Company Registration No. NI029742 (Northern Ireland)
MERIT RETAIL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
MERIT RETAIL LIMITED
CONTENTS
Page
Company information
1
Strategic report
2
Directors' report
3 - 4
Independent auditor's report
5 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 24
MERIT RETAIL LIMITED
COMPANY INFORMATION
- 1 -
Directors
Mr J Conway
Mrs M Conway
Ms O Conway
Mrs T E Conway
(Appointed 22 June 2017)
Mr P J Conway
(Appointed 9 June 2017)
Secretary
Mrs M Conway
Company number
NI029742
Registered office
58 Moneymore Road
Magherafelt
County Londonderry
BT45 6HG
Auditor
Moore Stephens (NI) LLP
32 Lodge Road
Coleraine
Co Londonderry
BT52 1NB
Bankers
Danske Bank
14 Broad Street
Magherafelt
Co. Londonderry
BT45 6EA
Solicitors
MKB Law
14 Great Victoria Street
Belfast
BT2 7BA
MERIT RETAIL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2017
- 2 -
The directors present the strategic report
and financial statements
for the year ended 31 December 2017.
Principal activities
The principal activities of the company are those of
the operation of residential nursing homes.
Review of business
The company's turnover has increased due to an increase in rates charged. T
he directors consider the results for the period to be satisfactory. The company will continue to seek every
opportunity to increase profitable turnover.
Risks and uncertainties
The company's operations expose it to a variety of financial risks that include price risk,
credit risk, liquidity risk and interest rate risk. The company has in place a risk
management programme that
seeks to limit the adverse effects on the financial performance of
the company by monitoring levels of debt
finance and the related finance costs.
Given the size of the company, the directors have assumed responsibility for the monitoring of
financial riskmanagement.
Price risk
The company is exposed to commodity price risk. However, given the size of the company's
operations, the
costs of managing exposure to commodity price risk exceed any potential benefits. The directors will keep this
policy under review having regard to the company's operations and any change in size or nature.
Credit risk
The company is exposed to credit risk due to its policy of giving credit to
residents. However given the nature of the company's activities, the exposure to credit risk is minimal.
Liquidity risk
The company actively maintains a mixture of long-term and short-term debt finance that is
designed to ensure
the company has sufficient available funds for operations and planned expansions.
Interest rate cash flow risk
The company has interest bearing liabilities. The company has a policy of monitoring its debt
finance to ensure certainty of future interest cash flows. The directors will revisit this policy should the
company's operations change in size or nature or otherwise be deemed necessary.
Key performance indicators
Given the straightforward nature of the business, the company's
directors are of the opinion that analysis using KPI's is not necessary for an understanding of the
development, performance or position of the business.
Mrs M Conway
Director
29 June 2018
MERIT RETAIL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2017
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2017.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr J Conway
Mrs M Conway
Ms O Conway
Mrs T E Conway
(Appointed 22 June 2017)
Mr P J Conway
(Appointed 9 June 2017)
Results and dividends
The results for the year are set out on page 7.
No interim dividends were paid. The directors do not recommend payment of a final dividend.
Auditor
The auditors, Moore Stephens (NI) LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
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, including Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS102). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
MERIT RETAIL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 4 -
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
Mrs M Conway
Director
29 June 2018
MERIT RETAIL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MERIT RETAIL LIMITED
- 5 -
Opinion
We have audited the financial statements of Merit Retail Limited (the 'company') for the year ended 31 December 2017 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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 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 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.
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
.
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.
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 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.
MERIT RETAIL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MERIT RETAIL LIMITED
- 6 -
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 directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the 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.
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 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.
John Love (Senior Statutory Auditor)
for and on behalf of Moore Stephens (NI) LLP
29 June 2018
Chartered Accountants
Statutory Auditor
32 Lodge Road
Coleraine
Co Londonderry
BT52 1NB
MERIT RETAIL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
- 7 -
2017
2016
Notes
£
£
Turnover
3
3,886,456
3,857,213
Cost of sales
(150,495)
(141,258)
Gross profit
3,735,961
3,715,955
Administrative expenses
(2,810,712)
(2,647,131)
Other operating income
264,445
281,238
Operating profit
4
1,189,694
1,350,062
Interest payable and similar expenses
6
(110,784)
(125,227)
Profit on ordinary activities before taxation
1,078,910
1,224,835
Taxation on profit on ordinary activities
7
(12,230)
(244,944)
Profit for the financial year
1,066,680
979,891
Other comprehensive income
-
-
Total comprehensive income for the year
1,066,680
979,891
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
The notes on pages 11 - 24 form part of these financial statements and should be read in conjunction therewith.
