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REGISTERED NUMBER: 00987162 (England and Wales)















MORGENROT GROUP PLC

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2023






MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

CONTENTS OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023










Page

Company Information 1

Strategic Report 2

Report of the Directors 4

Report of the Independent Auditors 6

Statement of Comprehensive Income 9

Statement of Financial Position 10

Statement of Changes in Equity 11

Statement of Cash Flows 12

Notes to the Statement of Cash Flows 13

Notes to the Financial Statements 15


MORGENROT GROUP PLC

COMPANY INFORMATION
FOR THE YEAR ENDED 30 APRIL 2023







DIRECTORS: V M Plath
C M Plath



SECRETARY: A E Southworth



REGISTERED OFFICE: Unit 2 Canary Way
Agecroft Commerce Park
Swinton
Manchester
M27 8AW



REGISTERED NUMBER: 00987162 (England and Wales)



AUDITORS: DTE Business Advisers Limited
Chartered Accountants
Statutory Auditors
The Exchange
5 Bank Street
Bury
BL9 0DN



BANKERS: National Westminster Bank plc
Parklands
De Havilland Way
Horwich
Bolton
Greater Manchester
BL6 4YU

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2023


The directors present their strategic report for the year ended 30 April 2023.

REVIEW OF BUSINESS
During the last 12 months, the growth rate of our business experienced a slowdown compared to the previous year, despite surpassing the £10 million mark with total revenue reaching £10,091,186. This increase was relatively small compared to the previous year's total of £9,965,317. Additionally, our net margin declined to 2.5% compared to the previous year's 3.8%. We attribute these factors primarily to the exceptional growth achieved in the prior year as the business emerged from the COVID-19 pandemic and performed exceptionally well.

The innovation of our customers in the UK and the continued support from our suppliers from across the world have enabled us to adapt and manage the business during this period of recovery and growth.

Morgenrot have continued to reduce overheads and spending where possible, particularly in response to the increase in shipping fees caused by the global supply chain crisis. The future cannot be seen with certainty, but Morgenrot will continue to manage the business within the rules that are available. The company has prepared prudent sales and cashflow forecasts and they are meeting or exceeding these projections. The industry is continuing to bounce back, and the future looks much more positive following the increase in the popularity of our customers with the general public. The sales for the first half of the current financial year are continuing in line with the period of the accounts.

Morgenrot controls their operations from the head office in Swinton with the bonded warehouse facility. The service and distribution continue from Bristol and the Southern depot near Brighton. The Bristol warehouse allows better access to customers in the Southwest of England. The Southern depot allows us to better serve London and the Southeast of England.

PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties facing our business remain largely unchanged. However, we anticipate a potential government change in 2024, which could introduce new policies and regulations that may impact our operations. Additionally, we have recently experienced a revision in the duty system, the first in 140 years, resulting in significant cost increases across all our products, except for draught beer. These factors contribute to the ongoing risks and uncertainties we navigate in our industry.

FINANCIAL RISK MANAGEMENT
The key risk to the business remains the ability to maintain high revenue levels, which the directors manage by keeping in regular contact with key customers. This regular contact also helps ensure that the company can maintain the projected margin levels. The withdrawal of the UK from The European Union and rising interest rates abroad, has led to continued exchange rate variances which will need to be carefully monitored by the company.

KEY PERFORMANCE INDICATORS
The business continues to improve the internal control mechanisms and uses standard key performance indicators in the measurement of business performance. These include turnover, margin analysis, and monitoring of working capital requirements.


MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2023

FUTURE DEVELOPMENTS
Our sales trends reflect a notable shift towards premiumisation in the industry, as consumers are opting to go out less frequently but spend more when they do. To align with this trend, we are expanding our range of organic and natural wines, catering to the growing demand for these products. Additionally, we are diversifying our entry-level wine offerings to move beyond our current focus on Spain. To achieve this, we have introduced a new range of affordably priced Italian wines, ensuring a more varied selection for our customers.

