- Part 2: For the preceding part double click ID:nRSQ7491Ta
(514,161) 937,896 580,342
5. Expenses by nature
2017 2016
£ £
Interest payable in cost of sales 329,478 238,079
Employee costs (including directors) 1,072,259 838,544
Advertising and selling costs 218,855 151,791
Bank fees 437,566 353,577
Other expenses 860,811 616,143
Total cost of sales, other operational costs and administrative expenses 2,918,969 2,198,134
6. Finance income and costs
The group's income comes from making loans.
Interest payable on borrowings to finance these loans is therefore included as
a cost of sale. The amount included was £329,478 (2016 £238,079).
7. Income tax expense
7.1 Current period tax charge:
2017 2016
£ £
Current tax expense 331,050 250,616
Adjustment re previous year tax expense (25,240) 6,549
Deferred tax expense relating to the origination and reversal of temporary differences (2,596) 9,488
303,214 266,653
7.2 Tax reconciliation
The tax assessed for the year differs from the main corporation tax rates in
the UK (19% and 20%, 2016 - 20%).
The differences are explained below.
2017 2016
£ £
Profit for the financial period 1,640,997 1,270,730
Applicable rate - 19.67% (2016 20%) 19.67% 20.00%
Tax at the applicable rate 322,784 254,146
Effects of:
Expenses not deductible for tax 5,263 7,737
Adjustment re previous year tax expense (25,240) 6,549
Reduced rate of tax (17%) on reversing timing differences 407 (1,779)
Tax charge for the period 303,214 266,653
8. Earnings per share
Earnings per share is based on the profit for the year of £1,337,783 (2016
£1,004,077) and the weighted average number of ordinary shares in issue during
the year of 21,354,167 (2016 21,354,167). There are no options or other
factors which would dilute these therefore the fully diluted earnings per
share is identical.
9. Dividends
2017 2016
£ £
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 July 2016 of 1.405p (2015 Nil) per share 300,026 -
Interim dividend for the year ended 31 July 2017 of 1p (2016 1.405p) per share 213,542 300,026
513,568 300,026
Proposed final dividend for the year ended 2017 of 2p (2016 1.405p) per share 427,083 300,026
10. Trade and other receivables
2017 2016
Group Group
£ £
Non-current
Other receivables 22,720 -
22,720 -
Current
Trade receivables 28,412,738 21,799,397
Other receivables 86,321 170,947
Prepayments 23,952 33,524
28,523,011 22,003,868
Standard credit terms for trade receivables are based on the length of the
loan but payments are due on a monthly basis. The directors consider that the
carrying amount of trade and other receivables approximates their fair value.
There are impaired debts at the year end amounting to £52,681 (2016 £Nil).
Provision has been made in full for these. The value of debts which were past
due but not impaired at the year end was £Nil (2016 £Nil).
11. Borrowings
2017 2016
Group Group
£ £
Non-current:
Other loans 41,170 1,100
Hire purchase contracts 16,288 26,218
57,458 27,318
Current:
Bank loan 13,519,513 9,174,044
Other loans 204,490 25,110
Hire purchase contracts 9,501 8,773
13,733,504 9,207,927
11.1 Terms and repayment of debt schedule
The bank loan is due within one year.
The other loans fall due as follows:
2017 2016
Group Group
£ £
Within 1 year 204,490 25,110
Later than 1 year but no later than 3 40,170 100
Later than 3 years but no later than 5 1,000 1,000
245,660 26,210
The minimum payments under hire purchase contracts are as follows:
2017 2016
Group Group
£ £
Within 1 year 11,036 11,036
Later than 1 year but no later than 5 17,568 29,144
28,604 40,180
Future finance charges (2,815) (5,189)
25,789 34,991
The present value of hire purchase liabilities are as follows:
Within 1 year 9,501 8,773
Later than 1 year but no later than 5 16,288 26,218
Future finance charges 25,789 34,991
Bank borrowings are secured by a fixed and floating charge over all the assets
of Bexhill UK Limited, bear interest at rates of 2.90% above LIBOR plus any
associated costs, and are repayable within one year of the advances. The
maximum drawdown facility is currently £15m therefore at 31 July 2017
£1,480,487 was undrawn.
Other borrowings are unsecured and bear interest at varying rates between
4.00% and 6.25%.
Hire purchase liabilities are secured on the assets that they finance and bear
interest at varying rates.
12. Trade and other payables
2017 2016
Group Group
£ £
Trade payables 2,832,827 1,469,707
Other payables 40,028 33,584
Other tax and social security costs 42,623 34,187
Accrued expenses 266,460 119,552
3,181,938 1,657,030
The directors consider that the carrying value of trade and other payables
approximates their fair value.
13. Financial instruments
The company is exposed to the risks that arise from its use of financial
instruments. The objectives, policies and processes of the company for
managing those risks and the methods used to measure them are detailed in note
3 to the statutory accounts.
13.1 Principal financial instruments
The principal financial instruments used by the company, from which financial
instrument risk arises, are as follows:
● Cash and cash equivalents
● Trade and other receivables
● Trade and other payables
● Borrowings
13.2 Financial instruments by category
The group held the following financial assets at the reporting date:
2017 2016
Group Group
£ £
Loans and receivables:
Trade and other receivables: non-current 22,720 -
Trade and other receivables: current 28,499,059 21,970,344
Cash and cash equivalents:
Bank balances and cash in hand 1,728,484 1,390,098
30,250,263 23,360,442
The group held the following financial liabilities at the reporting date:
2017 2016
Group Group
£ £
Other financial liabilities at amortised cost:
Interest bearing loans and borrowings:
Borrowings payable: non-current 57,458 27,318
Borrowings payable: current 13,733,504 9,207,927
Trade and other payables 3,139,315 1,622,843
16,930,277 10,858,088
13.3 Fair value of financial instruments
The fair values of the financial assets and liabilities are not materially
different to their carrying values due to the short term nature of the current
assets and liabilities.
13.4 A Financial risk management
The company's policies for financial risk management are outlined in note 3 on
page 32 of the statutory accounts.
14. Treatment of borrowings
The group borrows money from its bankers and lends this on, together with its
own funds, to its customers.
Any increase in activity leads to an increase in debtors and an associated
increase in borrowings. If the company was one which bought and sold goods or
services the money borrowed would be similar to the company's stock in trade
and the change in creditors would be shown as part of operating cash flows.
However, accounting standards require cash flows from financing to be shown
separately and this means that there appears to be a large outflow of cash
from the company's operations which is then covered by borrowings. For reasons
stated above this is not the case.
This information is provided by RNS
The company news service from the London Stock Exchange