Company Registration No. 02826103 (England and Wales)
MERLIN CYCLES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2019
MERLIN CYCLES LIMITED
COMPANY INFORMATION
Director
Mr J A Moss
Company number
02826103
Registered office
Unit A4-A5 Buckshaw Link
Ordnance Road
Chorley
Lancashire
PR7 7EL
Auditor
Baldwins Audit Services
St Crispin House
St Crispin Way
Rossendale
BB4 4PW
MERLIN CYCLES LIMITED
CONTENTS
Page
Strategic report
1
Director's report
2
Director's responsibilities statement
3
Independent auditor's report
4 - 5
Statement of income and retained earnings
6
Balance sheet
7
Notes to the financial statements
8 - 19
MERLIN CYCLES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2019
- 1 -
The director presents the strategic report for the year ended 31 October 2019.
Fair review of the business
During the year the company has continued to expand in most of its major geographical markets. Turnover has increased by 17%, with the company's gross profit margin remaining stable.
The company's profit before tax has increased in comparison the previous year, in both absolute terms and margin. The company continues to recruit and invest in its staff, whilst attempting to secure market share with targeted advertising.
The levels of stock held by the company continue to increase, broadly in line with turnover. This puts us in a strong position in a competitive market. Pressure on margin remains high in online retail, but we hope to remain competitive with new business relationships and improved buying prices.
Principal risks and uncertainties
At the date of approval of the financial statements, the main uncertainty facing the company is the medium to long term impact of the COVID-19 pandemic. During the outbreak of the pandemic in Spring 2020, the company experienced an increase in demand from customers and remains in strong financial health. There are no reasonable concerns over the company's ability to continue trading for the foreseeable future, however there is uncertainty over the longer term impact of the pandemic on the wider economy, and the effect this could have on the company.
The company trades in various currencies and is at risk of fluctuations in exchange rates. This risk is managed by entering into forward exchange contracts where appropriate.
The company is also facing uncertainty related to the UK's exit from the EU. It is anticipated that any increase in purchase costs from other EU countries will also impact the company's major competitors.
Mr J A Moss
Director
28 July 2020
MERLIN CYCLES LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 OCTOBER 2019
- 2 -
The director presents his annual report and financial statements for the year ended 31 October 2019.
Principal activities
The principal activity of the company continued to be that of the retailing of cycles and cycle accessories.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr J A Moss
Results and dividends
The results for the year are set out on page 6.
Ordinary dividends were paid amounting to £350,750. The director does not recommend payment of a final dividend.
Financial instruments
Principal financial instruments
The company’s principal financial instruments include derivative financial instruments, the purpose of which is to manage currency risks arising from the company’s activities, and bank overdrafts and loans, the main purpose of which is to raise finance for the company’s operations.
In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations. Derivative transactions which the company enters into principally comprise forward exchange contracts. Derivative instruments are not entered into for speculative purposes.
Liquidity risk
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Auditor
The auditor, Baldwins Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr J A Moss
Director
28 July 2020
MERLIN CYCLES LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2019
- 3 -
The director is responsible 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 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 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 them 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.
MERLIN CYCLES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MERLIN CYCLES LIMITED
- 4 -
Opinion
We have audited the financial statements of Merlin Cycles Limited (the 'company') for the year ended 31 October 2019 which comprise the statement of income and retained earnings, the balance sheet 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 FRS 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 31 October 2019 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.
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 director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the director has 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
.
The director is 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.
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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the director's r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
MERLIN CYCLES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MERLIN CYCLES LIMITED
- 5 -
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 identifie
d
material misstatements in the strategic report and the director's
r
eport
.
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 director's remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, 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 has 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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s 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 him 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.