MERIT RETAIL LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2017
31 December 2017
- 8 -
2017
2016
Notes
£
£
£
£
Fixed assets
Tangible assets
9
5,403,803
5,563,492
Investment properties
10
1,039,174
1,039,174
6,442,977
6,602,666
Current assets
Stocks
12
1,000
1,000
Debtors
13
10,141,522
9,598,779
Cash at bank and in hand
325,002
459,888
10,467,524
10,059,667
Creditors: amounts falling due within one year
14
(3,311,118)
(3,803,226)
Net current assets
7,156,406
6,256,441
Total assets less current liabilities
13,599,383
12,859,107
Creditors: amounts falling due after more than one year
15
(3,442,929)
(3,791,733)
Provisions for liabilities
18
(250,123)
(227,723)
Net assets
9,906,331
8,839,651
Capital and reserves
Called up share capital
21
100,000
100,000
Profit and loss reserves
9,806,331
8,739,651
Total equity
9,906,331
8,839,651
The financial statements were approved by the board of directors and authorised for issue on 29 June 2018 and are signed on its behalf by:
Mrs M Conway
Director
Company Registration No. NI029742
The notes on pages 11 - 24 form part of these financial statements and should be read in conjunction therewith.
MERIT RETAIL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2016
100,000
7,759,760
7,859,760
Year ended 31 December 2016:
Profit and total comprehensive income for the year
-
979,891
979,891
Balance at 31 December 2016
100,000
8,739,651
8,839,651
Year ended 31 December 2017:
Profit and total comprehensive income for the year
-
1,066,680
1,066,680
Balance at 31 December 2017
100,000
9,806,331
9,906,331
The notes on pages 11 - 24 form part of these financial statements and should be read in conjunction therewith.
MERIT RETAIL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
- 10 -
2017
2016
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
227,820
722,375
Interest paid
(110,784)
(125,227)
Corporation tax paid
(1)
(74,055)
Net cash inflow from operating activities
117,035
523,093
Investing activities
Purchase of tangible fixed assets
(3,358)
(13,157)
Net cash used in investing activities
(3,358)
(13,157)
Financing activities
Repayment of bank loans
(245,573)
(237,941)
Payment of finance leases obligations
(2,990)
(2,990)
Net cash used in financing activities
(248,563)
(240,931)
Net (decrease)/increase in cash and cash equivalents
(134,886)
269,005
Cash and cash equivalents at beginning of year
459,888
190,883
Cash and cash equivalents at end of year
325,002
459,888
The notes on pages 11 - 24 form part of these financial statements and should be read in conjunction therewith.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
- 11 -
1
Accounting policies
Company information
Merit Retail Limited is a
private
company
limited by shares
incorporated in Northern Ireland.
The registered office is
58 Moneymore Road, Magherafelt, County Londonderry, BT45 6HG.
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 principal accounting policies adopted are set out below.
1.2
Going concern
A
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.
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
.
Revenue is recognised
to the extent that the company obtains the right to consideration in exchange for its nursing home services,
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
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:
Land and buildings Freehold
Depreciation is provided on the asset value within property cost, which qualifies for capital allowances on a straight line basis of 10% per annum
Plant and machinery
15% straight line
Fixtures, fittings & equipment
25% 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
.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 12 -
1.5
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure
. Subsequently it is measured
at fair value a
t
the reporting end date.
The surplus or deficit on revaluation is recognised in profit or loss.
Where fair value cannot be achieved without undue cost or effort, investment property is accounted for as tangible fixed assets.
1.6
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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset 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.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Stocks
Stocks
are stated at the lower of cost and
net realisable value.
1.8
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
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.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 13 -
Basic financial assets
Basic financial assets, which include trade and other receivables 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.
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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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.
Basic financial liabilities, including trade and other payables, bank loans, loans from
fellow group companies and preference shares that are classified as debt, 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 receipts discounted at a market rate of interest.
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. Accounts 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 payables are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
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 direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 14 -
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
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
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 the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
1
Accounting policies
(Continued)
- 15 -
1.15
Related party transactions
The company has taken advantage of the exemption contained in FRS 102 not to disclose details of transactions between members of a wholly owned group.
