |
) |
| Credit to Income Statement during year | (22,576 | ) |
| Other comprehensive income | 7,107 |
| Balance at 31st December 2020 | ( |
) |
| 19. | CALLED UP SHARE CAPITAL |
| Allotted and issued: |
| Number: | Class: | Nominal | 2020 | 2019 |
| value: | £ | £ |
| Ordinary A | £1 | 100,000 | 100,000 |
| Ordinary B | £1 | 20,000 | 20,000 |
| 120,000 | 120,000 |
| 20. | RESERVES |
| Share |
| Capital | based |
| Retained | contribution | payment |
| earnings | reserve | reserve | Totals |
| £ | £ | £ | £ |
| At 1st January 2020 | 4,157,964 |
| Deficit for the year | ( |
) | ( |
) |
| Other comprehensive income | - | 93,269 | (7,107 | ) | 86,162 |
| At 31st December 2020 | ( |
) | 3,198,868 |
| The capital contribution is in relation to the share based payment scheme. |
| The deferred tax within the share based payment reserve relates to the tax that will be saved in relation to the fair value movement on the share options. |
| 21. | RELATED PARTY DISCLOSURES |
| The company has availed of the exemption under FRS 101 in relation to the disclosure of transactions with group undertakings. |
| SOUND TECHNOLOGY LIMITED (REGISTERED NUMBER: 01454050) |
| NOTES TO THE FINANCIAL STATEMENTS - continued |
| FOR THE YEAR ENDED 31ST DECEMBER 2020 |
| 22. | EVENTS AFTER THE REPORTING PERIOD |
| The outbreak of coronavirus, also known as COVID-19, has spread across the globe and is impacting worldwide economic activity. The outbreak and the related mitigation measures may have an adverse impact on global economic conditions as well as on the company's business activities. |
| The directors continue to monitor the impact of the virus on the business as more information about the pandemic emerges and have a reasonable expectation that the company has adequate resource to continue in operational existence and to meet its financial obligations as they fall due for at least 12 months from the date of signing these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. |
| 23. | PARENT RELATIONSHIPS |
| The company is a wholly owned subsidiary of Midwich Limited, a company incorporated in England and Wales. |
| Midwich Group plc is the ultimate parent company. Midwich Group plc is incorporated in England and Wales and its registered office is Vinces Road, Diss, Norfolk, IP22 4YT. |
| Midwich Group plc is the parent undertaking of the smallest and largest group which prepares publicly available consolidated financial statements for the year ended 31 December 2020. Copies of the consolidated financial statements may be obtained from Companies House. |
| As at 31 December 2020 Midwich Group plc had no ultimate controlling party. |
| 24. | SHARE-BASED PAYMENT TRANSACTIONS |
| The company has a share option scheme for purchasing shares in the ultimate parent. Options are exercisable at a price of £0.01 and the vesting period is three years. If the options remain unexercised after a period of three years from the date of grant the options expire. Options are forfeited if the employee leaves the company before the options vest. The options outstanding at 31 December 2020 had an exercise price of £0.01 and a weighted average remaining contractual life two and a half years. In 2020, no options were vested. |