ACCOUNTS - Final Accounts

ACCOUNTS - Final Accounts

SMD (HOLDINGS) LIMITED - Company Information

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Registered number: 04594575









SMD (Holdings) Limited









Annual Report and Consolidated Financial Statements

For the Year Ended 30 September 2020
 
SMD (Holdings) Limited
 
 
Company Information


Directors
R J Kenworthy 
R J Hargreaves 
J E Pink 




Registered number
04594575



Registered office
Pittman Way
Fulwood

Preston

PR2 9ZD




Independent auditors
Hurst Accountants Limited
Chartered Accountants & Statutory Auditors

Lancashire Gate

21 Tiviot Dale

Stockport

Cheshire

SK1 1TD




Bankers
Barclays Bank Plc
Barclays Business Centre

38 Fishergate

Preston

PR1 2DD




 
SMD (Holdings) Limited
 

Contents



Page
Group Strategic Report
 
1 - 2
Directors' Report
 
3 - 4
Independent Auditors' Report
 
5 - 7
Consolidated Profit and Loss Account
 
8
Consolidated Statement of Comprehensive Income
 
9
Consolidated Balance Sheet
 
10
Company Balance Sheet
 
11
Consolidated Statement of Changes in Equity
 
12 - 13
Company Statement of Changes in Equity
 
14
Consolidated Statement of Cash Flows
 
15
Analysis of Net Debt
 
16
Notes to the Financial Statements
 
17 - 38

 
SMD (Holdings) Limited
 
 
Group Strategic Report
For the Year Ended 30 September 2020

Business review
 
The group's balance sheet as detailed on page 10 shows shareholder funds of £7,572,945.
Group turnover for the year fell by 17.1% and gross margin fell by 9.9% however the gross margin percentage increased to 29.8% from 27.4% due to improved rates of return on point of sale investment.  The company remains committed to investing in the ILIV brand through targeted promotional and marketing activity and this strategy is allowing new export markets and UK sales channels to increase sales volumes.
During the economic slowdown caused by the Covid 19 pandemic the group underwent a restructuring programme which unfortunately resulted in a small number of redundancies..

Principal risks and uncertainties
 
Economic Downturn
The success of the business is reliant on consumer spending in soft furnishing and commercial spending within healthcare, education and hospitality. A downturn in any area could affect group sales and so senior management keep abreast of economic conditions. In the case of a severe economic downturn, marketing and pricing strategies are modified to reflect the new conditions.
Proportion of Fixed Overheads as a Percentage of Turnover
A proportion of the group’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 group operates are highly competitive. As a result there is constant downward pressure on margins. The group strives to develop its sourcing routes to ensure the lowest cost of production is maintained.
People
The group operates a wellbeing programme for employees which covers off health checks, team building, charity events amongst others.  Engagement surveys are conducted annually and feedback from listening groups is acted on.  During the pandemic, where possible, employees were encouraged to work from home and a comprehensive Covid 19 safety policy was introduced for those working on site.
 
Fluctuations in Currency
The majority of the group’s purchases come from overseas and are dominated in foreign currencies. The group is therefore, exposed to foreign currency fluctuations. As required, the business uses forward contracts and other derivatives / financial instruments to reduce the exposure for 12 months into the future.

Financial key performance indicators
 
The group views its banking covenants as its key financial KPI and due to the improvement in cash during the year significant headroom exists for investments for the future.

Page 1
 
SMD (Holdings) Limited
 

Group Strategic Report (continued)
For the Year Ended 30 September 2020

Other key performance indicators
 
The group 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.   
Customer service KPI's include customer retention and acquisition, along with on time delivery performance.

Financial instruments
Funding and liquidity
The objective is to ensure that there is continuity of funding, that cash levels are sufficient to meet the 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 the risk of loss arising from default by customers.  The policy is to ensure customer debt and credit ratings are routinely monitored.   
Interest risk management
The objective is to limit the group's exposure to interest rate fluctuations.  At present, the group only has secured bank borrowings in the form of a bank overdraft and maintains a policy of interest rate management.  
Foreign currency risk management
The group's objective is to mitigate the effect of exchange rate volatility by using forward contracts to purchase foreign currency.
Derivatives
The group has forward contracts in place at the year end that are classified as derivatives.
 


This report was approved by the board and signed on its behalf.



R J Hargreaves
Director

Date: 24 March 2021

Page 2
 
SMD (Holdings) Limited
 
 
 
Directors' Report
For the Year Ended 30 September 2020

The directors present their report and the financial statements for the year ended 30 September 2020.

Directors' responsibilities statement

The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 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 for the Group'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 Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The profit for the year, after taxation, amounted to £927,337 (2019 - £810,479).

