Smyle Creative Limited
Annual Report and Financial Statements
For the year ended 31 March 2022
Company Registration No. 06095949 (England and Wales)
Smyle Creative Limited
Company Information
Directors
R C Stainton
M J Margetson
A H Dawson-Wills
D Thomas-Smith
K A O'Loughlin
C E Wright
Secretary
C E Wright
Company number
06095949
Registered office
The Lockhouse
Mead Lane
Hertford
United Kingdom
SG13 7AX
Auditor
Moore Kingston Smith LLP
Charlotte Building
17 Gresse Street
London
W1T 1QL
Business address
The Lockhouse
Mead Lane
Hertford
United Kingdom
SG13 7AX
Smyle Creative Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 25
Smyle Creative Limited
Strategic Report
For the year ended 31 March 2022
Page 1
The directors present the strategic report for the year ended 31 March 2022.
Fair review of the business
FY2021-22 was
a
transitional period for businesses as governments repealed
Covid
pandemic restrictions progressively around the world on the back of a growing vaccination program and adapted the emerging opportunities. The Directors acted boldly through the year to positive
e
ffect
-
live experiences became possible once again from quarter two leading to a sharp up-swing in gross profit and client revenues,
and
growth continued through the year and on in to the new year. Alongside live experiences
,
clients retained an appetite for digital experiences allowing wider participation and flexibility.
The business has a clear strategy to build commercial success and resilience based on three key pillars:-
In support of strategy
,
the Smyle Group completed the acquisition of UK-based agency NJ Live, a business specialist experience agency in the computer gaming space, principally consumer (fan) experiences but also in the confidential (pre-sales) communications arena.
The return to profitability puts the business in a position to simultaneously reduce debt and invest in evolution
.
Turnover for the year was £23.8m (2021: £11.5m) with an operating profit of £1.2m, compared to an operating loss of £1.1m in the year ended 31 March 2021. The turnover increase of
107
% was a result of our developed service delivery in line with clients
'
need
s
. Our digital division coupled with the return to live experience
s
as well as the ever evolving hybrid solution has meant we have retained our clients as well as winning many new ones.
The resulting turnover mix represents continuous movement in gross profit percentage from March 2021 and 2020 accounts. In 2022, gross profit was £9.7m representing a margin of 42
.0
%
,
compared to gross profit
margin
in 2021 of 4
2.5
% and 2020 a much lower margin of
29.7
%, driven by far higher
l
ive pass-through costs.
Operational expenses, mainly headcount (£
5.
6m), increased by £
2.0
m as the agency focused on adding more retained skills especially in strategy, client development
,
and digital experience services
,
but also in line with the significant increase in delivered gross profit.
Principal risks and uncertainties
The directors have identified the following principal risks and uncertainties for the business:
Accelerated growth and resources
The disruption of Covid continues to challenge the resource and supply chain uncertainty for the live experience industry some two-years in. Resources and venues are in short supply but this is improving with time.
Secondly with such accelerated growth, especially with much return to Live delivery
, this
requires more focus on working capital management and business investment strategies.
Key performance indicators
The key performance indicators of the business which have been discussed in the business review section
include the
following:
• Actual reconciled gross profit achieved, reviewed monthly in the management accounts against both forecast and budget
for each individual project.
•
Short
term working capital
availability
on a weekly basis
,
with a detailed thirteen week cash flow and over a
rolling thirty six month model reviewed monthly by the Board.
Smyle Creative Limited
Strategic Report (Continued)
For the year ended 31 March 2022
Page 2
K A O'Loughlin
Director
29 September 2022
Smyle Creative Limited
Directors' Report
For the year ended 31 March 2022
Page 3
The directors present their annual report and financial statements for the year ended 31 March 2022.
Principal activities
The principal activity of the company is strategic commercial review leading to the creation, production, delivery and measurement of digital and physical experiences alongside video content projects.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
R C Stainton
M J Margetson
A H Dawson-Wills
D Thomas-Smith
K A O'Loughlin
C E Wright
Auditor
The auditor, Moore Kingston Smith LLP, 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
K A O'Loughlin
Director
29 September 2022
Smyle Creative Limited
Directors' Responsibilities Statement
For the year ended 31 March 2022
Page 4
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Smyle Creative Limited
Independent Auditor's Report
To the Members of Smyle Creative Limited
Page 5
Opinion
We have audited the financial statements of Smyle Creative Limited (the 'company') for the year ended 31 March 2022 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and notes to the financial statements, including 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 March 2022 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
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 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.