In line with our strategy to maximise efficiency and drive margins, we continue to pursue our bulk projects. These projects now encompass Chile, Argentina, South Africa, and New Zealand, enabling us to achieve economies of scale across various key categories. By streamlining our sourcing and production processes, we aim to enhance profitability and deliver cost-effective options to our customers.

On the beer front, we are finalising long-term agreements with our principal brands, Alhambra and Krombacher. These agreements will provide us with greater security compared to the current 12-month rolling agreements, ensuring a stable and reliable supply of these popular brands.

Furthermore, we are actively exploring opportunities within the "No/Low" alcohol category. With duty savings and a growing consumer interest in healthier beverage choices, we aim to capitalize on this market segment. By offering compelling options within the "No/Low" category, we can cater to the evolving preferences of our customers and tap into new revenue streams.

These strategic developments in our product range and supplier agreements reflect our commitment to staying ahead of consumer trends, optimising our operations, and driving profitability in the coming year.

ON BEHALF OF THE BOARD:





A E Southworth - Secretary


4 October 2023

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 APRIL 2023


The directors present their report with the financial statements of the company for the year ended 30 April 2023.

PRINCIPAL ACTIVITIES
The principal activities of the company in the year under review were those of importer, bonded warehouse keeper, national and regional wholesaler of wines, spirits, beers and related promotional products.

DIVIDENDS
The total distribution of dividends for the year ended 30 April 2023 will be £19,333.

DIRECTORS
The directors shown below have held office during the whole of the period from 1 May 2022 to the date of this report.

V M Plath
C M Plath

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.

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 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.

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.

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 APRIL 2023


AUDITORS
DTE Business Advisers Limited has indicated its willingness to be reappointed for another term and appropriate arrangements are being made for it to be deemed reappointed as auditor in the absence of an Annual General Meeting.

ON BEHALF OF THE BOARD:



A E Southworth - Secretary


4 October 2023

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
MORGENROT GROUP PLC


Opinion
We have audited the financial statements of Morgenrot Group PLC (the 'company') for the year ended 30 April 2023 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).

In our opinion the financial statements:
-give a true and fair view of the state of the company's affairs as at 30 April 2023 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.

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.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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.

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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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
MORGENROT GROUP PLC


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.

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 Statement of Directors' Responsibilities set out on page four, 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.

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.

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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

As part of our planning process:
- We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.
- We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, The Warehousekeepers and Owners of Warehoused Goods Regulation Act 1999, Producer Responsibility Obligations, Alcohol Wholesaler Registration Scheme, General Data Protection Regulation (GDPR) and Anti-Money Laundering Supervision.
- We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
- Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.



REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
MORGENROT GROUP PLC

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
- Identifying and testing journal entries, in particular those that were significant and unusual and those near the cut-off date.
- Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
- Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to depreciation rates and estimated useful lives of assets, stock provisions and provision for bad debts.
- Assessing the extent of compliance, or lack of, with the relevant laws and regulations in particular those that are central to the entities ability to continue in operation.
- Testing key revenue lines, in particular cut-off, for evidence of management bias.
- Performing a physical verification of key assets, including stock.
- Obtaining third-party confirmation of material bank and loan balances.
- Documenting and verifying all significant related party balances and transactions.
- Reviewing documentation such as the company board minutes, for discussions of irregularities including fraud.

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. The primary responsibility for the prevention and detection of irregularities and fraud rests with management.

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.

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.




Richard Taylor (Senior Statutory Auditor)
for and on behalf of DTE Business Advisers Limited
Chartered Accountants
Statutory Auditors
The Exchange
5 Bank Street
Bury
BL9 0DN

12 October 2023

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

STATEMENT OF COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 30 APRIL 2023

2023 2022
Notes £    £   

REVENUE 3 10,091,186 9,965,317

Cost of sales (7,858,568 ) (7,771,469 )
GROSS PROFIT 2,232,618 2,193,848

Distribution costs (279,400 ) (248,522 )
Administrative expenses (1,726,287 ) (1,672,038 )
226,931 273,288

