Mcfadden Utilities Ltd |
Strategic Report |
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Business Review |
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The company is an operating business in the UK utilities services and civil engineering market. The company is in a very healthy position as they have no external borrowings or loans. The company has a reputation of successfully delivering many contracts with various water authorities, civil engineering and telecommunications companies. Contracts include repairs and maintenance, renewal and replacement of utilities within the civil engineering sector. The turnover of the business increase by 15% in comparision to last year. This is due to additional new contract from utilities to fit new water meters as well as increase in repair and maintenance works. The company has been in the forefront of no dig technology by using methods such as pipe bursting, pipe insertion and directional drilling to minimise disruption to the public and cost savings to the client. The company offers an immediate solution to leaks and bursts on external pipes. They carry out such work on a daily basis for Water Companies, Local Authorities, Housing Associations and Individual home owners. |
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Financial key performance indicators |
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The business strategy and risk approach are determine by the directors. |
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The directors have established a number of key perforamce indicators which they use to measure and moonitor performance of the company in a number of dirrerent areas. |
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31 July 2023 |
31 July 2022 |
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£ |
£ |
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Turnover |
16,391,625 |
13,869,764 |
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Gross profit |
3,460,894 |
3,625,966 |
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Gross profit margin |
22% |
26% |
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Profit before tax |
1,313,453 |
1,172,943 |
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We have been able to achieve a 22% gross profit margin which is pleasing when considering the current market challenges and it is really in higher brackets for our industry |
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Overall we are satisfied with the performance of the company this year and the fact that our strategy and new opportunities which we could capitalise has resulted in better than expected results reaching closer to our long terms goals. |
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Principal risks and uncertainties |
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The company operates in a very dynamic and volatile business environment which requires a close check on each and every transaction at every step. The retention of current customers and the ability to secure work is a cornerstone of the success of the business. We offer solutions to our customers needs and enable the Company to stay ahead of the competition. |
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Credit risk |
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The Company's principal financial assets are the bank balances, amounts recoverable on contracts and trade debtors, which represents maximum exposure to credit risk in relation to financial assets. The Company's credit risk is primarily attributable to its amounts recoverable on contracts and trade debtors. Credit risk is managed by monitoring the aggregate amount and duration of exposureto any one customer depending upon their credit rating. |
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Future developments |
The directors believe that the Company is well positioned with a strong order book to deliver profitable results in 2024. |
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This report was approved by the board on 15 April 2024 and signed on its behalf. |
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Paul Mcfadden |
Director |
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have been prepared in accordance with the requirements of the Companies Act 2006. |
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Basis for qualified opinion |
There were issues with client's opening balances. Opening stock of £165,000 could not be verified. There were several balances in the prior years accounts which had to be written off and as a result there was an unidentified opening balance difference of £49,500 written off in current year accounts. It was not possible for us to perform the auditing procedures necessary to obtain sufficient appropriate audit evidence as regards to all the closing balances included in the preceding years’ financial statements. We were unable to determine whether the opening balances as at 1 August 2022 are fairly stated. Any adjustment to these figures would have a consequential effect on the profit for the year ended 31 July 2022. |
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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 qualified opinion. |
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Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
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. |
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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. |
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Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
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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 |
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the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. |
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Matters on which we are required to report by exception |
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Capability of the audit in detecting irregularities, including fraud |
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The objectives of our audit are to identify and assess the risks of material misstatement of the financial statements due to fraud or error; to obtain sufficient appropiate audit evidence regarding the assessed risks of material misstatement due to fraud or error; and to respond appropiately to those risks. |
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Based on our understanding of the company and industry, and through discussion with the directors and other management (as required by the auditing standards), we identified that the principal risks of non-compliance with laws and regulations. we considered the estent to which noncompliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and taxation. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements(including the risk of override of controls), and determined that the principal risks were related to posting inappropiate journal enties to increase revenue or reduce expenditure. Audit procedures performed by the engagement team included: |
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Discussions with management and assessment of known or suspected instances of non-compliance with law and regulations (including health and safety) and fraud; and |
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Assessment of identified fraud risk factors; and |
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Challanging assumptions and judgements made by the management in its significant accounting estimates; and |
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Confirmation of related parties with management, and reviewof transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and |
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Reading minutes of meetings of those charged with governance; and |
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Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transaction; and |
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Performing analytical procedures with automated data analytics tools to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and |
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Identifying and testing journal entries, in particular any manual entries made at the year end for the financial statement preparation; and |
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There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentation, or through collusion. |
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As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also: |
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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. 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 controls. |
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Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control. |
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Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. |
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Conclude on the appropriateness of the directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a materialuncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' Report to the related disclosures in the financial statements or if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' Report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
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Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
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Stocks |
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Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in first out method. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. |
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Debtors |
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Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
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Creditors |
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Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
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Taxation |
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A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. |
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Provisions |
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Provisions (ie liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
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Leased assets |
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A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
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Pensions |
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Contributions to defined contribution plans are expensed in the period to which they relate. |
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2 |
Analysis of turnover |
2023 |
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2022 |
£ |
£ |
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Sale of goods |
16,391,625 |
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13,869,762 |
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By geographical market: |
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UK |
16,391,625 |
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13,869,762 |
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3 |
Operating profit |
2023 |
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2022 |
£ |
£ |
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This is stated after charging: |
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Depreciation of owned fixed assets |
186 |
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310 |
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Auditors' remuneration for audit services |
8,000 |
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- |
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Carrying amount of stock sold |
5,818,141 |
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5,178,436 |
