Company registration number SC362390 (Scotland)
MCGHEE GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 JULY 2023
MCGHEE GROUP LIMITED
COMPANY INFORMATION
Directors
G McGhee
S McGhee
I C McGhee
Secretary
I C McGhee
Company number
SC362390
Registered office
10 Keppochhill Drive
M8 Food Park
Glasgow
United Kingdom
G21 1HX
Auditor
Azets Audit Services
Titanium 1
King's Inch Place
Renfrew
Renfrewshire
United Kingdom
PA4 8WF
MCGHEE GROUP LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Profit and loss account
9
Group statement of comprehensive income
10
Group balance sheet
11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Notes to the financial statements
16 - 34
MCGHEE GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 29 JULY 2023
- 1 -

The directors present the strategic report for the year ended 29 July 2023.

Review of the business

The results for the year show an operating profit of £3.901m (2022: £3.136m).

 

During the year the Group experienced difficult trading conditions, primarily from substantial increases in key ingredients and other input costs, with the war in the Ukraine being a contributory factor. Despite this the business achieved an operating profit of £3.901m (2022: £3.136m) which the Directors consider an excellent result in the circumstances. Building on amounts spent in previous years on capital improvements across the group, substantial investment was made in the current year including a new state of the art site for Kerrs Bakery Ltd, focused on our long-life confectionery products. This demonstrates our continued commitment to provide our customers with outstanding service levels, a high quality and varied product range, and deliver new product development to satisfy customer needs .

Principal risks and uncertainties

We believe that the company can meet its key business risks of competition, both local and national, and of employee retention. In addition, it is company policy to limit exposure to any one customers to below 10% of net turnover.

 

The Group operates in the food supply market, deemed a key sector in response to the COVID-19 pandemic, and took steps to create a COVID secure workplace in line with statutory requirements and Government guidance. While the COVID-19 pandemic is hopefully behind us, this resulted in a comprehensive review of all business risks, improved KPI reporting, and the Group has continued to monitor its cash flow requirements very closely. The results achieved to date and subsequent to the year end have been strong and demonstrate the Group's ability to adapt and perform well through such periods.

 

The Group continues to follow enhanced Health and Safety best practices, with a BRC Grade A awarded at our annual audit.

 

Operating in the food and manufacturing sectors, the Group is experiencing inflation on all major input costs. While we work closely with our suppliers to minimise increases as far as possible, in the current environment this has been exceptionally challenging. We welcome the support and understanding of our customers during these challenging times.

Research and development

In addition to the above, the Group continues to invest in the development of new products, which the Family consider to be integral to the success of the group.

Key performance indicators

Given the straightforward nature of the business, the directors are of the opinion that analysis using KPI's is not necessary in this report for an understanding of the development, performance or position of the business.

Financial instruments

Our financial risk management objectives are to ensure there is sufficient working capital and cash flow for the Group to meet the operating needs of the group and to ensure there is sufficient support for its growth strategy. This is achieved through careful management of our cash resources and by obtaining bank or other funding where necessary.

 

MCGHEE GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 2 -
Promoting the success of the company

The Directors of the Group believe that they have acted in the way they consider to be both in good faith and would be most likely to promote the success of the group for the benefit of its members as a whole. The Directors duties are fully detailed in section 172 of the UK Companies Act 2006. This is summarised as follows:

 

•    The likely consequences of any decisions in the long-term;

•    The interests of the company’s employees;

•    The need to foster the company’s business relationships with suppliers, customers and others;

•    The impact of the company’s operations on the community and environment;

•    The desirability of the company maintaining a reputation for high standards of business conduct; and

•    The need to act fairly as between shareholders of the company.

 

Business conduct and relationships

We understand the importance of engaging with all our stakeholders and the directors regularly discuss issues concerning employees, clients, suppliers, community and environment, health and safety and shareholders which inform our decision making processes. The directors are aware that their strategic decisions can have long term implications for the business and its stakeholders, and these implications are carefully assessed.