Other operating income 4 60,412 117,566
OPERATING PROFIT 6 287,343 390,854

Interest receivable and similar income 7 1,275 300
288,618 391,154

Interest payable and similar expenses 8 (36,036 ) (13,155 )
PROFIT BEFORE TAXATION 252,582 377,999

Tax on profit 9 (58,473 ) (73,394 )
PROFIT FOR THE FINANCIAL YEAR 194,109 304,605

OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

194,109

304,605

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

STATEMENT OF FINANCIAL POSITION
30 APRIL 2023

2023 2022
Notes £    £   
FIXED ASSETS
Intangible assets 11 - -
Property, plant and equipment 12 1,196,474 1,234,096
1,196,474 1,234,096

CURRENT ASSETS
Inventories 13 1,720,498 1,585,907
Debtors 14 1,667,747 1,680,659
Cash in hand 28,495 5,549
3,416,740 3,272,115
CREDITORS
Amounts falling due within one year 15 (2,589,087 ) (2,507,955 )
NET CURRENT ASSETS 827,653 764,160
TOTAL ASSETS LESS CURRENT
LIABILITIES

2,024,127

1,998,256

CREDITORS
Amounts falling due after more than one
year

16

(233,342

)

(386,666

)

PROVISIONS FOR LIABILITIES 20 (25,101 ) (20,682 )
NET ASSETS 1,765,684 1,590,908

CAPITAL AND RESERVES
Called up share capital 21 109,905 109,905
Share premium 10,403 10,403
Capital redemption reserve 2,250 2,250
Retained earnings 1,643,126 1,468,350
SHAREHOLDERS' FUNDS 1,765,684 1,590,908

The financial statements were approved by the Board of Directors and authorised for issue on 10 October 2023 and were signed on its behalf by:





C M Plath - Director


MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2023

Called up Capital
share Retained Share redemption Total
capital earnings premium reserve equity
£    £    £    £    £   

Balance at 1 May 2021 109,905 1,163,745 10,403 2,250 1,286,303

Changes in equity
Total comprehensive income - 304,605 - - 304,605
Balance at 30 April 2022 109,905 1,468,350 10,403 2,250 1,590,908

Changes in equity
Dividends - (19,333 ) - - (19,333 )
Total comprehensive income - 194,109 - - 194,109
Balance at 30 April 2023 109,905 1,643,126 10,403 2,250 1,765,684

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2023

2023 2022
Notes £    £   
Cash flows from operating activities
Cash generated from operations 1 286,866 (474,569 )
Interest paid (35,432 ) (11,459 )
Interest element of hire purchase payments
paid

(604

)

(1,696

)
Tax (paid) / received (62,700 ) 2,104
Net cash from operating activities 188,130 (485,620 )

Cash flows from investing activities
Purchase of property plant and equipment (29,110 ) (46,346 )
Interest received 1,275 300
Net cash from investing activities (27,835 ) (46,046 )

Cash flows from financing activities
Loan repayments in year (79,992 ) (6,668 )
Capital repayments in year (7,945 ) (22,813 )
Amounts introduced by directors 168,991 10,881
Amounts withdrawn by directors (69,873 ) (32,809 )
Net cash from financing activities 11,181 (51,409 )

Increase/(decrease) in cash and cash equivalents 171,476 (583,075 )
Cash and cash equivalents at beginning of
year

2

(483,008

)

100,067

Cash and cash equivalents at end of year 2 (311,532 ) (483,008 )

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2023


1. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
2023 2022
£    £   
Profit before taxation 252,582 377,999
Depreciation charges 66,733 73,377
Finance costs 36,036 13,155
Finance income (1,275 ) (300 )
354,076 464,231
Increase in inventories (134,591 ) (419,872 )
Decrease/(increase) in trade and other debtors 12,912 (245,108 )
Increase/(decrease) in trade and other creditors 54,469 (273,820 )
Cash generated from operations 286,866 (474,569 )

2. CASH AND CASH EQUIVALENTS

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:

