Company registration number NI029742 (Northern Ireland)
MERIT RETAIL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
MERIT RETAIL LIMITED
CONTENTS
Page
Company information
1
Strategic report
2 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
MERIT RETAIL LIMITED
COMPANY INFORMATION
- 1 -
Directors
Mr Jarlath Conway
Mrs Matilda Conway
Mrs Olivia McElwee
Mrs Therese Conway
Mr P J Conway
Secretary
Mrs Matilda Conway
Company number
NI029742
Registered office
58 Moneymore Road
Magherafelt
County Londonderry
BT45 6HG
Auditor
Moore (N.I.) LLP
32 Lodge Road
Coleraine
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 2021
- 2 -
The directors present the strategic report
and financial statements
for the year ended 31 December 2021.
Principal activities
The principal activities of the company are those of
the operation of residential nursing homes.
Review of business
Despite an increase in rates charged, the company's turnover has reduced due to the transfer of the Ailsa Lodge home to Merit Homes Limited at the beginning of the financial year. 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 risk
management.
In accordance with the requirement to analyse the key risks and uncertainties facing the future development of the company, the following have been identified:
As the impact of COVID-19 remains a current event, the directors continue to monitor developments. Further increases in cases may lead to reintroduction of more stringent government restrictions which may cause disruption to customers’ and suppliers’ businesses. The directors continue to implement measures which address associated risks and mitigate the impact of any negative outcomes. Accordingly, the directors are satisfied with the company's ability to continue trading.
The directors continue to monitor developments in relation to Brexit and take appropriate actions to mitigate any risks to which the company is exposed.
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.
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.
The company has financing facilities in place that are designed to ensure there are sufficient available funds for operations and planned expansions.
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.
MERIT RETAIL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
Mr Jarlath Conway
Director
30 June 2022
MERIT RETAIL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that of the rental of property and operation of nursing homes.
Results and dividends
The results for the year are set out on page 9.
No interim 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:
Mr Jarlath Conway
Mrs Matilda Conway
Mrs Olivia McElwee
Mrs Therese Conway
Mr P J Conway
Auditor
The auditors, Moore (N.I.) 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.
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.
MERIT RETAIL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 5 -
On behalf of the board
Mr Jarlath Conway
Director
30 June 2022
MERIT RETAIL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MERIT RETAIL LIMITED
- 6 -
Opinion
We have audited the financial statements of Merit Retail Limited (the 'company') for the year ended 31 December 2021 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 significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2021 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.
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 MEMBER OF MERIT RETAIL LIMITED
- 7 -
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 or the directors'
r
eport
. We have nothing to report in respect of the following matters in relation to which 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.
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
.
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
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.
Based on our understanding of the company and its operating environment, we determined that the most significant frameworks which have a direct impact on the preparation of the financial statements are those related to the reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations.
We assessed the susceptibility of the company's financial statements to material misstatement, including how fraud might occur, including evaluating management's incentives and opportunities to manage earnings or influence the reported results. From the results of our assessment, we determined that the principal risk of fraud related to posting inappropriate journal entries. In common with all audits under ISAs (UK), we are required to perform specific procedures to respond to the risk of management override.
MERIT RETAIL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MERIT RETAIL LIMITED
- 8 -
Audit response to risks identified
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. Audit procedures performed by the engagement team included:
-
We obtained an understanding of the company's internal control systems 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.
-
We obtained an understanding of how the company complies with relevant laws and regulations, by making enquiries of management and those charged with governance.
-
Enquiry of management, those charged with governance and the entity’s solicitors around actual and potential litigation and claims.
-
Enquiry of entity staff to identify any instances of non-compliance with laws and regulations.
-
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud
-
Reviewing minutes of management and directors meetings
-
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
-
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions that are unusual or outside the normal course of business.
