SMH Products Limited - Limited company accounts 18.2

REGISTERED NUMBER: 02968133 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 28 FEBRUARY 2018

FOR

SMH PRODUCTS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

DIRECTORS:

D Meehan

D T Rowe

P Cameron

J C Leese

G Barker

D Clark

REGISTERED OFFICE:

SMH House

29-33 Maxwell Street

South Shields

Tyne and Wear

NE33 4PU

REGISTERED NUMBER:

02968133 (England and Wales)

SENIOR STATUTORY AUDITOR:

Michael Moran BA FCA

AUDITORS:

Robson Laidler Accountants Limited

Statutory Auditor

Fernwood House

Fernwood Road

Jesmond

Newcastle upon Tyne

Tyne and Wear

NE2 1TJ

BANKERS:

Lloyds Bank Plc

High Street

Gosforth

Newcastle upon Tyne

NE3 1JQ

SOLICITORS:

Ward Hadaway

Sandgate House

102 Quayside

Newcastle upon Tyne

NE1 3DX

The directors present their strategic report for the year ended 28 February 2018.

REVIEW OF BUSINESS

The results for the year end financial position are as shown in the annexed accounts.

The main activities of the Company have been sale and hire of equipment related to the abatement, control

and disposal of hazardous substances and related consumables.

The Company has seen a small reduction in turnover in the current year with like for like sales having fallen

from £13.3m to £13.05m.

Bottom line profits have fallen by £560K, of which £387K was due to the write off of intercompany loans as

the group has re-organised its corporate structure and streamlined its UK and International operations.

The company continues to invest heavily in its fleet hire to meet customer requirements. This investment

amounted to £518K in the year.

We continue to actively pursue market diversification and the company has invested significantly in research

and development in order to develop products for extant and future markets.

Taking these factors into account it is our opinion the company is in an excellent position to meet its

objectives in the coming year.

PRINCIPAL RISKS AND UNCERTAINTIES

The company has an established, structured approach to risk management.

The company's principal risk is with regard to the threat of an economic downturn in any of the company's

overseas markets or any markets serviced by any of the related companies with which the company has

links. This risk is particularly worrying when we considered the aftermath of Brexit, and the effect on

investment and business confidence in both foreign and domestic markets.These risks are mitigated by

diversification into different product ranges and expansion into different markets throughout the world.

The company's activities expose it to a variety of financial risks, including effects of credit, liquidity and cash

flows, and foreign currency risk. The company has adopted risk management policies that seek to mitigate

these risks in a cost effective manner. Financial assets that expose the company to financial risk consist

primarily of trade debtors and cash. Financial liabilities that expose the company to financial risk consist

primarily of trade creditors, bank loans and inter company loan agreements.

CREDIT RISK

Credit risk is the loss in the value of financial assets due to counterparties failing to meet all or part of their

obligations. The company performs ongoing credit evaluations of its customer's financial condition.

LIQUIDITY RISK

Liquidity risk is the risk that the company does not have sufficient liquid assets to meet its obligations as they

fall due. Liquidity is maintained at the prudent level and the company ensure there is adequate liquidity buffer

to cover contingencies. The company maintains sufficient cash and credit lines from its bankers to meet its

funding requirements.

ON BEHALF OF THE BOARD:

D T Rowe - Director

23 November 2018

The directors present their report with the financial statements of the company for the year ended 28 February 2018.

DIVIDENDS

No dividends will be distributed for the year ended 28 February 2018.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 March 2017 to the date of

this report.

D Meehan

D T Rowe

Other changes in directors holding office are as follows:

P Cameron - appointed 1 October 2017

J C Leese - appointed 1 October 2017

G Barker and D Clark were appointed as directors after 28 February 2018 but prior to the date of this report.

FINANCIAL INSTRUMENTS

The company has bank loans which are interest bearing and which are secured on the company's freehold

property and certain investment properties. The applicable loan interest rates are linked to movements in the

bank base rates. Interest rate risk with regard to unfavourable interest rate movements is not considered to

be material to the financial statements due to the arrangements in place.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial

statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law

the directors have elected to prepare the financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including

Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of

Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied

that they give a true and fair view of the state of affairs of the company and of the profit or loss of the

company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain

the company's transactions and disclose with reasonable accuracy at any time the financial position of the

company and enable them to ensure that the financial statements comply with the Companies Act 2006. They

are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for

the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the

Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps

that he ought to have taken as a director in order to make himself aware of any relevant audit information and

to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Robson Laidler Accountants Limited, will be proposed for re-appointment at the forthcoming

Annual General Meeting.

