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 2022
 
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
38 Fishergate

Preston

PR1 2DD




 
SMD (Holdings) Limited
 

Contents



Page
Group Strategic Report
 
1 - 2
Directors' Report
 
3 - 4
Independent Auditors' Report
 
5 - 8
Consolidated Profit and Loss Account
 
9
Consolidated Statement of Comprehensive Income
 
10
Consolidated Balance Sheet
 
11
Company Balance Sheet
 
12
Consolidated Statement of Changes in Equity
 
13 - 14
Company Statement of Changes in Equity
 
15
Consolidated Statement of Cash Flows
 
16 - 17
Consolidated Analysis of Net Debt
 
18
Notes to the Financial Statements
 
19 - 38

 
SMD (Holdings) Limited
 
 
Group Strategic Report
For the Year Ended 30 September 2022

Business review
 
Management have taken the decision to separate the group’s different trading operations into two whereby the Company’s subsidiaries SMD Textiles Limited and SMD Home Limited will operate independently of each other. This was achieved on 1 October 2021 by disposing of the assets of SMD Home Limited to SMD Home (Holdings) Limited a company under common control.
The trading conditions and competition faced by each prospective operating company are unique and distinct from one another in terms of customer base and services. As such the splitting of the group will ensure that each entity is independently structured to allow it to more effectively compete within its respective market. Separation will allow more accurate division of profit and loss accounts to support a more strategic pricing approach to support growth in each business.
The group's balance sheet as detailed on page 11 shows shareholder funds of £6,579,423 (2021: £8,452,580). Had the disposal of SMD Home Limited not occurred the balance sheet value would have been £9,458,473 and net profit before taxation £1,380,974 (2021: £1,964,889).
Group turnover for the year on continuing operations increased by 22.8% and gross margin increased by 19.2% with the gross margin percentage decreasing from 34.5% to 33.5% due to foreign exchange movements and freight costs. 
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 market penetration.

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 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.

Page 1
 
SMD (Holdings) Limited
 

Group Strategic Report (continued)
For the Year Ended 30 September 2022

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.

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: 21 February 2023

Page 2
 
SMD (Holdings) Limited
 
 
 
Directors' Report
For the Year Ended 30 September 2022

The directors present their report and the financial statements for the year ended 30 September 2022.

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 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.

Results and dividends

The loss for the year, after taxation, amounted to £841,321 (2021 -profit £1,578,950).

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 2022

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.

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: 21 February 2023

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 2022, 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 2022 and of the Group's loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


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


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.


Other information


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.


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


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.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out 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 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:

 
Page 6
 
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.


Page 7
 
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.


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in 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.





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

21 February 2023
Page 8
 
SMD (Holdings) Limited
 
 
Consolidated Profit and Loss Account
For the Year Ended 30 September 2022

Continuing operations
Discontin'd operations
Total
Continuing operations
Discontinued operations
Total
2022
2022
2022
2021
2021
2021
Note
£
£
£
£
£
£

  

Turnover
 4 
17,192,653
-
17,192,653
13,999,852
10,357,240
24,357,092

Cost of sales
  
(11,436,779)
-
(11,436,779)
(9,171,245)
(7,636,357)
(16,807,602)

  
5,755,874
-
5,755,874
4,828,607
2,720,883
7,549,490

Distribution costs
  
(846,897)
-
(846,897)
(376,853)
(84,379)
(461,232)

Administrative expenses
  
(4,040,367)
-
(4,040,367)
(3,266,071)
(1,813,073)
(5,079,144)

Other operating income
 5 
291,007
-
291,007
7,341
877
8,218

Operating profit
  
1,159,617
-
1,159,617
1,193,024
824,308
2,017,332

Loss on disposal of subsidiary
 25 
(1,728,646)
-
(1,728,646)
-
-
-

Interest payable and similar expenses
 9 
(36,179)
-
(36,179)
(46,565)
(5,878)
(52,443)

(Loss)/profit before tax
  
(605,208)
-
(605,208)
1,146,459
818,430
1,964,889

Tax on (loss)/profit
 10 
(236,113)
-
(236,113)
(354,964)
(30,975)
(385,939)

(Loss)/profit for the financial year
  
(841,321)
-
(841,321)
791,495
787,455
1,578,950

(Loss)/profit for the year attributable to:
  

Owners of the parent
  
(841,321)
-
(841,321)
791,495
787,455
1,578,950

  
(841,321)
-
(841,321)
791,495
787,455
1,578,950

The notes on pages 19 to 38 form part of these financial statements.