Year ended 30 April 2023
30.4.23 1.5.22
£    £   
Cash and cash equivalents 28,495 5,549
Bank overdrafts (340,027 ) (488,557 )
(311,532 ) (483,008 )
Year ended 30 April 2022
30.4.22 1.5.21
£    £   
Cash and cash equivalents 5,549 459,516
Bank overdrafts (488,557 ) (359,449 )
(483,008 ) 100,067


MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2023


3. ANALYSIS OF CHANGES IN NET DEBT

At 1.5.22 Cash flow At 30.4.23
£    £    £   
Net cash
Cash at bank and in hand 5,549 22,946 28,495
Bank overdrafts (488,557 ) 148,530 (340,027 )
(483,008 ) 171,476 (311,532 )
Debt
Finance leases (7,945 ) 7,945 -
Debts falling due within 1 year (6,668 ) (73,332 ) (80,000 )
Debts falling due after 1 year (386,666 ) 153,324 (233,342 )
(401,279 ) 87,937 (313,342 )
Total (884,287 ) 259,413 (624,874 )

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023


1. STATUTORY INFORMATION

Morgenrot Group PLC is an unlisted public company, limited by shares, registered in England and Wales. The registered number is 00987162. The registered office address is Unit 2, Canary Way, Agecroft Commerce Park, Swinton, Manchester, M27 8AW.

2. ACCOUNTING POLICIES

Basis of preparation
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report.

The company meets the day-to-day working capital requirements using an agreed overdraft facility as required. The directors' expectations, which include increases in revenue and taking account of reasonable possible changes in trading performance, indicate that the company should be able to operate within the level of its current facility.

The company is in regular contact with its finance providers. During these discussions about the company's future borrowing needs, no matters have been drawn to the directors' attention that suggest that the existing facilities will not continue on acceptable terms beyond the current arrangement.

The directors have considered the impact of the ongoing global supply chain crisis and interest rate rises on the company and recognise that the future cannot be predicted with absolute certainty. As the company's client base is principally within the hospitality sector, sales stabilised in the year following fluctuations in prior years.

The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Significant judgements and estimates
In the application of the company's accounting policies, the directors are required to make estimates and judgements. The estimates are based on historical experience and other relevant factors. Actual results may differ from these estimates.

The estimates are continually evaluated. Revisions to accounting estimates are recognised in the period in which the estimate is revised.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Estimating the useful economic life of an asset and the anticipated residual value are considered key estimates in calculating an appropriate depreciation charge.

In categorising leases as finance or operating leases, the directors make judgements as to whether significant risks and rewards of ownership have transferred to the company as lessee.

Making judgement based on historical experience on the level of provision required for impairment of inventories. Further information received after the statement of financial position date may impact on the level of provision required.

Determining the recoverability of trade debtors is considered the key judgement in calculating the bad debt provision at the year end.

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


2. ACCOUNTING POLICIES - continued

Revenue
Revenue represents sales of goods, excluding value added tax. Sale of goods are recognised when the company has delivered products to the customer, the customer has accepted the products and collectability of the related receivables is fairly assured.

Goodwill
Goodwill has been amortised evenly over its estimated useful life of 10 years.

Property, plant and equipment
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.
Freehold property - 2% straight line on valuation
Land - Not provided
Office equipment and machinery - 25% on cost and 7.5% on cost
Fixtures and fittings - 25% on cost
Motor vehicles - 25% on reducing balance
Bar and pub equipment - 33% on cost

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each statement of financial position date. The effects of any revision are recognised in the income statement when the change arises.

Government grants
Grants are accounted for under the accruals model as permitted by FRS 102.

During the prior year the company benefitted from the Government Coronavirus Job Retention Scheme ('Furlough'). Furlough income has been recognised in "other income" in the same period as the related wage costs.

The company has not directly benefitted from any other forms of government assistance.

Inventories
Inventories are valued at the lower of cost and net realisable value on a first-in, first-out basis, after making due allowance for obsolete and slow moving items. Cost is based on the invoice value of goods plus a variable charge for duty, levy and delivery and stocking costs. Net realisable value is estimated selling price less costs to complete and sell.