ON BEHALF OF THE BOARD:

D T Rowe - Director

23 November 2018

Opinion

We have audited the financial statements of SMH Products Limited (the 'company') for the year ended

28 February 2018 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of

Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting

policies. The financial reporting framework that has been applied in their preparation is applicable law and

United Kingdom Accounting Standards, including Financial Reporting Standard 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 company's affairs as at 28 February 2018 and of its profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the Auditors'

responsibilities for the audit of the financial statements section of our report. We are independent of the

company in accordance with the ethical requirements that are relevant to our audit of the financial statements

in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in

accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to

report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the

Strategic Report and the Report of the Directors, but does not include the financial statements and our Report

of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent

otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,

in doing so, consider whether the other information is materially inconsistent with the financial statements or

our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine whether there is a

material misstatement in the financial statements or a material misstatement of the other information. If,

based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact. We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of

the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to

report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair

view, and for such internal control as the directors determine necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the company or to cease

operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our

Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's

members those matters we are required to state to them in a Report of the Auditors and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the

company and the company's members as a body, for our audit work, for this report, or for the opinions we

have formed.

Michael Moran BA FCA (Senior Statutory Auditor)

For and on behalf of Robson Laidler Accountants Limited

Statutory Auditor

Fernwood House

Fernwood Road

Jesmond

Newcastle upon Tyne

Tyne and Wear

NE2 1TJ

23 November 2018

TURNOVER

4

13,045,390

13,335,455

Cost of sales

7,978,239

8,055,707

GROSS PROFIT

5,067,151

5,279,748

Administrative expenses

4,485,637

4,277,949

581,514

1,001,799

Gain/loss on revaluation of assets

75,000

-

OPERATING PROFIT

6

656,514

1,001,799

Intercompany loan write off

7

386,934

-

269,580

1,001,799

Interest receivable and similar income

8,829

9,549

278,409

1,011,348

Interest payable and similar expenses

8

47,810

45,334

PROFIT BEFORE TAXATION

230,599

966,014

Tax on profit

9

(88,127

)

87,050

PROFIT FOR THE FINANCIAL YEAR

318,726

878,964

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

318,726

878,964

FIXED ASSETS

Tangible assets

10

2,833,243

2,697,014

Investment property

11

300,000

225,000

3,133,243

2,922,014

CURRENT ASSETS

Stocks

12

1,031,756

814,080

Debtors

13

6,805,045

6,938,411

Cash at bank and in hand

161,045

499,634

7,997,846

8,252,125

CREDITORS

Amounts falling due within one year

14

5,374,808

5,821,737

NET CURRENT ASSETS

2,623,038

2,430,388

TOTAL ASSETS LESS CURRENT LIABILITIES

5,756,281

5,352,402

CREDITORS

Amounts falling due after more than one year

15

(685,997

)

(611,089

)

PROVISIONS FOR LIABILITIES

19

(167,923

)

(157,678

)

NET ASSETS

4,902,361

4,583,635

CAPITAL AND RESERVES

Called up share capital

20

750

750

Revaluation reserve

21

55,055

56,818

Capital redemption reserve

21

500

500

Retained earnings

21

4,846,056

4,525,567

SHAREHOLDERS' FUNDS

4,902,361

4,583,635

The financial statements were approved and authorised for issue by the Board of Directors on 23 November 2018 and were signed on its behalf by:

D T Rowe - Director

Called up

Capital

share

Retained

Revaluation

redemption

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1 March 2016

750

3,644,840

58,581

500

3,704,671

Changes in equity

Total comprehensive income

-

880,727

(1,763

)

-

878,964

Balance at 28 February 2017

750

4,525,567

56,818

500

4,583,635

Changes in equity

Total comprehensive income

-

320,489

(1,763

)

-

318,726

Balance at 28 February 2018

750

4,846,056

55,055

500

4,902,361

1.	STATUTORY INFORMATION

SMH Products Limited is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information

page.

The presentation currency of the financial statements is the Pound Sterling (£).

The financial statements are rounded to the nearest £1.

2.	STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention as modified by the

revaluation of certain assets.

The significant accounting policies applied in the preparation of these financial statements are set out

below. These policies have been consistently applied to all years presented unless otherwise stated.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial

statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and

Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows.

Significant judgements and estimates

The preparation of the financial statements requires management to make estimates and assumptions

that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of

contingent liabilities at the date of the financial statements. If, in the future, such estimates and

assumptions, which are based on management's best judgement at the date of the financial

statements, deviate from the actual circumstances, the original estimates and judgements will be

modified as appropriate in the year in which the circumstances change.

The key assumptions concerning the future and other key sources of estimation uncertainty at the

reporting date that have a significant risk of causing a material adjustment to the carrying amounts of

assets and liabilities within the next financial year include:

The estimated useful lives of tangible fixed assets

The investment properties have been valued at fair value based on directors' estimates.

