Company registration number 02189432 (England and Wales)
M B DISTRIBUTION (CLEVELAND) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
M B DISTRIBUTION (CLEVELAND) LIMITED
COMPANY INFORMATION
Directors
Mr M Greenup
Mrs B Greenup
Mr M L Greenup
Mrs S M Harding
Mrs C Roberts
Secretary
Mrs B Greenup
Company number
02189432
Registered office
Unit 1
MB Court
South Bank Road
Middlesbrough
United Kingdom
TS3 8AN
Auditor
Azets Audit Services
Wynyard Park House
Wynyard Avenue
Wynyard
United Kingdom
TS22 5TB
Bankers
Barclays Bank PLC
Unit 1 Centre Mall
The Mall
Middlesbrough
United Kingdom
TS1 2NR
Solicitors
Knights Professional Services Ltd
Lakeside House
Kingfisher Way
Stockton-On-Tees
United Kingdom
TS18 3NB
M B DISTRIBUTION (CLEVELAND) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
M B DISTRIBUTION (CLEVELAND) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 1 -
The directors present the strategic report for the year ended 28 February 2023.
Review of the business
Turnover at £17,041,363 was £514,202 (3.1%) higher than the previous year. This resulted in a gross profit margin of 31.7% which is a increase when compared to the previous year from 27.3%. The increase in turnover was due mainly to a continued increase in online sales together with the company widening it's product range and also it's geographical reach in the UK. The board expects growth to continue into next year.
Net capital expenditure in the year was £121,840, with the main cost being related to fitting out new warehouse.
Profit before tax at £606,087 is 3.6% of turnover which is a decrease on previous year of 7.1%. This is considered acceptable by the board given the volatility in the value of the US$ and global markets which has had an impact on purchase costs. The company also had a loss on disposal of property as part of a group restructure of £1,164,014. Without this exceptional loss the profit before tax would have been £1,770,101 or 10.4% of turnover.
Principal risks and uncertainties
The directors do not consider there to be any immediate risks likely to have a significant impact on the short or long-term value of the business. There are, however, risks identified by the Board for which mitigating controls are in place.
Market trends are monitored closely and diversity of the customer base is carefully preserved. Annual objectives are directed by the need for a constant focus on quality and lead to operational targets designed to reduce waste and ensure quality standards are maintained.
Operational risks are those of health, safety and environmental (HSE) performance, and the company minimises risks through its accredited quality and environmental management systems and through a robust and pro-active health and safety management system. The Board seeks to meet ethical and corporate social responsibility expectations through its company management system.
Financial risks continue to stem from import activity as exchange rate volatility can have a significant effect on margins. Credit control continues to be a priority and the risk of insolvent customers or suppliers is mitigated through strict internal procedures.
Development and performance
The company strives to grow the business by offering high quality products at great prices both for the tradesman and the DIY enthusiast. The company places a huge focus on customer service.
In Summer 2023 the company's new premises were opened. The board believe that this site will take the company to the next level in terms of turnover and breadth of product range.
Key performance indicators
The directors review monthly management accounts and reports and compare to budgeted targets to monitor the company's performance. The directors are also actively involved in performance monitoring. Turnover 2022 £16,527,161, 2023 £17,041,363 an increase of 3.6%. Gross profit margin 2022 27.4%, 2023 31.7% this is in relation to global markets settling down post Covid 19. The increase in turnover was mainly due to a continued increase in online sales along with the company widening its product ranges and geographical reach. |
M B DISTRIBUTION (CLEVELAND) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 2 -
..............................
Mr M Greenup
Director
Date: .............................................
M B DISTRIBUTION (CLEVELAND) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 3 -
The directors present their annual report and financial statements for the year ended 28 February 2023.
Principal activities
The principal activity of the company continued to be that of distributing general hardware to the building industry and to the DIY market.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £5,721,980. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr M Greenup
Mrs B Greenup
Mr M L Greenup
Mrs S M Harding
Mrs C Roberts
Future developments
The directors intend to continue to expand the company's geographical reach across the UK and Ireland.
Auditor
In accordance with the company's articles, a resolution proposing that Azets Audit Services be reappointed as auditor of the company will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr M Greenup
Director
5 October 2023
M B DISTRIBUTION (CLEVELAND) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
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.
