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Strategic Report, Report of the Directors and |
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Financial Statements |
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for the Year Ended 31 December 2020 |
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for |
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Mackay's Ltd. |
REGISTERED NUMBER:
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Strategic Report, Report of the Directors and |
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Financial Statements |
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for the Year Ended 31 December 2020 |
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for |
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Mackay's Ltd. |
Mackay's Ltd. (Registered number: SC155016) |
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Contents of the Financial Statements |
for the Year Ended 31 December 2020 |
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Page |
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Company Information | 1 |
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Strategic Report | 2 |
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Report of the Directors | 5 |
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Report of the Independent Auditors | 7 |
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Statement of Comprehensive Income | 10 |
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Statement of Financial Position | 11 |
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Statement of Changes in Equity | 12 |
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Statement of Cash Flows | 13 |
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Notes to the Statement of Cash Flows | 14 |
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Notes to the Financial Statements | 16 |
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Mackay's Ltd. |
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Company Information |
for the Year Ended 31 December 2020 |
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DIRECTORS: |
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SECRETARY: |
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REGISTERED OFFICE: |
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REGISTERED NUMBER: |
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SENIOR STATUTORY AUDITOR: |
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AUDITORS: |
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Statutory Auditor |
Chapelshade House |
78-84 Bell Street |
Dundee |
DD1 1RQ |
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SOLICITORS: |
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Whitehall House |
33 Yeaman Shore |
Dundee |
DD1 4BJ |
Mackay's Ltd. (Registered number: SC155016) |
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Strategic Report |
for the Year Ended 31 December 2020 |
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The directors present their strategic report for the year ended 31 December 2020. |
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REVIEW OF BUSINESS |
As observed last year, the Covid-19 pandemic presents an unprecedented challenge for all businesses, large and small. The company gives the highest priority to the health and safety of all staff. |
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There is uncertainty due to the ongoing and developing impact from Coronavirus, particularly with emerging variants. The executive team have reacted with extraordinary speed and diligence to this crisis both in terms of contingency planning and innovative thinking. The executive team have spent a great deal of time on investigating various scenarios and financial planning and the policy of managing activities in a way that avoids unnecessary or unacceptable risks is crucial. The Covid-19 procedures which were instituted with staff being trained in their observance will continue for the foreseeable future, bearing in mind Scottish Government legislation. We have added to and augmented measures so that staff are able to work within the social distancing guidelines set out by the United Kingdom and Scottish Governments for food producers. We are thankful for the support of our employees during this period of uncertainty, and we continue to work with them on strengthening our processes and procedures. |
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The board reports that revenues were reduced compared with last year (£16,960,944 in 2020 and £17,964,922 in 2019). UK sales accounted for 65% of sales which was lower in both percentage and revenue terms compared with last year. International sales increased to 35% of turnover, a rise on 2019 in both percentage and revenue terms. |
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Performance was impacted by the significant effect of Covid-19 which led to two lockdowns during the year. Raw material costs were controlled during the year, down by 2.14% over 2019, following the trend in reduced turnover of 5.59%. These are under constant review and future pricing arrangement with key suppliers will continue for the foreseeable future. We managed to increase our operating margin to 46.46% achieved against the 2019 figure of 45.24% |
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The Mackays and Mrs Bridges brands continue to develop in home and international markets and the board places great emphasis on this. |
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Movements in the value of sterling have to be continually monitored. The business has continued with its policy of steady progress in capital investment and a total of £299,817 was expended on plant and machinery and office equipment. |
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FUTURE OUTLOOK |
The board believes that the operating margin can be maintained in 2021. Home and international markets remain challenging with the Brexit effect having particular resonance in additional administrative requirements and transport and haulage. New products are in the pipeline with development of these well advanced. Conversations with the company's bankers are ongoing in respect of currency transactions in order to mitigate the effect of these as far as possible. |