Turnover

Sale of goods

Turnover from the sale of goods is recognised when significant risks and rewards of ownership of the

goods have transferred to the buyer, the amount of turnover can be measured reliably, it is probable

that the economic benefits associated with the transaction will flow to the company and the costs

incurred or to be incurred in respect of the transaction can be measured reliably. This is usually on

despatch of the goods.

Tangible fixed assets

Tangible fixed assets are stated at cost (or deemed cost) or valuation less accumulated depreciation

and accumulated impairment losses. Cost includes costs directly attributable to making the asset

capable of operating as intended.

Plant hire fleet assets are capitalised using direct cost, direct labour and an attributable level of

overhead.

Freehold property

-

2% straight line basis

Long leasehold

-

over term of the lease

Improvements to property

-

10% straight line basis

Plant and machinery

-

at varying SL and RB rates

Fixtures and fittings

-

20% straight line basis

Motor vehicles

-

20% straight line basis

Plant hire fleet

-

at varying SL and RB rates

Investment property

Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from

changes in fair value is recognised in profit or loss.

The investment property has been valued on the basis of advice given by a local estate agent.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost

includes all costs of purchase, costs of conversion and other costs incurred in bringing stock to its

present location and condition. Cost is calculated using the first-in, first-out formula. Provision is

made for damaged, obsolete and slow-moving stock where appropriate.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of

Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive

income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been

enacted or substantively enacted by the balance sheet date.

Deferred taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at

the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods

different from those in which they are recognised in financial statements. Deferred tax is measured

using tax rates and laws that have been enacted or substantively enacted by the year end and that are

expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable

that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at

the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of

exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at

the operating result.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet.

Those held under hire purchase contracts are depreciated over their estimated useful lives. Those

held under finance leases are depreciated over their estimated useful lives or the lease term,

whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The

capital element of the future payments is treated as a liability.

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the

period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the

company's pension scheme are charged to profit or loss in the period to which they relate.

Debtors and creditors receivable/payable within one year

Debtors and creditors with no stated interest rate and receivable or payable within one year are

recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss

account in other administrative expenses.

Loans and borrowings

Loans and borrowings are initially recognised at the transaction price including transaction costs.

Subsequently, they are measured at amortised cost using the effective interest rate method, less

impairment. If an arrangement constitutes a finance transaction it is measured at present value.

Impairment of assets

Assets not measured at fair value are reviewed for any indication that the asset may be impaired at

each balance sheet date. If such indication exists, the recoverable amount of the asset, or the asset's

cash generating unit, is estimated and compared to the carrying amount. Where the carrying amount

exceeds its recoverable amount, an impairment loss is recognised in profit or loss unless the asset is

carried at a revalued amount where the impairment loss is a revaluation decrease.

Provisions

Provisions are recognised when the company has an obligation at the balance sheet date as a result of

a past event, it is probable that an outflow of economic benefits will be required in settlement and the

amount can be reliably estimated.

4.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2018

2017

£

£

Sale of goods

13,045,390

13,335,455

13,045,390

13,335,455

An analysis of turnover by geographical market is given below:

2018

2017

£

£

United Kingdom

12,986,806

13,227,398

Europe

58,584

108,057

13,045,390

13,335,455

5.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

2,575,771

2,167,890

Social security costs

233,962

209,089

Other pension costs

59,568

47,074

2,869,301

2,424,053

The average number of employees during the year was as follows:

2018

2017

Administrative staff

9

4

Branch staff

76

79

Directors

4

3

89

86

2018

2017

£

£

Directors' remuneration

79,713

264

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

2

2

6.	OPERATING PROFIT

The operating profit is stated after charging:

2018

2017

£

£

Hire of plant and machinery

17,476

30,335

Other operating leases

360,080

382,718

Depreciation - owned assets

360,929

382,953

Depreciation - assets on hire purchase contracts

107,042

110,093

Loss on disposal of fixed assets

53,674

12,192

Auditors' remuneration

8,800

15,525

Foreign currency losses

25

36,879

Auditors' remuneration - non audit services

-

415

7.	EXCEPTIONAL ITEMS

2018

2017

£

£

Intercompany loan write off

(386,934

)

-

During the year the company wrote off a number of intercompany loan balances as part of a group

restructuring exercise.

8.

INTEREST PAYABLE AND SIMILAR EXPENSES

2018

2017

£

£

Bank interest

-

277

Bank loan interest

12,197

15,458

Other interest payable

8,650

7,420

Hire purchase interest

26,963

22,179

47,810

45,334

9.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the profit for the year was as follows:

2018

2017

£

£

Current tax:

UK corporation tax

-

98,372

Adjustment in respect of

previous years

(98,372

)

-

Total current tax

(98,372

)

98,372

Deferred tax

10,245

(11,322

)

Tax on profit

(88,127

)

87,050