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
An analysis of the company's turnover is as follows:
2017
2016
£
£
Turnover analysed by class of business
Rendering of services
3,886,456
3,857,213
2017
2016
£
£
Turnover analysed by geographical market
United Kingdom
3,886,456
3,857,213
4
Operating profit
2017
2016
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
6,000
6,000
Depreciation of owned tangible fixed assets
29,991
27,204
Depreciation of tangible fixed assets held under finance leases
3,056
3,056
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2017
2016
Number
Number
143
154
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
5
Employees
(Continued)
- 16 -
Their aggregate remuneration comprised:
2017
2016
£
£
Wages and salaries
2,343,335
2,204,905
Social security costs
138,197
131,243
Pension costs
14,708
16,135
2,496,240
2,352,283
6
Interest payable and similar expenses
2017
2016
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
110,222
124,438
Interest on finance leases and hire purchase contracts
562
789
110,784
125,227
7
Taxation
2017
2016
£
£
Current tax
UK corporation tax on profits for the current period
-
221,924
Adjustments in respect of prior periods
(10,170)
(23)
Total current tax
(10,170)
221,901
Deferred tax
Origination and reversal of timing differences
22,400
23,043
Total tax charge
12,230
244,944
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
7
Taxation
(Continued)
- 17 -
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:
2017
2016
£
£
Profit before taxation
1,078,910
1,224,835
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2016: 20.00%)
204,993
244,967
Adjustments in respect of prior years
(10,170)
(23)
Group relief
(180,869)
-
Permanent capital allowances in excess of depreciation
(24,124)
(23,043)
Deferred tax charge
22,400
23,043
Taxation charge for the year
12,230
244,944
8
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2017 and 31 December 2017
500,000
Amortisation and impairment
At 1 January 2017 and 31 December 2017
500,000
Carrying amount
At 31 December 2017
-
At 31 December 2016
-
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 18 -
9
Tangible fixed assets
Land and buildings Freehold
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
Cost
At 1 January 2017
5,472,365
313,121
569,129
6,354,615
Additions
-
-
3,358
3,358
Adjustment
(130,000)
-
-
(130,000)
At 31 December 2017
5,342,365
313,121
572,487
6,227,973
Depreciation and impairment
At 1 January 2017
-
311,749
479,374
791,123
Depreciation charged in the year
-
279
32,768
33,047
At 31 December 2017
-
312,028
512,142
824,170
Carrying amount
At 31 December 2017
5,342,365
1,093
60,345
5,403,803
At 31 December 2016
5,472,365
1,372
89,755
5,563,492
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2017
2016
£
£
Fixtures, fittings & equipment
5,348
8,405
Depreciation charge for the year in respect of leased assets
3,056
3,056
Freehold land and buildings with a carrying amount of £5,342,365(2016 - £5,472,365) have been pledged to secure borrowings of the company.
10
Investment property
2017
£
Cost
At 1 January 2017 and 31 December 2017
1,039,174
Investment property comprises land and buildings held to earn rental income. The directors deem initial cost to be a fair reflection of market value, based on market evidence of transaction prices for similar properties.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 19 -
11
Financial instruments
2017
2016
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
10,115,720
9,573,867
Carrying amount of financial liabilities
Measured at amortised cost
6,500,358
7,335,822
12
Stocks
2017
2016
£
£
Finished goods and goods for resale
1,000
1,000
13
Debtors
2017
2016
Amounts falling due within one year:
£
£
Trade debtors
14,043
8,119
P J Conway Contractors Limited
9,621,854
8,827,625
Hillhead Building Supplies
125,775
125,775
Conway Estates Limited
-
161,100
Glenbrook Stud Limited
169,023
139,023
Merit Homes Limited
-
143,700
Merit Holdings Limited
185,025
168,525
Prepayments and accrued income
25,802
24,912
10,141,522
9,598,779
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 20 -
14
Creditors: amounts falling due within one year
2017
2016
Notes
£
£
Bank loans
16
332,165
245,571
Obligations under finance leases
17
2,741
2,990
Trade creditors
74,892
57,586
Merit Construction NI Limited
354,734
354,734
Brooklands Healthcare Limited
423,068
267,591
Conway Estates Limited
1,637,537
-
Spencer Properties Limited
-
13,000
P. J. (Conway) Developments N.I Limited
-
2,360,587
Corporation tax
211,753
221,924
Other taxation and social security
41,936
37,213
Other loans
13,896
35,488
Accruals and deferred income
218,396
206,542
3,311,118
3,803,226
The bank
borrowings are
secured
as follows:-
- A fixed charge over book debts
- A floating charge
- Mortgages on the following properties:-
Cottage Nursing Home - Lodge Park, Coleraine
Kilwee Nursing Home - Cloona Park, Belfast
Security has also been provided by Brooklands Healthcare Limited.
The company has an intercompany cross guarantee in favour of P J Conway Contractors Limited and Conway Estates Limited.
15
Creditors: amounts falling due after more than one year
2017
2016
Notes
£
£
Bank loans and overdrafts
16
3,442,929
3,775,096
Obligations under finance leases
17
-
2,741
Other loans
-
13,896
3,442,929
3,791,733
Refer to note 14 for security details.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 21 -
16
Loans and overdrafts
2017
2016
£
£
Bank loans
3,775,094
4,020,667
Payable within one year
332,165
245,571
Payable after one year
3,442,929
3,775,096
Refer to note 14 for security details.