We communicated relevant laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. 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 through collusion, forgery, intentional omissions, misrepresentations or the override of internal control.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, 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 (N.I.) LLP
30 June 2022
Chartered Accountants
Statutory Auditor
32 Lodge Road
Coleraine
BT52 1NB
MERIT RETAIL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 9 -
2021
2020
Notes
£
£
Turnover
3
5,090,448
5,761,614
Cost of sales
(167,099)
(224,395)
Gross profit
4,923,349
5,537,219
Administrative expenses
(3,463,664)
(4,235,184)
Other operating income
989,040
452,962
Operating profit
4
2,448,725
1,754,997
Interest receivable and similar income
6
491,516
419,898
Interest payable and similar expenses
7
(117,159)
(186,903)
Profit before taxation
2,823,082
1,987,992
Tax on profit
8
(522,528)
Profit for the financial year
2,300,554
1,987,992
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
MERIT RETAIL LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 10 -
2021
2020
Notes
£
£
£
£
Fixed assets
Goodwill
9
566,995
Tangible assets
10
5,370,464
6,243,272
Investment properties
11
1,039,174
1,039,174
6,409,638
7,849,441
Current assets
Stocks
12
1,000
1,000
Debtors
13
15,424,603
10,912,036
Cash at bank and in hand
2,765,957
2,341,573
18,191,560
13,254,609
Creditors: amounts falling due within one year
14
(2,159,501)
(1,710,150)
Net current assets
16,032,059
11,544,459
Total assets less current liabilities
22,441,697
19,393,900
Creditors: amounts falling due after more than one year
15
(5,206,104)
(4,458,861)
Provisions for liabilities
Deferred tax liability
18
198,500
198,500
(198,500)
(198,500)
Net assets
17,037,093
14,736,539
Capital and reserves
Called up share capital
20
100,000
100,000
Profit and loss reserves
16,937,093
14,636,539
Total equity
17,037,093
14,736,539
The financial statements were approved by the board of directors and authorised for issue on 30 June 2022 and are signed on its behalf by:
Mr Jarlath Conway
Director
Company Registration No. NI029742
MERIT RETAIL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2020
100,000
12,648,547
12,748,547
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
1,987,992
1,987,992
Balance at 31 December 2020
100,000
14,636,539
14,736,539
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
2,300,554
2,300,554
Balance at 31 December 2021
100,000
16,937,093
17,037,093
MERIT RETAIL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 12 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
23
(769,481)
1,330,440
Interest paid
(117,159)
(186,903)
Net cash (outflow)/inflow from operating activities
(886,640)
1,143,537
Investing activities
Purchase of tangible fixed assets
(34,708)
Interest received
491,516
419,898
Net cash generated from investing activities
456,808
419,898
Financing activities
Proceeds of new bank loans
1,200,000
Repayment of bank loans
(316,416)
(280,900)
Payment of finance leases obligations
(29,368)
(10,068)
Net cash generated from/(used in) financing activities
854,216
(290,968)
Net increase in cash and cash equivalents
424,384
1,272,467
Cash and cash equivalents at beginning of year
2,341,573
1,069,106
Cash and cash equivalents at end of year
2,765,957
2,341,573
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 13 -
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 financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
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.
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
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is ten years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
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.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
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
Motor vehicles
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
.
1.6
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.
Changes in fair value are recognised in 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.
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.
1.8
Stocks
Stocks
are stated at the lower of cost and
net realisable value.
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 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.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
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 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.
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.
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.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
Basic financial 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.
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. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
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.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 17 -
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.
1.13
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 18 -
1.17
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 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:
2021
2020
£
£
Turnover analysed by class of business
Rendering of services
5,090,448
5,761,614
2021
2020
£
£
Turnover analysed by geographical market
United Kingdom
5,090,448
5,761,614
2021
2020
£
£
Other revenue
Interest income
491,516
419,898
Grants received
21,584
4
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(21,584)
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
7,217
9,325
Depreciation of tangible fixed assets held under finance leases
11,188
Amortisation of intangible assets
80,999
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 19 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
115
134
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
2,484,411
3,079,721
Social security costs
172,840
176,577
Pension costs
40,188
42,063
2,697,439
3,298,361
6
Interest receivable and similar income
2021
2020
£
£
Interest income
Interest receivable from group companies
477,413
412,876
Other interest income
14,103
7,022
Total income
491,516
419,898
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
477,413
412,876
7
Interest payable and similar expenses
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
74,720
136,376
Interest payable to group undertakings
39,642
49,976
114,362
186,352
Other finance costs:
Interest on finance leases and hire purchase contracts
551
Other interest
2,797
117,159
186,903
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
8
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
522,528
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:
2021
2020
£
£
Profit before taxation
2,823,082
1,987,992
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
536,386
377,718
Tax effect of expenses that are not deductible in determining taxable profit
531
Group relief
(379,640)
Permanent capital allowances in excess of depreciation
(14,389)
1,922
Taxation charge for the year
522,528
-
9
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2021
1,309,992
Disposals
(809,992)
At 31 December 2021
500,000
Amortisation and impairment
At 1 January 2021
742,997
Disposals
(242,997)
At 31 December 2021
500,000
Carrying amount
At 31 December 2021
At 31 December 2020
566,995
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
10
Tangible fixed assets
Land and buildings Freehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2021
6,203,365
313,121
592,495
44,750
7,153,731
Additions
34,708
34,708
Disposals
(861,000)
(20,008)
(44,750)
(925,758)
At 31 December 2021
5,342,365
313,121
607,195
6,262,681
Depreciation and impairment
At 1 January 2021
312,865
585,474
12,120
910,459
Depreciation charged in the year
256
6,961
7,217
Eliminated in respect of disposals
(13,339)
(12,120)
(25,459)
At 31 December 2021
313,121
579,096
892,217
Carrying amount
At 31 December 2021
5,342,365
28,099
5,370,464
At 31 December 2020
6,203,365
256
7,021
32,630
6,243,272
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2021
2020
£
£
Motor vehicles
32,630
11
Investment property
2021
£
Cost
At 1 January 2021 and 31 December 2021
1,039,174
Investment property comprises the company's portfolio of land and buildings held to earn rental income. The fair value of the investment property has been arrived at on the basis of a valuation carried out at 31 December 2021 by the company's directors. The directors deem initial cost to be a fair reflection of market value, based on market evidence of transaction prices for similar properties.