Mr Nicholas Stockton (Senior Statutory Auditor)
for and on behalf of Baldwins Audit Services
29 July 2020
Statutory Auditor
St Crispin House
St Crispin Way
Rossendale
BB4 4PW
MERLIN CYCLES LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 OCTOBER 2019
- 6 -
2019
2018
Notes
£
£
Turnover
3
28,609,113
24,479,041
Cost of sales
(24,024,675)
(20,534,618)
Gross profit
4,584,438
3,944,423
Administrative expenses
(3,328,364)
(3,097,363)
Operating profit
4
1,256,074
847,060
Interest receivable and similar income
236
97
Interest payable and similar expenses
7
(49,212)
(46,644)
Profit before taxation
1,207,098
800,513
Tax on profit
8
(259,582)
(155,639)
Profit for the financial year
947,516
644,874
Retained earnings brought forward
3,093,597
2,683,723
Dividends
9
(350,750)
(235,000)
Retained earnings carried forward
3,690,363
3,093,597
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MERLIN CYCLES LIMITED
BALANCE SHEET
AS AT
31 OCTOBER 2019
31 October 2019
- 7 -
2019
2018
Notes
£
£
£
£
Fixed assets
Intangible assets
10
78,494
104,659
Tangible assets
11
70,437
75,838
Investments
12
11,500
11,500
160,431
191,997
Current assets
Stocks
13
8,220,984
6,854,030
Debtors
14
156,284
66,616
Cash at bank and in hand
473,383
352,604
8,850,651
7,273,250
Creditors: amounts falling due within one year
15
(5,297,476)
(4,343,757)
Net current assets
3,553,175
2,929,493
Total assets less current liabilities
3,713,606
3,121,490
Provisions for liabilities
17
(22,743)
(27,393)
Net assets
3,690,863
3,094,097
Capital and reserves
Called up share capital
20
500
500
Profit and loss reserves
3,690,363
3,093,597
Total equity
3,690,863
3,094,097
The financial statements were approved and signed by the director and authorised for issue on 28 July 2020
Mr J A Moss
Director
Company Registration No. 02826103
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2019
- 8 -
1
Accounting policies
Company information
Merlin Cycles Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Unit A4-A5 Buckshaw Link, Ordnance Road, Chorley, Lancashire, PR7 7EL.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements have been prepared with early application of
the
FRS 102 Triennial Review 2017 amendments in full.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’
:
Interest income/expense and net gains/losses for each category of financial instrument;
basis
of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 26 ‘Share based Payment’
:
Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements
;
-
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
Merlin Cycles Group Limited
. These consolidated financial statements are available from its registered office,
Unit A4-A5 Buckshaw Link, Ordnance Road, Chorley, Lancashire, PR7 7EL.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he director has a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future.
The company has seen an increase in trade during the ongoing COVID-19 pandemic. At the date of approval of the financial statements, the company's cash position is very strong, with net current assets increasing considerably since the year end. Whilst the medium to long term impact of the pandemic is unclear, the director does not reasonably foresee any circumstances in which the company's ability to remain a going concern would be at risk.
Thus
t
he director continues to adopt the going concern basis of accounting in preparing the financial statements.
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
1
Accounting policies
(Continued)
- 9 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated
.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Website development
20% straight line
1.6
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
over the length of the lease
Plant and machinery
15% reducing balance
Computer equipment
20% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.7
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
1
Accounting policies
(Continued)
- 10 -
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash at bank and in hand
Cash at bank and in hand
are basic financial assets
and
include cash in hand
.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company 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 debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method 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.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
1
Accounting policies
(Continued)
- 11 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans
and
loans from
fellow group companies are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
1
Accounting policies
(Continued)
- 12 -
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The main area of judgement that has the most significant effect on the amounts recognised in the financial statements is in regard to any provision for impairment of stock. Management monitor the ageing of stock, along with market trends, in determining whether a provision is required in relation to particular stock items.
