ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
|
Registered number:
For the year ended
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Company Information
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Contents
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Strategic report
For the year ended 30 September 2019
The company's balance sheet on page 10 shows shareholder funds of £4,596,788.
Turnover decreased by 6.2% which is reflective on the number of new collections introduced into our major customer against those discontinued.
Economic Downturn
The success of the business is reliant on consumer spending in soft furnishing and a downturn in this area could affect sales and so senior management keep abreast of economic conditions. In the case of a severe economic downturn or fluctuations in currency rates, marketing and pricing strategies are modified to reflect the new conditions. Proportion of Fixed Overheads as a Percentage of Turnover A proportion of the company’s overheads are fixed. There is a risk that any significant decrease in revenue may lead to an inability to remain profitable. Management closely monitor fixed overheads against budgets on a monthly basis and cost savings are made when there is an anticipated decline in revenue. Competition The markets in which the company operates are highly competitive. As a result there is constant downward pressure on margins. The company strives to develop its sourcing routes to ensure the lowest cost of production is maintained. People The company operates a wellbeing programme for employees which covers off health checks, team building, charity events amongst others. The directors have started an office development project which will improve the working environment at the main office in Preston. Engagement surveys are conducted annually and feedback from listening groups is acted on. Fluctuations in Currency The majority of the company’s purchases come from overseas and are dominated in foreign currencies. The group is therefore, exposed to foreign currency fluctuations. If required, the business uses forward contracts and other derivatives / financial instruments to reduce the exposure. If the hedging activity does not mitigate the exposure, then the results and the financial condition of the company may be adversely impacted by foreign currency fluctuations.
The company views its banking covenants as its key financial KPI and monitors performance to ensure this is significantly better than required.
Gross margin decreased from 25.1% in 2018 to 24.8% this year, partly down to increased discontinuation costs and price pressure from customers.
Page 1
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Strategic report (continued)
For the year ended 30 September 2019
The company uses a number of KPI's to deliver improvements in performance of working capital and customer service levels.
Working capital KPI's include debtor and creditor days, stock turn and cashflow benchmarked against predefined budget numbers.
Financial instruments
The company makes little use of financial instruments other than an operational bank account and so its main exposure to risk relates to the availability of funds to meet its business needs, the risk of default by customers and fluctuations in interest and foreign exchange rates. Funding and liquidity The company finances its operations from retained profits. The objective is to ensure continuity of funding and cash levels are sufficient to meet ongoing needs of the business and that there is flexibility to deal with unforeseen events. The policy is to smooth the cash management of the business and to arrange funding ahead of requirements, should it be needed. Credit risk The objective is to reduce risk of loss arising from default by customers. The policy is to ensure customer debt and credit ratings are routinely monitored as well as the use of a credit insurance policy. Interest risk management The objective is to limit the company's exposure to interest rate fluctuations. The company only has secured bank borrowings at present in the form of a bank overdraft and maintains a policy of interest rate management. Foreign currency risk management The company's objective is to mitigate the effect of exchange rate volatility through the use of forward contracts. Derivatives The company has forward contracts in place at the year end that fall to be classified as derivatives.
This report was approved by the board and signed on its behalf.
Page 2
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Directors' report
For the year ended 30 September 2019
The directors present their report and the financial statements for the year ended 30 September 2019.
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;
∙make judgments 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 to 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.
The profit for the year, after taxation, amounted to £340,849 (2018 - £510,888).
The directors do not recommend payment of a final dividend.
The directors who served during the year were:
The directors review the critical success factors of the business on a regular basis to ensure all group companies can contribute successfully in the future.
Page 3
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Directors' report (continued)
For the year ended 30 September 2019
Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
The financial statements have been prepared on a going concern basis. The following paragraphs set out the basis of which the directors have reached their conclusion.
