Company registration number 02053742 (England and Wales)
MECALUX (UK) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
MECALUX (UK) LIMITED
COMPANY INFORMATION
Director
Juan Pablo Alonso Alvarez-Tostado
Company number
02053742
Registered office
Unit 8, Junction 6 Industrial Park
Electric Avenue
Witton
Birmingham
West Midlands
B6 7JJ
Auditor
Alliotts LLP
3 London Square
Cross Lanes
Guildford
GU1 1UJ
Business address
Unit 8, Junction 6 Industrial Park
Electric Avenue
Witton
Birmingham
West Midlands
B6 7JJ
MECALUX (UK) LIMITED
CONTENTS
Page
Strategic report
1 - 3
Director's report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 26
MECALUX (UK) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The director presents the strategic report for the year ended 31 December 2023.

Review of the business

The scenario for 2023 has been rather challenging, inflation remained high with 14 successive interest rates rises by the Bank of England, the fastest cycle seen in the last 50 years, however there are now some grounds for optimism. Unemployment remains low and by the end of 2023 inflation started to lower, still above the target Bank of England’s 2% target. The Consumer Prices Index (CPI) rose by 4.0% in the 12 months to December 2023.The annual rate in December 2023 was the second lowest since September 2021 [Office for National Statistics]. The economy with the already known adversities like the high inflation, interest rates, the wars between Ukraine and Russia, Israel and Hamas, has done better than predicted however still remains a shy growth compare to 2022.

 

In terms of the Company’s performance throughout 2023, the path was on the rise throughout the year consolidating the business growth during 2022, with commercial activity improving in demand, noticeably a market reshaping large scale projects to smaller dynamic solutions less dependant to long term financial commitments. The Company achieved a turnover of £37.2m, representing a 53% increase against 2022, and a profit after tax of £1.3 million.

Focusing on the factors that directly affects the Company the most, during the last years some factors have been identified that will favorably influence company's evolution. Driven by the continuous shortage of labour, the industry has had to adapt and rely more on automation. This element plays a lead role in how the intralogistics and storage sector has been reshaping in the last couple of years since the pandemic and now with the effects of Brexit. The pandemic shuttled the online retail industry years ahead of any previous prediction, this has caused an enormous momentum for the intralogistics sector requiring desperately warehouse storage space. The increase on demand and labour shortages could only be tackled with more cost effective intralogistics solution, such as Automated warehouse storage solutions. Our Group has specialised in the last decades in this type of solutions, we have seen the last year the biggest jump in Automation activity in Mecalux UK and expect the trend to continue in the years to follow. Along with Automation, the warehouse management software sector that helps both manual and automated warehouses to run more efficiently, is presenting as well a big demand, driven mainly by the necessity of having a perfect control and prediction of stock requirements, for a market that has had to learn to react and adapt on real time as external factors continue to reshape the world every day.

The second half of 2023 the economy entered into a technical recession, however towards the end of the year it already pointed out a positive GDP with shy stable perspectives for 2024. This will represent a familiar scenari, very similar to how the previous year started, there will be needs to continue supplying for demand, adapting for labour shortages and becoming more cost effective. We will continue our drive in automated solutions, covering the ever demanding market in all areas of our portfolio, growing our automation, software and racking sales team to satisfy the country warehouse storage solutions needs as they evolve. We are solidifying our current market share with a strategic Installations department focused in safe and cost effective assembly, the expansion of our Automation team, continuous training to our growing Sales team and taking advantage of our Group R+D and production muscle to keep increasing our brand awareness in the UK as one of the leading European racking manufacturers.

 

MECALUX (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties

The management of the business and the execution of the Company's strategy are subject to a number of business risks:

 

Essential raw materials costs volatility risk and availability risk

The commercial activity of the Company supplies certain materials and components together with the factories of the Group, being Mecalux, S.A. its main supplier, and the prices of these materials and components are subject to market fluctuations based on multiple factors exogenous to the actions of the Company or its Group. These price fluctuations can be sudden and significant. In response to this business circumstance, the Company and the rest of the subsidiaries of the Mecalux group have a team of professionals with extensive management experience of its supplies and constantly monitors the prices of its factors of production in order to provide itself with relevant information for decision-making sufficiently in advance with a view to defending its margins and profitability.