Included in bank loans is an amount of £1,393,022 which is payable in quarterly instalments. The lending margin applicable to the loan is 2.35%. The bank term loan facility is due to be renegotiated during the year ended 31st December 2022 and as such is therefore shown as being fully repayable within 5 years.
Included in bank loans is an amount of £1,597,894 which is payable in quarterly instalments. The lending margin applicable to the loan is 2.35%. The bank term loan facility is due to be renegotiated during the year ended 31st December 2022 and as such is therefore shown as being fully repayable within 5 years.
Included in bank loans is an amount of £784,178 which is payable in quarterly instalments. The lending margin applicable to the loan is 3.0%. The bank term loan facility is due to be renegotiated during the year ended 31st December 2022 and as such is therefore shown as being fully repayable within 5 years.
17
Finance lease obligations
2017
2016
Future minimum lease payments due under finance leases:
£
£
Within one year
3,256
3,552
In two to five years
-
3,256
3,256
6,808
Less: future finance charges
(515)
(1,077)
2,741
5,731
Finance lease payments represent rentals payable by the company for certain items of fixtures and fittings. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
18
Provisions for liabilities
2017
2016
Notes
£
£
Deferred tax liabilities
19
250,123
227,723
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
- 22 -
19
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2017
2016
Balances:
£
£
Accelerated capital allowances
250,123
227,723
2017
Movements in the year:
£
Liability at 1 January 2017
227,723
Charge to profit or loss
22,330
Liability at 31 December 2017
250,053
The net deferred tax liability expected to reverse in 12 months is £19,257. This primarily relates to the reversal of tax timing differences on capital allowances.
20
Retirement benefit schemes
2017
2016
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
14,708
16,135
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.
21
Share capital
2017
2016
£
£
Ordinary share capital
Issued and fully paid
100,000 Ordinary shares of £1 each
100,000
100,000
100,000
100,000
The company has one class of ordinary shares which carry full voting rights, entitles the holders to full rights to participate in dividends as voted and entitles holders to full rights to participate in a distribution.
22
Related party transactions
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
22
Related party transactions
(Continued)
- 23 -
The company has taken advantage of the exemption not to disclose related party transactions with
wholly owned
members of the group under FRS 102 - Related Party Disclosures.
The members of the group are:
-
P J Conway Contractors Limited
-
Merit Investments & Properties Limited
-
P J Conway (Developments) NI Limited
-
McAuley Property Developments Limited
-
Brooklands Healthcare Limited
-
Merit Retail Limited
-
Merit Construction (NI) Limited
-
Conway Estates Limited
-
Merit Developments Limited
-
Spencer Properties Limited
-
Carswood Limited
-
Merit Homes Limited
Mr Patrick Conway, Mrs Matilda Conway and Mr Jarlath Conway, who are directors in the company, are also directors in the following companies with whom there were transactions during the period, or balances outstanding, and on that basis these companies are considered to be a related party as defined by FRS102 “Related Party Disclosures”.
In addition to the above, Mr Patrick Conway and Mrs Matilda Conway, were also directors in the following company with whom there were transactions during the period, or balances outstanding, and on that basis this company is considered to be a related party as defined by FRS102 “Related Party Disclosures”.
Mr Patrick Conway also operates an unincorporated business, Hillhead Building Supplies with whom there were transactions during the period, or balances outstanding, and on that basis it is considered to be a related party as defined by FRS102 “Related Party Disclosures”.
The transactions during the year with these related undertakings and the amounts owed by/(to) these related undertakings at the start and end of the year are analysed as follows:
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2017
22
Related party transactions
(Continued)
- 24 -
At 1
Loan repayment/
Other
At 31
January 2017
(advance)
transactions
December 2017
Glenbrook Stud Limited
139,023
30,000
-
169,023
Hillhead Building Supplies
125,775
-
-
125,775
Merit Holdings Limited
168,525
16,500
-
185,025
433,323
46,500
-
479,823
Interest has not been charged on outstanding balances.
23
Controlling party
At the balance sheet date 100% of the company's share capital was owned by Brooklands Healthcare Limited, 58 Moneymore Road, Magherafelt, BT45 6HG.
The Conway family are the ultimate controlling party.
24
Cash generated from operations
2017
2016
£
£
Profit for the year after tax
1,066,680
979,891
Adjustments for:
Taxation charged
12,230
244,944
Finance costs
110,784
125,227
Depreciation and impairment of tangible fixed assets
33,047
30,260
Movements in working capital:
(Increase) in debtors
(542,743)
(538,594)
(Decrease) in creditors
(452,178)
(119,353)
Cash generated from operations
227,820
722,375
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