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4 |
Directors' emoluments |
2023 |
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2022 |
£ |
£ |
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Emoluments |
70,000 |
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70,000 |
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5 |
Staff costs |
2023 |
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2022 |
£ |
£ |
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Wages and salaries |
524,026 |
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545,633 |
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Social security costs |
388,851 |
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471,358 |
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Other pension costs |
80,777 |
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192,544 |
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993,654 |
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1,209,535 |
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Average number of employees during the year |
Number |
Number |
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Management |
6 |
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5 |
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Operatives |
38 |
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35 |
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Supervisor |
5 |
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7 |
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Administation |
6 |
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3 |
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55 |
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50 |
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6 |
Taxation |
2023 |
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2022 |
£ |
£ |
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Analysis of charge in period |
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Current tax: |
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UK corporation tax on profits of the period |
286,737 |
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223,591 |
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Adjustments in respect of previous periods |
- |
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133,308 |
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286,737 |
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356,899 |
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Tax on profit on ordinary activities |
286,737 |
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356,899 |
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Factors affecting tax charge for period |
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The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
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2023 |
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2022 |
£ |
£ |
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Profit on ordinary activities before tax |
1,313,453 |
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1,172,943 |
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Standard rate of corporation tax in the UK |
20% |
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20% |
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£ |
£ |
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Profit on ordinary activities multiplied by the standard rate of corporation tax |
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262,691 |
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234,589 |
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Effects of: |
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Expenses not deductible for tax purposes |
24,046 |
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(10,998) |
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Adjustments to tax charge in respect of previous periods |
- |
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133,308 |
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Current tax charge for period |
286,737 |
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356,899 |
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Factors that may affect future tax charges |
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Increase in corporation tax charge to 25% from 1st April 2023 will affect future tax charges. |
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7 |
Tangible fixed assets |
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Fixtures, fittings, tools and equipment |
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At cost |
£ |
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Cost or valuation |
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At 1 August 2022 |
10,401 |
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At 31 July 2023 |
10,401 |
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Depreciation |
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At 1 August 2022 |
9,471 |
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Charge for the year |
186 |
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At 31 July 2023 |
9,657 |
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Carrying amount |
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At 31 July 2023 |
744 |
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At 31 July 2022 |
930 |
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8 |
Stocks |
2023 |
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2022 |
£ |
£ |
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Finished goods and goods for resale |
13,976 |
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165,334 |
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9 |
Debtors |
2023 |
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2022 |
£ |
£ |
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Trade debtors |
421,622 |
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250,250 |
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Other debtors |
45,229 |
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43,009 |
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466,851 |
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293,259 |
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10 |
Creditors: amounts falling due within one year |
2023 |
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2022 |
£ |
£ |
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Trade creditors |
739,929 |
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862,751 |
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Corporation tax |
510,329 |
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223,591 |
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Other taxes and social security costs |
504,274 |
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387,964 |
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Other creditors |
31,692 |
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346,909 |
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Accruals and deferred income |
19,274 |
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11,509 |
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1,805,498 |
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1,832,724 |
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11 |
Share capital |
Nominal |
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2023 |
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2023 |
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2022 |
value |
Number |
£ |
£ |
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Allotted, called up and fully paid: |
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Ordinary shares |
£1 each |
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100 |
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100 |
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100 |
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12 |
Profit and loss account |
2023 |
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2022 |
£ |
£ |
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At 1 August |
4,092,995 |
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3,316,951 |
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Profit for the financial year |
1,026,716 |
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816,044 |
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Dividends |
(40,000) |
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(40,000) |
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At 31 July |
5,079,711 |
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4,092,995 |
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13 |
Dividends |
2023 |
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2022 |
£ |
£ |
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Dividends on ordinary shares (note 12) |
40,000 |
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40,000 |
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14 |
Prior year adjustment |
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There is an unidentified balance of £49,500 written off in the accounts. These relates to prior years opening balance difference. |
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15 |
Related party transactions |
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During the year the company paid £324,600 as consultancy fee to McFadden Properties Ltd, a company incorporated in England. Paul MacFadden is the Director and 100% Shareholder of this company. During the year the comany paid £408,000 as consultancy fee to McFadden Developments Ltd, a company incorporated in England. Tony McFadden and Karen McFadden are the Directors and 50% shareholders of this company. |
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16 |
Controlling party |
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The company is under the control of Tony McFadden and Paul McFadden, both of them are the directors and own 50% shares each. |
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17 |
Presentation currency |
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The financial statements are presented in Sterling. |
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18 |
Legal form of entity and country of incorporation |
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Mcfadden Utilities Ltd is a private company limited by shares and incorporated in England. |
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19 |
Principal place of business |
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The address of the company's principal place of business and registered office is: |
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Upper Farm Bell Lane |
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Brookmans Park |
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Hatfield |
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England |
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AL9 7AY |
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20 |
Reconciliations on adoption of FRS 102 |
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Profit and loss for the year ended 31 July 2022 |
£ |
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Profit under former UK GAAP |
816,044 |
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Profit under FRS 102 |
816,044 |
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Balance sheet at 31 July 2022 |
£ |
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Equity under former UK GAAP |
4,093,095 |
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Equity under FRS 102 |
4,093,095 |
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Balance sheet at 1 August 2021 |
£ |
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Equity under former UK GAAP |
- |
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Equity under FRS 102 |
- |
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