Page 9
 
SMD (Holdings) Limited
 

Consolidated Statement of Comprehensive Income
For the Year Ended 30 September 2022

2022
2021
Note
£
£


(Loss)/profit for the financial year

  

(841,321)
1,578,950

Other comprehensive income
  


Fair value gains/(losses) on forward currency contracts
  
114,218
80,544

Transfer from cashflow hedge reserve to profit and loss account
  
-
14,878

Other comprehensive income for the year
  
114,218
95,422

Total comprehensive income for the year
  
(727,103)
1,674,372

(Loss)/profit for the year attributable to:
  


Owners of the parent Company
  
(841,321)
1,578,950

  
(841,321)
1,578,950

Total comprehensive income attributable to:
  


Owners of the parent Company
  
(727,103)
1,674,372

  
(727,103)
1,674,372

The notes on pages 19 to 38 form part of these financial statements.

Page 10
 
SMD (Holdings) Limited
Registered number: 04594575

Consolidated Balance Sheet
As at 30 September 2022

2022
2021
Note
£
£

Fixed assets
  

Tangible assets
 13 
2,707,228
2,966,514

Current assets
  

Stocks
 15 
6,438,289
7,247,970

Debtors: amounts falling due within one year
 16 
3,381,387
3,954,024

Cash at bank and in hand
 17 
740,840
782,515

  
10,560,516
11,984,509

Creditors: amounts falling due within one year
 18 
(6,546,794)
(6,320,414)

Net current assets
  
 
 
4,013,722
 
 
5,664,095

Total assets less current liabilities
  
6,720,950
8,630,609

Creditors: amounts falling due after more than one year
 19 
(10,845)
(103,146)

Provisions for liabilities
  

Deferred taxation
 22 
(130,682)
(74,883)

Net assets
  
6,579,423
8,452,580


Capital and reserves
  

Called up share capital 
 23 
51,000
51,000

Non-distributable reserve
 24 
475,370
928,519

Capital redemption reserve
 24 
49,000
49,000

Cash flow hedge reserve
 24 
114,218
80,544

Profit and loss account
 24 
5,889,835
7,343,517

  
6,579,423
8,452,580


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




R J Hargreaves
Director

Date: 21 February 2023

The notes on pages 19 to 38 form part of these financial statements.

Page 11
 
SMD (Holdings) Limited
Registered number: 04594575

Company Balance Sheet
As at 30 September 2022

2022
2021
Note
£
£

Fixed assets
  

Tangible assets
 13 
86,802
125,022

Investments
 14 
4,913,472
5,055,112

  
5,000,274
5,180,134

Current assets
  

Debtors: amounts falling due within one year
 16 
96,383
383,715

Cash at bank and in hand
 17 
715,243
572,782

  
811,626
956,497

Creditors: amounts falling due within one year
 18 
(3,341,928)
(3,349,617)

Net current liabilities
  
 
 
(2,530,302)
 
 
(2,393,120)

Total assets less current liabilities
  
2,469,972
2,787,014

  

Creditors: amounts falling due after more than one year
 19 
(10,845)
(85,166)

Provisions for liabilities
  

Deferred taxation
 22 
(21,700)
(23,754)

Net assets
  
2,437,427
2,678,094


Capital and reserves
  

Called up share capital 
 23 
51,000
51,000

Capital redemption reserve
 24 
49,000
49,000

Profit and loss account brought forward
  
2,578,094
227,786

Profit for the year
  
394,757
3,143,745

Dividends

  

(635,424)
(793,437)

Profit and loss account carried forward
  
2,337,427
2,578,094

  
2,437,427
2,678,094


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


R J Hargreaves
Director

Date: 21 February 2023

The notes on pages 19 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 2022


Called up share capital
Capital redemption reserve
Non-distributable reserve
Cash flow hedge reserve
Profit and loss   account
Total equity

£
£
£
£
£
£

At 1 October 2021
51,000
49,000
928,519
80,544
7,343,517
8,452,580


Comprehensive income for the year

Loss for the year

-
-
-
-
(841,321)
(841,321)