 

The Company and the Group to which it belongs are also exposed, like the generality of economic actors, to the availability and/or scarcity of certain goods and services necessary for their commercialization activity, which are conditioned by the supply capacity and also the logistics capacity for transport and delivery, as these are, in some cases, products subject to a logistics process from the manufacturer's location. Also in this aspect, the Company and the Group take the defensive measures deemed appropriate at all times with the aim of maintaining certain volumes of inventories and supply orders that allow it to efficiently comply with the commitments agreed with its customers.

 

In general, the Company, for certain contracts whose lead time at the beginning of the same may be delayed in time and therefore may be subject to possible scenarios of volatility in the price of steel, has the capability to introduce clauses in the contracts with their clients that protect them in the event that an increase in the cost of steel exceeds a certain threshold, and these clauses are valid until the beginning of the execution of the contract.

 

 

Competition

Mecalux UK continues to operate in a highly competitive market. The competition is vast with many companies competing on lead times, price and services. Mecalux UK continues to offer competitive solutions, with the most consistent lead times taking advantage of our Group various factories to guarantee product availability, an experienced sales team capable of designing the most cost effective solutions and relying on our Group’s manufacturing capabilities and adaptability to steel price fluctuations thus achieving well controlled short term aggressive prices, increasing their presence in the dealer and distributor channel, by offering the service level that other suppliers are not being able to provide, gaining constantly new accounts that generate repeated business. In terms of competition, although there are quite a few local and European manufacturers well established in the UK, with our successful business model they are not considered to be a competition risk to a diversified market, however it is worth keeping an eye to an aggressive price strategy as profit margins may need to be narrower when expanding market share. Mecalux UK believes that the sector is only growing allowing greater opportunities for increased turnover in the future.

 

Foreign exchange

Mecalux UK buys all stock from the Group in Spain. The purchases are in Euros but the Company
operates and sells in GBP. This exposes the Company to accepting losses due to the movement in exchange rates, however it is worth noting the commercial exchange rate is fixed at the mid term and adjusted as required to prevent losses at the long run. Mecalux UK does not use hedging to predict the Euro costs to the Company

 

 

MECALUX (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Key performance indicators

The directors are satisfied with the position of Mecalux UK at the year end. The board of directors monitor the Company's progress by reference to two indicators:

Growth in Turnover

Mecalux UK has been focusing in creating brand awareness and expanding their presence in the market, mainly by understanding the market needs and trends through the dealer and distributor channels, at the same time proving their expertise on larger projects where a narrow profit margins are required to win them. The result of it can be shown in the turnover increasing to £37.2 in 2023 from £24.2m the previous year. Mecalux UK aims to continue increasing their turnover in future.

 

Profitability

Mecalux UK has done big efforts to increase turnover and profit to reduce the loss made during previous years, part of a learning curve and investment in new resources, which has been achieved in the past two years, maintaining profitability above £500,000 in 2022 and in 2023. The company aims to continue being profit making in the future, keeping in consideration the risk factors of steel volatility and competition.

 

The director considers that the Company’s key financial performance indicators are those that communicate its financial performance and strength as a whole and these are:

 

 

2023

2022

 

Turnover

£37,158,496

£24,232,092

 

 

 

Gross Profit

£5,830,942

£4,535,751

 

Gross Profit Margin

15.69%

18.70%

 

Profit Before Taxation

£600,261

£576,909

 

On behalf of the board

Juan Pablo Alonso Alvarez-Tostado
Director
2 September 2024
MECALUX (UK) LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

The director presents his annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company continued to be that of the supply and installation of industrial racking and ancillary products.

Results and dividends

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

No ordinary dividends were paid. The director does not recommend payment of a final dividend.

Director

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

Juan Pablo Alonso Alvarez-Tostado
Auditor

In accordance with the company's articles, a resolution proposing that Alliotts LLP be reappointed as auditor of the company will be put at a General Meeting.

Statement of director's responsibilities

The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:

 

 

The director is 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. He is 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.

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.

Going concern

Having reviewed the impact of Covid-19, the director believes that the company can successfully manage its business risks and, after making relevant enquiries,the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis in preparing the annual financial statements. Further details regarding the adoption of the going concern basis can be found in note 1.2 of the financial statements.