The other information comprises the information included in the annual report, other than the financial statements and our auditor's 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.
Smyle Creative Limited
Independent Auditor's Report (Continued)
To the Members of Smyle Creative Limited
Page 6
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 Directors'
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 Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the Strategic Report and the Directors'
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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors'
R
esponsibilities
S
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the
financial statements
, the
directors are
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors
either
intend
to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Smyle Creative Limited
Independent Auditor's Report (Continued)
To the Members of Smyle Creative Limited
Page 7
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 judgement and maintain professional scepticism throughout the audit. We also:
-
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 purposes 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 directors.
-
Conclude on the appropriateness of the directors’ 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.
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.
Smyle Creative Limited
Independent Auditor's Report (Continued)
To the Members of Smyle Creative Limited
Page 8
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
-
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
-
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
-
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
-
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
-
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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.
Esther Carder (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
29 September 2022
Chartered Accountants
Statutory Auditor
Charlotte Building
17 Gresse Street
London
W1T 1QL
Smyle Creative Limited
Statement of Comprehensive Income
For the year ended 31 March 2022
Page 9
2022
2021
Notes
£
£
Turnover
3
23,085,649
11,514,192
Cost of sales
(13,380,522)
(6,622,711)
Gross profit
9,705,127
4,891,481
Administrative expenses
(8,790,876)
(6,790,862)
Other operating income
272,272
796,159
Exceptional item
4
10,000
(21,906)
Operating profit/(loss)
5
1,196,523
(1,125,128)
Interest receivable and similar income
8
76
452
Interest payable and similar expenses
9
(127,159)
(126,234)
Profit/(loss) before taxation
1,069,440
(1,250,910)
Tax on profit/(loss)
10
(75,094)
42,697
Profit/(loss) for the financial year
994,346
(1,208,213)
The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.
Smyle Creative Limited
Balance Sheet
As at 31 March 2022
Page 10
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
11
10,036
10,036
Tangible assets
12
1,824,397
1,907,027
Investments
13
1,065,301
717,759
2,899,734
2,634,822
Current assets
Debtors
15
10,475,767
7,355,624
Cash at bank and in hand
1,005,377
1,083,871
11,481,144
8,439,495
Creditors: amounts falling due within one year
16
(8,820,455)
(6,063,403)
Net current assets
2,660,689
2,376,092
Total assets less current liabilities
5,560,423
5,010,914
Creditors: amounts falling due after more than one year
17
(2,006,225)
(2,445,724)
Provisions for liabilities
Provisions
20
(114,568)
(195,000)
Deferred tax liability
21
(240,854)
(165,760)
(355,422)
(360,760)
Net assets
3,198,776
2,204,430
Capital and reserves
Called up share capital
22
1,097
1,097
Capital redemption reserve
100
100
Profit and loss reserves
3,197,579
2,203,233
Total equity
3,198,776
2,204,430
The financial statements were approved by the board of directors and authorised for issue on 29 September 2022 and are signed on its behalf by:
K A O'Loughlin
Director
Company Registration No. 06095949
Smyle Creative Limited
Statement of Changes in Equity
For the year ended 31 March 2022
Page 11
Share capital
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 April 2020
1,097
100
3,411,446
3,412,643
Year ended 31 March 2021:
Loss and total comprehensive income for the year
-
-
(1,208,213)
(1,208,213)
Balance at 31 March 2021
1,097
100
2,203,233
2,204,430
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
-
994,346
994,346
Balance at 31 March 2022
1,097
100
3,197,579
3,198,776
Smyle Creative Limited
Notes to the Financial Statements
For the year ended 31 March 2022
Page 12
1
Accounting policies
Company information
Smyle Creative Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
The Lockhouse, Mead Lane, Hertford, United Kingdom, SG13 7AX.
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 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 financial instruments not measured at fair value; 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
Smyle Creative Group Limited
. These consolidated financial statements are available from its registered office,
The Lockhouse, Mead Lane, Hertford, England, SG13 7AX.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
1
Accounting policies
(Continued)
Page 13
1.3
Turnover
Turnover is recognised
to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured 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.
Rendering of services
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
1.4
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.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the
fair
value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
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:
1.5
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 shorter of the lease term or the useful economic life
Motor vehicles
25% reducing-balance method
Fixtures and fittings
25% reducing-balance method
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
.
