Simpson, McLearnon & Ferguson Limited - Period Ending 2017-12-31

Registration number: NI014479

Simpson, McLearnon & Ferguson Limited

Annual Report and Financial Statements

for the Year Ended 31 December 2017

Duffy & Co. (A&T) Ltd
Chartered Accountants & Registered Auditors
126 Eglantine Avenue
Belfast
Co Antrim
BT9 6EU

Simpson, McLearnon & Ferguson Limited

Contents

Company Information	1
Strategic Report	2
Director's Report	3
Statement of Director's Responsibilities	4
Independent Auditor's Report	5 to 7
Profit and Loss Account	8
Statement of Comprehensive Income	9
Balance Sheet	10
Statement of Changes in Equity	11
Statement of Cash Flows	12
Notes to the Financial Statements	13 to 24

Simpson, McLearnon & Ferguson Limited

Company Information

Directors

Mr Alan John Simpson

Registered office

1 Kiltonga Industrial Estate Belfast Road Newtownards Co Down BT23 4TJ

Solicitors

Stephen Perrott & Co 49 High Street Hollywood BT18 9AB

Bankers

Bank of Ireland Ballygowan Ballygowan Road Belfast BT5 7LH

Auditors

Duffy & Co. (A&T) Ltd Chartered Accountants & Registered Auditors 126 Eglantine Avenue Belfast Co Antrim BT9 6EU

Page 1

Simpson, McLearnon & Ferguson Limited

Strategic Report for the Year Ended 31 December 2017

The director presents his strategic report for the year ended 31 December 2017.

Principal activity

The principal activity of the company is the sale of toys, prams, nursery good etc

Fair review of the business

Turnover for the year amounted to £8,892,324 compared to £8,584,175 for the previous year.

Profit after tax amounted to £231,674 - (2016 - £218,741). The trading results and year end financial position were considered to be satisfactory.

The directors believe that there are further opportunities for growth as new stores are opened and plans are in place to ensure the company is well placed to retain its market position.

The company's key financial and other performance indicators during the year were as follows:

	Unit	2017	2016
Movement in sales	%	4	8
Gross margin	%	38	33
Net profit	%	3	3

Principal risks and uncertainties

The management of the business and the execution of the company's strategy are subject to a number of risks. The key business risks and uncertainties affecting the company are considered to relate to the current economic climate and competition from other key players in the market.

Approved by the director on 12 September 2018 and signed on its behalf by:

.........................................
Mr Alan John Simpson
Director

Page 2

Simpson, McLearnon & Ferguson Limited

Director's Report for the Year Ended 31 December 2017

The director presents his report and the financial statements for the year ended 31 December 2017.

Director of the company

The director who held office during the year was as follows:

Mr Alan John Simpson

Financial instruments

Objectives and policies

The company's operations expose it to a variety of financial risks that include credit risk, liquidity risk and cashflow risk. The company has in place a risk management programme that seeks to limit adverse effects on financial performance by monitoring levels of debt and the related finance costs.

Price risk, credit risk, liquidity risk and cash flow risk

Credit risk

The company has no significant concentration of credit risk. Customers who wish to trade on credit terms are subject to strict verification procedures in advance of credit being awarded and are continually being monitored.
The current prevailing market conditions have required discounting and lower margin on wholesale.

Currency risk

While the greater part of the company's revenues and expenses are denominated in sterling the company is exposed to some foreign exchange risk in the normal course of business. While the company has not used complex financial instruments to date to hedge foreign exchange exposure this position is kept constantly under review.

Liquidity and cash flow risk

The company's policy is to ensure that sufficient resources are available either from cash balances and cash flows to ensure all obligations can be met when they fall due.

Future developments

The directors aim to continue to seek new opportunities to expand the business within their existing areas of expertise.

Disclosure of information to the auditors

The director has taken 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. The director confirms that there is no relevant information that he knows of and of which he knows the auditors are unaware.

Approved by the director on 12 September 2018 and signed on its behalf by:

.........................................
Mr Alan John Simpson
Director

Page 3

Simpson, McLearnon & Ferguson Limited

Statement of Director's Responsibilities

The director acknowledges his responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is 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 director is required to:

•	select suitable accounting policies and apply them consistently;

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

•	state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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

The director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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.

