Company Registration No. 04697936 (England and Wales)
MCCALLS SPECIAL PRODUCTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
MCCALLS SPECIAL PRODUCTS LIMITED
COMPANY INFORMATION
Directors
Mr P B Hoy
Secretary
Mr P B Hoy
Company number
04697936
Registered office
Caxton Way
Dinnington
Sheffield
S25 3QE
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
MCCALLS SPECIAL PRODUCTS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Statement of cash flows
9
Notes to the financial statements
10 - 22
MCCALLS SPECIAL PRODUCTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 1 -
The directors present the strategic report for the year ended 31 December 2019.
Fair review of the business
Trading conditions improved during 2019 with traditional European markets performing well as well as India with some large infrastructure projects. Competition remains tough with margins under constant pressure and with the Covid19 2020 remains a challenge in terms of business and profitability.
Despite tough competition and margin pressures the directors consider 2019 another successful year. Sales have increased by 5.7% on the previous year. Gross profit margins increased to 20.79% from 18.38% in 2018. The company generated a pre tax profit of £366k (2018: £128k). The company has a healthy balance sheet with shareholders funds increasing from £5,104k to £5,413k.
The director has no plans for any large capital equipment in the foreseeable future but remains open to take advantage of any business opportunity which may present itself. The business strategy remains consistent with previous years.
Principal risks and uncertainties
The management of the business and execution of the company’s strategy were subject to several risks.
The business is particularly vulnerable to fluctuating exchange rates and steel prices. The company has managed volatile scrap and alloy prices brought about by the decline of sterling by passing on costs wherever it can. Exports benefited from the decrease value of sterling making our conversion costs very competitive internationally.
The key business risks and uncertainties affecting the company were considered to be fluctuating steel prices, changing fuel duty, the weakness of sterling, the impact of government legislation and the state of the worldwide construction market.
Mr P B Hoy
Director
18 December 2020
MCCALLS SPECIAL PRODUCTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2019.
Principal activities
The principal activity of the company continued to be the design and manufacture of high strength bars and fittings for ground engineering, tension structures and facade applications.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr P B Hoy
Results and dividends
The results for the year are set out on page 6.
Ordinary dividends were paid amounting to £12,461. The directors do not recommend payment of a final dividend.
Auditor
BHP were appointed as auditor to the company and is deemed to be reappointed under section 487(2) of the Companies Act 2006
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr P B Hoy
Director
18 December 2020
MCCALLS SPECIAL PRODUCTS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
MCCALLS SPECIAL PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MCCALLS SPECIAL PRODUCTS LIMITED
- 4 -
Opinion
We have audited the financial statements of McCalls Special Products Limited
(the 'company')
for the year ended 31 December 2019 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 2019 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the 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.
MCCALLS SPECIAL PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MCCALLS SPECIAL PRODUCTS LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the 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.
Use of our 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 Warner (Senior Statutory Auditor)
for and on behalf of BHP LLP
18 December 2020
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
MCCALLS SPECIAL PRODUCTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
- 6 -
2019
2018
Notes
£
£
Turnover
3
11,109,058
10,506,851
Cost of sales
(8,799,530)
(8,575,916)
Gross profit
2,309,528
1,930,935
Distribution costs
(1,073,469)
(898,790)
Administrative expenses
(836,901)
(878,634)
Operating profit
4
399,158
153,511
Interest receivable and similar income
7
6,554
13,685
Interest payable and similar expenses
8
(39,780)
(38,972)
Profit before taxation
365,932
128,224
Tax on profit
9
(44,741)
(30,432)
Profit for the financial year
321,191
97,792
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MCCALLS SPECIAL PRODUCTS LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2019
31 December 2019
- 7 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
11
3,207,450
3,289,152
Investments
12
1,000
1,000
3,208,450
3,290,152
Current assets
Stocks
15
2,510,892
3,456,867
Debtors
16
2,633,864
3,187,831
Investments
17
150,000
150,000
Cash at bank and in hand
145,241
45,524
5,439,997
6,840,222
Creditors: amounts falling due within one year
18
(2,163,580)
(3,283,945)
Net current assets
3,276,417
3,556,277
Total assets less current liabilities
6,484,867
6,846,429
Creditors: amounts falling due after more than one year
19
(1,012,766)
(1,680,258)
Provisions for liabilities
21
(59,000)
(61,800)
Net assets
5,413,101
5,104,371
Capital and reserves
Called up share capital
24
31,147
31,147
Revaluation reserve
156,298
156,298
Capital redemption reserve
1,640
1,640
Other reserves
1,333,335
1,333,335
Profit and loss reserves
3,890,681
3,581,951
Total equity
5,413,101
5,104,371
The financial statements were approved and signed by the director and authorised for issue on 18 December 2020
