Company registration number 03350268 (England and Wales)
MCCRORY BRICKWORK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
MCCRORY BRICKWORK LIMITED
COMPANY INFORMATION
Directors
A. P. Kendall
P. M. McCrory
Secretary
C. A. McCrory
Company number
03350268
Registered office
47-107 Europa Business Park
Bird Hall Lane
Cheadle Heath
Stockport
Cheshire
SK3 0XA
Auditor
JS. Audit Limited
James House
Stonecross Business Park
Yew Tree Way
Warrington
Cheshire
WA3 3JD
Business address
47-107 Europa Business Park
Bird Hall Lane
Cheadle Heath
Stockport
Cheshire
SK3 0XA
Bankers
Barclays Bank UK PLC
1 Bridge Street
Stockport
SK1 1XU
MCCRORY BRICKWORK LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of income and retained earnings
7
Balance sheet
8
Notes to the financial statements
9 - 21
MCCRORY BRICKWORK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 1 -
The directors present the strategic report for the year ended 31 October 2023.
Review of the business
The results for the company show a pre-tax profit of £1.38m (2022: £1.09m) for the year and turnover of £11.22m (2022: £10.56m).
The performance of the company remains steady despite challenging economic market conditions, revenue has increased by 6.28% and gross profit margin has increased to 30.55% (2022: 28.75%). The company’s range of building processes, expert knowledge and wide customer base continue to generate nationwide opportunities.
Strategy
The company’s success is pertained to the track record of its heritage, passion and innovation to deliver effective and efficient solutions at all stages of the building process. The company regard continued innovation within the sector as the foremost way of maintaining its leading market position.
Principal risks and uncertainties
The management of the business and the execution of the company’s strategy are subject to a number of risks. Risks are rigorously monitored and regularly reviewed by the Board and appropriate processes put in place to manage and mitigate them.
Challenging economic market conditions have resulted in a decline in the construction sector as a whole. The company believes their long track record of excellent service and wide choice of supply will help them overcome this decline. Furthermore, the company intends to make contract uplifts to help mitigate the risk of any future price increases.
Increases in wages costs have affected the company's ability to attract skilled labour. The company strives to retain their strong core team of employees to mitigate this risk.
Key performance indicators
The company monitors progress and the impact of policy adjustments with reference to gross profit margins and EBIT growth combined with ongoing monitoring of our liquidity position.
2023 2022
Gross Margin 30.55% 28.75% Gross profit generated as a proportion of revenue
EBIT £1.55m £1.40m Earnings before interest and tax
A. P. Kendall
Director
31 July 2024
MCCRORY BRICKWORK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 October 2023.
Principal activities
The principal activity of the company continued to be that of construction.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £535,222. 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:
A. P. Kendall
P. M. McCrory
Financial instruments
Liquidity risk
The company manages its cash and borrowing requirements in order to generate interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Credit risk
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Future developments
The decline in the construction sector in expected to continue during 2023/24 but the directors remain confident that the company’s range of building processes, expert knowledge and wide customer base will continue to generate opportunities for the next year and beyond.
Auditor
The auditor, JS. Audit Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
MCCRORY BRICKWORK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 3 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The company has chosen in accordance with Companies Act 2006, s.414C(11) to set out in the company's strategic 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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
A. P. Kendall
Director
31 July 2024
MCCRORY BRICKWORK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MCCRORY BRICKWORK LIMITED
- 4 -
Opinion
We have audited the financial statements of McCrory Brickwork Limited (the 'company') for the year ended 31 October 2023 which comprise the statement of income and retained earnings, the balance sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 October 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
MCCRORY BRICKWORK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MCCRORY BRICKWORK LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement included within the directors' report, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities and fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities including fraud is detailed below.
Based on our understanding of the company and sector, we identified that the principal risks of non-compliance with laws and regulations related to, but were not limited to, the Companies Act 2006, UK tax, employment, pension and health and safety legislation and we considered the extent to which non-compliance 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.