The directors do not recommend payment of a final dividend. 

Directors

The directors who served during the year were:

R J Kenworthy 
R J Hargreaves 
J E Pink 

Future developments

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 (Holdings) Limited
 
 
 
Directors' Report (continued)
For the Year Ended 30 September 2020

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
∙so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and

∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.

Going concern

The consolidated 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.
At the time of signing last years Directors’ Report it was clear that the group was recovering well from the initial effects of the first pandemic lockdown and this continued all the way until the end of the financial period end of September 2020. Sales recovered to pre Covid 19 levels, margins held up and costs were kept under control. The cash position improved due to better working capital ratio’s and this can be seen in the cashflow workings.  
 
Post balance sheet trading and accounting for the second and third lockdown periods where a proportion of customers are either not trading or with limitations is satisfactory and is above forecast expectations. 
Therefore, the directors believe it is appropriate to prepare the accounts to 30 September 2020 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 consolidated financial statements

Auditors

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.
 





R J Hargreaves
Director

Date: 24 March 2021

Page 4
 
SMD (Holdings) Limited
 
 
 
Independent Auditors' Report to the Members of SMD (Holdings) Limited
 

Opinion


We have audited the financial statements of SMD (Holdings) Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 30 September 2020, which comprise the Group Profit and Loss Account, the Group Statement of Comprehensive Income, the Group and Company Balance Sheets, the Group Statement of Cash Flows, the Group and Company 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:


∙give a true and fair view of the state of the Group's and of the parent Company's affairs as at 30 September 2020 and of the Group's profit for the year then ended;

∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

∙have been prepared in accordance with the requirements of the Companies Act 2006.



Basis for opinion


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


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 or the parent 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.



Page 5
 
SMD (Holdings) Limited
 
 
 
Independent Auditors' Report to the Members of SMD (Holdings) Limited (continued)


Other information


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.


We have nothing to report in this regard.


Opinion 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

∙the Group Strategic Report and the Directors' Report 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 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:


∙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.


Page 6
 
SMD (Holdings) Limited
 
 
 
Independent Auditors' Report to the Members of SMD (Holdings) Limited (continued)


Responsibilities of directors
 

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 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 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.


Use of our report
 

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.





Helen Besant-Roberts (Senior Statutory Auditor)
for and on behalf of
Hurst Accountants Limited
Chartered Accountants
Statutory Auditors
Lancashire Gate
21 Tiviot Dale
Stockport
Cheshire
SK1 1TD

24 March 2021
Page 7
 
SMD (Holdings) Limited
 
 
Consolidated Profit and Loss Account
For the Year Ended 30 September 2020

2020
2019
Note
£
£

  

Turnover
 4 
20,360,767
24,573,504

Cost of sales
  
(14,301,078)
(17,849,942)

Gross profit
  
6,059,689
6,723,562

Distribution costs
  
(563,749)
(795,879)

Administrative expenses
  
(4,758,677)
(4,819,250)

Exceptional administrative expenses
 13 
-
66,050

Other operating income
 5 
518,661
430

Operating profit
 6 
1,255,924
1,174,913

Interest payable and similar expenses
 10 
(85,472)
(144,607)

Profit before tax
  
1,170,452
1,030,306

Tax on profit
 11 
(243,115)
(219,827)

Profit for the financial year
  
927,337
810,479

Profit for the year attributable to:
  

Owners of the parent
  
927,337
810,479

  
927,337
810,479

The notes on pages 17 to 38 form part of these financial statements.

Page 8
 
SMD (Holdings) Limited
 

Consolidated Statement of Comprehensive Income
For the Year Ended 30 September 2020

2020
2019
Note
£
£


Profit for the financial year

  

927,337
810,479

Other comprehensive income
  


Fair value gains/(losses) on forward currency contracts
  
(14,878)
130,697

Transfer from cashflow hedge reserve to profit and loss account
  
(130,697)
(114,125)

Forex adjustment on retranslation of foreign subsidiary
  
-
13,614

Other comprehensive income/(expenditure) for the year
  
(145,575)
30,186

Total comprehensive income for the year
  
781,762
840,665

Profit for the year attributable to:
  


Owners of the parent Company
  
927,337
810,479

  
927,337
810,479

Total comprehensive income attributable to:
  


Owners of the parent Company
  
781,762
840,665

  
781,762
840,665

The notes on pages 17 to 38 form part of these financial statements.