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As reported in 2018, the lease of adjoining premises in James Chalmers Road from the previous tenants and a second building on the site sub-leased from Angus Council were acquired to allow distribution and co-packing to be moved to these new facilities. In the space released in the main factory the process of installation of further manufacturing capability continues, accounting for the majority of the capital expenditure. As noted, this will enable the company to expand its product range and development of new customer offerings continues apace. |
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Ultimately, the board believes that the enduring nature of customer relationships and the absolute quality of the products manufactured, coupled with a long-term programme of capital investment leaves the company well placed to meet the challenges of the current economic environment. |
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Mackay's Ltd. (Registered number: SC155016) |
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Strategic Report |
for the Year Ended 31 December 2020 |
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PRINCIPAL RISKS AND UNCERTAINTIES |
The day-to-day management of the business and execution of the board's strategy exposes the company to a variety of financial and demand and supply side risks. In addition, there are other factors such as government regulation and unexpected economic conditions in overseas markets affecting the financial position of customers and their willingness to commit expenditure. The company monitors developments in these areas on an ongoing basis to ensure it is able to mitigate the effect of such changes. |
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Demand based risks are managed by the operation of a broadly based business with a diverse customer base and sales in a significant number of markets across the world. On the supply side, the company takes steps where possible to limit exposure to input price inflation through the negotiation of medium to long-term contracts and it remains committed to the use of only the finest ingredients available. |
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The company also has a loyal and committed workforce and believes its focus on the maintenance of well established relationships with customers and suppliers alike remains a key differentiator. All these provide a route to continued long-term success. |
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Financial key performance indicators (KPIs) |
The directors rely upon a number of financial KPIs and, for the period under review, consider all of these to be in line with their expectations. |
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Non financial key performance indicators (KPIs) |
The directors consider a number of non financial performance indicators on an ongoing basis, such as the recruitment and retention of talented employees with skills to meet its objectives and the monitoring of health and safety incident reports. |
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Financial risk management objectives and policies |
The company's principal financial instruments comprise bank and other loans, hire purchase contracts. The main purpose of these financial instruments is to raise finance for the company's operations. The company has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations. The company does not enter into derivative transactions. It is, and has been throughout the period under review, the company's policy that no trading in financial instruments shall be undertaken. The main risks arising from the company's financial instruments relate to interest rates, commodity price rises, liquidity, foreign currency fluctuations and credit. The board reviews and agrees policies for managing each of these risks and these are summarised below. |
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Interest rate risk |
The company's exposure to market risk for changes in interest rates relates primarily to the company's long-term debt obligations. The company's policy is to manage its interest cost using a mix of fixed and variable rate debt and to minimise its overdraft as far as possible. The company finances specific large plant acquisitions via hire purchase contracts. |
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Foreign currency risk |
As a result of sales to customers outwith the United Kingdom, the company's profits can be affected by movements in foreign exchange rates. The company does not seek to hedge this exposure, with any gains or losses arising on movements in exchange rates being recognised as they occur. |
Mackay's Ltd. (Registered number: SC155016) |
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Strategic Report |
for the Year Ended 31 December 2020 |
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Commodity price risk |
The company's exposure to the price of production materials and ingredients is significant; selling prices are, therefore, monitored regularly to reduce the impact of such risk. |
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Credit risk |
The company trades with only recognised, creditworthy third parties. It is company policy that customers who wish to trade on credit terms are subject to credit vetting procedures. In the case of overseas customers, either a partial or full deposit payment may be requested before goods are shipped or, alternatively, letters of credit may be obtained from the customers' bankers. In addition, receivable balances are monitored on an ongoing basis with the result that the company's exposure to bad debts is not significant. |
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Liquidity risk |
The company's objective is to maintain a balance between a continuity of funding and flexibility through the use of overdrafts, bank and other loans and hire purchase contracts. This balance mitigates the risk of potential cashflow issues which may have an impact on operational requirements of the company. |