Mr P B Hoy
Director
Company Registration No. 04697936
MCCALLS SPECIAL PRODUCTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
- 8 -
Share capital
Revaluation reserve
Capital redemption reserve
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
£
£
Balance at 1 January 2018
31,147
156,298
1,640
1,333,335
3,519,285
5,041,705
Year ended 31 December 2018:
Profit and total comprehensive income for the year
-
-
-
-
97,792
97,792
Dividends
10
-
-
-
-
(35,126)
(35,126)
Balance at 31 December 2018
31,147
156,298
1,640
1,333,335
3,581,951
5,104,371
Year ended 31 December 2019:
Profit and total comprehensive income for the year
-
-
-
-
321,191
321,191
Dividends
10
-
-
-
-
(12,461)
(12,461)
Balance at 31 December 2019
31,147
156,298
1,640
1,333,335
3,890,681
5,413,101
MCCALLS SPECIAL PRODUCTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
- 9 -
2019
2018
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
663,290
1,182,566
Interest paid
(39,780)
(38,972)
Income taxes paid
(42,632)
(41,993)
Net cash inflow from operating activities
580,878
1,101,601
Investing activities
Purchase of tangible fixed assets
-
(19,500)
Receipts arising from loans made
45,082
(462,252)
Interest received
6,554
13,685
Net cash generated from/(used in) investing activities
51,636
(468,067)
Financing activities
Repayment of bank loans
(520,336)
(136,077)
Dividends paid
(12,461)
(35,126)
Net cash used in financing activities
(532,797)
(171,203)
Net increase in cash and cash equivalents
99,717
462,331
Cash and cash equivalents at beginning of year
45,524
(416,807)
Cash and cash equivalents at end of year
145,241
45,524
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
- 10 -
1
Accounting policies
Company information
McCalls Special Products Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Caxton Way, Dinnington, Sheffield, S25 3QE.
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 certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The directors have considered the potential impact on the company of the Covid-19 pandemic and do not believe that any impact will be significant. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
true
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
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:
Freehold buildings
2% straight line per annum
Plant and machinery
10 - 20% straight line per annum
Motor vehicles
25% straight line per annum
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
.
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 11 -
1.5
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities
.
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
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 (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 (or cash-generating unit) 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 (or cash-generating unit)
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 estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 12 -
1.8
Cash at bank and in hand
Cash at bank and in hand
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.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets
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.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal 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.
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 13 -
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
Basic financial liabilities, including creditors and bank loans are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. 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.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
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.
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 14 -
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.
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
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
2019
2018
£
£
Turnover analysed by class of business
Sales
11,109,058
10,506,851
2019
2018
£
£
Turnover analysed by geographical market
United Kingdom
1,715,408
2,036,797
Europe
4,220,812
3,102,699
Rest of the World
5,172,838
5,367,355
11,109,058
10,506,851
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 15 -
4
Operating profit
2019
2018
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
11,839
(33,133)
Depreciation of owned tangible fixed assets
81,702
101,652
Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to
£11,839 (2018: £33,133).
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Administration and Support
31
30
Production
39
40
Total
70
70
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
2,348,535
2,243,432
Social security costs
168,873
179,266
Pension costs
107,949
107,633
2,625,357
2,530,331
6
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
220,421
237,778
Company pension contributions to defined contribution schemes
50,409
51,689
270,830
289,467
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
6
Directors' remuneration
(Continued)
- 16 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2019
2018
£
£
Remuneration for qualifying services
220,421
237,778
Company pension contributions to defined contribution schemes
50,409
51,689
7
Interest receivable and similar income
2019
2018
£
£
Interest income
Other interest income
6,554
13,685
8
Interest payable and similar expenses
2019
2018
£
£
Other interest
39,780
38,972
9
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
82,929
42,632
Adjustments in respect of prior periods
(35,388)
-
Total current tax
47,541
42,632
Deferred tax
Origination and reversal of timing differences
(2,800)
(12,200)
Total tax charge
44,741
30,432
