ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
Registered number:
For the Year Ended
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SMD (Holdings) Limited
Company Information
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SMD (Holdings) Limited
Contents
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SMD (Holdings) Limited
Group Strategic Report
For the Year Ended 30 September 2021
The group's balance sheet as detailed on page 11 shows shareholder funds of £8,452,580 (2020: £7,572,945).
Group turnover for the year increased by 19.6% and gross margin increased by 24.6% with the gross margin percentage increasing to 31.0% from 29.8% due to improved rates of return on point of sale investment. The group 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. The group performed satisfactorily through the second and third lockdowns and with the help of a recruitment drive and continued investment in new product was well placed to take advantage of the upturn when the UK economy fully reopened.
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 Directors regularly ask for feedback on employee wellbeing and provide training to improve engagement and retention. Where possible the group encourages a hybrid working model and the head office is currently undergoing a refurbishment to create a better onsite working environment. 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.
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.
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SMD (Holdings) Limited
Group Strategic Report (continued)
For the Year Ended 30 September 2021
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.
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SMD (Holdings) Limited
Directors' Report
For the Year Ended 30 September 2021
The directors present their report and the financial statements for the year ended 30 September 2021.
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 judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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.
The profit for the year, after taxation, amounted to £1,578,950 (2020 - £927,337).
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.
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SMD (Holdings) Limited
Directors' Report (continued)
For the Year Ended 30 September 2021
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.
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SMD (Holdings) Limited
Independent Auditors' Report to the Members of SMD (Holdings) Limited
We have audited the financial statements of SMD (Holdings) Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 30 September 2021, 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).
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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. 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. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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SMD (Holdings) Limited
Independent Auditors' Report to the Members of SMD (Holdings) Limited (continued)
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.
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.
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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
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SMD (Holdings) Limited
Independent Auditors' Report to the Members of SMD (Holdings) Limited (continued)
Identifying and assessing potential risks related to irregularities
In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
∙The nature of the industry and sector in which the Group operates; the control environment and business performance including key drivers for directors' remuneration, bonus levels and performance targets.
∙The outcome of enquiries of local management and parent company management, including whether management was aware of any instances of non-compliance with laws and regulations, and whether management had knowledge of any actual, suspected, or alleged fraud.
∙Supporting documentation relating to the Group's policies and procedures for:
°Identifying, evaluating, and complying with laws and regulations
°Detecting and responding to the risks of fraud
∙The internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.
∙The outcome of discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
∙The legal and regulatory framework in which the Group operates, particularly those laws and regulations which have a direct effect on the financial statements, such as the Companies Act 2006, pensions and tax legislation, or which had a fundamental effect on the operations of the Group, including General Data Protection requirements, and Anti-bribery and Corruption.
Audit response to risks identified
Our procedures to respond to the risks identified included the following:
∙Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with the provisions of those relevant laws and regulations which have a direct effect on the financial statements.
∙Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud.
∙Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities.
∙Enquiring of management about any actual and potential litigation and claims.
∙Performing analytical procedures to identify any unusual or unexpected relationships which may indicate risks of material misstatement due to fraud.
We have also considered the risk of fraud through management override of controls by:
∙Testing the appropriateness of journal entries and other adjustments. We have used data analytics software to identify accounting transactions which may pose a heightened risk of material misstatement, whether due to fraud or error.
∙Challenging assumptions made by management in their significant accounting estimates, and assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and
∙Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we would become aware of them. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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SMD (Holdings) Limited
Independent Auditors' Report to the Members of SMD (Holdings) Limited (continued)
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.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in 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, as a body, 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
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SMD (Holdings) Limited
Consolidated Profit and Loss Account
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Consolidated Statement of Comprehensive Income
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Registered number: 04594575
Consolidated 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 19 to 39 form part of these financial statements.
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SMD (Holdings) Limited
Registered number: 04594575
Company 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 19 to 39 form part of these financial statements.
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SMD (Holdings) Limited
Registered number: 04594575
Company Balance Sheet (continued)
As at 30 September 2021
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SMD (Holdings) Limited
Consolidated Statement of Changes in Equity
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Consolidated Statement of Changes in Equity
For the Year Ended 30 September 2020
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SMD (Holdings) Limited
Company Statement of Changes in Equity
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Consolidated Statement of Cash Flows
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Consolidated Analysis of Net Debt
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
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. The principal activity of the company is that of a holding company which incurs central costs for the group.
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 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.
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.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
2.Accounting policies (continued)
Grants of a revenue nature are recognised in the Consolidated Profit and Loss Account in the same period as the related expenditure.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
2.Accounting policies (continued)
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
2.Accounting policies (continued)
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:
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss 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.
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.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
2.Accounting policies (continued)
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 £3,722,188 (2020: £3,532,545). 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 £7,247,970 (2020: £5,414,940). 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 £2,966,514 (2020: £3,048,807). Should these estimates vary, the profit or loss and balance sheet of the following years could be impacted.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
Analysis of turnover by country of destination:
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
The main rate of corporation tax is due to increase to 25% in the tax year commencing 1 April 2023 for companies where profits exceed £250,000. A tapered rate will be introduced for profits above £50,000 up to £250,000 limit.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
14.Tangible fixed assets (continued)
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Notes to the Financial Statements
For the Year Ended 30 September 2021
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Notes to the Financial Statements
For the Year Ended 30 September 2021
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Notes to the Financial Statements
For the Year Ended 30 September 2021
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Notes to the Financial Statements
For the Year Ended 30 September 2021
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Notes to the Financial Statements
For the Year Ended 30 September 2021
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Notes to the Financial Statements
For the Year Ended 30 September 2021
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
Capital redemption reserve
Profit and loss account
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.
A guarantee exists in favour of HM Revenue & Customs for £125,000.
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 £115,540 (2020: £134,618). Contributions totalling £10,544 (2020: £41,656) were payable to the fund at the balance sheet date.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2021
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.
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