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PENSION PROVISION |
In line with the government's push to widen access to workplace pensions, the board is pleased to report that all employees now have the opportunity to join the company's defined contribution pension scheme, with company contributions higher than those set out in the relevant legislation. As an employer with a long standing commitment to all of its people, the company has always believed in and practised promotion of pension saving and, on this point, it is confident that its contribution level will minimise opt out rates and will not incur additional cost or risk. |
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HEALTH AND SAFETY |
The company gives a high priority to the health and safety of all staff and the general public and, accordingly, it is its policy to manage activities in a way that avoids unnecessary or unacceptable risks. |
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ENVIRONMENT |
The company recognises its environmental responsibilities and products are constantly reviewed to ensure a proper balance is struck between the conflicting requirements of product protection and unnecessary packaging. The company is also committed to reducing its carbon footprint through schemes to recycle waste materials and improve the efficiency of energy and water consumption. |
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ON BEHALF OF THE BOARD: |
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27 August 2021 |
Mackay's Ltd. (Registered number: SC155016) |
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Report of the Directors |
for the Year Ended 31 December 2020 |
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The directors present their report with the financial statements of the company for the year ended 31 December 2020. |
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PRINCIPAL ACTIVITY |
The principal activities of Mackay's Ltd. are the manufacture and sale of the finest quality marmalade, jams, preserves, relishes, chutneys and sauces. |
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DIVIDENDS |
The results for the year are set out on page 9. No interim dividends have been paid. The directors do not recommend the payment of a final dividend. |
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DIRECTORS |
The directors shown below have held office during the whole of the period from 1 January 2020 to the date of this report. |
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Other changes in directors holding office are as follows: |
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EMPLOYMENT POLICIES |
The company has a comprehensive framework of employment policies, details of which are provided to all employees in the form of a handbook. |
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The rights and opportunities of people of all ages to seek, obtain and hold employment with dignity and without any form of discrimination is central to the company. It is the company's policy that employees at all levels shall not in their dealings harass or discriminate against other individuals on the grounds of gender, race, nationality, religion, sexual orientation, disability, age or for any other reason whatsoever. |
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The company gives full and fair consideration to the employment of disabled persons, having regard to their particular aptitudes and abilities. Should an employee become disabled every effort is made to provide appropriate training to allow their employment to continue. |
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Training and development activities are available to all employees, having due regard to their ambitions, aptitudes and abilities. |
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EMPLOYEE INVOLVEMENT |
The company places considerable value on the contribution of its employees and continues to encourage the development of employee involvement in the company. Management meets regularly with employees through a consultative committee to discuss matters of mutual interest and to provide opportunities to employees to contribute to the success of the business. Employee communications are a high priority and the use of email, notice boards and briefings ensure all employees are informed about matters of interest to them. |
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DISCLOSURE IN THE STRATEGIC REPORT |
The review of business and principal risks and uncertainties are not shown in the report of the directors as they are now shown in the strategic report under section 414C(11) of the Companies Act 2006. |
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Mackay's Ltd. (Registered number: SC155016) |
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Report of the Directors |
for the Year Ended 31 December 2020 |
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STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
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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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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: |
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- | 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. |
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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. |
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STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
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AUDITORS |
The auditors, MMG Archbold, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
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ON BEHALF OF THE BOARD: |
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Report of the Independent Auditors to the Members of |
Mackay's Ltd. |
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Opinion |