Page 9
 
SMD (Holdings) Limited
Registered number: 04594575

Consolidated Balance Sheet
As at 30 September 2020

2020
2019
Note
£
£

Fixed assets
  

Tangible assets
 15 
3,048,807
3,025,476

  
3,048,807
3,025,476

Current assets
  

Stocks
 17 
5,414,940
6,632,595

Debtors: amounts falling due within one year
 18 
3,693,880
3,412,384

Cash at bank and in hand
 19 
3,964,495
2,246,693

  
13,073,315
12,291,672

Creditors: amounts falling due within one year
 20 
(7,553,340)
(7,258,765)

Net current assets
  
 
 
5,519,975
 
 
5,032,907

Total assets less current liabilities
  
8,568,782
8,058,383

Creditors: amounts falling due after more than one year
 21 
(926,394)
(803,255)

Provisions for liabilities
  

Deferred taxation
 24 
(69,443)
(52,595)

  
 
 
(69,443)
 
 
(52,595)

Net assets
  
7,572,945
7,202,533


Capital and reserves
  

Called up share capital 
 25 
51,000
51,000

Non-distributable reserve
 26 
961,835
995,151

Capital redemption reserve
 26 
49,000
49,000

Cash flow hedge reserve
 26 
(14,878)
130,697

SMD Textiles Employee Benefit Trust
 26 
93,662
148,490

Profit and loss account
 26 
6,432,326
5,828,195

  
7,572,945
7,202,533


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 



R J Hargreaves
Director

Date: 24 March 2021

The notes on pages 17 to 38 form part of these financial statements.

Page 10
 
SMD (Holdings) Limited
Registered number: 04594575

Company Balance Sheet
As at 30 September 2020

2020
2019
Note
£
£

Fixed assets
  

Tangible assets
 15 
163,241
64,405

Investments
 16 
5,055,112
5,055,112

  
5,218,353
5,119,517

Current assets
  

Debtors: amounts falling due within one year
 18 
502,526
238,002

  
502,526
238,002

Creditors: amounts falling due within one year
 20 
(4,465,895)
(4,262,968)

Net current liabilities
  
 
 
(3,963,369)
 
 
(4,024,966)

Total assets less current liabilities
  
1,254,984
1,094,551

  

Creditors: amounts falling due after more than one year
 21 
(902,070)
(781,000)

Provisions for liabilities
  

Deferred taxation
 24 
(25,128)
(12,095)

  
 
 
(25,128)
 
 
(12,095)

Net assets
  
327,786
301,456


Capital and reserves
  

Called up share capital 
 25 
51,000
51,000

Capital redemption reserve
 26 
49,000
49,000

Profit and loss account brought forward
  
201,456
356,838

Profit for the year
  
437,680
202,642

Dividends

  

(411,350)
(358,024)

Profit and loss account carried forward
  
227,786
201,456

  
327,786
301,456


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




R J Hargreaves
Director

Date: 24 March 2021

The notes on pages 17 to 38 form part of these financial statements.

Page 11
 
SMD (Holdings) Limited
 

Consolidated Statement of Changes in Equity
For the Year Ended 30 September 2020


Called up share capital
Capital redemption reserve
Non-distributable reserve
Cash flow hedge reserve
SMD Textiles Employee Benefit Trust
Profit and loss   account
Total equity

£
£
£
£
£
£
£

At 1 October 2019
51,000
49,000
995,151
130,697
148,490
5,828,195
7,202,533


Comprehensive income for the year

Profit for the year

-
-
-
-
-
927,337
927,337

Fair value gains on forward currency contracts
-
-
-
(14,878)
-
-
(14,878)

Transfer from cash flow hedge reserve to profit and loss account
-
-
-
(130,697)
-
-
(130,697)


Other comprehensive income for the year
-
-
-
(145,575)
-
-
(145,575)


Total comprehensive income for the year
-
-
-
(145,575)
-
927,337
781,762

Dividends: Equity capital
-
-
-
-
-
(411,350)
(411,350)

Transfer to/from profit and loss account
-
-
(33,316)
-
(54,828)
88,144
-


Total transactions with owners
-
-
(33,316)
-
(54,828)
(323,206)
(411,350)


At 30 September 2020
51,000
49,000
961,835
(14,878)
93,662
6,432,326
7,572,945


The notes on pages 17 to 38 form part of these financial statements.