The impact of the Covid-19 virus outbreak started to affect the performance of the company from the middle of March 2020. At this time the SMD group was operating at a level above budget in terms of profitability and with significant headroom in its funding facilities and was well placed to enter this turbulent period. Since this time, SMD group has continued to operate, albeit at a reduced level, due to the varied sales channels it operates in which includes providing products for the healthcare sector. Costs have been significantly reduced, partly due to the use of the Employee Retention Scheme set up by the government, and this will continue whilst we increase activity over the next few months. The group is following government guidance on safe working and, where possible, working from home. Forecast modelling, including stress testing, has been undertaken and this shows that the group will remain profitable in the year to September 2020, although at a lower level than the previous year. This modelling predicts that a return to more normalised levels of trading will not occur until well into 2021 and that the group has more than sufficient funding available to move to this state and continue to invest in new product development and an organisation and cultural structure backed by investment in technology which limits travelling and promotes working from home. Profitability for the year to September 2021 is predicted to increase on the year to September 2020. There is no requirement at this time for the SMD group to apply for the Coronavirus Business Interruption Scheme (CBILS) and the forecasts point to the group continuing to operate within it's banking covenants. The Company and its parent, SMD (Holdings) Limited, currently meets its working capital requirements through its cash balances and bank funding. Based on the Company and Group's forecasts and projections, the directors believe they have sufficient facilities to trade through the next 12 month period. Therefore, the directors believe it is appropriate to prepare the accounts to 30 September 2019 on a going concern basis and there will be no adverse effect on solvency for more than 12 months after the date of approval of the financial statements.
The auditors, Hurst Accountants Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Page 4
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Independent auditors' report to the members of SMD Home Limited
We have audited the financial statements of SMD Home Limited (the 'Company') for the year ended 30 September 2019, which comprise the Income statement, the Statement of comprehensive income, the Balance sheet, the Statement of changes in equity and the related notes, 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:
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 United Kingdom, including the Financial Reporting Council'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.
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 Company'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.
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
Page 5
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Independent auditors' report to the members of SMD Home Limited (continued)
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the Directors' responsibilities statement on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the 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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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 Auditors' report.
Page 6
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Independent auditors' report to the members of SMD Home Limited (continued)
This report is made solely to the Company's members in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Lancashire Gate
21 Tiviot Dale
Stockport
Cheshire
SK1 1TD
Page 7
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Income statement
For the year ended 30 September 2019
Page 8
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Statement of comprehensive income
For the year ended 30 September 2019
Page 9
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Registered number: 01456976
Balance sheet
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 13 to 28 form part of these financial statements.
Page 10
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Statement of changes in equity
For the year ended 30 September 2019
Page 11
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Statement of changes in equity
For the year ended 30 September 2018
Page 12
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
SMD Home Limited is a private company limited by members capital incorporated in England. The address of the registered office and principal place of business is Pittman Way, Fulwood, Preston, PR2 9ZD.
The nature of the company's operation and its principal activity is that of the design, manufacture and distribution of readymade curtains and bed linen.
2.Accounting policies
The financial statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3). The following principal accounting policies have been applied:
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
- the requirement of Section 7 Statement of Cash Flows - the requirement of Section 3 Financial Statement Presentation paragraph 3.17 (d); This information is included in the consolidated financial statements of SMD Holdings Limited as at 30 September 2019 and these financial statements may be obtained from Companies House.
Page 13
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
2.Accounting policies (continued)
The financial statements have been prepared on a going concern basis. The following paragraphs set out the basis of which the directors have reached their conclusion.