M B DISTRIBUTION (CLEVELAND) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF M B DISTRIBUTION (CLEVELAND) LIMITED
- 5 -
Opinion
We have audited the financial statements of M B Distribution (Cleveland) Limited (the 'company') for the year ended 28 February 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 28 February 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
M B DISTRIBUTION (CLEVELAND) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF M B DISTRIBUTION (CLEVELAND) LIMITED
- 6 -
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 directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
M B DISTRIBUTION (CLEVELAND) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF M B DISTRIBUTION (CLEVELAND) LIMITED
- 7 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Ian Whitfield BA FCA
Senior Statutory Auditor
For and on behalf of Azets Audit Services
5 October 2023
Chartered Accountants
Statutory Auditor
Wynyard Park House
Wynyard Avenue
Wynyard
United Kingdom
TS22 5TB
M B DISTRIBUTION (CLEVELAND) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
17,041,363
16,527,161
Cost of sales
(11,632,549)
(12,006,300)
Gross profit
5,408,814
4,520,861
Distribution costs
(2,302,074)
(2,239,128)
Administrative expenses
(1,404,885)
(1,207,086)
Other operating income
75,400
127,710
Exceptional item
4
(1,164,014)
Operating profit
5
613,241
1,202,357
Interest receivable and similar income
8
37,623
167
Interest payable and similar expenses
9
(44,777)
(26,118)
Profit before taxation
606,087
1,176,406
Tax on profit
10
(276,326)
(237,954)
Profit for the financial year
329,761
938,452
The profit and loss account has been prepared on the basis that all operations are continuing operations.
M B DISTRIBUTION (CLEVELAND) LIMITED
BALANCE SHEET
AS AT
28 FEBRUARY 2023
28 February 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
265,512
3,995,699
Investment property
13
632,652
265,512
4,628,351
Current assets
Stocks
14
2,905,475
2,643,016
Debtors
15
2,013,154
1,929,433
Cash at bank and in hand
1,738,284
2,494,039
6,656,913
7,066,488
Creditors: amounts falling due within one year
16
(3,322,404)
(1,702,131)
Net current assets
3,334,509
5,364,357
Total assets less current liabilities
3,600,021
9,992,708
Creditors: amounts falling due after more than one year
17
(934,256)
Provisions for liabilities
Deferred tax liability
19
88,794
155,006
(88,794)
(155,006)
Net assets
3,511,227
8,903,446
Capital and reserves
Called up share capital
21
2
2
Profit and loss reserves
3,511,225
8,903,444
Total equity
3,511,227
8,903,446
The financial statements were approved by the board of directors and authorised for issue on 5 October 2023 and are signed on its behalf by:
Mr M Greenup
Director
Company Registration No. 02189432
M B DISTRIBUTION (CLEVELAND) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 March 2021
2
8,197,792
8,197,794
Year ended 28 February 2022:
Profit and total comprehensive income for the year
-
938,452
938,452
Dividends
11
-
(232,800)
(232,800)
Balance at 28 February 2022
2
8,903,444
8,903,446
Year ended 28 February 2023:
Profit and total comprehensive income for the year
-
329,761
329,761
Dividends
11
-
(5,721,980)
(5,721,980)
Balance at 28 February 2023
2
3,511,225
3,511,227
M B DISTRIBUTION (CLEVELAND) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
3,209,425
467,121
Interest paid
(44,777)
(26,118)
Income taxes paid
(237,340)
(284,145)
Net cash inflow from operating activities
2,927,308
156,858
Investing activities
Purchase of tangible fixed assets
(1,705,527)
(112,273)
Proceeds from disposal of tangible fixed assets
4,109,940
11,000
Proceeds from disposal of investment property
632,652
Repayment of loans
(284)
370
Interest received
37,623
167
Net cash generated from/(used in) investing activities
3,074,404
(100,736)
Financing activities
Repayment of bank loans
(1,035,487)
(101,231)
Dividends paid
(5,721,980)
(232,800)
Net cash used in financing activities
(6,757,467)
(334,031)
Net decrease in cash and cash equivalents
(755,755)
(277,909)
Cash and cash equivalents at beginning of year
2,494,039
2,771,948
Cash and cash equivalents at end of year
1,738,284
2,494,039
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 12 -
1
Accounting policies
Company information
M B Distribution (Cleveland) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 1, MB Court, South Bank Road, Middlesbrough, United Kingdom, TS3 8AN.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Buildings freehold
2% straight line
Plant and machinery
25% straight line
Motor vehicles
25% straight line
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 13 -
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
Cost formula applied to stocks is FIFO.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 15 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
1
Accounting policies
(Continued)
- 16 -
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.15
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 17 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
17,041,363
16,527,161
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
16,916,275
16,470,868
Europe
19,862
-
Rest of World
105,226
56,293
17,041,363
16,527,161
2023
2022
£
£
Other revenue
Interest income
37,623
167
Commissions received
32,836
Grants received
3,025
12,449
4
Exceptional item
2023
2022
£
£
Expenditure
Loss on disposal of property
1,164,014
-
5
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(3,025)
(12,449)
Fees payable to the company's auditor for the audit of the company's financial statements
22,500
12,500
Depreciation of owned tangible fixed assets
161,760
175,916
Profit on disposal of tangible fixed assets
-
(9,596)
Operating lease charges
21,764
19,526
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 18 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Selling and distribution