Page 4

Simpson, McLearnon & Ferguson Limited

Independent Auditor's Report to the Members of Simpson, McLearnon & Ferguson Limited

Opinion

We have audited the financial statements of Simpson, McLearnon & Ferguson Limited (the 'company') for the year ended 31 December 2017, which comprise the Profit and Loss Account, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, 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).

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 auditor’s 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.

In our opinion the financial statements:

•	give a true and fair view of the state of the company's affairs as at 31 December 2017 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 Auditor’s 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 included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Page 5

Simpson, McLearnon & Ferguson Limited

Independent Auditor's Report to the Members of Simpson, McLearnon & Ferguson Limited

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 matter 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 Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

•	the Strategic Report and Director's Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our 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 and the Director's Report.

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 the director

As explained more fully in the Statement of Director's Responsibilities [set out on page 4], the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor’s 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 auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Page 6

Simpson, McLearnon & Ferguson Limited

Independent Auditor's Report to the Members of Simpson, McLearnon & Ferguson Limited

•

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

•	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the director.

•

Conclude on the appropriateness of the director's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.

•	Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

......................................
Desmond Duffy (Senior Statutory Auditor)
For and on behalf of Duffy & Co. (A&T) Ltd, Statutory Auditor

126 Eglantine Avenue
Belfast
Co Antrim
BT9 6EU

12 September 2018

Page 7

Simpson, McLearnon & Ferguson Limited

Profit and Loss Account for the Year Ended 31 December 2017

	Note	2017 £	2016 £
Turnover	3	8,892,324	8,584,175
Cost of sales		(5,647,277)	(5,753,286)
Gross profit		3,245,047	2,830,889
Administrative expenses		(2,988,340)	(2,606,742)
Other operating income	4	50,000	65,000
Operating profit	6	306,707	289,147
Interest payable and similar expenses	7	(16,845)	(12,784)
		(16,845)	(12,784)
Profit before tax		289,862	276,363
Taxation	11	(58,188)	(57,622)
Profit for the financial year		231,674	218,741

The above results were derived from continuing operations.

The company has no recognised gains or losses for the year other than the results above.

The notes on pages 13 to 24 form an integral part of these financial statements.

Page 8

Simpson, McLearnon & Ferguson Limited

Statement of Comprehensive Income for the Year Ended 31 December 2017

	2017 £	2016 £
Profit for the year	231,674	218,741
Total comprehensive income for the year	231,674	218,741

The notes on pages 13 to 24 form an integral part of these financial statements.

Page 9

Simpson, McLearnon & Ferguson Limited

(Registration number: NI014479)
Balance Sheet as at 31 December 2017

	Note	2017 £	2016 £
Fixed assets
Tangible assets	12	928,097	938,960
Investments	13	2	2
		928,099	938,962
Current assets
Stocks	14	2,705,000	2,740,720
Debtors	15	1,184,863	1,257,000
Cash at bank and in hand		857,825	681,907
		4,747,688	4,679,627
Creditors: Amounts falling due within one year	17	(3,043,175)	(3,092,272)
Net current assets		1,704,513	1,587,355
Total assets less current liabilities		2,632,612	2,526,317
Creditors: Amounts falling due after more than one year	17	-	(101,530)
Provisions for liabilities	18	(34,002)	(31,846)
Net assets		2,598,610	2,392,941
Capital and reserves
Called up share capital	20	1,000	5
Capital redemption reserve	21	5	5
Profit and loss account	21	2,597,605	2,392,931
Total equity		2,598,610	2,392,941

Approved and authorised by the director on 12 September 2018
 

.........................................

Mr Alan John Simpson
Director

The notes on pages 13 to 24 form an integral part of these financial statements.

Page 10

Simpson, McLearnon & Ferguson Limited

Statement of Changes in Equity for the Year Ended 31 December 2017

	Share capital £	Capital redemption reserve £	Profit and loss account £	Total £
At 1 January 2017	5	5	2,392,931	2,392,941
Profit for the year	-	-	231,674	231,674
Total comprehensive income	-	-	231,674	231,674
Dividends	-	-	(27,000)	(27,000)
New share capital subscribed	995	-	-	995
At 31 December 2017	1,000	5	2,597,605	2,598,610

	Share capital £	Capital redemption reserve £	Profit and loss account £	Total £
At 1 January 2016	5	5	2,179,190	2,179,200
Profit for the year	-	-	218,741	218,741
Total comprehensive income	-	-	218,741	218,741
Dividends	-	-	(5,000)	(5,000)
At 31 December 2016	5	5	2,392,931	2,392,941

The notes on pages 13 to 24 form an integral part of these financial statements.