The impact of the Covid-19 virus outbreak started to affect the performance of the company from the middle of March 2020. At this time the SMD group was operating at a level above budget in terms of profitability and with significant headroom in its funding facilities and was well placed to enter this turbulent period. Since this time, SMD group has continued to operate, albeit at a reduced level, due to the varied sales channels it operates in which includes providing products for the healthcare sector. Costs have been significantly reduced, partly due to the use of the Employee Retention Scheme set up by the government, and this will continue whilst we increase activity over the next few months. The group is following government guidance on safe working and, where possible, working from home. Forecast modelling, including stress testing, has been undertaken and this shows that the group will remain profitable in the year to September 2020, although at a lower level than the previous year. This modelling predicts that a return to more normalised levels of trading will not occur until well into 2021 and that the group has more than sufficient funding available to move to this state and continue to invest in new product development and an organisation and cultural structure backed by investment in technology which limits travelling and promotes working from home. Profitability for the year to September 2021 is predicted to increase on the year to September 2020. There is no requirement at this time for the SMD group to apply for the Coronavirus Business Interruption Scheme (CBILS) and the forecasts point to the group continuing to operate within it's banking covenants. The Company and its parent, SMD (Holdings) Limited, currently meets its working capital requirements through its cash balances and bank funding. Based on the Company and Group's forecasts and projections, the directors believe they have sufficient facilities to trade through the next 12 month period. Therefore, the directors believe it is appropriate to prepare the accounts to 30 September 2019 on a going concern basis and there will be no adverse effect on solvency for more than 12 months after the date of approval of the financial statements.
Page 14
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
2.Accounting policies (continued)
Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income statement except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Statement of comprehensive income within 'cost of sales'.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
Rentals paid under operating leases are charged to the Income statement on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Page 15
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
2.Accounting policies (continued)
Finance costs are charged to the Income statement over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in the Income statement in the year in which they are incurred.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Income statement when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance sheet date, except that:
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Page 16
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Income statement.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Page 17
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
2.Accounting policies (continued)
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Income statement in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet.
The Company enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties and loans to related parties.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Income statement.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.
Page 18
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
2.Accounting policies (continued)
The Company uses foreign currency forward contracts to manage its exposure to cash flow risk on its future foreign currency stock purchases. These derivatives are measured at fair value at each balance sheet date.
To the extent the cash flow hedge is effective, movements in fair value are recognised in other comprehensive income and presented in a separate cash flow hedge reserve. Any ineffective portions of those movements are recognised in profit or loss for the year.
Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made include:
Provision for impairment loss on trade debtors The management of the company exercises significant judgement in providing for impairment loss on trade debtors. The value of trade debtors at the year-end totalled £1,031,073 (2018: £1,519,452). Provision for obsolete and slow moving stocks The company reviews its stocks to assess loss on account of obsolescence on a regular basis. In determining whether provision for obsolescence should be recorded in the profit and loss account, the company makes judgements as to whether there is any observable data indicating that there is any future saleability of the product and the estimated net realisable value for such product. Accordingly, provision for impairment is made where the net realisable value is less than the cost based on best estimates by the management. The provision for obsolescence of stock is based on the ageing and historical sales pattern. The value of stock at the year end totalled £2,322,705 (2018: £2,864,966). Other estimates and judgements Management of the company also exercises significant judgement in estimating the useful life of tangible fixed assets. The net book value of tangible fixed assets at the year end totalled £664,040 (2018: £687,188). Should these estimates vary, the profit or loss and balance sheet of the following years could be impacted.
Page 19
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
Analysis of turnover by country of destination:
Page 20
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
Page 21
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
Page 22
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
10.Taxation (continued)
Page 23
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
Page 24
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
Page 25
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
Page 26
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
Share premium
The share premium account includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium. Non-distributable reserve The non-distributable reserve includes all revaluation gains or losses on the property. Cashflow hedge reserve The cashflow hedge reserve includes all gains and losses made on forward contracts. Profit and loss account The profit and loss account includes all current and prior period retained profits and losses.
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £24,553 in respect of staff and £21,861 in respect of directors (2018: £30,231 and £17,493 respectively). Contributions totalling £8,735 (2018: £2,601) were payable to the fund at the balance sheet date.
Page 27
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
SMD Home Limited
Notes to the financial statements
For the year ended 30 September 2019
SMD Home Limited is a wholly owned subsidiary of SMD (Holdings) Limited, company number 04594575, incorporated in England and Wales. R J Kenworthy is the majority shareholder of SMD (Holdings) Limited.
The consolidated financial statements of this group are available to the public and may be obtained from the Registrar of Companies, Companies House, Crown Way, Maindy, Cardiff, CF4 3UZ.
Page 28
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||