The directors present the strategic report for the year ended 31 July 2023.
The company is a holding company for the group's trading subsidiary offering management support and property rental.
The subsidiary company trades as a wholesaler of beers, wines, spirits and other drinks products, supplying to cash and carry businesses, public houses and retail outlets throughout the United Kingdom.
The directors are pleased with the results for the year, which have shown continued growth in both turnover and profitability, following a very successful year ended 31 July 2022. This has been particularly pleasing given there is still significant volatility in the economy, arising from both domestic and international factors, such as the ongoing worldwide conflicts.
The trading subsidiary has again reported record turnover and profit before tax of £28.6m and £1m respectively.
Due to the build up of cash in the trading company following this increased turnover, the company has been able to buy more efficiently. The high inflation seen in the UK over the period has enabled the company to increase its profitability.
Post year end the company has continued to trade at similar levels to the current financial year, albeit the directors are realistic that trade might not outperform that of the current year.
Also after the year end the company has repaid its bank loans ahead of their scheduled repayment dates of the final quarter of 2026. This has been achieved as a result of the trading success of the current and previous financial year. The company has also been able to invest some of its cash into high interest bearing accounts post year end, to take advantage of the current rates of interest.
The group does not actively use financial instruments as part of its financial risk management. The group is exposed to the usual credit and cash flow risks associated with selling on credit and manages this through standard credit control procedures. The directors undertake yearly credit searches on their customers and are willing to adjust credit terms accordingly. The group has a history of very few bad debts, and is able to typically able to recover its debts in a timely manner.
The group has historically been funded by retained profits, but, following the Covid-19 pandemic, the group took on external debt in the form of advances under the Coronavirus Business Interruption Loan Scheme, as well as loans from connected entities. As was noted in the fair review of the business, post year end, the group's bank loans have been repaid in full, funded from working capital. The group's exposure to price and liquidity risks is therefore considered to be minimal.
The directors are aware of ongoing issues in respect of the cost of living crisis, affecting households across the UK, which may lead to a reduction in demand for the group's services. To safeguard against these potential risks the group will look to continue to offer its products at competitive prices. In addition, the group has continued to be impacted by increasing shipping costs and general stock price increases across the alcoholic and soft drinks industry.
The directors are aware that the above factors have led to an expected downturn in customer spending, and that drinking habits are constantly changing and evolving. To safeguard against such issues, the directors are committed to adjusting the group's strategy accordingly, and making sure they are in front or at least in line with their competitors and the market.
The group has achieved sales of £28.65m (2022 - £27.47m) and a gross profit margin of 9.0% (2022 - 7.9%). Gross profit margins are a key performance indicator used by the directors to measure the company’s performance.
The increase in turnover and profit margin has been reflected in a significantly improved profitability before taxation of £1.3m (2022 - £1.0m).
Following the year end the group will look to continue to strengthen their performance, utilising their small team, all of whom are significantly experienced in the industry.
The directors are focused on staff retention, which is a vital key performance indicator for the group, as well as customer retention, which they hope to obtain by continuing an excellent price offering and overall quality of service.
Plans continue to be made for an e-commerce offering of drinks and home bars/events equipment to the public through the group's website, to sell on other e-commerce platforms, and negotiations are on-going for the group to become the UK agent for a variety of brands.
The ability to adapt to the changing requirements is paramount and the group has reacted accordingly.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 July 2023.
The results for the year are set out on page 8.
During the year dividends of £2,000 (2022: £2,000) were paid in respect of the ordinary shares.
The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with the company's articles, a resolution proposing that Pierce C A Limited be reappointed as auditor of the group will be put at a General Meeting.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Middleton Associates Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 July 2023 which comprise the group profit and loss account, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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).
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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and parent 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 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.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
In identifying and assessing risks of material misstatements in respect of irregularities (including fraud) we considered the following:
The nature of the industry, the company and the group’s control environment, the significant laws and regulations relevant to the group and to the company, and the group and the company's policies on detection of fraud;
Results of our enquiries of management and of those charged with governance;
Our review of disclosures included in the financial statements, and
Engagement team discussions in respect of any potential indicators of non-compliance or fraud.
We have also performed specific procedures to consider the risk of management override and of fraud arising in significant transactions outside the normal course of business.
We did not identify a material risk of non-compliance with laws and regulations or of fraud.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.
Middleton Associates Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Mentor House, Ainsworth Street, Blackburn, Lancashire BB1 6AY.
The group consists of Middleton Associates Holdings Limited and all of its subsidiary.
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 investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Middleton Associates Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 July 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts receivable for goods net of VAT and trade discounts and has been wholly derived from the group's principal activity.
Freehold land and leasehold improvements are not depreciated.
Freehold property is not depreciated as it is deemed that the market value of the property and its net book value do not materially differ.
Included within motor vehicles are vehicle registration plates which have not been depreciated as they are held as long term investments and the total net realisable value is expected to exceed the total cost.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, 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, 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.
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.
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 group after deducting all of its 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 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.
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.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
Freehold land and buildings in stated at the director's estimate of open market value as at 31 July 2023. Had the property not been revalued its historic cost would have been £487,952 (2022: £487,952).
The investment property is stated at the director's estimate of open market value as at 31 July 2023. Had the property not been revalued its historic cost would have been £487,952 (2022: £487,952).
Details of the company's subsidiaries at 31 July 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Included in Other debtors are amounts owed by the director of £Nil (2022: £85,126).
Also included within Other debtors are interest free loans due from connected companies of £236,936 (2022: £309,654).
Other borrowings includes amounts owed of £56,686 (2022: £67,795) relating to a loan from the Middleton Associates Pension Scheme.
Other borrowings includes amounts owed of £200,366 (2022: £256,818) relating to a loan from the Middleton Associates Pension Scheme.
The group's bank loan is secured by an unlimited debenture incorporating a fixed and floating charge. After the year end the group has repaid its bank loans in full, and as such, the amounts have been classified as being due within one year.
The group's other loans comprises of £256,329 (2022: £324,613) relating to a loan from the Middleton Associates Pension Scheme, of £249,000 (2022: £249,000) relating to a loan from a connected company and of £453,050 (2022: £453,050) relating to loans from two connected Trusts.
Amounts owed to the Middleton Associates Pension Scheme are secured by way of a first legal charge over the group's investment property, Unit 2a, Gorse Street, Chadderton.
Amounts owed to the connected company and the Trusts are unsecured.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The non-distributable profits reserve relates to the revaluation applied to the company's investment property adjusted for the deferred tax provision in respect of the revalued amounts.