Financial instruments
The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks and other third parties and loans to related parties.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the income statement.

Basic financial liabilities are initially measured at transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.


MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


2. ACCOUNTING POLICIES - continued
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.

Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short term liquid investments with original maturities of three months or less.

Foreign currencies
Monetary 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 statement of financial position. 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 the income statement over the relevant period. The capital element of the future payments is treated as a liability.

Rentals paid under operating leases are charged to the income statement 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.

3. REVENUE

The revenue and profit before taxation are attributable to the principal activities of the company.

All revenue is generated in the United Kingdom.

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


4. OTHER OPERATING INCOME
2023 2022
£    £   
Rents received 14,340 15,006
Sundry receipts 46,072 69,593
Government grants - 32,967
60,412 117,566

5. EMPLOYEES AND DIRECTORS
2023 2022
£    £   
Wages and salaries 677,822 603,005
Social security costs 65,804 54,190
Other pension costs 37,172 32,659
780,798 689,854

The average number of employees during the year was as follows:
2023 2022

Administration and selling 19 21
Directors 2 3
21 24

During the year, a total of key management personnel compensation of £282,966 (2022: £262,089) was paid.

2023 2022
£    £   
Directors' remuneration 68,500 57,700

6. OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2023 2022
£    £   
Depreciation - owned assets 66,733 59,655
Depreciation - assets on hire purchase contracts - 13,722
Auditors' remuneration 7,000 7,000
Government grants - (32,967 )

7. INTEREST RECEIVABLE AND SIMILAR INCOME
2023 2022
£    £   
Bank account interest 1,275 300

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


8. INTEREST PAYABLE AND SIMILAR EXPENSES
2023 2022
£    £   
Bank interest 10,342 11,459
Bank loan interest 25,090 -
Hire purchase interest 604 1,696
36,036 13,155

9. TAXATION

Analysis of the tax charge
The tax charge on the profit for the year was as follows:
2023 2022
£    £   
Current tax:
UK corporation tax 54,054 62,701

Deferred tax 4,419 10,693
Tax on profit 58,473 73,394

Reconciliation of total tax charge 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:

2023 2022
£    £   
Profit before tax 252,582 377,999
Profit multiplied by the standard rate of corporation tax in the UK of 19%
(2022 - 19%)

47,991

71,820

Effects of:
Expenses not deductible for tax purposes (171 ) 398
Depreciation in excess of capital allowances 4,989 1,918
Utilisation of tax losses - (11,435 )
Change in tax rate to 25% 1,245 -
Deferred tax in respect of capital allowances 4,343 596
Deferred tax in respect of prior periods 76 (3,481 )
Deferred tax in respect of trading losses - 13,578
Total tax charge 58,473 73,394

10. DIVIDENDS
2023 2022
£    £   
Ordinary shares of 10p each
Interim 19,333 -

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


11. INTANGIBLE FIXED ASSETS
Goodwill
£   
COST
At 1 May 2022
and 30 April 2023 106,213
AMORTISATION
At 1 May 2022
and 30 April 2023 106,213
NET BOOK VALUE
At 30 April 2023 -
At 30 April 2022 -

12. PROPERTY, PLANT AND EQUIPMENT
Office
equipment
Freehold and
property Land machinery
£    £    £   
COST
At 1 May 2022 1,287,150 260,000 228,276
Additions - - 2,810
At 30 April 2023 1,287,150 260,000 231,086
DEPRECIATION
At 1 May 2022 417,085 - 220,682
Charge for year 25,743 - 3,683
At 30 April 2023 442,828 - 224,365
NET BOOK VALUE
At 30 April 2023 844,322 260,000 6,721
At 30 April 2022 870,065 260,000 7,594