Page 12
 
SMD (Holdings) Limited
 

Consolidated Statement of Changes in Equity
For the Year Ended 30 September 2019


Called up share capital
Capital redemption reserve
Non-distributable reserve
Cash flow hedge reserve
SMD Textiles Employee Benefit Trust
Profit and loss account
Total equity

£
£
£
£
£
£
£

At 1 October 2018
51,000
49,000
1,028,467
114,125
182,339
5,294,961
6,719,892


Comprehensive income for the year

Profit for the year

-
-
-
-
-
810,479
810,479

Fair value gains on forward currency contracts
-
-
-
130,697
-
-
130,697

Transfer from cash flow hedge reserve to profit and loss account
-
-
-
(114,125)
-
-
(114,125)

Foreign exchange retranslation of foreign subsidiary
-
-
-
-
-
13,614
13,614


Other comprehensive income for the year
-
-
-
16,572
-
13,614
30,186


Total comprehensive income for the year
-
-
-
16,572
-
824,093
840,665

Dividends: Equity capital
-
-
-
-
-
(358,024)
(358,024)

Transfer to/from profit and loss account
-
-
(33,316)
-
(33,849)
67,165
-


Total transactions with owners
-
-
(33,316)
-
(33,849)
(290,859)
(358,024)


At 30 September 2019
51,000
49,000
995,151
130,697
148,490
5,828,195
7,202,533


The notes on pages 17 to 38 form part of these financial statements.

Page 13
 
SMD (Holdings) Limited
 

Company Statement of Changes in Equity
For the Year Ended 30 September 2020


Called up share capital
Capital redemption reserve
Profit and loss account
Total equity

£
£
£
£

At 1 October 2018
51,000
49,000
356,838
456,838


Comprehensive income for the year

Profit for the year
-
-
202,642
202,642
Total comprehensive income for the year
-
-
202,642
202,642


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(358,024)
(358,024)


Total transactions with owners
-
-
(358,024)
(358,024)


At 1 October 2019
51,000
49,000
201,456
301,456


Comprehensive income for the year

Profit for the year
-
-
437,680
437,680
Total comprehensive income for the year
-
-
437,680
437,680


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(411,350)
(411,350)


Total transactions with owners
-
-
(411,350)
(411,350)


At 30 September 2020
51,000
49,000
227,786
327,786


Page 14
 
SMD (Holdings) Limited
 

Consolidated Statement of Cash Flows
For the Year Ended 30 September 2020

2020
2019
£
£

Cash flows from operating activities

Profit for the financial year
927,337
810,479

Adjustments for:

Depreciation of tangible assets
283,130
252,805

Loss on disposal of tangible assets
5,660
-

Government grants
(518,661)
-

Interest paid
85,472
144,607

Taxation charge
243,115
219,827

Decrease in stocks
1,217,655
760,233

(Increase)/decrease in debtors
(412,193)
864,978

Increase/(decrease) in creditors
542,675
(830,718)

Corporation tax (paid)
(108,080)
(176,380)

Unrealised foreign exchange movements
-
13,614

Net cash generated from operating activities

2,266,110
2,059,445


Cash flows from investing activities

Purchase of tangible fixed assets
(359,121)
(214,419)

Sale of tangible fixed assets
47,000
-

Government grants received
518,661
-

Net cash from investing activities

206,540
(214,419)

Cash flows from financing activities

Repayment of/new finance leases
51,540
(140,063)

Dividends paid
(411,350)
(358,024)

Interest paid
(78,503)
(133,277)

HP interest
(6,969)
(11,330)

Net cash used in financing activities
(445,282)
(642,694)

Net increase in cash and cash equivalents
2,027,368
1,202,332

Cash and cash equivalents at beginning of year
(1,161,663)
(2,363,995)

Cash and cash equivalents at the end of year
865,705
(1,161,663)


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
3,964,495
2,246,693

Bank overdrafts
(3,098,790)
(3,408,356)

865,705
(1,161,663)


Page 15
 
SMD (Holdings) Limited
 

Consolidated Analysis of Net Debt
For the Year Ended 30 September 2020






At 1 October 2019
Cash flows
New finance leases
Other non-cash changes
At 30 September 2020
£

£

£

£

£

Cash at bank and in hand

2,246,693

1,717,802

-

-

3,964,495

Bank overdrafts

(3,408,356)

309,566

-

-

(3,098,790)

Debt due after 1 year

(781,000)

-

-

-

(781,000)

Debt due within 1 year

(37,669)

(6,062)

-

-

(43,731)

Finance leases

(150,154)

124,926

(176,466)

-

(201,694)

Liquid investments

130,697

-

-

(130,697)

-


(1,999,789)
2,146,232
(176,466)
(130,697)
(160,720)

The notes on pages 17 to 38 form part of these financial statements.

Page 16
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

1.


General information

SMD (Holdings) 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 group's operation and its principal activity is that of the design, manufacture and distribution of ready-made products and fabrics. 

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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 Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

 
2.2

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Profit and Loss Account from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 October 2014.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilites of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at the opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income. 