MECALUX (UK) LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
Juan Pablo Alonso Alvarez-Tostado
Director
2 September 2024
MECALUX (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MECALUX (UK) LIMITED
- 6 -
Opinion

We have audited the financial statements of Mecalux (UK) Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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 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 director's 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 director 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 director is 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:

MECALUX (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MECALUX (UK) LIMITED
- 7 -
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 director's 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 director

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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, including 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.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

 

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

MECALUX (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MECALUX (UK) LIMITED
- 8 -
Audit response to risks identified

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

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 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.

Use of our 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 Cairns BSc FCA
Senior Statutory Auditor
For and on behalf of Alliotts LLP
2 September 2024
Chartered Accountants
Statutory Auditor
3 London Square
Cross Lanes
Guildford
GU1 1UJ
MECALUX (UK) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Revenue
3
37,158,496
24,232,092
Cost of sales
(31,327,554)
(19,696,341)
Gross profit
5,830,942
4,535,751
Distribution costs
(742,929)
(991,373)
Administrative expenses
(4,506,872)
(2,982,528)
Other operating (expenses)/income
(9)
16
Operating profit
4
581,132
561,866
Investment income
8
19,129
15,043
Profit before taxation
600,261
576,909
Taxation
9
657,859
-
0
Profit for the financial year
1,258,120
576,909
Other comprehensive income
-
-
Total comprehensive result for the year
1,258,120
576,909

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

MECALUX (UK) LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
10
41,175
35,430
Current assets
Inventories
12
725,708
699,765
Trade and other receivables - deferred tax
15
657,859
-
0
Trade and other receivables - other
13
9,714,628
15,027,850
Cash and cash equivalents
600,519
654,236
11,698,714
16,381,851
Current liabilities
14
(9,444,163)
(15,379,675)
Net current assets
2,254,551
1,002,176
Net assets
2,295,726
1,037,606
Equity
Called up share capital
17
4,450,000
4,450,000
Retained earnings
(2,154,274)
(3,412,394)
Total equity
2,295,726
1,037,606

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved and signed by the director and authorised for issue on 2 September 2024
Juan Pablo Alonso Alvarez-Tostado
Director
Company registration number 02053742 (England and Wales)
MECALUX (UK) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 January 2022
4,450,000
(3,989,303)
460,697
Year ended 31 December 2022:
Profit and total comprehensive income
-
576,909
576,909
Balance at 31 December 2022
4,450,000
(3,412,394)
1,037,606
Year ended 31 December 2023:
Profit and total comprehensive income
-
1,258,120
1,258,120
Balance at 31 December 2023
4,450,000
(2,154,274)
2,295,726
MECALUX (UK) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
22
(48,995)
282,343
Investing activities
Purchase of property, plant and equipment
(24,694)
(9,372)
Proceeds from disposal of property, plant and equipment
843
-
0
Interest received
19,129
15,043
Net cash (used in)/generated from investing activities
(4,722)
5,671
Net (decrease)/increase in cash and cash equivalents
(53,717)
288,014
Cash and cash equivalents at beginning of year
654,236
366,222
Cash and cash equivalents at end of year
600,519
654,236
MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information

Mecalux (UK) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 8, Junction 6 Industrial Park, Electric Avenue, Witton, Birmingham, West Midlands, B6 7JJ.

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.

1.2
Going concern

The accounts have been prepared on the going concern basis, as the ultimate parent company has confirmed they will provide continued financial support for at least 12 months from the date of signing the financial statements. The Company meets its day-to-day working capital requirements through trading facilities provided by its ultimate parent company.true

 

The director believes that the company can successfully manage its business risks and, after making relevant enquiries, the director has a reasonable expectation that the company will have access to adequate resources to continue to trade for the foreseeable future and he believes it is appropriate to continue to adopt the going concern basis in preparing the annual report and accounts. No adjustments have been made should the parent company withdraw its support to the company.

1.3
Revenue

Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of installation services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

1.4
Property, plant and equipment

Property, plant and equipment 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 or valuation of assets less their residual values over their useful lives on the following bases:

Plant and equipment
5 or 6 years straight line basis
MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -

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 non-current assets

At each reporting end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.6
Inventories

Inventories 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 inventories to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.7
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.