Page 11

Simpson, McLearnon & Ferguson Limited

Statement of Cash Flows for the Year Ended 31 December 2017

	Note	2017 £	2016 £
Cash flows from operating activities
Profit for the year		231,674	218,741
Adjustments to cash flows from non-cash items
Depreciation and amortisation	6	89,805	84,183
Profit from disposals of investments	5	-	(20,576)
Finance costs	7	16,845	12,784
Income tax expense	11	58,188	57,622
		396,512	352,754
Working capital adjustments
Decrease/(increase) in stocks	14	35,720	(744,480)
Decrease/(increase) in trade debtors	15	72,137	(27,612)
(Decrease)/increase in trade creditors	17	(14,756)	796,697
Cash generated from operations		489,613	377,359
Income taxes paid	11	(51,384)	(63,156)
Net cash flow from operating activities		438,229	314,203
Cash flows from investing activities
Acquisitions of tangible assets		(78,942)	(83,155)
Proceeds from investment activities		-	220,878
Net cash flows from investing activities		(78,942)	137,723
Cash flows from financing activities
Interest paid	7	(16,845)	(12,784)
Proceeds from issue of ordinary shares, net of issue costs		995	-
Repayment of bank borrowing		(40,074)	(37,030)
Repayment of other borrowing		(100,000)	(100,000)
Payments to finance lease creditors		(445)	(2,666)
Dividends paid	24	(27,000)	(5,000)
Net cash flows from financing activities		(183,369)	(157,480)
Net increase in cash and cash equivalents		175,918	294,446
Cash and cash equivalents at 1 January		681,907	387,461
Cash and cash equivalents at 31 December		857,825	681,907

The notes on pages 13 to 24 form an integral part of these financial statements.

Page 12

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

1	General information

The company is a private company limited by share capital, incorporated in Northern Ireland.

The address of its registered office is:
1 Kiltonga Industrial Estate
Belfast Road
Newtownards
Co Down
BT23 4TJ

These financial statements were authorised for issue by the director on 12 September 2018.

2	Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

Group accounts not prepared

Group accounts are not prepared as the consolidated accounts would not be materially different from the company accounts.

Going concern

The financial statements have been prepared on a going concern basis and in accordance with accounting standards issued by the Financial Reporting Council of the UK.

Page 13

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

Judgements

The preparation of the financial statements requires the management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances.

Inventory provisioning - The company sells products and is subject to changing consumer demands and trends. As a result it is necessary to consider the recoverability of the cost of inventory and the associated provisioning required. When calculating the inventory provision, management considers the nature and condition of the inventory, as well as applying assumptions around anticipated saleability of goods.

Impairment of debtors - The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of the debtors and historical experience.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.

The company recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the company's activities.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the financial statements.

Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.

Tangible assets

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Page 14

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

Asset class	Depreciation method and rate
Motor vehicles	25% reducing balance
Fixtures and fittings	25% reducing balance
Buildings	2% straight line

Investments

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.


Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the weighted average method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are 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.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Page 15

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

3

Revenue

The analysis of the company's revenue for the year from continuing operations is as follows:

	2017  £	2016  £
Sale of goods	8,892,324	8,584,175

Page 16

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

4	Other operating income

The analysis of the company's other operating income for the year is as follows:

	2017  £	2016  £
Miscellaneous other operating income	50,000	65,000

5	Other gains and losses

The analysis of the company's other gains and losses for the year is as follows:

	2017  £	2016  £
Gain (loss) from disposals of investments	-	20,576

6	Operating profit

Arrived at after charging/(crediting)

	2017  £	2016  £
Depreciation expense	89,805	84,183
Operating lease expense - plant and machinery	2,743	2,580