67
67
Administration
10
9
Directors
5
5
Total
82
81
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,365,874
2,369,890
Social security costs
196,767
197,050
Pension costs
202,541
151,612
2,765,182
2,718,552
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
279,653
281,222
Company pension contributions to defined contribution schemes
160,156
109,910
439,809
391,132
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2022 - 5).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
94,308
94,052
Company pension contributions to defined contribution schemes
18,600
3,600
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 19 -
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
37,623
167
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
37,623
167
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
43,927
25,914
Other finance costs:
Other interest
850
204
44,777
26,118
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
342,538
237,340
Adjustments in respect of prior periods
11
Total current tax
342,538
237,351
Deferred tax
Origination and reversal of timing differences
(66,212)
603
Total tax charge
276,326
237,954
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
10
Taxation
(Continued)
- 20 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
606,087
1,176,406
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
115,157
223,517
Tax effect of expenses that are not deductible in determining taxable profit
150,967
4,195
Depreciation on assets not qualifying for tax allowances
10,202
10,193
Other non-reversing timing differences
49
Taxation charge for the year
276,326
237,954
11
Dividends
2023
2022
£
£
Interim paid
5,721,980
232,800
12
Tangible fixed assets
Buildings freehold
Assets under construction
Plant and machinery
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 March 2022
4,028,343
27,233
177,926
503,744
4,737,246
Additions
1,583,687
85,845
35,995
1,705,527
Disposals
(5,639,263)
(12,000)
(5,651,263)
Transfers
27,233
(27,233)
At 28 February 2023
263,771
527,739
791,510
Depreciation and impairment
At 1 March 2022
298,085
158,160
285,302
741,547
Depreciation charged in the year
67,224
12,324
82,212
161,760
Eliminated in respect of disposals
(365,309)
(12,000)
(377,309)
At 28 February 2023
170,484
355,514
525,998
Carrying amount
At 28 February 2023
93,287
172,225
265,512
At 28 February 2022
3,730,258
27,233
19,766
218,442
3,995,699
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
12
Tangible fixed assets
(Continued)
- 21 -
During the year all freehold buildings have been transferred to a connected company at market value.
13
Investment property
2023
£
Fair value
At 1 March 2022
632,652
Disposals
(632,652)
At 28 February 2023
Investment property comprises commercial properties held to generate rental income.
During the year all investment properties have been transferred to a connected company at market value.
14
Stocks
2023
2022
£
£
Finished goods and goods for resale
2,905,475
2,643,016
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,951,856
1,872,868
Other debtors
14,096
16,801
Prepayments and accrued income
47,202
39,764
2,013,154
1,929,433
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
18
101,231
Trade creditors
1,678,722
1,127,740
Corporation tax
342,538
237,340
Other taxation and social security
1,017,547
69,354
Other creditors
244,212
140,897
Accruals and deferred income
39,385
25,569
3,322,404
1,702,131
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 22 -
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
18
934,256
Amounts included above which fall due after five years are as follows:
Payable by instalments
-
529,330
18
Loans and overdrafts
2023
2022
£
£
Bank loans
1,035,487
Payable within one year
101,231
Payable after one year
934,256
The long-term loan is secured by fixed charges over the freehold land of the company and has an interest rate of 3% above the Bank of England base rate.
During the year the freehold land was transferred to a connected company and the bank loan was settled in full.
19
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
58,041
124,253
Revaluations
30,753
30,753
88,794
155,006
2023
Movements in the year:
£
Liability at 1 March 2022
155,006
Credit to profit or loss
(66,212)
Liability at 28 February 2023
88,794
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 23 -
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
202,541
151,612
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
2
2
2
2
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
52,766
19,486
Between two and five years
101,876
34,002
154,642
53,488
23
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Aggregate compensation
429,690
382,122
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sale of property
Rentals paid
2023
2022
2023
2022
£
£
£
£
Other related parties
4,742,592
-
14,000
-
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
23
Related party transactions
(Continued)
- 24 -
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due to related parties
£
£
Other related parties
16,800
-
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
Other related parties
13,500
-
24
Directors' transactions
Dividends totalling £147,300 (2022 - £232,800) were paid in the year in respect of shares held by the company's directors.
25
Ultimate controlling party
The company is ultimately controlled by Mr M and Mrs B Greenup through their ownership of MB Holdco Ltd.
During the year the company was acquired by MB Holdco Limited on 31 January 2023.
These financial statements are consolidated within the MB Holdco Limited financial statements to the period ended 28 February 2023.
MB Holdco Limited is an incorporated company registered at Unit 1, MB Court, South Bank Road, Middlesbrough, United Kingdom, TS3 8AN.