1.8
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 statement of financial position 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.

MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Basic financial assets

Basic financial assets, which include trade and other receivables 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.

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

 

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

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 trade and other payables and loans from fellow group companies, 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 receipts discounted at a market rate of interest.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -

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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.9
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.

1.10
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 income statement 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 income statement, 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.

1.11
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 non-current 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.

1.12
Retirement benefits

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

MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.13
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

1.14
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the director is 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.

Leases

The director determines whether leases entered into by the company as a lessee constitute operating leases or finance leases. These decisions depend on an assessment, on a lease by lease basis, of whether the lease transfers substantially all the risks and rewards incidental to ownership.

Tangible fixed assets

The director determines whether there are any indicators of impairment of the company’s tangible fixed assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.

Deferred tax

The company has a deferred tax asset on tax losses which has not been recognised in the accounts as the director has considered that for the foreseeable future, taxable trading profits are not likely to be realised.

Debtor recoverability

The company makes an estimate of the recoverable value of trade and other receivables. When assessing impairment of trade and other receivables, management considers factors including the current credit rating of the receivable, the ageing of the profile of receivables and historical experience.

MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 18 -
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.

Tangible fixed assets

Tangible fixed assets, other than investment properties, are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values

Long term contracts

The value of the long term contracts are estimated by the stage of completion of each individual contract. This is based on projections of the time and resources required to complete the projects which are prepared by Mecalux (UK) Limited for every contract.

3
Revenue

An analysis of the company's revenue is as follows:

2023
2022
£
£
Revenue analysed by class of business
Supply and installation of industrial racking
37,158,496
24,232,092
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
37,029,461
24,146,693
European Community
129,035
85,399
37,158,496
24,232,092
2023
2022
£
£
Other revenue
Interest income
19,129
15,043
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Exchange losses
13,850
227,381
Depreciation of owned property, plant and equipment
18,106
22,640
Operating lease charges
402,391
412,757
MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
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 company
21,800
19,500
6
Employees

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

2023
2022
Number
Number
Warehouse
4
3
Sales and admin
32
26
Total
36
29

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
2,040,225
1,538,517
Social security costs
478,705
192,875
Pension costs
32,784
26,241
2,551,714
1,757,633
7
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
262,299
192,244
Company pension contributions to defined contribution schemes
1,321
-
263,620
192,244

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).

MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Director's remuneration
(Continued)
- 20 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
262,299
192,244
Company pension contributions to defined contribution schemes
1,321
-

There are no key management personnel other than the director.

8
Investment income
2023
2022
£
£
Interest income
Interest receivable from group companies
19,122
13,652
Other interest income
7
1,391
Total income
19,129
15,043
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
19,122
13,652
9
Taxation
2023
2022
£
£
Deferred tax
Previously unrecognised tax loss, tax credit or timing difference
(657,859)
-
0
MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
(Continued)
- 21 -

The actual (credit)/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
600,261
576,909
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
141,181
109,613
Tax effect of expenses that are not deductible in determining taxable profit
378
1,336
Change in unrecognised deferred tax assets
(141,465)
-
0
Depreciation on assets not qualifying for tax allowances
(94)
401
Deferred tax adjustments in respect of prior years
-
0
(111,350)
Recognition of previously unrecognised deferred tax assets
(657,859)
-
0
Taxation credit for the year
(657,859)
-

 

10
Property, plant and equipment
Plant and equipment
£
Cost
At 1 January 2023
310,282
Additions
24,694
Disposals
(1,062)
At 31 December 2023
333,914
Depreciation and impairment
At 1 January 2023
274,852
Depreciation charged in the year
18,106
Eliminated in respect of disposals
(219)
At 31 December 2023
292,739
Carrying amount
At 31 December 2023
41,175
At 31 December 2022
35,430
MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
11
Financial instruments
2023
2022
2022
as restated
as previously
stated
£
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
9,184,824
14,816,800
14,303,045
Carrying amount of financial liabilities
Measured at amortised cost
8,930,052
13,625,931
13,625,931

The comparative balances have been restated to better reflect the nature of the balances. The restatement did not affect the result for the year, equity, or any line items on the face of the statement of financial position.