7	Interest payable and similar expenses

	2017  £	2016  £
Interest on bank overdrafts and borrowings	16,236	11,190
Interest on obligations under finance leases and hire purchase contracts	40	240
Interest expense on other finance liabilities	569	1,354
	16,845	12,784

8	Staff costs

The aggregate payroll costs (including director's remuneration) were as follows:

	2017  £	2016  £
Wages and salaries	1,415,170	1,279,332
Social security costs	65,639	63,178
Other short-term employee benefits	7,063	6,559
Pension costs, defined contribution scheme	3,912	3,326
Other employee expense	7,410	7,844
	1,499,194	1,360,239

The average number of persons employed by the company (including the director) during the year, analysed by category was as follows:

Page 17

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

	2017 No.	2016 No.
Administration and support	9	10
Sales, marketing and distribution	132	95
	141	105

9	Director's remuneration

The director's remuneration for the year was as follows:

	2017  £	2016  £
Remuneration	42,000	42,000

10	Auditors' remuneration

	2017  £	2016  £
Audit of the financial statements	7,000	5,500

 

11

Taxation

Tax charged/(credited) in the income statement

	2017  £	2016  £
Current taxation
UK corporation tax	56,032	51,384
UK corporation tax adjustment to prior periods	-	(44)
	56,032	51,340
Deferred taxation
Arising from origination and reversal of timing differences	2,156	6,282
Tax expense in the income statement	58,188	57,622

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2016 - the same as the standard rate of corporation tax in the UK) of 19.25% (2016 - 20%).

The differences are reconciled below:

	2017  £	2016  £
Profit before tax	289,862	276,363
Corporation tax at standard rate	55,798	55,273
Effect of expense not deductible in determining taxable profit (tax loss)	2,390	2,349
Total tax charge	58,188	57,622

Page 18

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

Deferred tax

Deferred tax assets and liabilities

2017	Liability £
Accelerated tax depreciation	34,002

2016	Liability £
Accelerated tax depreciation	31,846

12	Tangible assets

	Land and buildings £	Furniture, fittings and equipment  £	Motor vehicles  £	Total £
Cost or valuation
At 1 January 2017	1,012,998	541,485	9,000	1,563,483
Additions	-	78,942	-	78,942
At 31 December 2017	1,012,998	620,427	9,000	1,642,425
Depreciation
At 1 January 2017	312,839	306,903	4,781	624,523
Charge for the year	20,260	68,490	1,055	89,805
At 31 December 2017	333,099	375,393	5,836	714,328
Carrying amount
At 31 December 2017	679,899	245,034	3,164	928,097
At 31 December 2016	700,159	234,582	4,219	938,960

Included within the net book value of land and buildings above is £679,899 (2016 - £700,159) in respect of freehold land and buildings.
 

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

	2017 £	2016 £
Motor vehicle	-	-

Page 19

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

13	Investments in subsidiaries, joint ventures and associates

	2017  £	2016  £
Investments in subsidiaries	2	2

Subsidiaries	£
Cost or valuation
At 1 January 2017	2
Provision
Carrying amount
At 31 December 2017	2
At 31 December 2016	2

Details of undertakings

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking	Registered office	Holding	Proportion of voting rights and shares held
			2017	2016

Subsidiary undertakings
SMF Toys (Ireland) Ltd		Ordinary	100%	100%
	Ireland

The principal activity of SMF Toys (Ireland) Ltd is is the retail sale of toys.

14

Stocks

	2017  £	2016  £
Other inventories	2,705,000	2,740,720

15

Debtors

	2017  £	2016  £
Trade debtors	908,594	985,925
Other debtors	117,183	50,000
Prepayments	159,086	221,075
Total current trade and other debtors	1,184,863	1,257,000

Page 20

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

16	Cash and cash equivalents

	2017  £	2016  £
Cash at bank	857,825	681,907

17

Creditors

	Note	2017  £	2016  £
Due within one year
Loans and borrowings	22	-	38,989
Trade creditors		2,441,011	2,449,823
Social security and other taxes		390,110	329,552
Outstanding defined contribution pension costs		2,727	2,569
Other payables		71,112	130,660
Accrued expenses		82,183	89,295
Income tax liability	11	56,032	51,384
		3,043,175	3,092,272
Due after one year
Loans and borrowings	22	-	101,530

18	Deferred tax and other provisions

	Deferred tax £	Total £
At 1 January 2017	31,846	31,846
Additional provisions	2,156	2,156
At 31 December 2017	34,002	34,002

19	Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £3,912 (2016 - £3,326).