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 management bias in accounting estimates and judgements and the risk of fraud in revenue recognition.
MCCRORY BRICKWORK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MCCRORY BRICKWORK LIMITED
- 6 -
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management about actual and potential litigation and claims, their policies and procedures to prevent and detect fraud as well as whether they have knowledge of any actual, suspected or alleged fraud;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
obtaining an understanding of provisions and holding discussions with management to understand the basis of recognition or non-recognition of tax provisions;
in addressing the risk of fraud through management override of controls: testing the appropriateness of journal entries; assessing whether the accounting estimates, judgements and decisions made by management are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Christopher Moss BSc F.C.A.
Senior Statutory Auditor
For and on behalf of JS. Audit Limited
31 July 2024
Chartered Accountants
Statutory Auditor
James House
Stonecross Business Park
Yew Tree Way
Warrington
Cheshire
WA3 3JD
MCCRORY BRICKWORK LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 7 -
Restated
2023
2022
Notes
£
£
Turnover
3
11,218,681
10,555,944
Cost of sales
(7,791,772)
(7,520,799)
Gross profit
3,426,909
3,035,145
Administrative expenses
(2,381,743)
(1,864,413)
Other operating income
505,017
226,104
Operating profit
4
1,550,183
1,396,836
Interest receivable and similar income
7
1,348
1,480
Interest payable and similar expenses
8
(166,710)
(306,455)
Profit before taxation
1,384,821
1,091,861
Tax on profit
9
(391,421)
(217,718)
Profit for the financial year
993,400
874,143
Retained earnings brought forward
3,584,255
3,172,432
Dividends
10
(535,222)
(462,320)
Retained earnings carried forward
4,042,433
3,584,255
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MCCRORY BRICKWORK LIMITED
BALANCE SHEET
AS AT
31 OCTOBER 2023
31 October 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
319,751
96,905
Current assets
Debtors
12
6,082,679
7,394,817
Cash at bank and in hand
2,131,044
177,969
8,213,723
7,572,786
Creditors: amounts falling due within one year
13
(3,864,918)
(3,348,258)
Net current assets
4,348,805
4,224,528
Total assets less current liabilities
4,668,556
4,321,433
Creditors: amounts falling due after more than one year
14
(558,124)
(726,555)
Provisions for liabilities
Deferred tax liability
17
67,998
10,622
(67,998)
(10,622)
Net assets
4,042,434
3,584,256
Capital and reserves
Called up share capital
19
1
1
Profit and loss reserves
20
4,042,433
3,584,255
Total equity
4,042,434
3,584,256
The financial statements were approved by the board of directors and authorised for issue on 31 July 2024 and are signed on its behalf by:
A. P. Kendall
Director
Company registration number 03350268 (England and Wales)
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 9 -
1
Accounting policies
Company information
McCrory Brickwork Limited is a private company limited by shares incorporated in England and Wales. The registered office is 47-107 Europa Business Park, Bird Hall Lane, Cheadle Heath, Stockport, Cheshire, SK3 0XA.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of McCrory (Holdings) Limited. These consolidated financial statements are available from Companies House, Crown Way, Maindy, Cardiff, CF14 3UZ.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Profit is recognised on long term contracts, if the final outcome can be assessed with reasonable certainty, by including in the profit and loss account turnover and related costs as contract activity progresses. Turnover is calculated as that proportion of the total contract value which costs to date bear to total expected costs for that contract.
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 10 -
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Plant and machinery
25%/33.33% reducing balance basis per annum
Motor vehicles
25% reducing balance basis per annum
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
1.6
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
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.
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 11 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 12 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
1.12
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.