Fair value gains on forward currency contracts
-
-
-
114,218
-
114,218


Other comprehensive income for the year
-
-
-
114,218
-
114,218


Total comprehensive income for the year
-
-
-
114,218
(841,321)
(727,103)

Dividends: Equity capital
-
-
-
-
(635,424)
(635,424)

Transfer to/from profit and loss account
-
-
(23,063)
-
23,063
-

Disposal of subsidiary
-
-
-
(80,544)
-
(80,544)

Disposal of subsidiary
-
-
(430,086)
-
-
(430,086)


Total transactions with owners
-
-
(453,149)
(80,544)
(612,361)
(1,146,054)


At 30 September 2022
51,000
49,000
475,370
114,218
5,889,835
6,579,423


The notes on pages 19 to 38 form part of these financial statements.

Page 13
 
SMD (Holdings) Limited
 

Consolidated Statement of Changes in Equity
For the Year Ended 30 September 2021


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


Comprehensive income for the year

Profit for the year

-
-
-
-
-
1,578,950
1,578,950

Fair value gains on forward currency contracts
-
-
-
80,544
-
-
80,544

Transfer from cash flow hedge reserve to profit and loss account
-
-
-
14,878
-
-
14,878


Other comprehensive income for the year
-
-
-
95,422
-
-
95,422


Total comprehensive income for the year
-
-
-
95,422
-
1,578,950
1,674,372

Dividends: Equity capital
-
-
-
-
-
(793,437)
(793,437)

Transfer to/from profit and loss account
-
-
(33,316)
-
(93,662)
125,678
(1,300)


Total transactions with owners
-
-
(33,316)
-
(93,662)
(667,759)
(794,737)


At 30 September 2021
51,000
49,000
928,519
80,544
-
7,343,517
8,452,580


The notes on pages 19 to 38 form part of these financial statements.

Page 14
 
SMD (Holdings) Limited
 

Company Statement of Changes in Equity
For the Year Ended 30 September 2022


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

£
£
£
£

At 1 October 2020
51,000
49,000
227,786
327,786


Comprehensive income for the year

Profit for the year
-
-
3,143,745
3,143,745
Total comprehensive income for the year
-
-
3,143,745
3,143,745


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(793,437)
(793,437)


Total transactions with owners
-
-
(793,437)
(793,437)


At 1 October 2021
51,000
49,000
2,578,094
2,678,094


Comprehensive income for the year

Profit for the year
-
-
394,757
394,757
Total comprehensive income for the year
-
-
394,757
394,757


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(635,424)
(635,424)


Total transactions with owners
-
-
(635,424)
(635,424)


At 30 September 2022
51,000
49,000
2,337,427
2,437,427


Page 15
 
SMD (Holdings) Limited
 

Consolidated Statement of Cash Flows
For the Year Ended 30 September 2022

2022
2021
£
£

Cash flows from operating activities

(Loss)/profit for the financial year
(841,321)
1,578,950

Adjustments for:

Depreciation of tangible assets
265,851
286,918

Government grants
-
(8,218)

Interest paid
36,179
27,755

Taxation charge
236,113
385,939

(Increase) in stocks
(1,761,744)
(1,833,030)

(Increase) in debtors
(250,939)
(179,600)

Decrease in amounts owed by participating ints
288,154
-

(Decrease)/increase in creditors
(400,868)
1,053,566

(Decrease)/increase in amounts owed to participating ints
(10,820)
-

Corporation tax (paid)
(347,240)
(326,216)

Loss on disposal of subsidiary
1,728,646
-

Net cash generated from operating activities

(1,057,989)
986,064


Cash flows from investing activities

Purchase of tangible fixed assets
(669,044)
(204,625)

Government grants received
-
8,218

Cash outflow from disposal of subsidiary
(201,250)
-

Net cash from investing activities

(870,294)
(196,407)
Page 16
 
SMD (Holdings) Limited
 

Consolidated Statement of Cash Flows (continued)
For the Year Ended 30 September 2022


2022
2021

£
£



Cash flows from financing activities

Repayment of/new finance leases
(33,186)
(63,076)

Shares treated as debt - redeemed
-
(781,000)

Dividends paid
(493,784)
(793,437)

Interest paid
(36,179)
(20,373)

HP interest
-
(7,382)

Net cash used in financing activities
(563,149)
(1,665,268)

Net (decrease) in cash and cash equivalents
(2,491,432)
(875,611)

Cash and cash equivalents at beginning of year
(9,906)
865,705

Cash and cash equivalents at the end of year
(2,501,338)
(9,906)


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
740,840
782,515

Bank overdrafts
(3,242,178)
(792,421)

(2,501,338)
(9,906)


The notes on pages 19 to 38 form part of these financial statements.