 

Employees

We believe the core strength of the group is its people and we are committed to being a responsible business and employer. The group aims to recruit, develop, motivate and retain the best talent. For the business to succeed we need to engage and enable our people to perform at their best, develop their skills and capabilities, while ensuring we operate as efficiently and productively as possible.

Community and environment

The group's environmental commitment is to adopt and promote industry standards and best practices, enhancing awareness of environmental responsibilities and a reduction in harmful emissions. The group remains committed to exploring methods to enhance the sustainability of our business and its supply chain. This includes evaluating energy consumption within our production facilities, optimising waste management practices, making eco-friendly choices in packaging materials, and reducing our carbon footprint during product distribution.

 

The group maintains its active engagement and strong support for local communities. We regularly donate our products to selected charities, and in an effort to minimise waste, we also make contributions to local food banks. .

 

Stakeholders

The directors are committed to openly engaging with our stakeholders, as we recognise the importance of transparency and a continuing effective dialogue. It is important to us that all stakeholders understand our strategy and objectives, and the group is committed to considering properly their questions, issues or feedback received.

By order of the board

I C McGhee
Secretary
29 February 2024
MCGHEE GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 29 JULY 2023
- 3 -

The directors present their annual report and financial statements for the year ended 29 July 2023.

Principal activities

The principal activity of the company and group continued to be that of production of morning goods and flour confectionery.

Results and dividends

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £700,810. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

G McGhee
S McGhee
I C McGhee
Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employee involvement

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

 

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

Auditor

The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Energy and carbon report

Information in respect of the Energy and carbon report is presented below for McGhee Group Limited and its subsidiaries.

2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
22,533,579
18,172,663
MCGHEE GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 4 -
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
3,810.00
3,158.00
Scope 2 - indirect emissions
392.00
781.00
Total gross emissions
4,202.00
3,939.00
Intensity ratio
Tonnes CO2e per £'000 of revenue
0.09
0.10
Quantification and reporting methodology

The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting

Intensity measurement

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £'000 of revenue.

Measures taken to improve energy efficiency

We continue to focus on energy efficient capex across our sites, minimise all but essential travel, increase our use of recyclable packaging and are investigating carbon offset measures.

Strategic report

The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategictrue report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of financial instruments.

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 auditor of the company 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 auditor of the company is aware of that information.

By order of the board
I C McGhee
I C McGhee
Secretary
Director
29 February 2024
MCGHEE GROUP LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 29 JULY 2023
- 5 -

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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

MCGHEE GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MCGHEE GROUP LIMITED
- 6 -
Opinion

We have audited the financial statements of McGhee Group Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 29 July 2023 which comprise the group profit and loss account, the group statement of comprehensive income, 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).

In our opinion the financial statements:

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:

MCGHEE GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MCGHEE GROUP LIMITED
- 7 -
Matters on which we are required to report by exception

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:

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 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.

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.

MCGHEE GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MCGHEE GROUP LIMITED
- 8 -

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:

 

 

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.

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.