M B DISTRIBUTION (CLEVELAND) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2023
- 25 -
26
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
329,761
938,452
Adjustments for:
Taxation charged
276,326
237,954
Finance costs
44,777
26,118
Investment income
(37,623)
(167)
Loss/(gain) on disposal of tangible fixed assets
1,164,014
(9,596)
Depreciation and impairment of tangible fixed assets
161,760
175,916
Movements in working capital:
Increase in stocks
(262,459)
(597,001)
Increase in debtors
(83,437)
(375,220)
Increase in creditors
1,616,306
70,665
Cash generated from operations
3,209,425
467,121
27
Analysis of changes in net funds
1 March 2022
Cash flows
28 February 2023
£
£
£
Cash at bank and in hand
2,494,039
(755,755)
1,738,284
Borrowings excluding overdrafts
(1,035,487)
1,035,487
-
1,458,552
279,732
1,738,284
M B DISTRIBUTION (CLEVELAND) LIMITED
MANAGEMENT INFORMATION
FOR THE YEAR ENDED 28 FEBRUARY 2023
2023-02-282022-03-01falseCCH SoftwareCCH Accounts Production 2023.300Mr M GreenupMr M L GreenupMrs S M HardingMrs C RobertsMrs C RobertsMrs B Greenupfalse021894322022-03-012023-02-2802189432bus:Director12022-03-012023-02-2802189432bus:CompanySecretaryDirector12022-03-012023-02-2802189432bus:Director22022-03-012023-02-2802189432bus:Director32022-03-012023-02-2802189432bus:Director42022-03-012023-02-2802189432bus:CompanySecretary12022-03-012023-02-2802189432bus:Director52022-03-012023-02-2802189432bus:RegisteredOffice2022-03-012023-02-2802189432bus:Agent12022-03-012023-02-28021894322023-02-28021894322021-03-012022-02-280218943212022-03-012023-02-280218943212021-03-012022-02-2802189432core:RetainedEarningsAccumulatedLosses2021-03-012022-02-2802189432core:RetainedEarningsAccumulatedLosses2022-03-012023-02-28021894322022-02-2802189432core:LandBuildingscore:OwnedOrFreeholdAssets2023-02-2802189432core:ConstructionInProgressAssetsUnderConstruction2023-02-2802189432core:PlantMachinery2023-02-2802189432core:MotorVehicles2023-02-2802189432core:LandBuildingscore:OwnedOrFreeholdAssets2022-02-2802189432core:ConstructionInProgressAssetsUnderConstruction2022-02-2802189432core:PlantMachinery2022-02-2802189432core:MotorVehicles2022-02-2802189432core:CurrentFinancialInstrumentscore:WithinOneYear2023-02-2802189432core:CurrentFinancialInstrumentscore:WithinOneYear2022-02-2802189432core:Non-currentFinancialInstrumentscore:AfterOneYear2023-02-2802189432core:Non-currentFinancialInstrumentscore:AfterOneYear2022-02-2802189432core:CurrentFinancialInstruments2023-02-2802189432core:CurrentFinancialInstruments2022-02-2802189432core:ShareCapital2023-02-2802189432core:ShareCapital2022-02-2802189432core:RetainedEarningsAccumulatedLosses2023-02-2802189432core:RetainedEarningsAccumulatedLosses2022-02-2802189432core:ShareCapital2021-02-2802189432core:RetainedEarningsAccumulatedLosses2021-02-28021894322022-02-28021894322021-02-2802189432core:LandBuildingscore:OwnedOrFreeholdAssets2022-03-012023-02-2802189432core:PlantMachinery2022-03-012023-02-2802189432core:MotorVehicles2022-03-012023-02-2802189432core:UKTax2022-03-012023-02-2802189432core:UKTax2021-03-012022-02-2802189432core:LandBuildingscore:OwnedOrFreeholdAssets2022-02-2802189432core:ConstructionInProgressAssetsUnderConstruction2022-02-2802189432core:PlantMachinery2022-02-2802189432core:MotorVehicles2022-02-2802189432core:ConstructionInProgressAssetsUnderConstruction2022-03-012023-02-2802189432core:Non-currentFinancialInstruments2023-02-2802189432core:Non-currentFinancialInstruments2022-02-2802189432core:WithinOneYear2023-02-2802189432core:WithinOneYear2022-02-2802189432core:BetweenTwoFiveYears2023-02-2802189432core:BetweenTwoFiveYears2022-02-2802189432bus:PrivateLimitedCompanyLtd2022-03-012023-02-2802189432bus:FRS1022022-03-012023-02-2802189432bus:Audited2022-03-012023-02-2802189432bus:FullAccounts2022-03-012023-02-28xbrli:purexbrli:sharesiso4217:GBP