Page 17
 
SMD (Holdings) Limited
 

Consolidated Analysis of Net Debt
For the Year Ended 30 September 2022






At 1 October 2021
Cash flows
Acquisition and disposal of subsidiaries
Other non-cash changes
At 30 September 2022
£

£

£

£

£

Cash at bank and in hand

782,515

159,575

(201,250)

-

740,840

Bank overdrafts

(792,421)

(2,449,757)

-

-

(3,242,178)

Debt due within 1 year

(130,870)

(116,375)

-

-

(247,245)

Finance leases

(138,618)

33,186

-

24,324

(81,108)

Liquid investments

80,544

-

-

33,674

114,218


(198,850)
(2,373,371)
(201,250)
57,998
(2,715,473)

The notes on pages 19 to 38 form part of these financial statements.

Page 18
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

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.  The principal activity of the company is that of a holding company which incurs central costs for the group.

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 19
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

2.Accounting policies (continued)

 
2.3

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.

 
2.4

Finance costs

Finance costs are charged to profit or loss 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.

 
2.5

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.6

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 profit or loss 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.

Page 20
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

2.Accounting policies (continued)

 
2.7

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss 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 21
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

2.Accounting policies (continued)

 
2.8

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
-
2-10% straight line
Plant and machinery
-
20-50% straight line
Motor vehicles
-
25-33% straight line
Fixtures and fittings
-
20-100% straight line
Other fixed assets
-
20-33% straight line

 
2.9

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.10

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 average basis. 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.

 
2.11

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.

 
2.12

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 22
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

2.Accounting policies (continued)

 
2.13

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.

 
2.14

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 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.

 
2.15

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.

Page 23
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

2.Accounting policies (continued)

 
2.16

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.

 
2.17

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.


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 £3,011,215 (2021: £3,713,739).
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 £6,438,289 (2021: £7,247,970).
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 £2,707,228 (2021: £2,966,514).
Should these estimates vary, the profit or loss and balance sheet of the following years could be impacted.

Page 24
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

4.


Turnover

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


2022
2021
£
£

Design, manufacture and resale of readymade homeware products and fabrics
17,192,653
24,357,092


Analysis of turnover by country of destination:

2022
2021
£
£

United Kingdom
14,841,370
22,118,866

Rest of Europe
1,314,785
1,179,283

Rest of the world
1,036,498
1,058,943

17,192,653
24,357,092



5.


Other operating income

2022
2021
£
£

Other operating income
291,007
-

Government grants receivable
-
8,218

291,007
8,218



6.


Auditors' remuneration

2022
2021
£
£


Fees payable to the Group's auditor and its associates for the audit of the Group's annual accounts
18,000
30,000




The auditing of accounts of associates of the company pursuant to legislation
870
4,910

Payroll services
1,450
5,500

All other services
4,800
9,462

7,120
19,872

Page 25
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

7.


Employees

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


Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£


Wages and salaries
2,843,532
3,338,399
32,053
37,807

Social security costs
308,447
352,008
4,110
931

Cost of defined contribution scheme
161,151
205,528
93,920
38,928

3,313,130
3,895,935
130,083
77,666


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


        2022
        2021
            No.
            No.







Warehouse and distribution staff
20
33



Sales, management and clerical staff
41
56

61
89


8.


Directors remuneration

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


2022
2021
£
£



Emoluments
373,528
572,586

Pension contributions to money purchase schemes
79,105
36,409

452,633
608,995

During the year retirement benefits were accruing to 3 directors (2021: 3) in respect of defined contribution pension schemes. 
The highest paid director received remuneration of £174,972 (2021: £377,719).
The value of the company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £528 (2020: £1,317).
There are no other key management personnel. 


Page 26
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

9.


Interest payable and similar expenses

2022
2021
£
£


Bank interest payable
36,179
20,373

Preference share dividends
-
24,688

Finance leases and hire purchase contracts
-
7,382

36,179
52,443


10.