Michael Walker (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
29 February 2024
Chartered Accountants
Statutory Auditor
Titanium 1
King's Inch Place
Renfrew
Renfrewshire
United Kingdom
PA4 8WF
MCGHEE GROUP LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 29 JULY 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
48,135,081
38,565,282
Cost of sales
(32,700,798)
(26,907,825)
Gross profit
15,434,283
11,657,457
Distribution costs
(6,121,602)
(5,628,245)
Administrative expenses
(5,433,705)
(2,988,929)
Other operating income
21,844
95,398
Operating profit
4
3,900,820
3,135,681
Interest receivable and similar income
8
15
202
Interest payable and similar expenses
9
(104,348)
(18,581)
Profit before taxation
3,796,487
3,117,302
Tax on profit
10
(531,379)
(530,989)
Profit for the financial year
26
3,265,108
2,586,313
Profit for the financial year is all attributable to the owners of the parent company.
MCGHEE GROUP LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 29 JULY 2023
- 10 -
2023
2022
£
£
Profit for the year
3,265,108
2,586,313
Other comprehensive income
-
-
Total comprehensive income for the year
3,265,108
2,586,313
Total comprehensive income for the year is all attributable to the owners of the parent company.
MCGHEE GROUP LIMITED
GROUP BALANCE SHEET
AS AT
29 JULY 2023
29 July 2023
- 11 -
29 July 2023
30 July 2022
Notes
£
£
£
£
Fixed assets
Tangible assets
13
18,363,841
11,623,193
Investments
14
125,006
181,000
18,488,847
11,804,193
Current assets
Stocks
16
1,925,797
1,043,549
Debtors
17
7,085,016
6,995,476
Cash at bank and in hand
1,987,054
2,240,930
10,997,867
10,279,955
Creditors: amounts falling due within one year
18
(10,074,414)
(7,043,011)
Net current assets
923,453
3,236,944
Total assets less current liabilities
19,412,300
15,041,137
Creditors: amounts falling due after more than one year
19
(1,750,096)
(78,612)
Provisions for liabilities
Deferred tax liability
22
1,237,635
1,102,254
(1,237,635)
(1,102,254)
Net assets
16,424,569
13,860,271
Capital and reserves
Called up share capital
24
105
105
Capital redemption reserve
18,000
18,000
Other reserves
41,901
41,901
Profit and loss reserves
26
16,364,563
13,800,265
Total equity
16,424,569
13,860,271
The financial statements were approved by the board of directors and authorised for issue on 29 February 2024 and are signed on its behalf by:
29 February 2024
G McGhee
Director
Company registration number SC362390 (Scotland)
MCGHEE GROUP LIMITED
COMPANY BALANCE SHEET
AS AT 29 JULY 2023
29 July 2023
- 12 -
29 July 2023
30 July 2022
Notes
£
£
£
£
Fixed assets
Investments
14
99
99
Current assets
Debtors
17
550,006
750,006
Creditors: amounts falling due within one year
18
(550,000)
(750,000)
Net current assets
6
6
Net assets
105
105
Capital and reserves
Called up share capital
24
105
105

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £700,810 (2022 - £900,810 profit).

The financial statements were approved by the board of directors and authorised for issue on 29 February 2024 and are signed on its behalf by:
29 February 2024
G McGhee
Director
Company registration number SC362390 (Scotland)
MCGHEE GROUP LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 JULY 2023
- 13 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 August 2021
105
18,000
41,901
12,114,762
12,174,768
Year ended 30 July 2022:
Profit and total comprehensive income
-
-
-
2,586,313
2,586,313
Dividends
11
-
-
-
(900,810)
(900,810)
Balance at 30 July 2022
105
18,000
41,901
13,800,265
13,860,271
Year ended 29 July 2023:
Profit and total comprehensive income
-
-
-
3,265,108
3,265,108
Dividends
11
-
-
-
(700,810)
(700,810)
Balance at 29 July 2023
105
18,000
41,901
16,364,563
16,424,569
MCGHEE GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 JULY 2023
- 14 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 August 2021
105
-
0
105
Year ended 30 July 2022:
Profit and total comprehensive income for the year
-
900,810
900,810
Dividends
11
-
(900,810)
(900,810)
Balance at 30 July 2022
105
-
0
105
Year ended 29 July 2023:
Profit and total comprehensive income
-
700,810
700,810
Dividends
11
-
(700,810)
(700,810)
Balance at 29 July 2023
105
-
0
105
MCGHEE GROUP LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 JULY 2023
- 15 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
31
6,822,286
4,320,380
Interest paid
(104,348)
(18,581)
Income taxes paid
(562,196)
(244,976)
Net cash inflow from operating activities
6,155,742
4,056,823
Investing activities
Purchase of tangible fixed assets
(7,690,273)
(2,702,750)
Proceeds from disposal of tangible fixed assets
138,825
40,498
Proceeds from disposal of investments
55,994
(31,000)
Interest received
15
202
Net cash used in investing activities
(7,495,439)
(2,693,050)
Financing activities
Proceeds from new bank loans
1,000,000
-
Repayment of bank loans
(55,366)
(237,095)
Payment of finance leases obligations
(100,917)
(174,983)
Dividends paid to equity shareholders
(700,810)
(900,810)
Net cash generated from/(used in) financing activities
142,907
(1,312,888)
Net (decrease)/increase in cash and cash equivalents
(1,196,790)
50,885
Cash and cash equivalents at beginning of year
1,351,540
1,300,655
Cash and cash equivalents at end of year
154,750
1,351,540
Relating to:
Cash at bank and in hand
1,987,054
2,240,930
Bank overdrafts included in creditors payable within one year
(1,832,304)
(889,390)
MCGHEE GROUP LIMITED
GROUP STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 16 -
1
Judgements and key sources of estimation uncertainty