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 13 -
1.13
The management fees receivable, disclosed under operating income, has been restated for the comparative year. This income was originally allocated against the costs to which it related and amounted to £226,104. This has not impacted on the results for the prior year or the brought forward reserves.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements:
Contingent liabilities
The contingent liability of £4,176,324 (2022: £2,179,037) as set out in note 21 is subject to uncertainty as it is yet to be confirmed whether this amount will be payable by the company.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:
Long term contracts
The calculation of accrued and deferred income on long term contracts is subject to estimation uncertainty and requires an estimation of the value at the reporting date based on the stage of completion of the contract and the overall contract value. Due to the nature of the work undertaken the contracts can take several years to complete and are subject to unforeseen circumstances, however historically this has not been an issue. The carrying amount of amounts due from contract customers at the reporting date was £4,189,158 (2022: £4,931,088).
Useful economic lives of tangible fixed assets
The calculation of useful economic lives of the company's tangible fixed assets is subject to estimation uncertainty, as set out in Note 1.4.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Construction
11,218,681
10,555,944
All turnover arose within the United Kingdom.
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
3
Turnover and other revenue
(Continued)
- 14 -
2023
2022
£
£
Other revenue
Interest income
1,348
1,480
4
Operating profit
Restated
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
13,000
10,000
Depreciation of owned tangible fixed assets
4,870
3,880
Depreciation of tangible fixed assets held under finance leases
19,359
20,821
Profit on disposal of tangible fixed assets
-
(10,743)
Operating lease charges
58,405
50,394
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
46
41
Project/site
15
15
Admin
21
19
Total
82
75
Their aggregate remuneration comprised:
Restated
2023
2022
£
£
Wages and salaries
4,633,241
3,538,739
Social security costs
310,037
228,419
Pension costs
308,428
298,386
5,251,706
4,065,544
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 15 -
6
Directors' remuneration
Restated
2023
2022
£
£
Remuneration for qualifying services
49,361
40,466
Company pension contributions to defined contribution schemes
500
229,085
49,861
269,551
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 2).
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
1,348
1,480
8
Interest payable and similar expenses
Restated
2023
2022
£
£
Loan interest
151,198
302,642
Interest on finance leases and hire purchase contracts
4,165
3,813
Other interest
11,347
166,710
306,455
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
334,045
215,838
Adjustments in respect of prior periods
1,900
Total current tax
334,045
217,738
Deferred tax
Origination and reversal of timing differences
57,376
(20)
Total tax charge
391,421
217,718
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
9
Taxation
(Continued)
- 16 -
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
1,384,821
1,091,861
Expected tax charge based on the standard rate of corporation tax in the UK of 22.52% (2022: 19.00%)
311,862
207,454
Tax effect of expenses that are not deductible in determining taxable profit
73,900
8,711
Adjustments in respect of prior years
1,900
Permanent capital allowances in excess of depreciation
(342)
Difference in deferred and corporation tax rates
5,659
(5)
Taxation charge for the year
391,421
217,718
A UK corporation tax rate of 25% was announced in the Chancellor's budget of 3 March 2021 and applied from 1 April 2023. Deferred tax has been calculated at this rate.
10
Dividends
2023
2022
£
£
Final paid
535,222
462,320
11
Tangible fixed assets
Plant and machinery
Motor vehicles
Total
£
£
£
Cost
At 1 November 2022
178,008
108,444
286,452
Additions
247,075
247,075
At 31 October 2023
425,083
108,444
533,527
Depreciation and impairment
At 1 November 2022
160,601
28,946
189,547
Depreciation charged in the year
4,355
19,874
24,229
At 31 October 2023
164,956
48,820
213,776
Carrying amount
At 31 October 2023
260,127
59,624
319,751
At 31 October 2022
17,407
79,498
96,905
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
11
Tangible fixed assets
(Continued)
- 17 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and machinery
247,075
Motor vehicles
58,077
59,944
305,152
59,944
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
860,715
163,860
Gross amounts owed by contract customers
4,189,158
4,931,088
Other debtors
830,305
2,136,340
Prepayments and accrued income
152,807
113,835
6,032,985
7,345,123
2023
2022
Amounts falling due after more than one year:
£
£
Corporation tax recoverable
49,694
49,694
Total debtors
6,082,679
7,394,817
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
15
325,000
325,000
Obligations under finance leases
16
64,532
20,866
Other borrowings
15
719,466
Trade creditors
1,554,711
622,301
Amounts owed to group undertakings
522,795
489,439
Corporation tax
182,583
566,985
Other taxation and social security
260,088
81,028
Other creditors
550,439
50,000
Accruals and deferred income
404,770
473,173
3,864,918
3,348,258
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
13
Creditors: amounts falling due within one year
(Continued)
- 18 -
Net obligations under finance leases of £64,532 (2022: £20,866) are secured against the assets to which they relate.