Taxation


2022
2021
£
£

Corporation tax


Current tax on profits for the year
168,358
380,382


168,358
380,382


Total current tax
168,358
380,382

Deferred tax


Origination and reversal of timing differences
67,755
5,557

Total deferred tax
67,755
5,557


Taxation on profit on ordinary activities
236,113
385,939
Page 27
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022
 
10.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is higher than (2021 -higher than) the standard rate of corporation tax in the UK of 19% (2021 -19%). The differences are explained below:

2022
2021
£
£


(Loss)/profit on ordinary activities before tax
(605,208)
1,964,889


(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 -19%)
(114,990)
373,329

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
991
6,628

Super deduction pool adjustment
(18,930)
(5,663)

Ineligible depreciation
8,605
11,645

Disposal of subsidiary
328,443
-

Other timing differences leading to an increase (decrease) in taxation
31,994
-

Total tax charge for the year
236,113
385,939


Factors that may affect future tax charges

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. 

Page 28
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

11.


Dividends

2022
2021
£
£

Ordinary A


Dividends paid on equity capital
41,417
62,123

Ordinary B


Dividends paid on equity capital
452,367
731,314

Dividend in specie


Disposal of SMD Home investment
141,640
-

Preference


Dividends paid on shares classed as debt
-
24,688

635,424
818,125


12.


Intangible assets

Group and Company





Goodwill
Negative goodwill
Total

£
£
£



Cost


At 1 October 2021
297,953
(217,664)
80,289


Disposals
-
47,573
47,573



At 30 September 2022

297,953
(170,091)
127,862



Amortisation


At 1 October 2021
297,953
(217,664)
80,289


On disposals
-
47,573
47,573



At 30 September 2022

297,953
(170,091)
127,862



Net book value



At 30 September 2022
-
-
-



At 30 September 2021
-
-
-



Page 29
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

13.


Tangible fixed assets

Group






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

£
£
£
£
£
£



Cost or valuation


At 1 October 2021
2,980,822
1,073,571
175,536
1,698,803
1,218,842
7,147,574


Additions
440,315
-
-
191,887
36,842
669,044


Disposals on disposal of subsidiary
(700,000)
(751,194)
-
-
(760,335)
(2,211,529)



At 30 September 2022

2,721,137
322,377
175,536
1,890,690
495,349
5,605,089



Depreciation


At 1 October 2021
355,368
1,145,456
50,514
1,479,329
1,150,393
4,181,060


Charge for the year on owned assets
49,577
-
38,220
151,885
26,169
265,851


Disposals on disposal of subsidiary
(126,004)
(697,075)
-
-
(725,971)
(1,549,050)



At 30 September 2022

278,941
448,381
88,734
1,631,214
450,591
2,897,861



Net book value



At 30 September 2022
2,442,196
(126,004)
86,802
259,476
44,758
2,707,228



At 30 September 2021
2,625,454
(71,885)
125,022
219,474
68,449
2,966,514

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


2022
2021
£
£



Plant and machinery
-
22,740

Motor vehicles
86,802
125,022

86,802
147,762

Page 30
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

           13.Tangible fixed assets (continued)


Company






Motor vehicles
Fixtures and fittings
Total

£
£
£

Cost or valuation


At 1 October 2021
175,536
13,015
188,551



At 30 September 2022

175,536
13,015
188,551



Depreciation


At 1 October 2021
50,514
13,015
63,529


Charge for the year
38,220
-
38,220



At 30 September 2022

88,734
13,015
101,749



Net book value



At 30 September 2022
86,802
-
86,802



At 30 September 2021
125,022
-
125,022






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


2022
2021
£
£



Motor vehicles
86,802
125,022

Page 31
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

14.


Fixed asset investments

Company





Investments in subsidiary companies

£



Cost or valuation


At 1 October 2021
5,055,112


Disposals
(141,640)



At 30 September 2022
4,913,472





Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Registered office

Class of shares

Holding

SMD Textiles Limited
Design and sales of furnishing textiles
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 32
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

15.


Stocks

Group
Group
2022
2021
£
£

Raw materials and consumables
183,498
164,569

Work in progress (goods to be sold)
96,937
284,538

Finished goods and goods for resale
6,157,854
6,798,863

6,438,289
7,247,970


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

A gain of £109,871 (2021: loss £254,317) was recognised in cost of sales against stock during the year due to slow-moving and obsolete stock.