We have audited the financial statements of Mackay's Ltd. (the 'company') for the year ended 31 December 2020 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Statement of Cash Flows, 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 Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
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In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 31 December 2020 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. |
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Basis for opinion |
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 Auditors' 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. |
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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. |
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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. |
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Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
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Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
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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. |
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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 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. |
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Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
Report of the Independent Auditors to the Members of |
Mackay's Ltd. |
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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 identified material misstatements in the Strategic Report or the Report of the Directors. |
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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. |
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Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page six, 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 necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
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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. |
Report of the Independent Auditors to the Members of |
Mackay's Ltd. |
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Auditors' 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 a Report of the Auditors 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. |
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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: |
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We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. |
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We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management, the recognition of Business Development Costs, the calculation of inventory overheads and the misstatement of revenue. Our audit procedures to respond to these risks included: |
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- | Enquiries of management about their own identification and assessment of the risks of irregularities. |
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Testing of the appropriateness and correct authorisation of journal entries and any other significant transactions
outside the ordinary course of business including those entered into with related parties. |
- | Review of significant estimates to ensure there is no indication of management bias. |
- | Testing of the completeness and correct allocation of revenue in the year. |
- Testing the captalisation of development costs and their future benefits |
- Testing the overhead allocation to inventory is consistent with the company's activities, the age of stock and its condition. |
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Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. |
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These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations. |
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A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
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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 a Report of the Auditors 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. |
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for and on behalf of
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Statutory Auditor |
Chapelshade House |
78-84 Bell Street |
Dundee |
DD1 1RQ |
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Mackay's Ltd. (Registered number: SC155016) |
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Statement of Comprehensive |
Income |
for the Year Ended 31 December 2020 |
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2020 | 2019 |
Notes | £ | £ | £ | £ |
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TURNOVER | 4 |
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Cost of sales |
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GROSS PROFIT |
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Distribution costs |
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Administrative expenses |
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5,033,731 | 5,513,377 |
239,656 | (395,676 | ) |
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Other operating income |
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OPERATING PROFIT/(LOSS) | 6 |
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Exceptional items | 7 |
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431,181 | (393,455 | ) |
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Interest receivable and similar income |
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431,221 | (393,455 | ) |
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Interest payable and similar expenses | 8 |
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PROFIT/(LOSS) BEFORE TAXATION |
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Tax on profit/(loss) | 9 |
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PROFIT/(LOSS) FOR THE FINANCIAL
YEAR |
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( |
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OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE
INCOME/(LOSS) FOR THE YEAR |