12
Stocks
2021
2020
£
£
Finished goods and goods for resale
1,000
1,000
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
13
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
40,903
45,198
Amounts owed by group undertakings
8,662,448
5,588,738
Other debtors
6,710,600
5,212,312
Prepayments and accrued income
10,652
65,788
15,424,603
10,912,036
14
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Bank loans
16
406,809
289,767
Obligations under finance leases
17
10,069
Trade creditors
21,132
59,553
Amounts owed to group undertakings
565,380
488,848
Corporation tax
556,845
34,317
Other taxation and social security
78,480
123,252
Other creditors
-
96,934
Accruals and deferred income
530,855
607,410
2,159,501
1,710,150
15
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Bank loans and overdrafts
16
5,206,104
4,439,562
Obligations under finance leases
17
19,299
5,206,104
4,458,861
16
Loans and overdrafts
2021
2020
£
£
Bank loans
5,612,913
4,729,329
Payable within one year
406,809
289,767
Payable after one year
5,206,104
4,439,562
Freehold land and buildings with a carrying amount of
£5,342,365
(
2020 - £6,203,365
) have been pledged to secure borrowings of the company.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
17
Finance lease obligations
2021
2020
Future minimum lease payments due under finance leases:
£
£
Within one year
10,620
In two to five years
20,355
30,975
Less: future finance charges
(1,607)
29,368
Finance lease payments represent rentals payable by the company for certain items of motor vehicles. 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 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
18
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
2021
2020
Balances:
£
£
Accelerated capital allowances
198,500
198,500
There were no deferred tax movements in the year.
19
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
40,188
42,063
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
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
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.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
21
Related party transactions
Remuneration of key management personnel
The directors are considered to be the key management personnel of the company. None of the
directors
received any remuneration for their services during the year.
Transactions with related parties
The company has taken advantage of the exemption not to disclose related party transactions with other members of the group under S33.1A of FRS 102, as all group members are wholly owned subsidiaries.
During the year the company entered into the following transactions with related parties:
Name of related party
Nature of relationship
Entities controlled by the directors
Entities controlled by the directors
Description of
Income
Payments
transaction
2021
2020
2021
2020
£
£
£
£
Entities controlled by the directors
Interest income
14,103
7,022
Balances with related parties
The following amounts were outstanding at the reporting end date:
Amounts owed by
Amounts owed to
related parties
related parties
2021
2020
2021
2020
£
£
£
£
Entities controlled by the directors
6,710,600
5,212,312
22
Ultimate controlling party
The parent company of
Merit Retail Limited
is
Brooklands Healthcare Limited
and its registered office is
58 Moneymore Road, Magherafelt, BT45 6HG.
MERIT RETAIL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
23
Cash (absorbed by)/generated from operations
2021
2020
£
£
Profit for the year after tax
2,300,554
1,987,992
Adjustments for:
Taxation charged
522,528
Finance costs
117,159
186,903
Investment income
(491,516)
(419,898)
Amortisation and impairment of intangible assets
80,999
Depreciation and impairment of tangible fixed assets
7,217
20,513
Movements in working capital:
Increase in debtors
(4,512,567)
(564,590)
Increase in creditors
1,287,144
38,521
Cash (absorbed by)/generated from operations
(769,481)
1,330,440
24
Analysis of changes in net debt
1 January 2021
Cash flows
31 December 2021
£
£
£
Cash at bank and in hand
2,341,573
424,384
2,765,957
Borrowings excluding overdrafts
(4,729,329)
(883,584)
(5,612,913)
Obligations under finance leases
(29,368)
29,368
-
(2,417,124)
(429,832)
(2,846,956)
2021-12-31
2021-01-01
false
CCH Software
CCH Accounts Production 2022.200
Mr Jarlath Conway
Mrs Olivia McElwee
Mrs Therese Conway
Mr P J Conway
Mr P J Conway
Mrs Matilda Conway
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