16.


Debtors

Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£


Trade debtors
3,011,215
3,713,739
-
-

Amounts owed by group undertakings
-
-
-
374,862

Amounts owed by related parties
86,708
-
86,708
-

Other debtors
7,703
8,539
635
1,282

Prepayments and accrued income
161,543
151,202
9,040
7,571

Financial instruments
114,218
80,544
-
-

3,381,387
3,954,024
96,383
383,715


An impairment loss of £116,156 (2021: £12,438) was recognised against trade debtors.


17.


Cash and cash equivalents

Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£

Cash at bank and in hand
740,840
782,515
715,243
572,782

Less: bank overdrafts
(3,242,178)
(792,421)
-
-

(2,501,338)
(9,906)
715,243
572,782


Page 33
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

18.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£

Bank overdrafts
3,242,178
792,421
-
-

Trade creditors
1,994,906
2,876,386
700
700

Amounts owed to group undertakings
-
-
2,662,207
2,495,018

Amounts owed to related parties
7,765
-
-
-

Corporation tax
166,756
378,810
99,509
158,829

Other taxation and social security
275,733
888,029
1,205
2,216

Obligations under finance lease and hire purchase contracts
70,263
35,472
70,263
29,128

Other creditors
266,509
144,670
248,245
131,870

Accruals and deferred income
522,684
1,204,626
259,799
531,856

6,546,794
6,320,414
3,341,928
3,349,617


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. 


19.


Creditors: Amounts falling due after more than one year

Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£

Net obligations under finance leases and hire purchase contracts
10,845
103,146
10,845
85,166


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


20.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£

Within one year
70,263
35,472
70,263
29,128

Between 1-5 years
10,845
76,929
10,845
70,263

Over 5 years
-
26,217
-
14,903

81,108
138,618
81,108
114,294

Page 34
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

21.


Financial instruments

Group
Group
2022
2021
£
£

Financial assets

Financial assets measured at fair value through other comprehensive income
114,218
80,544




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. 


22.


Deferred taxation


Group



2022


£






At beginning of year
(74,883)


Credited to the profit or loss
(67,755)


Disposal of subsidiary
11,956



At end of year
(130,682)

Page 35
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022
 
22.Deferred taxation (continued)

Company


2022


£






At beginning of year
(23,754)


Charged to profit or loss
2,054



At end of year
(21,700)

The provision for deferred taxation is made up as follows:

Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£

Accelerated capital allowances
(134,684)
(76,887)
(21,700)
(23,754)

Pension surplus
4,002
2,004
-
-

(130,682)
(74,883)
(21,700)
(23,754)


23.


Share capital

2022
2021
£
£
Shares classified as equity

Allotted, called up and fully paid



387,600 (2021 -387,600) Ordinary A shares of £0.10 each
38,760
38,760
122,400 (2021 -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. 


Page 36
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

24.


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. 


25.


Discontinued operations

On 1 October 2021, there was a demerger exercise and the group disposed of its 100% shareholding in SMD Home Limited.  A dividend in specie of £141,640 was declared to transfer the shares in SMD Home Limited to SMD Home (Holdings) Limited. 

£

Net assets disposed of:


Tangible fixed assets
662,479

Stocks
2,571,425

Debtors
962,543

Cash
201,250

Creditors
(2,669,051)

 
 
(1,728,646)

Loss on disposal before tax
(1,728,646)

The net outflow of cash in respect of the sale of SMD Home Limited is as follows:

£


Cash transferred on disposal
(201,250)

Net outflow of cash
(201,250)


26.


Contingent liabilities

A guarantee exists in favour of HM Revenue & Customs for £125,000 in relation to the group VAT registration.

Page 37
 
SMD (Holdings) Limited
 
 
 
Notes to the Financial Statements
For the Year Ended 30 September 2022

27.


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 £161,151 (2021: £115,540). Contributions totalling £16,058 (2021: £10,544) were payable to the fund at the balance sheet date.


28.


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. 


2022
2021
£
£

Dividends paid to directors
41,417
62,123
Dividends paid to close family members of directors
452,367
731,314
Amounts owed to directors
247,245
130,870
Sales to companies with a shared director
668,013
-
Purchases from companies with a shared director
6,012
-
Amounts owed by companies with a shared director
78,943
-
Dividend in specie paid to companies with a shared director
141,640
-


29.


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