Page 17
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

2.Accounting policies (continued)

 
2.3

Going concern

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 Covid-19 virus outbreak has had a significant impact on the majority of UK businesses. Since lockdown restrictions were implemented by the UK Government in March 2020, the directors have carried out a variety of actions, including applying for applicable Government support (including utilisation of the Coronavirus Job Retention Scheme 'CJRS' for some employees) and deferring or cancelling costs where appropriate.
Management has prepared forecasts which show the company will be able to realise its assets and discharge its liabilities in the normal course of business. Accordingly, the directors believe it is appropriate to prepare the financial statements on a going concern basis.

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group 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:
∙the Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 
2.5

Operating leases: the Group as lessee

Rentals paid under operating leases are charged to the Consolidated Profit and Loss Account 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.

The Group has taken advantage of the optional exemption available on transition to FRS 102 which allows lease incentives on leases entered into before the date of transition to the standard 01 October 2018 to continue to be charged over the period to the first market rent review rather than the term of the lease.

 
2.6

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. 
Grants of a revenue nature are recognised in the Consolidated Profit and Loss Account in the same period as the related expenditure.

Page 18
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

2.Accounting policies (continued)

 
2.7

Finance costs

Finance costs are charged to the Consolidated Profit and Loss Account 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.

 
2.8

Borrowing costs

All borrowing costs are recognised in the Consolidated Profit and Loss Account in the year in which they are incurred.

 
2.9

Pensions

Defined contribution pension plan

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in the Consolidated Profit and Loss Account 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 Group in independently administered funds.

 
2.10

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in the Consolidated Profit and Loss Account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

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 19
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

2.Accounting policies (continued)

 
2.11

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.

 
2.12

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives. 

Depreciation is provided on the following basis:

Freehold property
-
2% on cost
Plant and machinery
-
20-50% on cost
Motor vehicles
-
30% reducing balance
Fixtures and fittings
-
20-50% on cost
Other fixed assets
-
25-33% on cost

 
2.13

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.14

Stocks

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 averagebasis. Work in progress and finished goods include labour and attributable overheads.

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.

 
2.15

Debtors

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.

 
2.16

Cash and cash equivalents

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.

In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.

Page 20
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

2.Accounting policies (continued)

 
2.17

Creditors

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.

 
2.18

Provisions for liabilities

Provisions are made where an event has taken place that gives the Group 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 Consolidated Profit and Loss Account in the year that the Group 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.

Page 21
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

2.Accounting policies (continued)

 
2.19

Financial instruments

The Group enters into 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, loans to related parties and investments in non-puttable ordinary shares.

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 in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.

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 Consolidated Profit and Loss Account.

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 Group would receive for the asset if it were to be sold at the balance sheet date.

 
2.20

Hedge accounting

The Group 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.

 
2.21

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Dividends on shares recognised as liabilities are recognised as expenses and classified within interest payable.

Page 22
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

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 are the year end totalled £3,532,545 (2019: £3,079,355).
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 £5,414,940 (2019: £6,632,595).
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 £3,048,807 (2019: £3,025,476).
Should these estimates vary, the profit or loss and balance sheet of the following years could be impacted.


4.


Turnover

An analysis of turnover by class of business is as follows:


2020
2019
£
£

Design, manufacture and resale of readymade homeware products and fabrics
20,360,767
24,573,504


Analysis of turnover by country of destination:

2020
2019
£
£

United Kingdom
18,449,460
22,482,685

Rest of Europe
1,107,007
1,283,570

Rest of the world
804,300
807,249

20,360,767
24,573,504


Page 23
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

5.


Other operating income

2020
2019
£
£

Other operating income
-
430

Government grants receivable
518,661
-

518,661
430



6.


Operating profit

The operating profit is stated after charging/(crediting):

2020
2019
£
£

Depreciation of tangible fixed assets
283,130
252,805

Loss on sale of fixed asset
6,660
-

Exchange differences
(186,330)
(124,413)

Other operating lease rentals
39,901
26,784

Defined contribution pension cost
134,618
131,673


7.


Auditors' remuneration

2020
2019
£
£


Fees payable to the Group's auditor and its associates for the audit of the Group's annual accounts
20,400
20,400

20,400
20,400

Fees payable to the Group's auditor and its associates in respect of:


Taxation compliance services
4,975
4,975

Other services relating to taxation
2,065
2,065

Payroll services
5,500
500

All other services
450
450

12,990
7,990


Page 24
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

8.