In the application of the group’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.

2
Accounting policies
Company information

McGhee Group Ltd (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 10 Keppochhill Drive, M8 Food Park, Glasgow, United Kingdom, G21 1HX.

 

The group consists of McGhee Group Ltd and all of its subsidiaries.

2.1
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. The principal accounting policies adopted are set out below.

2.2
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company McGhee Group Ltd 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 29 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.

2.3
Going concern

The directors are required to prepare the statutory financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. In satisfaction of this responsibility the directors have considered the Group's ability to meet its liabilities as they fall due.

MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 JULY 2023
2
Accounting policies
(Continued)
- 17 -
2.4
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.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

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.

2.5
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is between four and twenty years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

2.6
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings
At variable rates on a straight line basis between 2% and 33%
Leasehold land and buildings
Over the period of the lease
Leasehold improvements
At varying rates on cost
Plant and equipment
at varying rates on cost
Fixtures and fittings
At variable rates on a straight line basis between 6.67% and 33%
Motor vehicles
20% on cost, 25% on cost and 33% on 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.

 

Deposits paid in respect of Fixtures & Fittings are capitalised within tangible fixed assets and not depreciated until the asset is available for use. Assets under construction relates to the development of a new factory which was completed during the year under review.

MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
2
Accounting policies
(Continued)
- 18 -
2.7
Fixed asset investments

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 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.

2.8
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.

2.9
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.

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.

2.10
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.

MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
2
Accounting policies
(Continued)
- 19 -
2.11
Financial instruments

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

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.

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 group 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 group after deducting all of its liabilities.

MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
2
Accounting policies
(Continued)
- 20 -
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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

2.12
Equity instruments

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.

2.13
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 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

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 if, and only if, there is 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.

MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
2
Accounting policies
(Continued)
- 21 -
2.14
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.

2.15
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

2.16
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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 leased asset are consumed.

2.17
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.

 

Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

2.18
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.

3
Turnover and other revenue

Turnover represents amounts derived from the provision of goods and services which fall within the Group's ordinary activities after deduction of trade discounts and value added tax. The turnover and pre-tax profit, all of which arises in the United Kingdom, is attributable to the Group's principal activities of production of morning foods and flour confectionery.

MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
3
Turnover and other revenue
(Continued)
- 22 -
2023
2022
£
£
Other revenue
Interest income
15
202
Grants received
21,844
95,398
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Depreciation of owned tangible fixed assets
1,769,277
1,290,579
Depreciation of tangible fixed assets held under finance leases
65,958
279,318
Profit on disposal of tangible fixed assets
(24,435)
(40,497)
Operating lease charges
498,683
479,338
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
3,500
2,750
Audit of the financial statements of the company's subsidiaries
47,250
37,750
50,750
40,500
For other services
Taxation compliance services
9,000
6,850
Other taxation services
7,000
-
All other non-audit services
4,565
4,432
20,565
11,282
6
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
2023
2022
Number
Number
Production
273
250
Sales and distribution
99
101
Administration
33
29
405
380
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
6
Employees
(Continued)
- 23 -

Their aggregate remuneration comprised:

Group
2023
2022
£
£
Wages and salaries
14,723,362
12,073,309
Social security costs
1,271,768
972,196
Pension costs
279,806
258,451
16,274,936
13,303,956
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
1,902,750
652,435
Company pension contributions to defined contribution schemes
10,006
25,372
1,912,756
677,807
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
644,136
222,288

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022: 3).

8
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
15
202
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
95,870
9,341
Other finance costs:
Interest on finance leases and hire purchase contracts
8,478
9,240
Total finance costs
104,348
18,581
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 24 -
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
436,493
367,739
Adjustments in respect of prior periods
(40,495)
(77)
Total current tax
395,998
367,662
Deferred tax
Origination and reversal of timing differences
124,745
163,225
Adjustment in respect of prior periods
10,636
102
Total deferred tax
135,381
163,327
Total tax charge
531,379
530,989

Current tax is calculated at an effective rate of 21% of the estimated taxable profit / (loss) for the year (2022 – 19%). Finance Act 2021 was ‘substantively enacted’ on 24 May 2021. This increased the main rate of corporation tax applicable to 25% from 1 April 2023, replacing the 20% rate previously effective from that date. The closing deferred tax assets and liabilities have been calculated in accordance with the rates substantively enacted at the Balance Sheet date.

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
3,796,487
3,117,302
Expected tax charge based on the standard rate of corporation tax in the UK of 21.01% (2022: 19.00%)
797,642
592,287
Tax effect of expenses that are not deductible in determining taxable profit
-
0
5,310
Tax effect of income not taxable in determining taxable profit
15,786
(48,344)
Adjustments in respect of prior years
(40,494)
(77)
Deferred tax adjustments in respect of prior years
10,700
102
Fixed asset differences
(272,196)
(57,463)
Adjust closing deferred tax to average rate
19,941
39,174
Taxation charge
531,379
530,989
11
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Interim paid
700,810
900,810
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 25 -
12
Intangible fixed assets
Group
Goodwill
Negative goodwill
Total
£
£
£
Cost
At 1 August 2022 and 29 July 2023
2,605,926
(547,110)
2,058,816
Amortisation and impairment
At 1 August 2022 and 29 July 2023
2,605,926
(547,110)
2,058,816
Carrying amount
At 29 July 2023
-
0
-
0
-
0
At 30 July 2022
-
0
-
0
-
0
The company had no intangible fixed assets at 29 July 2023 or 30 July 2022.
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 26 -
13
Tangible fixed assets
Group
Freehold land and buildings
Leasehold land and buildings
Leasehold improvements
Assets under construction
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
£
£
£
Cost
At 1 August 2022
918,519
589,892
5,421,770
205,698
12,322,359
2,339,173
2,091,203
23,888,614
Additions
-
0
11,214
3,935,539
-
0
963,636
2,774,693
1,005,191
8,690,273
Disposals
-
0
-
0
(3,853)
-
0
(26,636)
(8,649)
(671,740)
(710,878)
Transfers
205,698
-
0
-
0
(205,698)
-
0
-
0
-
0
-
0
At 29 July 2023
1,124,217
601,106
9,353,456
-
0
13,259,359
5,105,217
2,424,654
31,868,009
Depreciation and impairment
At 1 August 2022
169,327
501,204
1,018,530
-
0
8,309,860
777,530
1,488,970
12,265,421
Depreciation charged in the year
24,151
19,085
164,109
-
0
987,160
160,169
480,561
1,835,235
Eliminated in respect of disposals
-
0
-
0
(3,853)
-
0
(25,119)
(2,342)
(565,174)
(596,488)
At 29 July 2023
193,478
520,289
1,178,786
-
0
9,271,901
935,357
1,404,357
13,504,168
Carrying amount
At 29 July 2023
930,739
80,817
8,174,670
-
0
3,987,458
4,169,860
1,020,297
18,363,841
At 30 July 2022
749,192
88,688
4,403,240
205,698
4,012,499
1,561,643
602,233
11,623,193
The company had no tangible fixed assets at 29 July 2023 or 30 July 2022.
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
13
Tangible fixed assets
(Continued)
- 27 -