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( |
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Mackay's Ltd. (Registered number: SC155016) |
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Statement of Financial Position |
31 December 2020 |
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2020 | 2019 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 10 |
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Tangible assets | 11 |
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CURRENT ASSETS |
Stocks | 12 |
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Debtors | 13 |
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Cash at bank and in hand |
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CREDITORS |
Amounts falling due within one year | 14 |
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NET CURRENT ASSETS |
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TOTAL ASSETS LESS CURRENT
LIABILITIES |
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CREDITORS |
Amounts falling due after more than one
year |
15 |
( |
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( |
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PROVISIONS FOR LIABILITIES | 19 | ( |
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NET ASSETS |
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CAPITAL AND RESERVES |
Called up share capital | 20 |
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Share premium | 21 |
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Revaluation reserve | 21 |
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Retained earnings | 21 |
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SHAREHOLDERS' FUNDS |
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The financial statements were approved by the Board of Directors and authorised for issue on
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Mackay's Ltd. (Registered number: SC155016) |
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Statement of Changes in Equity |
for the Year Ended 31 December 2020 |
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Called up |
share | Retained | Share | Revaluation | Total |
capital | earnings | premium | reserve | equity |
£ | £ | £ | £ | £ |
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Balance at 1 January 2019 |
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Changes in equity |
Total comprehensive loss | - | ( |
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Balance at 31 December 2019 |
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Changes in equity |
Total comprehensive income | - |
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- | ( |
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Balance at 31 December 2020 |
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Mackay's Ltd. (Registered number: SC155016) |
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Statement of Cash Flows |
for the Year Ended 31 December 2020 |
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2020 | 2019 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 1 |
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Interest paid | ( |
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Interest element of hire purchase payments
paid |
( |
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( |
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Tax paid |
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( |
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Net cash from operating activities | ( |
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Cash flows from investing activities |
Purchase of intangible fixed assets | ( |
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Purchase of tangible fixed assets | ( |
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Sale of tangible fixed assets |
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Interest received |
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Net cash from investing activities | ( |
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Cash flows from financing activities |
New loans in year |
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Loan repayments in year | ( |
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Capital repayments in year | ( |
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Amount withdrawn by directors | (9,101 | ) | (30,357 | ) |
Grants received |
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Net cash from financing activities |
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Increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of
year |
2 |
(2,337,605 |
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(3,128,960 |
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Cash and cash equivalents at end of year | 2 | ( |
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Mackay's Ltd. (Registered number: SC155016) |
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Notes to the Statement of Cash Flows |
for the Year Ended 31 December 2020 |
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1. |
RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS |
2020 | 2019 |
£ | £ |
Profit/(loss) before taxation |
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( |
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Depreciation charges |
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Loss/(profit) on disposal of fixed assets |
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( |
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Government grants | ( |
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Finance costs | 331,706 | 283,949 |
Finance income | (40 | ) | - |
626,646 | 115,858 |
Decrease in stocks |
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(Increase)/decrease in trade and other debtors | ( |
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Decrease in trade and other creditors | ( |
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Cash generated from operations |
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2. | CASH AND CASH EQUIVALENTS |