Employees

Staff costs, including directors' remuneration, were as follows:


Group
Group
Company
Company
2020
2019
2020
2019
£
£
£
£


Wages and salaries
3,204,831
3,112,409
39,214
44,067

Social security costs
323,737
303,411
5,882
8,003

Cost of defined contribution scheme
134,618
131,673
56,415
61,416

3,663,186
3,547,493
101,511
113,486


The average monthly number of employees, including the directors, during the year was as follows:


        2020
        2019
            No.
            No.







Warehouse and distribution staff
31
32



Sales, management and clerical staff
61
66

92
98



9.


Directors remuneration

The directors' aggregate emoluments in respect of qualifying services were: 


2020
2019
£
£



Emoluments
407,211
270,050

Pension contributions to money purchase schemes
36,433
35,909

443,644
305,959

During the year retirement benefits were accruing to 3 directors (2019: 3) in respect of defined contribution pension schemes. 
The highest paid director received remuneration of £243,479 (2019: £114,151).
The value of the company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £1,315 (2019: £1,052).
There are no other key management personnel. 

Page 25
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

10.


Interest payable and similar expenses

2020
2019
£
£


Bank interest payable
39,003
93,777

Preference share dividends
39,500
39,500

Finance leases and hire purchase contracts
6,969
11,330

85,472
144,607


11.


Taxation


2020
2019
£
£

Corporation tax


Current tax on profits for the year
226,266
205,547

Adjustments in respect of previous periods
-
18,897


Total current tax

226,266
224,444

Deferred tax


Origination and reversal of timing differences
16,849
(4,617)

Total deferred tax

16,849
(4,617)


Taxation on profit on ordinary activities
243,115
219,827
Page 26
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is higher than (2019 - higher than) the standard rate of corporation tax in the UK of 19% (2019 - 19%). The differences are explained below:

2020
2019
£
£


Profit on ordinary activities before tax
1,170,452
1,030,306


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019 - 19%)
222,386
195,758

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
9,040
12,607

Ineligible depreciation
11,689
11,462

Total tax charge for the year
243,115
219,827


Factors that may affect future tax charges

There were no factors that may affect future tax charges.


12.


Dividends

2020
2019
£
£

Ordinary A


Dividends paid on equity capital
119,403
82,712

Ordinary B


Dividends paid on equity capital
291,947
275,312

Preference


Dividends paid on shares classed as debt
39,500
39,500

450,850
397,524

Page 27
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

13.


Exceptional items

2020
2019
£
£


Write off of investment in subsidiary
-
(66,050)

During the prior year, investments in subsidiaries were written off.


14.


Intangible assets

Group





Goodwill
Negative goodwill
Total

£
£
£



Cost


At 1 October 2019
297,953
(217,664)
80,289



At 30 September 2020

297,953
(217,664)
80,289



Amortisation


At 1 October 2019
297,953
(217,664)
80,289



At 30 September 2020

297,953
(217,664)
80,289



Net book value



At 30 September 2020
-
-
-



At 30 September 2019
-
-
-

Page 28
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

15.


Tangible fixed assets

Group






Freehold property
Plant and machinery
Motor vehicles
Fixtures and fittings
Other fixed assets
Total

£
£
£
£
£
£



Cost or valuation


At 1 October 2019
2,980,822
1,006,516
142,716
1,463,578
1,132,911
6,726,543


Additions
-
42,549
175,536
105,367
35,669
359,121


Disposals
-
-
(142,716)
-
-
(142,716)



At 30 September 2020

2,980,822
1,049,065
175,536
1,568,945
1,168,580
6,942,948



Depreciation


At 1 October 2019
358,139
998,983
78,311
1,223,851
1,041,783
3,701,067


Charge for the year
61,616
5,624
24,040
137,956
53,894
283,130


Disposals
-
-
(90,056)
-
-
(90,056)



At 30 September 2020

419,755
1,004,607
12,295
1,361,807
1,095,677
3,894,141



Net book value



At 30 September 2020
2,561,067
44,458
163,241
207,138
72,903
3,048,807



At 30 September 2019
2,622,683
7,533
64,405
239,727
91,128
3,025,476

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2020
2019
£
£



Plant and machinery
31,009
-

Motor vehicles
163,241
64,405

Furniture, fittings and equipment
92,027
161,277

286,277
225,682

Page 29
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

           15.Tangible fixed assets (continued)


Company






Motor vehicles
Fixtures and fittings
Total

£
£
£

Cost or valuation


At 1 October 2019
101,645
13,015
114,660


Additions
175,536
-
175,536


Disposals
(101,645)
-
(101,645)



At 30 September 2020

175,536
13,015
188,551



Depreciation


At 1 October 2019
37,240
13,015
50,255


Charge for the year
24,040
-
24,040


Disposals
(48,985)
-
(48,985)



At 30 September 2020

12,295
13,015
25,310



Net book value



At 30 September 2020
163,241
-
163,241



At 30 September 2019
64,405
-
64,405






The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2020
2019
£
£



Motor vehicles
163,241
64,405

163,241
64,405

Page 30
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

16.