Contributions totalling £2,727 (2016 - £2,569) were payable to the scheme at the end of the year and are included in creditors.

20	Share capital

Allotted, called up and fully paid shares

Page 21

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

	2017		2016
	No.	£	No.	£
Ordinary of £1 each	995	995	5	5
A Ordinary of £1 (2016 - £0) each	1	1	-	-
B Ordinary of £1 (2016 - £0) each	1	1	-	-
C Ordinary of £1 (2016 - £0) each	1	1	-	-
D Ordinary of £1 (2016 - £0) each	1	1	-	-
E Ordinary of £1 (2016 - £0) each	1	1	-	-
	1,000	1,000	5	5

New shares allotted

During the year 995 Ordinary having an aggregate nominal value of £995 were allotted for an aggregate consideration of £995.

21

Reserves

Capital redemption reserve

The capital redemption reserve is as a result of the purchase by the company of its own shares in a previous year.

22	Loans and borrowings

	2017  £	2016  £
Non-current loans and borrowings
Bank borrowings	-	1,530
Other borrowings	-	100,000
	-	101,530

	2017  £	2016  £
Current loans and borrowings
Bank borrowings	-	38,544
Finance lease liabilities	-	445
	-	38,989

Bank borrowings

Bank loans and overdrafts is denominated in sterling with a nominal interest rate of 5%, and the final instalment is due on 31 December 2017. The carrying amount at year end is £Nil (2016 - £40,074). Bank facilities are secured by way of a legal mortgage and standard bond and security over various properties owned by the company together with a personal guarantee provided by a director.

Page 22

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

23	Obligations under leases and hire purchase contracts

Finance leases

The total of future minimum lease payments is as follows:

	2017 £	2016 £
Not later than one year	-	444

24

Dividends

Interim dividends paid

		2017 £		2016 £
Interim dividend of £5.025 (2016 - £1,000.00) per each Ordinary		5,000		5,000
Interim dividend of £10,000.00 (2016 - £Nil) per each A Ordinary		10,000		-
Interim dividend of £2,000.00 (2016 - £Nil) per each B Ordinary		2,000		-
Interim dividend of £5,000.00 (2016 - £Nil) per each D Ordinary		5,000		-
Interim dividend of £5,000.00 (2016 - £Nil) per each E Ordinary		5,000		-
		27,000		5,000

25	Commitments

Capital commitments

The total amount contracted for but not provided in the financial statements was £Nil (2016 - £Nil).

26	Related party transactions

Key management compensation

	2017 £	2016 £
Salaries and other short term employee benefits	47,389	46,677

Dividends paid to directors

	2017 £	2016 £
Mr Alan John Simpson
Interim dividend	5,000	5,000

Summary of transactions with subsidiaries

Simpson McLearnon & Ferguson Limited supplies toys and nursery goods to its subsidiary SMF Toys ( Ireland) Ltd.
 

Page 23

Simpson, McLearnon & Ferguson Limited

Notes to the Financial Statements for the Year Ended 31 December 2017

Income and receivables from related parties

2017	Subsidiary £
Sale of goods	307,863
Receipt of services	20,000
Settlement of liabilities	(374,903)
	(47,040)
Amounts receivable from related party	469,934

2016	Subsidiary £
Sale of goods	426,548
Receipt of services	15,000
Settlement of liabilities	(277,571)
	163,977
Amounts receivable from related party	516,975

Loans to related parties

2017	Key management £
At start of period	100,000
Repaid	(100,000)
At end of period	-

2016	Subsidiary £	Key management £
At start of period	165,000	200,000
Advanced	-	50,000
Repaid	(165,000)	(150,000)
At end of period	-	100,000

Terms of loans to related parties

The loan is repayable on demand.
 

27	Parent and ultimate parent undertaking

The ultimate controlling party is Alan Simpson.

28	APB Ethical Standards relevant circumstances

In common with other businesses our size and nature we use our auditors to prepare and submit returns to tax authorities and assist with the preparation of the financial statements.

Page 24