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The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts: |
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Year ended 31 December 2020 |
31.12.20 | 1.1.20 |
£ | £ |
Cash and cash equivalents | 6,058 | 2,898 |
Bank overdrafts | ( |
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(1,733,889 | ) | (2,337,605 | ) |
Year ended 31 December 2019 |
31.12.19 | 1.1.19 |
£ | £ |
Cash and cash equivalents | 2,898 | 167,794 |
Bank overdrafts | ( |
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(2,337,605 | ) | (3,128,960 | ) |
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Mackay's Ltd. (Registered number: SC155016) |
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Notes to the Statement of Cash Flows |
for the Year Ended 31 December 2020 |
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3. | ANALYSIS OF CHANGES IN NET DEBT |
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At 1.1.20 | Cash flow | At 31.12.20 |
£ | £ | £ |
Net cash |
Cash at bank and in hand | 2,898 | 3,160 | 6,058 |
Bank overdrafts | (2,340,503 | ) | 600,556 | (1,739,947 | ) |
(2,337,605 | ) |
|
(1,733,889 | ) |
Debt |
Finance leases | (176,972 | ) | 74,367 | (102,605 | ) |
Debts falling due within 1 year | (596,429 | ) | 59,051 | (537,378 | ) |
Debts falling due after 1 year | (2,541,440 | ) | (1,062,622 | ) | (3,604,062 | ) |
(3,314,841 | ) | (929,204 | ) | (4,244,045 | ) |
Total | (5,652,446 | ) | (325,488 | ) | (5,977,934 | ) |
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements |
for the Year Ended 31 December 2020 |
|
1. | STATUTORY INFORMATION |
|
Mackay's Ltd. is a
|
|
|
2. | ACCOUNTING POLICIES |
|
Basis of preparing the financial statements |
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 accounting policies set out below have been applied consistently, other than where new policies have been adopted. |
|
The financial statements are prepared in sterling, which is the functional currency of the company. |
|
The financial statements have been prepared under the historical cost convention, modified to include certain fixed assets at fair value. The principal accounting policies adopted are set out below. |
|
Going concern |
The company's business activities, together with factors likely to affect its future development (specifically the Covid-19 pandemic and Brexit), performance and position are set out in the business review in the Strategic report. The financial position of the company, its cashflow, liquidity position and borrowing facilities are also described in that report. |
|
As highlighted in notes 14, 15 and 16 to the financial statements, the company meets its day to day working capital through an overdraft facility, bank loans, hire purchase contracts, and other loans. The current economic conditions create uncertainty particularly over:- |
(a) the level of demand for the company's products; |
(b) the exchange rate between sterling and the currency of countries with which the company trades; and |
(c) the availability of bank finance in the foreseeable future. |
|
The company's forecasts and projections, taking account of possible changes in trading performance, show that the company should be able to operate within its current bank facilities. The company has held discussions with its bankers about its future borrowing needs and no matters have been drawn to its attention to suggest that appropriate facilities will not be available. |
|
The directors have reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Therefore they continue to adopt the going concern basis of accounting in preparing the annual financial statements. |
|
Turnover |
Turnover is measured at the fair value of the consideration received or receivable, net of discounts and value added taxes. Turnover includes revenue earned from the sale of goods. |
|
Turnover is recognised when the significant risks and rewards of ownership of the goods has transferred to the buyer. This is usually at the point that the customer has signed for delivery of the goods. |
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
2. | ACCOUNTING POLICIES - continued |
|
Business development costs |
Development of products is capitalised where there is expected to be a benefit to future periods. |
|
Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses and amortised over its useful economic life. Assessment of useful economic life range from 5 to 20 years. Amortisation expenses for the year and last year are included in administrative expenses. |
|
If there is an indication that there has been a significant change in the amortisation rate or residual value of an asset, the amortisation of that asset is revised to reflect the new expectations. |
|
All other research and development expenditure is recognised as an expense in the period in which it is incurred. |
|
Tangible fixed assets |
|
Long leasehold | - |
|
Plant and machinery | - |
|
Motor vehicles | - |
|
Office equipment | - |
|
|
Depreciation is provided on any revaluation from the date of such revaluation, at rates calculated to write off the cost or valuation (less any estimated residual value) of each asset over its expected useful life. |
|
Stocks |
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. |
|
Production in progress is valued on the basis of direct costs plus attributable overheads based on normal level of activity. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the valuation of production in progress. |
|
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
|
Current or deferred taxation assets and liabilities are not discounted. |
|
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. |
|
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date. |
|
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
|
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
2. | ACCOUNTING POLICIES - continued |
|
Research and development |
In the research phase of an internal project it is not possible to demonstrate the project will generate future economic benefits and hence all expenditure on research is recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. |
|