Fixed asset investments

Company





Investments in subsidiary companies

£



Cost or valuation


At 1 October 2019
5,055,112



At 30 September 2020
5,055,112






Net book value



At 30 September 2020
5,055,112



At 30 September 2019
5,055,112


Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Principal Activity

Class of shares

Holding

SMD Textiles Limited
Design and sales of furnishing textiles
Ordinary
100
SMD Home Limited
Design, manufacture and resale of readymade curtains and bed linen
Ordinary
100
SMD (Contracts) Limited
Dormant
Ordinary
100
Asia Home Furnishings (Shanghai) Ltd
Design and sales of furnishing textiles
Ordinary
100
Wood & Watkins Limited
Dormant
Ordinary
100
Advance Textile Products Limited
Dormant
Ordinary
100
Asia Home Furnishings Limited
Dormant
Ordinary
100

The registered office address for Asia Home Furnishings (Shanghai) Ltd is Room 1829, 333 Lujiazui Ring Road, Pudong New District, Shanghai, 200120.
The registered office address for each of the other subsidiaries is Pittman Way, Fulwood, Preston, PR2 9ZD.

Page 31
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

17.


Stocks

Group
Group
2020
2019
£
£

Raw materials and consumables
166,044
180,441

Work in progress (goods to be sold)
93,622
190,559

Finished goods and goods for resale
5,155,274
6,261,595

5,414,940
6,632,595


The difference between purchase price or production cost of stocks and their replacement cost is not material.

An impairment loss of £193,914 (2019: gain £33,448) was recognised in cost of sales against stock during the year due to slow-moving and obsolete stock.


18.


Debtors

Group
Group
Company
Company
2020
2019
2020
2019
£
£
£
£


Trade debtors
3,532,545
3,079,355
-
-

Amounts owed by group undertakings
-
-
496,143
225,503

Other debtors
36,559
15,751
67
537

Prepayments and accrued income
124,776
186,581
6,316
11,962

Financial instruments
-
130,697
-
-

3,693,880
3,412,384
502,526
238,002


An impairment loss of £14,212 (2019: £4,437) was recognised against trade debtors.


19.


Cash and cash equivalents

Group
Group
Company
Company
2020
2019
2020
2019
£
£
£
£

Cash at bank and in hand
3,964,495
2,246,693
-
-

Less: bank overdrafts
(3,098,790)
(3,408,356)
(1,070,427)
(999,418)

865,705
(1,161,663)
(1,070,427)
(999,418)


Page 32
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

20.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2020
2019
2020
2019
£
£
£
£

Bank overdrafts
3,098,790
3,408,356
1,070,427
999,418

Trade creditors
2,719,469
2,584,947
700
700

Amounts owed to group undertakings
-
-
2,679,720
2,842,855

Corporation tax
323,344
205,157
134,656
72,307

Other taxation and social security
440,443
237,990
1,116
1,163

Obligations under finance lease and hire purchase contracts
56,300
127,899
26,410
58,942

Other creditors
57,606
62,275
44,731
38,697

Accruals and deferred income
842,510
632,141
508,135
248,886

Financial instruments
14,878
-
-
-

7,553,340
7,258,765
4,465,895
4,262,968


The bank overdrafts are secured by a debenture over all of the assets of the group, both present and future. Interest is charged at a commercial rate as agreed with the bank. 
Finance lease and hire purchase liabilities are secured on the assets to which they relate. 


21.


Creditors: Amounts falling due after more than one year

Group
Group
Company
Company
2020
2019
2020
2019
£
£
£
£

Net obligations under finance leases and hire purchase contracts
145,394
22,255
121,070
-

Share capital treated as debt
781,000
781,000
781,000
781,000

926,394
803,255
902,070
781,000


Disclosure of the terms and conditions attached to the non-equity shares is made in note 25.

Finance lease and hire purchase liabilities are secured on the assets to which they relate. 



Page 33
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

22.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

Group
Group
Company
Company
2020
2019
2020
2019
£
£
£
£

Within one year
56,300
127,899
26,410
58,942

Between 1-2 years
35,472
22,255
29,128
-

Between 2-5 years
109,922
-
91,942
-

201,694
150,154
147,480
58,942


23.