Included within other borrowings is an amount of £Nil (2022: £719,466) with a fixed and floating charge over all the property or undertakings of the company.
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans
15
352,083
677,083
Obligations under finance leases
16
206,041
49,472
558,124
726,555
Net obligations under finance leases of £206,041 (2022: £49,472) are secured against the assets to which they relate.
15
Loans and overdrafts
2023
2022
£
£
Bank loans
677,083
1,002,083
Other loans
719,466
677,083
1,721,549
Payable within one year
325,000
1,044,466
Payable after one year
352,083
677,083
The bank loan is secured by a fixed and floating charge over all of the property or undertakings of the company.
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
64,532
20,866
In two to five years
206,041
49,472
270,573
70,338
Finance lease payments represent rentals payable by the company 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 is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 19 -
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
67,998
10,622
2023
Movements in the year:
£
Liability at 1 November 2022
10,622
Charge to profit or loss
57,376
Liability at 31 October 2023
67,998
The deferred tax liability set out above is expected to reverse within 4 years and relates to accelerated capital allowances that are expected to mature within the same period.
18
Retirement benefit schemes
Restated
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
308,428
298,386
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
At the year-end accrued pension contributions amounted to £25,637 (2022: £2,019).
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary share of £1 each
1
1
1
1
20
Profit and loss reserves
Profit and loss reserve represents the cumulative profits or losses, net of dividends paid.
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 20 -
21
Financial commitments, guarantees and contingent liabilities
The company is currently in negotiations with HMRC in connection with underpaid taxes in prior years. The estimated amount involved is in the region of £4,176,324 (2022: £2,179,037) which has not been provided for in these financial statements.
McCrory Brickwork Limited has entered into an limited cross company guarantee of £200,000 relating to bank loans with it's parent company, McCrory (Holdings) Limited and connected company, McCrory Developments Limited. As a security for the bank loans, there are legal charges over certain properties owned by the group.
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
30,450
40,879
Between two and five years
13,128
14,647
43,578
55,526
23
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Sales
2023
2022
£
£
Entity under common control
-
864,998
Loan interest paid
Administrative expenses
2023
2022
2023
2022
£
£
£
£
Entity under common control
96,160
250,349
505,017
226,104
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due to related parties
£
£
Entity under common control
500,439
719,466
MCCRORY BRICKWORK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
23
Related party transactions
(Continued)
- 21 -
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
Entity under common control
659,033
1,844,693
Other information
During the year an amount of £300,000 (2022: £Nil) was waived on amounts due from an entity under common control.
24
Directors' transactions
Advances or credits have been granted by the company to its directors as follows:
Description
% Rate
Opening balance
Closing balance
£
£
A. P. Kendall - Loan
-
50,000
50,000
P. M. McCrory - Loan
-
102,904
102,904
152,904
152,904
25
Ultimate controlling party
The immediate and ultimate parent company is McCrory (Holdings) Limited, a company registered in England and Wales.
The ultimate controlling party is considered to be P. M. McCrory by virtue of his majority shareholding in the ultimate parent company.
The ultimate parent company prepares consolidated accounts which are publicly available from Companies House, Crown Way, Cardiff, CF14 3UZ.
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