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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 2024
The Group's balance sheet on page 11 reports shareholder funds of £7,143,112 (2023: £7,003,547).
Turnover declined by 9.4%, while gross margin decreased by 14.2% with the gross margin percentage decreasing from 37.6% to 35.6%, primarily due to increased investment in sampling and point-of-sale initiatives. The Group remains committed to investing in the ILIV brand through targeted promotional and marketing activities. This strategic approach is facilitating growth in both new export markets and UK sales channels, driving increased sales.
Economic Downturn
The Group's performance is closely tied to consumer spending in soft furnishings and commercial expenditure within the healthcare, education, and hospitality sectors. Any downturn in these areas could negatively impact sales. Senior management continuously monitors economic conditions and, in the event of a severe downturn, adjusts marketing and pricing strategies accordingly. Fixed Overheads as a Percentage of Turnover A significant portion of the Group's overheads are fixed, presenting a risk to profitability if revenue declines. Management closely tracks fixed overheads against budgeted figures on a monthly basis and implements cost-saving measures when revenue downturns are anticipated. Competitive Market Conditions The Group operates in highly competitive markets, exerting continual pressure on margins. To maintain cost efficiency, the Group consistently refines its sourcing strategies to ensure optimal production costs. Workforce Engagement and Retention The Group prioritises employee engagement and retention through regular feedback mechanisms such as engagement surveys, newsletters, and town hall meetings. Additionally, initiatives like wellness weeks and hybrid working arrangements play a key role in fostering employee satisfaction and retention. Foreign Currency Fluctuations As a significant proportion of the Group’s purchases are made in foreign currencies, the business is exposed to exchange rate fluctuations. To mitigate this risk, the Group utilises forward contracts and other financial instruments. However, if hedging strategies fail to fully offset currency fluctuations, financial results may be adversely affected.
The Group views its banking covenants as a critical financial KPI. With a stable cash flow during the year, significant headroom exists to support future investments.
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SMD (Holdings) Limited
Group Strategic Report (continued)
For the Year Ended 30 September 2024
The Group employs various KPIs to enhance working capital efficiency and customer service performance:
Working Capital KPIs: Debtor and creditor days, stock turnover, and cash flow are monitored against predefined budget targets. Customer Service KPIs: Metrics such as customer retention, acquisition, and on-time delivery performance are tracked to ensure service excellence.
Financial Instruments
The Group primarily utilises an operational bank account, with minimal reliance on complex financial instruments. Its primary financial risks include ensuring sufficient liquidity, mitigating customer default risk, and managing interest rate and foreign exchange fluctuations. Funding and Liquidity The Group finances its operations through retained earnings, ensuring sufficient cash levels to meet ongoing business needs while maintaining flexibility for unforeseen circumstances. The policy is to proactively manage cash flow and secure funding ahead of anticipated requirements when necessary. Credit Risk Management To minimise exposure to customer default risk, the Group routinely assesses customer creditworthiness and utilises a credit insurance policy with Allianz. Interest Rate Risk Management The Group's exposure to interest rate fluctuations is limited, as its only secured bank borrowing is a bank overdraft. A structured policy is in place to manage interest rate risks. Foreign Currency Risk Management To mitigate exchange rate volatility, the Group employs forward contracts as part of its risk management strategy.
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 2024
The directors present their report and the financial statements for the year ended 30 September 2024.
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.
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 £614,188 (2023 - £1,119,967).
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 2024
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 2024, which comprise the Consolidated Profit and Loss Account, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the 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.
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SMD (Holdings) Limited
Independent Auditors' Report to the Members of SMD (Holdings) Limited (continued)
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.
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.
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SMD (Holdings) Limited
Independent Auditors' Report to the Members of SMD (Holdings) Limited (continued)
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:
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 company 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 Company'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 Company 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 Company, 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 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.
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SMD (Holdings) Limited
Independent Auditors' Report to the Members of SMD (Holdings) Limited (continued)
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.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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
3 Stockport Exchange
Stockport
Cheshire
SK1 3GG
Date:
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SMD (Holdings) Limited
Consolidated Profit and Loss Account
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Consolidated Statement of Comprehensive Income
For the Year Ended 30 September 2024
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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 18 to 37 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 18 to 37 form part of these financial statements.
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SMD (Holdings) Limited
Consolidated Statement of Changes in Equity
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Consolidated Statement of Changes in Equity
For the Year Ended 30 September 2023
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SMD (Holdings) Limited
Company Statement of Changes in Equity
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Consolidated Statement of Cash Flows
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Consolidated Analysis of Net Debt
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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 2024
2.Accounting policies (continued)
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
2.Accounting policies (continued)
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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 2024
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Balance Sheet when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
2.Accounting policies (continued)
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
2.Accounting policies (continued)
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Provision for obsolete and slow moving stocks The company reviews its stocks to assess loss on account of obsolescence on a regular basis. In determining whether provision for obsolescence should be recorded in the profit and loss account, the company makes judgements as to whether there is any observable data indicating that there is any future saleability of the product and the estimated net realisable value for such product. Accordingly, provision for impairment is made where the net realisable value is less than the cost based on best estimates by the management. The provision for obsolescence of stock is based on the ageing and historical sales pattern. The value of stock at the year end totalled £5,996,859 (2023: £5,744,237). 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 2024
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 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
There were no factors that may affect future tax charges.
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
14.Tangible fixed assets (continued)
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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SMD (Holdings) Limited
Notes to the Financial Statements
For the Year Ended 30 September 2024
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.
A guarantee exists in favour of HM Revenue & Customs for £125,000 in relation to the group VAT registration.
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 £175,009 (2023: £165,641). Contributions totalling £9,922 (2023: £8,678) 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 2024
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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