Financial instruments

Group
Group
2020
2019
£
£

Financial assets

Financial assets measured at fair value through other comprehensive income
-
130,697


Financial liabilities

Financial liabilities measured at fair value through other comprehensive income
(14,878)
-


Financial assets measured at fair value through other comprehensive income comprise fair value gains on forward contracts. The company has elected to adopt hedging rules in accordance with FRS102 section 12. The company is hedging against exchange risk on future foreign currency stock purchases by using forward exchange contracts. The fair value gain on contracts in place at year end is held in reserves. 


Financial liabilities measured at fair value through other comprehensive income comprise fair value losses on forward contracts. The company has elected to adopt hedging rules in accordance with FRS102 section 12. The company is hedging against exchange risk on future foreign currency stock purchases by using forward exchange contracts. The fair value loss on contracts in place at year end is held in reserves. 

Page 34
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

24.


Deferred taxation


Group



2020


£






At beginning of year
(52,594)


Charged to profit or loss
(16,849)



At end of year
(69,443)

Company


2020


£






At beginning of year
(12,095)


Charged to profit or loss
(13,033)



At end of year
(25,128)

Group
Group
Company
Company
2020
2019
2020
2019
£
£
£
£

Accelerated capital allowances
77,358
56,654
31,016
12,095

Other timing differences
(7,915)
(4,060)
(5,888)
-

(69,443)
(52,594)
(25,128)
(12,095)

Page 35
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

25.


Share capital

2020
2019
£
£
Shares classified as equity

Allotted, called up and fully paid



387,600 (2019 - 387,600) Ordinary A shares of £0.10 each
38,760
38,760
122,400 (2019 - 122,400) Ordinary B shares of £0.10 each
12,240
12,240

51,000

51,000

The Ordinary A and Ordinary B shares carry the right to a dividend at the rates to be declared by the company and are entitled to one vote per share. 

2020
2019
£
£
Shares classified as debt

Allotted, called up and fully paid



781,000 (2019 - 781,000) Preference shares of £1.00 each
781,000
781,000


The preference shares of £1 each are entitled to:
- receive fixed dividends of 5p per share per annum
- no voting rights
- preferential rights to repayment of capital in the event of the company being wound up. 


26.


Reserves

Capital redemption reserve

The capital redemption reseve is a non-distributable reserve and represents paid up share capital. 

Profit and loss account

The profit and loss account includes all current and prior period retained profits and losses. 

Cashflow hedge reserve
The cashflow hedge reserve includes all gains and losses made on forward contracts. 
Non-distributable reserve
The non-distributable reserve includes revaluation gains and losses previously recognised. 
SMD Textiles Employee Benefit Trust
The group has prepared its financial statements in line with FRS 102 accounting for Employee Benefit Trusts and consolidated the assets and liabilitites of the SMD Textiles Employee Benefit Trust into its own results. 

Page 36
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

27.


Contingent liabilities

A guarantee exists in favour of HM Revenue & Customs for £125,000. 
In 2017, SMD Textiles Limited, a subsidiary of SMD (Holdings) Limited entered into a loan agreement with  SMD Textiles Limited Employee Benefit Trust. At the year end, £84,660 is outstanding. The amount has been eliminated on consolidation in these financial statements. SMD (Holdings) Limited is the Guarantor for this loan.


28.


Pension commitments

The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £134,618 (2019: £131,673). Contributions totalling £41,656 (2019: £21,372) were payable to the fund at the balance sheet date.


29.


Commitments under operating leases

At 30 September 2020 the Group had future minimum lease payments under non-cancellable operating leases as follows:


Group
Group
2020
2019
£
£

Other

Not later than 1 year
41,165
33,057

Later than 1 year and not later than 5 years
34,724
34,726

75,889
67,783

The Company had no commitments under the non-cancellable operating leases as at the balance sheet date.

Page 37
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2020

30.


Related party transactions

The group has taken advantage of the exemption available under FRS102 and opted not to disclose transactions with wholly-owned group companies. 


2020
2019
£
£

Dividends paid to directors - Ordinary
119,403
82,712
Dividends paid to directors - Preference
39,500
39,500
Dividends paid to close family members of directors
291,947
275,312
Amounts owed to directors
43,731
37,669

In 2017, SMD Textiles Limited Employee Benefit Trust loaned SMD Textiles Limited £284,900. The loan attracts an interest rate of 1.95% above base rate which is deemed to be market rate. The loan was due to be repaid on 26 October 2019. The repayment date subsequently extended to 31 December 2022. During the year, payments were made to employees totalling £56,606. The remaining balance of £84,660 is eliminated on consolidation. 


31.


Controlling party

The group was under the control of Mr R J Kenworthy throughout the current and previous period. Mr R J Kenworthy is the majority shareholder. 

 
Page 38