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
9
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:
2019
2018
£
£
Profit before taxation
365,932
128,224
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
69,527
24,363
Tax effect of expenses that are not deductible in determining taxable profit
859
2,116
Change in unrecognised deferred tax assets
(772)
(6,941)
Adjustments in respect of prior years
(35,388)
-
Permanent capital allowances in excess of depreciation
10,276
10,276
Effect of change in deferred tax rates
239
618
Taxation charge for the year
44,741
30,432
10
Dividends
2019
2018
£
£
Final paid
12,461
35,126
11
Tangible fixed assets
Freehold buildings
Plant and machinery
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2019 and 31 December 2019
3,495,000
291,781
92,266
3,879,047
Depreciation and impairment
At 1 January 2019
253,256
284,286
52,353
589,895
Depreciation charged in the year
63,312
1,166
17,224
81,702
At 31 December 2019
316,568
285,452
69,577
671,597
Carrying amount
At 31 December 2019
3,178,432
6,329
22,689
3,207,450
At 31 December 2018
3,241,744
7,495
39,913
3,289,152
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 18 -
12
Fixed asset investments
2019
2018
Notes
£
£
Investments in subsidiaries
13
1,000
1,000
Movements in fixed asset investments
Shares in group undertakings
£
Cost or valuation
At 1 January 2019 & 31 December 2019
1,000
Carrying amount
At 31 December 2019
1,000
At 31 December 2018
1,000
13
Subsidiaries
Details of the company's subsidiaries at 31 December 2019 are as follows:
Name of undertaking
Address
Class of
% Held
shares held
Direct
McCalls SP Ltd
England & Wales
Ordinary Shares
100.00
14
Financial instruments
2019
2018
£
£
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
150,000
150,000
15
Stocks
2019
2018
£
£
Raw materials and consumables
1,026,902
1,822,109
Work in progress
36,250
194,622
Finished goods and goods for resale
1,447,740
1,440,136
2,510,892
3,456,867
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 19 -
16
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
1,931,813
2,320,429
Other debtors
612,032
729,410
Prepayments and accrued income
90,019
137,992
2,633,864
3,187,831
17
Current asset investments
2019
2018
£
£
Unlisted investments
150,000
150,000
18
Creditors: amounts falling due within one year
2019
2018
Notes
£
£
Bank loans
20
289,779
182,623
Trade creditors
769,752
1,879,153
Amounts owed to group undertakings
1,000
1,000
Corporation tax
47,541
42,632
Other taxation and social security
44,987
46,682
Other creditors
759,431
824,665
Accruals and deferred income
251,090
307,190
2,163,580
3,283,945
Included within other creditors is an invoice discounting balance of £734,376 (2018: £801,996) which is secured on the debts concerned.
19
Creditors: amounts falling due after more than one year
2019
2018
Notes
£
£
Bank loans and overdrafts
20
1,012,766
1,640,258
Accruals and deferred income
-
40,000
1,012,766
1,680,258
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 20 -
20
Loans and overdrafts
2019
2018
£
£
Bank loans
1,302,545
1,822,881
Payable within one year
289,779
182,623
Payable after one year
1,012,766
1,640,258
The bank borrowings are all secured by a cross guarantee between the company and McCalls SP Limited.
There is a legal charge over the property owned by the company in respect of the term loan in addition to the security described above.
Interest on bank borrowings is charged at 1.80% above Base Rate.
21
Provisions for liabilities
2019
2018
Notes
£
£
Deferred tax liabilities
22
59,000
61,800
22
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2019
2018
Balances:
£
£
Accelerated capital allowances
59,000
61,800
2019
Movements in the year:
£
Liability at 1 January 2019
61,800
Credit to profit or loss
(2,800)
Liability at 31 December 2019
59,000
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 21 -
23
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
107,949
107,633
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.
24
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
31,147 Ordinary shares of £1 each
31,147
31,147
25
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£
£
Within one year
2,460
2,460
Between two and five years
7,380
9,840
9,840
12,300
26
Events after the reporting date
At 31 December 2019, a limited number of cases of an unknown virus had been reported to the World Health Organisation. At that date there was no scientific evidence of human to human transmission. The subsequent spread of the virus and its identification as a new coronavirus does not impact on the financial statements at 31 December 2019.
27
Directors' transactions
Description
% Rate
Opening balance
Amounts advanced
Interest charged
Amounts repaid
Closing balance
£
£
£
£
£
Mr P B Hoy -
2.50
333,401
686,566
6,554
(588,202)
438,319
333,401
686,566
6,554
(588,202)
438,319
MCCALLS SPECIAL PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 22 -
28
Cash generated from operations
2019
2018
£
£
Profit for the year after tax
321,191
97,792
Adjustments for:
Taxation charged
44,741
30,432
Finance costs
39,780
38,972
Investment income
(6,554)
(13,685)
Depreciation and impairment of tangible fixed assets
81,702
101,652
Movements in working capital:
Decrease/(increase) in stocks
945,975
(582,594)
Decrease in debtors
508,885
507,824
(Decrease)/increase in creditors
(1,272,430)
1,002,173
Cash generated from operations
663,290
1,182,566
29
Analysis of changes in net debt
1 January 2019
Cash flows
31 December 2019
£
£
£
Cash at bank and in hand
45,524
99,717
145,241
Borrowings excluding overdrafts
(1,822,881)
520,336
(1,302,545)
(1,777,357)
620,053
(1,157,304)
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