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2023
2022
2023
2022
£
£
£
£
Plant and equipment
1,203,551
1,322
-
0
-
0
Motor vehicles
-
0
85,049
-
0
-
0
1,203,551
86,371
-
-
14
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
15
-
0
-
0
99
99
Listed investments
125,006
181,000
-
0
-
0
125,006
181,000
99
99
Movements in fixed asset investments
Group
Investments
£
Cost or valuation
At 1 August 2022
181,000
Valuation changes
(55,994)
At 29 July 2023
125,006
Carrying amount
At 29 July 2023
125,006
At 30 July 2022
181,000
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 August 2022 and 29 July 2023
99
Carrying amount
At 29 July 2023
99
At 30 July 2022
99
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 28 -
15
Subsidiaries

Details of the company's subsidiaries at 29 July 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
D McGhee & Sons Limited
United Kingdom
Ordinary
100.00
-
Fergusons Bakers Limited
United Kingdom
Ordinary
-
100.00
Kerr's Bakery Limited
United Kingdom
Ordinary
-
100.00

The registered office of D McGhee & Sons Limited and Fergusons Bakers Limited is 10 Keppochhill Drive, M8 Food Park, Glasgow, G21 1HX. The registered office of Kerr's Bakery Limited is Oakfield House, 378 Brandon Street, Motherwell, ML1 1XA.

16
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
1,885,614
1,000,269
-
-
Work in progress
38,600
41,600
-
-
Finished goods and goods for resale
1,583
1,680
-
0
-
0
1,925,797
1,043,549
-
-
17
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
6,149,833
4,804,731
-
0
-
0
Amounts owed by group undertakings
-
-
550,000
750,000
Other debtors
616,942
1,986,983
6
6
Prepayments and accrued income
318,241
203,762
-
0
-
0
7,085,016
6,995,476
550,006
750,006
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 29 -
18
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
20
1,939,031
926,484
-
0
-
0
Obligations under finance leases
21
120,102
17,502
-
0
-
0
Trade creditors
4,074,328
3,336,085
-
0
-
0
Corporation tax payable
45,561
211,759
-
0
-
0
Other taxation and social security
762,398
231,195
-
-
Government grants
-
0
1,844
-
0
-
0
Other creditors
2,002,493
1,612,572
550,000
750,000
Accruals and deferred income
1,130,501
705,570
-
0
-
0
10,074,414
7,043,011
550,000
750,000
19
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
20
905,913
30,912
-
0
-
0
Obligations under finance leases
21
844,183
47,700
-
0
-
0
1,750,096
78,612
-
-
20
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
1,012,640
68,006
-
0
-
0
Bank overdrafts
1,832,304
889,390
-
0
-
0
2,844,944
957,396
-
-
Payable within one year
1,939,031
926,484
-
0
-
0
Payable after one year
905,913
30,912
-
0
-
0

The bank term loan is secured against a floating charge over the assets of the Company with all group companies providing a guarantee to the bank. The loan has interest charged at 1.9% per annum over the Bank of England Base Rate. It is repayable by installment with a bullet repayment due in April 2028.

MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 30 -
21
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
120,102
17,502
-
0
-
0
In two to five years
844,183
47,700
-
0
-
0
964,285
65,202
-
-

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term 81 months. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

 

Hire purchase contracts are secured over the assets to which they relate.