If it is not possible to distinguish between the research phase and the development phase of an internal project the expenditure is treated as if it were all incurred in the research phase only. |
|
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
|
Hire purchase and leasing commitments |
Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter. |
|
The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability. |
|
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
|
Pension costs and other post-retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
|
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. |
|
Retirement benefits |
The company operates a defined contribution pension scheme. Contributions are charged in the profit and loss account as they become payable in accordance with the rules of the scheme. |
|
Financial instruments |
Financial instruments are classified, and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. |
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
2. | ACCOUNTING POLICIES - continued |
|
Government grants |
Grants are accounted for under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to the profit and loss account at the same rate as the depreciation on the assets to which the grant relates. |
|
Grants of a revenue nature are recognised in "other income" within profit or loss in the same period as the related expenditure. This includes the Government Coronavirus Job Retention Scheme (furlough). The company has not directly benefitted from any other forms of government assistance. |
|
3. | CRITICAL ACCOUNTING 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 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. |
|
Key sources of estimation uncertainty |
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows: |
|
Inventory provisioning |
The company makes an estimate of the recoverability of the cost of the inventory net of the associated provisioning required. When calculating the inventory provision, management considers the nature and condition of inventory, as well as applying assumptions around the future use of raw materials. See Note 11 for the carrying amount of inventory net of any associated provision. |
|
Impairment of debtors |
The company makes an estimate of the recoverable value of amounts owed by customers and other debtors. When assessing impairment of trade and other debtors, management considers factors including the ageing profile of debtors and historical experience. See Note 12 for the carrying amount of debtors net of any associated impairment provision. |
|
Useful economic lives of tangible assets |
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual value of the assets. The useful economic lives and residual values are assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See Note 2 and Note 10 for the useful economic lives for each class of assets. |
|
4. | TURNOVER |
|
The turnover and profit (2019 - loss) before taxation are attributable to the one principal activity of the company. |
|
An analysis of turnover by geographical market is given below: |
|
2020 | 2019 |
£ | £ |
United Kingdom |
|
|
Rest of the world | 5,903,472 | 5,567,102 |
|
|
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
5. | EMPLOYEES AND DIRECTORS |
2020 | 2019 |
£ | £ |
Wages and salaries |
|
|
Social security costs |
|
|
Other pension costs |
|
|
|
|
|
The average number of employees during the year was as follows: |
2020 | 2019 |
|
Production | 122 | 130 |
Administration | 34 | 38 |
|
|
|
2020 | 2019 |
£ | £ |
Directors' remuneration |
|
|
|
The number of directors to whom retirement benefits were accruing was as follows: |
|
Money purchase schemes |
|
|
|
Information regarding the highest paid director is as follows: |
2020 | 2019 |
£ | £ |
Emoluments etc |
|
|
|
6. | OPERATING PROFIT/(LOSS) |
|
The operating profit (2019 - operating loss) is stated after charging/(crediting): |
|
2020 | 2019 |
£ | £ |
Hire of plant and machinery |
|
|
Depreciation - owned assets |
|
|
Depreciation - assets on hire purchase contracts |
|
|
Loss/(profit) on disposal of fixed assets |
|
( |
) |
Development costs amortisation |
|
|
Auditors' remuneration |
|
|
Foreign exchange differences |
|
|
|
7. | EXCEPTIONAL ITEMS |
2020 | 2019 |
£ | £ |
Exceptional items | ( |
) |
|
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
During the year the company had to reorganise its workforce and found it necessary to undertake a redundancy programme. There was full consultation with the staff with the objective to maximise the number of voluntary redundancies whilst retaining the skill required for the future. No compulsory redundancies were required and 15 staff left the company through voluntary redundancy by 31 December 2020. |
|
The total costs for this restructuring were £139,831. |
|
8. | INTEREST PAYABLE AND SIMILAR EXPENSES |
2020 | 2019 |
£ | £ |
Bank interest |
|
|
Bank loan interest |
|
|
Scottish Enterprise loan |
interest |
|
|
Hire purchase |
|
|
|
|
|
9. | TAXATION |
|
Analysis of the tax charge/(credit) |
The tax charge/(credit) on the profit for the year was as follows: |
2020 | 2019 |
£ | £ |
Current tax: |
UK corporation tax |
|
|
(Over) / under provision |
from earlier years | - | (53,778 | ) |
Total current tax |
|
( |
) |
|
Deferred tax: |
Deferred tax | ( |
) | ( |
) |
Underprovision in earlier year | - | 8,817 |
Total deferred tax | ( |
) | ( |
) |
|
Tax on profit/(loss) |
|
( |
) |
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
9. | TAXATION - continued |
|
Reconciliation of total tax charge/(credit) included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
|
2020 | 2019 |
£ | £ |
Profit/(loss) before tax |
|
( |
) |
Profit/(loss) multiplied by the standard rate of corporation tax in the UK of
|
|
( |
) |
|
Effects of: |
Expenses not deductible for tax purposes |
|
|
Adjustments to tax charge in respect of previous periods |
|
|
Total tax charge/(credit) | 69,002 | (79,450 | ) |
|
10. | INTANGIBLE FIXED ASSETS |
Development |
costs |
£ |
COST |
At 1 January 2020 |
|
Additions |
|
At 31 December 2020 |
|
AMORTISATION |
At 1 January 2020 |
|
Amortisation for year |
|
At 31 December 2020 |
|
NET BOOK VALUE |
At 31 December 2020 |
|
At 31 December 2019 |
|
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