3
Turnover and other revenue
2019
2018
£
£
Turnover analysed by class of business
Retail sales of goods
28,609,113
24,479,041
2019
2018
£
£
Turnover analysed by geographical market
UK
11,274,841
9,229,980
Europe
2,728,734
2,757,879
Rest of World
14,605,538
12,491,182
28,609,113
24,479,041
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
- 13 -
4
Operating profit
2019
2018
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(149,824)
(39,565)
Fees payable to the company's auditor for the audit of the company's financial statements
12,753
10,600
Depreciation of owned tangible fixed assets
15,050
14,794
Amortisation of intangible assets
26,165
26,165
Operating lease charges
250,341
163,717
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Administration & management
9
9
Warehouse & distribution
37
28
Total
46
37
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
910,630
795,346
Social security costs
72,206
63,294
Pension costs
73,035
37,839
1,055,871
896,479
6
Director's remuneration
2019
2018
£
£
Remuneration for qualifying services
9,692
9,352
Company pension contributions to defined contribution schemes
30,000
15,000
39,692
24,352
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
- 14 -
7
Interest payable and similar expenses
2019
2018
£
£
Interest on bank overdrafts and loans
49,212
46,644
8
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
263,700
150,432
Adjustments in respect of prior periods
532
-
Total current tax
264,232
150,432
Deferred tax
Origination and reversal of timing differences
(4,650)
5,207
Total tax charge
259,582
155,639
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2019
2018
£
£
Profit before taxation
1,207,098
800,513
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
229,349
152,097
Tax effect of expenses that are not deductible in determining taxable profit
30,233
3,542
Taxation charge for the year
259,582
155,639
9
Dividends
2019
2018
£
£
Interim paid
350,750
235,000
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
- 15 -
10
Intangible fixed assets
Website development
£
Cost
At 1 November 2018 and 31 October 2019
130,824
Amortisation and impairment
At 1 November 2018
26,165
Amortisation charged for the year
26,165
At 31 October 2019
52,330
Carrying amount
At 31 October 2019
78,494
At 31 October 2018
104,659
11
Tangible fixed assets
Leasehold improvements
Plant and machinery
Computer equipment
Total
£
£
£
£
Cost
At 1 November 2018
62,578
208,367
39,778
310,723
Additions
-
9,649
-
9,649
At 31 October 2019
62,578
218,016
39,778
320,372
Depreciation and impairment
At 1 November 2018
31,737
163,370
39,778
234,885
Depreciation charged in the year
6,853
8,197
-
15,050
At 31 October 2019
38,590
171,567
39,778
249,935
Carrying amount
At 31 October 2019
23,988
46,449
-
70,437
At 31 October 2018
30,841
44,997
-
75,838
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
- 16 -
12
Fixed asset investments
2019
2018
£
£
Other investments
11,500
11,500
The other investment relates to an investment in sporting memorabilia, which is shown at cost.
13
Stocks
2019
2018
£
£
Finished goods and goods for resale
8,220,984
6,854,030
14
Debtors
2019
2018
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
1
1
Other debtors
156,283
66,615
156,284
66,616
15
Creditors: amounts falling due within one year
2019
2018
Notes
£
£
Bank loans
16
2,065,973
1,638,763
Trade creditors
2,468,021
2,148,677
Corporation tax
263,700
150,432
Other taxation and social security
257,625
190,896
Other creditors
19,476
112,255
Accruals and deferred income
222,681
102,734
5,297,476
4,343,757
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
- 17 -
16
Loans and overdrafts
2019
2018
£
£
Bank loans
2,065,973
1,638,763
Payable within one year
2,065,973
1,638,763
Bank loans are secured by a debenture including a fixed charge over the company's leasehold property and a first fixed charge and a first floating charge over the present and future assets of the company.
17
Provisions for liabilities
2019
2018
Notes
£
£
Deferred tax liabilities
18
22,743
27,393
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2019
2018
Balances:
£
£
Accelerated capital allowances
22,743
27,393
2019
Movements in the year:
£
Liability at 1 November 2018
27,393
Credit to profit or loss
(4,650)
Liability at 31 October 2019
22,743
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
- 18 -
19
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
73,035
37,839
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
500 ordinary shares of £1 each
500
500
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£
£
Within one year
198,377
192,959
Between two and five years
560,825
683,916
759,202
876,875
22
Directors' transactions
The director has provided the company with an unsecured, interest free loan which has no set repayment date. At 31 October 2019, the total amount due to the director was £262 (2018 - £653).
The director has also provided a personal guarantee in respect of the company's bank borrowings up to a maximum amount of £150,000.
MERLIN CYCLES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2019
- 19 -
23
Ultimate controlling party
The company's immediate and ultimate parent is Merlin Cycles Group Limited, a company incorporated in England and Wales.
The ultimate controlling party is Mr J A Moss, as a result of his majority shareholding in Merlin Cycles Group Limited.
Copies of the consolidated financial statements of Merlin Cycles Group Limited are available from Companies House, Crown Way, Maindy, Cardiff, CF14 3UZ.
2019-10-31
2018-11-01
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