22
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
2,362,336
1,102,254
Losses and other deductions
(1,124,701)
-
1,237,635
1,102,254
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 August 2022
1,102,254
-
Charge to profit or loss
135,381
-
Liability at 29 July 2023
1,237,635
-
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 31 -
23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
279,806
258,451

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

24
Share capital
Group and company
2023
2022
Ordinary share capital
£
£
Issued and fully paid
99 Ordinary of £1 each
99
99
Preference share capital
Issued and fully paid
6 Preference of £1 each
6
6
Total equity share capital
105
105
25
Other reserves
2023
2022
Group
£
£
At the beginning and end of the year
41,901
41,901
2023
2022
Company
£
£
At the beginning and end of the year
-
-
26
Profit and loss reserves
Group
Company
2023
2022
2023
2022
£
£
£
£
At the beginning of the year
13,800,265
12,114,762
-
-
Profit for the year
3,265,108
2,586,313
700,810
900,810
Dividends
(700,810)
(900,810)
(700,810)
(900,810)
At the end of the year
16,364,563
13,800,265
-
0
-
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 32 -
27
Operating lease commitments
Lessee

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
640,772
514,687
-
-
Between two and five years
1,690,829
1,642,204
-
-
In over five years
854,621
1,200,000
-
-
3,186,222
3,356,891
-
-
28
Capital commitments

Amounts contracted for but not provided in the financial statements:

Group
Company
2023
2022
2023
2022
£
£
£
£
Acquisition of tangible fixed assets
1,025,453
-
-
-
29
Related party transactions
Transactions with related parties

During the year the group entered into the following transactions with related parties:

Purchase of goods
2023
2022
£
£
Group
A company with a mutual director
1,928,777
1,174,071
Rental of property
Other rental charges
2023
2022
2023
2022
£
£
£
£
Group
A company with a mutual director
366,000
366,000
8,974
35,896
MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
29
Related party transactions
(Continued)
- 33 -

The following amounts were outstanding at the reporting end date:

Amounts owed to related parties
2023
2022
£
£
Group
The directors of the company
751,386
166,276

The following amounts were outstanding at the reporting end date:

Amounts owed by related parties
2023
2022
Balance
Balance
£
£
Group
A company with a mutual director and shareholder
351,087
1,765,248

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

 

Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.

30
Directors' transactions

Dividends totalling £700,810 (2022 - £900,810) were paid in the year in respect of shares held by the company's directors.

Interest free loans have been granted by the group to its directors as follows: Directors Loan Account's totalling £751,398 (2022: £166,276).

MCGHEE GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 JULY 2023
- 34 -
31
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
3,265,108
2,586,313
Adjustments for:
Taxation charged
531,379
530,989
Finance costs
104,348
18,581
Investment income
(15)
(202)
Gain on disposal of tangible fixed assets
(24,435)
(40,497)
Depreciation and impairment of tangible fixed assets
1,835,235
1,569,897
Movements in working capital:
Increase in stocks
(882,248)
(233,139)
Increase in debtors
(89,540)
(1,019,148)
Increase in creditors
2,084,298
1,002,975
Decrease in deferred income
(1,844)
(95,389)
Cash generated from operations
6,822,286
4,320,380
32
Analysis of changes in net funds/(debt) - group
1 August 2022
Cash flows
New finance leases
29 July 2023
£
£
£
£
Cash at bank and in hand
2,240,930
(253,876)
-
1,987,054
Bank overdrafts
(889,390)
(942,914)
-
(1,832,304)
1,351,540
(1,196,790)
-
154,750
Borrowings excluding overdrafts
(68,006)
(944,634)
-
(1,012,640)
Obligations under finance leases
(65,202)
100,917
(1,000,000)
(964,285)
1,218,332
(2,040,507)
(1,000,000)
(1,822,175)
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