11. | TANGIBLE FIXED ASSETS |
Long | Plant and | Motor | Office |
leasehold | machinery | vehicles | equipment | Totals |
£ | £ | £ | £ | £ |
COST OR VALUATION |
At 1 January 2020 |
|
|
|
|
|
Additions |
|
|
|
|
|
Disposals |
|
|
( |
) |
|
( |
) |
At 31 December 2020 |
|
|
|
|
|
DEPRECIATION |
At 1 January 2020 |
|
|
|
|
|
Charge for year |
|
|
|
|
|
Eliminated on disposal |
|
|
( |
) |
|
( |
) |
At 31 December 2020 |
|
|
|
|
|
NET BOOK VALUE |
At 31 December 2020 |
|
|
|
|
|
At 31 December 2019 |
|
|
|
|
|
|
Cost or valuation at 31 December 2020 is represented by: |
|
Long | Plant and | Motor | Office |
leasehold | machinery | vehicles | equipment | Totals |
£ | £ | £ | £ | £ |
Valuation in 2012 | 2,700,000 | 415,013 | - | - | 3,115,013 |
Cost | 703,647 | 5,573,529 | 164,440 | 477,634 | 6,919,250 |
3,403,647 | 5,988,542 | 164,440 | 477,634 | 10,034,263 |
|
Fixed assets, included in the above, which are held under hire purchase contracts are as follows: |
Plant and | Motor | Office |
machinery | vehicles | equipment | Totals |
£ | £ | £ | £ |
COST OR VALUATION |
At 1 January 2020 |
|
|
|
|
Additions |
|
|
|
|
Transfer to ownership | - | (58,328 | ) | - | (58,328 | ) |
At 31 December 2020 |
|
|
|
|
DEPRECIATION |
At 1 January 2020 |
|
|
|
|
Charge for year |
|
|
|
|
Transfer to ownership | - | (18,228 | ) | - | (18,228 | ) |
At 31 December 2020 |
|
|
|
|
NET BOOK VALUE |
At 31 December 2020 |
|
|
|
|
At 31 December 2019 |
|
|
|
|
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
12. | STOCKS |
2020 | 2019 |
£ | £ |
Raw materials |
|
|
Work-in-progress |
|
|
Finished goods |
|
|
|
|
|
13. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2020 | 2019 |
£ | £ |
Trade debtors |
|
|
Other debtors |
|
|
Tax |
|
|
VAT |
|
|
Prepayments |
|
|
|
|
|
14. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2020 | 2019 |
£ | £ |
Bank loans and overdrafts (see note 16) |
|
|
Other loans (see note 16) |
|
|
Hire purchase contracts (see note 17) |
|
|
Trade creditors |
|
|
Tax |
|
|
Social security and other taxes |
|
|
Other creditors |
|
|
Directors' current accounts | 56,745 | 65,846 |
Accruals and deferred income |
|
|
Deferred lease reserve | 73,413 | 73,413 |
|
|
|
Dividends on the 3% floating rate cumulative redeemable preference shares are in arrears for the period from 16 December 2010 to 31 December 2015. |
|
15. |
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR |
2020 | 2019 |
£ | £ |
Bank loans (see note 16) |
|
|
Other loans (see note 16) |
|
|
Hire purchase contracts (see note 17) |
|
|
Deferred lease reserve | 367,064 | 440,477 |
|
|
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
16. | LOANS |
|
An analysis of the maturity of loans is given below: |
|
2020 | 2019 |
£ | £ |
Amounts falling due within one year or on demand: |
Bank overdrafts |
|
|
Bank loans |
|
|
Scottish Enterprise loan |
|
|
|
|
|
Amounts falling due between one and two years: |
Bank loans - 1-2 years |
|
|
Scottish Enterprise loan | 249,217 |
|
|
|
|
Amounts falling due between two and five years: |
Bank loans - 2-5 years |
|
|
Scottish Enterprise loan |
|
|
|
|
|
Amounts falling due in more than five years: |
|
Repayable by instalments |
Bank loans - more than 5 years | 741,987 | 511,654 |
|
Included in bank loans and overdrafts are term loans being repaid over various terms. New terms and conditions were negotiated with the bank during 2020 and the last payment now falls due in April 2030. Interest is charged at the bank base rate plus a percentage agreed at the time of the loan agreement. |
|
The loan from Scottish Enterprise is due to be repaid in monthly instalments from April 2021. The final instalment falls due in March 2025. Interest is charged at the rate agreed at the time of the loan agreement. |
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
17. | LEASING AGREEMENTS |
|
Minimum lease payments fall due as follows: |
|
Hire purchase contracts |
2020 | 2019 |
£ | £ |
Gross obligations repayable: |
Within one year |
|
|
Between one and five years |
|
|
|
|
|
Finance charges repayable: |
Within one year |
|
|
Between one and five years |
|
|
|
|
|
Net obligations repayable: |
Within one year |
|
|
Between one and five years |
|
|
|
|
|
Non-cancellable operating | leases |
2020 | 2019 |
£ | £ |
Within one year |
|
|
Between one and five years |
|
|
In more than five years |
|
|
|
|
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
18. | SECURED DEBTS |
|
The following secured debts are included within creditors: |
|
2020 | 2019 |
£ | £ |
Bank overdrafts |
|
|
Bank loans |
|
|
Scottish Enterprise loan |
|
|
Hire purchase contracts | 102,605 | 176,972 |
|
|
|
The bank loans and overdrafts are secured by a standard security over the company's leasehold property in Arbroath and a floating charge over the assets of the company. |
|
The loan from Scottish Enterprise is secured by a floating charge over all the property or undertaking of the company. |
|
The hire purchase creditors are secured on the underlying assets. |
|
19. | PROVISIONS FOR LIABILITIES |
2020 | 2019 |
£ | £ |
Deferred tax |
Other timing differences | 83,759 | 83,759 |
Accelerated capital allowances | 311,127 | 337,554 |
394,886 | 421,313 |
|
Deferred |
tax |
£ |
Balance at 1 January 2020 |
|
Credit to Statement of Comprehensive Income during year | ( |
) |
Balance at 31 December 2020 |
|
|
20. | CALLED UP SHARE CAPITAL |
|
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2020 | 2019 |
value: | £ | £ |
|
Ordinary | £1 | 14,542 | 14,542 |
Mackay's Ltd. (Registered number: SC155016) |
|
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2020 |
|
21. | RESERVES |
Retained | Share | Revaluation |
earnings | premium | reserve | Totals |
£ | £ | £ | £ |
|
At 1 January 2020 |
|
|
|
3,997,601 |
Profit for the year |
|
|
Transfer of depreciation on |
revalued asset | 49,133 | - | (49,133 | ) | - |
At 31 December 2020 |
|
|
|
4,028,114 |
|
22. | RELATED PARTY DISCLOSURES |
|
All directors who have the authority and responsibility for planning, directing and controlling the activities of the company are considered to be key management personnel. The total remuneration in respect of these individuals is £288,383 (2019 - £296,582). |