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
1
Accounting policies
(Continued)
Page 14
1.6
Fixed asset investments
Investments
in subsidiaries
are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in
profit
or
loss
.
Deferred and contingent consideration payable on acquisitions is recognised when the amounts become probable and can be reliably measured.
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).
1.8
Cash at bank and in hand
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The Company only enters into basic financial instruments transactions that result in the recognition of financial
assets and liabilities like trade
debtors, trade creditors,
loans from banks and other third
parties, loans to related parties and investments in ordinary shares.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting
period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is
recognised in the Statement of Comprehensive Income.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference
between an asset's carrying amount and best estimate of the recoverable amount, which is an
ap
proximation of
the amount that the Company would receive for the asset if it were to be sold at the reporting date.
Impairment of financial assets
Financial assets
are assessed for indicators of impairment at each reporting end date.
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.
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
1
Accounting policies
(Continued)
Page 15
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
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.
1.11
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 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. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Provisions
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event, it is probable that the
company
will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in
profit
or
loss
in the period
in which
it arises.
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
1
Accounting policies
(Continued)
Page 16
Onerous leases
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
Dilapidations
Present obligations relating to dilapidations arise when the company has a contractual obligation to return its leasehold properties to the state as at the commencement of the lease.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
1.16
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.17
Foreign exchange
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
1
Accounting policies
(Continued)
Page 17
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 directors are 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.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Delivery of creative services
23,085,649
11,514,192
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
15,682,503
8,986,872
North America
668,940
49,464
Rest of the world
6,734,206
2,477,856
23,085,649
11,514,192
2022
2021
£
£
Other significant revenue
Interest income
76
452
Grants received
120,524
710,802
4
Exceptional item
2022
2021
£
£
Expenditure
Onerous lease provision
(10,000)
21,906
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
Page 18
5
Operating profit/(loss)
2022
2021
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Government grants
(120,524)
(710,802)
Fees payable to the company's auditor for the audit of the company's financial statements
29,300
24,250
Depreciation of owned tangible fixed assets
606,714
647,541
Profit on disposal of tangible fixed assets
(474)
Operating lease charges
234,445
240,350
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Directors
6
6
Creative
70
57
Warehouse and logistics
8
10
Administrative
27
27
Total
111
100
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
4,969,560
3,631,723
Social security costs
487,285
359,851
Pension costs
138,154
117,370
5,594,999
4,108,944
7
Directors' remuneration
The directors of the company are remunerated through the parent company, Smyle Creative Group Limited, and are not recharged to the company. Disclosure of the directors' remuneration for qualifying services and benefits accruing under defined contribution schemes can be found in the consolidated group accounts.
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
Page 19
8
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
76
452
9
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
109,176
88,364
Interest on finance leases and hire purchase contracts
17,983
37,870
127,159
126,234
10
Taxation
2022
2021
£
£
Current tax
Adjustments in respect of prior periods
(164,274)
Deferred tax
Origination and reversal of timing differences
22,746
(42,697)
Changes in tax rates
55,794
Adjustment in respect of prior periods
160,828
Total deferred tax
239,368
(42,697)
Total tax charge/(credit)
75,094
(42,697)
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
10
Taxation
(Continued)
Page 20
The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit/(loss) before taxation
1,069,440
(1,250,910)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
203,194
(237,673)
Tax effect of expenses that are not deductible in determining taxable profit
1,852
9,168
Unutilised tax losses carried forward
164,275
Adjustments in respect of prior years
(164,274)
Effect of change in corporation tax rate
60,066
Group relief
(157,593)
Permanent capital allowances in excess of depreciation
28,526
Other non-reversing timing differences
(10,715)
(6,993)