12
Inventories
2023
2022
£
£
Finished goods and goods for resale
725,708
699,765
13
Trade and other receivables
2023
2022
2022
as restated
as previously
stated
Amounts falling due within one year:
£
£
£
Trade receivables
1,968,649
9,953,530
9,953,530
Gross amounts owed by contract customers
342,801
637,183
637,183
Amounts owed by group undertakings
6,813,042
4,173,276
4,173,276
Other taxation
125,492
123,428
-
Other receivables
7,106
-
176,239
Prepayments and accrued income
404,312
87,622
87,622
9,661,402
14,975,039
15,027,850
2023
2022
2022
as restated
as previously
stated
Amounts falling due after more than one year:
£
£
£
Other receivables
53,226
52,811
-
Deferred tax asset (note 15)
657,859
-
0
-
711,085
52,811
-
Total debtors
10,372,487
15,027,850
15,027,850
MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
13
Trade and other receivables
(Continued)
- 23 -

The comparative balances have been restated to better reflect the nature of the balances. The restatement did not affect the result for the year, equity, or any line items on the face of the statement of financial position.

14
Current liabilities
2023
2022
2022
as restated
as previously
stated
£
£
£
Payments received on account
7,614,452
12,440,299
12,440,299
Trade payables
219,706
202,089
202,089
Amount due to related companies
824,804
851,447
851,447
Other taxation and social security
514,111
1,753,744
1,753,744
Other payables
1,039
5,091
-
Accruals and deferred income
270,051
127,005
132,096
9,444,163
15,379,675
15,379,675

The comparative balances have been restated to better reflect the nature of the balances. The restatement did not affect the result for the year, equity, or any line items on the face of the statement of financial position.

15
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Assets
Assets
2023
2022
Balances:
£
£
ACAs
657,859
-
2023
Movements in the year:
£
Liability at 1 January 2023
-
Credit to profit or loss
(657,859)
Asset at 31 December 2023
(657,859)

The deferred tax asset set out above is expected to reverse within 3 years and relates to accelerated capital allowances that are expected to mature within the same period.

MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
32,784
26,241

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.

17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £50 each
89,000
89,000
4,450,000
4,450,000

The company has one class of ordinary shares which carry full and equal rights to participate in voting in all circumstances and in dividends and capital distribution.

18
Operating lease commitments
Lessee

 

Operating lease payments represent rentals payable by the company in respect of premises and motor vehicles.

 

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
312,554
224,333
Between two and five years
225,355
495,329
537,909
719,662
19
Financial commitments, guarantees and contingent liabilities

During the year, the Health and Safety Executive commenced an investigation after an accident involving a sub-contractor. At the reporting date, an outflow of economic benefits is not considered probable, and any potential obligation cannot be estimated reliably. Therefore, no provision has been recognised in respect of this matter.

MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
20
Related party transactions

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
646,812
818,742
Other related parties
177,992
32,705

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due from related parties
£
£
Entities with control, joint control or significant influence over the company
6,813,042
4,173,276
Other information

The company has taken advantage of the exemption available in Paragraph 33.1A of FRS102 whereby it has not disclosed transactions with other companies that are wholly owned within the Group.

21
Ultimate controlling party

The ultimate parent company is Mecalux S.A., a company registered in Spain. No one person has overall control.

 

The parent company Mecalux S.A. with registered office of Silici 1, 08940 Cornellá, Barcelona, Spain draws up consolidated financial statements which include Mecalux (UK) Limited.

22
Cash (absorbed by)/generated from operations
2023
2022
£
£
Profit for the year after tax
1,258,120
576,909
Adjustments for:
Taxation credited
(657,859)
-
0
Investment income
(19,129)
(15,043)
Depreciation and impairment of property, plant and equipment
18,106
22,640
Movements in working capital:
Increase in inventories
(25,943)
(58,618)
Decrease/(increase) in trade and other receivables
5,313,222
(10,818,048)
(Decrease)/increase in trade and other payables
(5,935,512)
10,574,503
Cash (absorbed by)/generated from operations
(48,995)
282,343
MECALUX (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
23
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
654,236
(53,717)
600,519
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