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


12. PROPERTY, PLANT AND EQUIPMENT - continued

Fixtures Bar and
and Motor pub
fittings vehicles equipment Totals
£    £    £    £   
COST
At 1 May 2022 192,780 120,022 719,457 2,807,685
Additions - - 26,301 29,111
At 30 April 2023 192,780 120,022 745,758 2,836,796
DEPRECIATION
At 1 May 2022 181,711 71,202 682,909 1,573,589
Charge for year 2,192 12,205 22,910 66,733
At 30 April 2023 183,903 83,407 705,819 1,640,322
NET BOOK VALUE
At 30 April 2023 8,877 36,615 39,939 1,196,474
At 30 April 2022 11,069 48,820 36,548 1,234,096

Fixed assets, included in the above, which are held under hire purchase contracts are as follows:
Motor
vehicles
£   
COST
At 1 May 2022 54,907
Transfer to ownership (54,907 )
At 30 April 2023 -
DEPRECIATION
At 1 May 2022 26,871
Transfer to ownership (26,871 )
At 30 April 2023 -
NET BOOK VALUE
At 30 April 2023 -
At 30 April 2022 28,036

13. INVENTORIES
2023 2022
£    £   
Finished goods 1,720,498 1,585,907

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


14. DEBTORS
2023 2022
£    £   
Amounts falling due within one year:
Trade debtors 1,498,413 1,437,477
Other debtors 28,393 99,234
Prepayments and accrued income 55,316 43,491
1,582,122 1,580,202

Amounts falling due after more than one year:
Other debtors 85,625 100,457

Aggregate amounts 1,667,747 1,680,659

15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2023 2022
£    £   
Bank loans and overdrafts (see note 17) 420,027 495,225
Hire purchase contracts (see note 18) - 7,945
Trade creditors 1,070,572 947,275
Other creditors 380,618 426,544
Corporation tax 54,055 62,701
Social security and other taxes 412,013 400,061
Directors' current accounts 201,906 87,455
Accrued expenses 49,896 80,749
2,589,087 2,507,955

16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR
2023 2022
£    £   
Bank loans (see note 17) 233,342 386,666

17. LOANS

An analysis of the maturity of loans is given below:

2023 2022
£    £   
Amounts falling due within one year or on demand:
Bank overdrafts 340,027 488,557
Bank loan 80,000 6,668
420,027 495,225

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


17. LOANS - continued
2023 2022
£    £   
Amounts falling due between one and two years:
Bank loans - 1-2 years 80,000 80,005

Amounts falling due between two and five years:
Bank loans - 2-5 years 153,342 240,014

Amounts falling due in more than five years:

Repayable by instalments
Bank loans more 5 yr by instal - 66,647

18. LEASING AGREEMENTS

Minimum lease payments fall due as follows:

Hire purchase contracts
2023 2022
£    £   
Net obligations repayable:
Within one year - 7,945

Non-cancellable operating leases
2023 2022
£    £   
Within one year 7,235 -
Between one and five years 17,420 -
24,655 -

19. SECURED DEBTS

The following secured debts are included within creditors:

2023 2022
£    £   
Bank overdrafts 340,027 488,557
Bank loans 313,342 393,334
Hire purchase contracts - 7,945
653,369 889,836

The bank overdraft and bank loan are secured by a fixed charge over the company's freehold land and buildings and plant and machinery. Hire purchase contracts are secured on the assets concerned.

MORGENROT GROUP PLC (REGISTERED NUMBER: 00987162)

NOTES TO THE FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 30 APRIL 2023


20. PROVISIONS FOR LIABILITIES
2023 2022
£    £   
Deferred tax
Accelerated capital allowances 25,101 20,682

Deferred
tax
£   
Balance at 1 May 2022 20,682
Movement in the year 4,419
Balance at 30 April 2023 25,101

21. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number: Class: Nominal 2023 2022
value: £    £   
1,099,050 Ordinary 10p 109,905 109,905

22. PENSION COMMITMENTS

The company operates a defined contribution scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension costs charge represents contributions payable by the company to the fund and amounted to £37,172 (2022: £32,659).

23. CONTINGENT LIABILITIES

The company has given a guarantee in favour of HM Revenue and Customs for £20,000 (2022: £20,000).

24. ULTIMATE CONTROLLING PARTY

The ultimate controlling party are members of the Plath family holding shares.