Deferred tax adjustments in respect of prior years
160,828
Fixed asset differences
(18,264)
Taxation charge/(credit) for the year
75,094
(42,697)
11
Intangible fixed assets
Goodwill
Spare Asset 1
Total
£
£
£
Cost
At 1 April 2021 and 31 March 2022
272,392
10,036
282,428
Amortisation and impairment
At 1 April 2021 and 31 March 2022
272,392
272,392
Carrying amount
At 31 March 2022
10,036
10,036
At 31 March 2021
10,036
10,036
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
Page 21
12
Tangible fixed assets
Fixtures and fittings
Total
£
£
£
£
Cost
At 1 April 2021
1,021,448
3,860,318
107,699
4,989,465
Additions
36,184
541,172
577,356
Disposals
(153,570)
(153,570)
At 31 March 2022
1,057,632
4,247,920
107,699
5,413,251
Depreciation and impairment
At 1 April 2021
534,646
2,484,514
63,278
3,082,438
Depreciation charged in the year
115,844
479,765
11,105
606,714
Eliminated in respect of disposals
(100,298)
(100,298)
At 31 March 2022
650,490
2,863,981
74,383
3,588,854
Carrying amount
At 31 March 2022
407,142
1,383,939
33,316
1,824,397
At 31 March 2021
486,802
1,375,804
44,421
1,907,027
13
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
14
1,065,299
717,757
Investments in associates
2
2
1,065,301
717,759
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
13
Fixed asset investments
(Continued)
Page 22
Movements in fixed asset investments
Shares in subsidiaries and associates
£
Cost or valuation
At 1 April 2021
717,759
Valuation changes due to contingent consideration
347,542
At 31 March 2022
1,065,301
Carrying amount
At 31 March 2022
1,065,301
At 31 March 2021
717,759
14
Subsidiaries
Details of the company's subsidiaries at 31 March 2022 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Powered by Humans Limited
England
Ordinary
100.00
Pump House Productions International Limited
England
Ordinary
100.00
NJ Live Limited
England
Ordinary
100.00
15
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
3,147,903
1,117,270
Corporation tax recoverable
2,132
2,132
Amounts owed by group undertakings
4,814,796
3,896,884
Other debtors
108,126
15,673
Prepayments and accrued income
2,402,810
2,323,665
10,475,767
7,355,624
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
Page 23
16
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Obligations under finance leases
19
103,176
244,234
Other borrowings
18
559,322
440,663
Trade creditors
1,814,155
616,092
Amounts owed to group undertakings
819,358
476,128
Taxation and social security
350,995
606,103
Deferred income
3,694,178
2,603,458
Other creditors
177,131
65,664
Accruals and deferred income
1,302,140
1,011,061
8,820,455
6,063,403
17
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Obligations under finance leases
19
44,714
136,387
Other borrowings
18
1,961,511
2,309,337
2,006,225
2,445,724
18
Loans and overdrafts
2022
2021
£
£
Other loans
2,520,833
2,750,000
Payable within one year
559,322
440,663
Payable after one year
1,961,511
2,309,337
In June 2020, the company entered into a six year agreement with Natwest to draw down on £2,750,000 under the government's Coronavirus Business Interruption Loan Scheme (CBILS). The loan accrues interest quarterly at 4.01%, of which the UK government paid the initial twelve months. The loan is repayable over five years commencing twelve months after the draw down date.
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
Page 24
19
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
103,176
244,234
In two to five years
44,714
136,387
147,890
380,621
The hire purchase liabilities are secured by the related assets held under the leases.
20
Provisions for liabilities
2022
2021
Notes
£
£
Dilapidations provision
100,000
100,000
Onerous lease provision
14,568
95,000
114,568
195,000
Deferred tax liabilities
21
240,854
165,760
355,422
360,760
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
240,854
165,760
2022
Movements in the year:
£
Liability at 1 April 2021
165,760
Charge to profit or loss
75,094
Liability at 31 March 2022
240,854
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
Smyle Creative Limited
Notes to the Financial Statements (Continued)
For the year ended 31 March 2022
Page 25
22
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A of £1 each
789
789
789
789
Ordinary B of £1 each
197
197
197
197
Ordinary C of £1 each
55
55
55
55
Ordinary D of £1 each
56
56
56
56
1,097
1,097
1,097
1,097
23
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:
2022
2021
£
£
Within one year
569,689
206,750
Between two and five years
909,700
827,000
In over five years
1,253,018
328,534
2,732,407
1,362,284
24
Related party transactions
The company leases its head office building in Hertford from Staintonmargetson LLP, an entity controlled by two of the company's directors. The total charge for rental and related expenses during the period was £206,750 (2021: £211,070), and the amount due to the entity at year end was £nil (2021: £nil).
25
Ultimate controlling party
The largest and smallest group undertaking in which the results of the company are consolidated is that headed by Smyle Creative Group Limited. The consolidated accounts are available to the public and at the registered office: The Lockhouse, Mead Lane, Hertford, England, SG13 7AX.
The ultimate controlling party is Rockpool Investments LLP.
2022-03-31
2021-04-01
false
CCH Software
CCH Accounts Production 2022.100
R C Stainton
M J Margetson
A H Dawson-Wills
D Thomas-Smith
K A O'Loughlin
C E Wright
C E Wright
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