Company registration number 05475848 (England and Wales)
MANCHESTER DRINKS COMPANY LTD
ANNUAL REPORT AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
MANCHESTER DRINKS COMPANY LTD
COMPANY INFORMATION
Directors
B Levine
R Benjamin
Company number
05475848
Registered office
Suite 30, Imperial House
79-81 Hornby Street
Bury
BL9 5BN
Auditor
UHY Hacker Young Manchester LLP
St James Building
79 Oxford Street
Manchester
M1 6HT
Business address
Suite 30, Imperial House
79-81 Hornby Street
Bury
BL9 5BN
MANCHESTER DRINKS COMPANY LTD
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
MANCHESTER DRINKS COMPANY LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
The Directors are pleased to report that, despite continuing difficult trading conditions at home and abroad, the business continues to flourish. An annual turnover of £23,507,301 has resulted in profit before tax of £3,232,375 for the year.
The investment in capital equipment made previously has facilitated these excellent results and the introduction and ongoing development of new products has helped ensure the business remains profitable and continues to be well placed to thrive despite the challenges faced.
Sales since the start of the new financial year have been robust. The Company has now opened new markets overseas and introduced a new range of products that promise a successful year ahead.
B Levine
Director
11 September 2024
MANCHESTER DRINKS COMPANY LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present their 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 manufacture and distribution of ready-to-drink products.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £1,896,000. 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:
B Levine
R Benjamin
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.
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
MANCHESTER DRINKS COMPANY LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
On behalf of the board
B Levine
Director
11 September 2024
MANCHESTER DRINKS COMPANY LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MANCHESTER DRINKS COMPANY LTD
- 4 -
Opinion
We have audited the financial statements of Manchester Drinks Company Ltd (the 'company') for the year ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, 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:
give a true and fair view of the state of the company's affairs as at 31 December 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.
MANCHESTER DRINKS COMPANY LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MANCHESTER DRINKS COMPANY LTD
- 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, 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.
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
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, we considered the following:
the nature of the industry and sector, control environment and business performance;
any matters we identified having obtained and reviewed the Company’s documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
the matters discussed among the audit engagement team and involving relevant internal specialists, including tax, and industry specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: valuation of stock. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
MANCHESTER DRINKS COMPANY LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MANCHESTER DRINKS COMPANY LTD
- 6 -
We also obtained an understanding of the legal and regulatory frameworks the company operates in, focussing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty.
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 and those charged with governance concerning actual and potential litigation claims;
in addressing the risk of fraud through inappropriate valuation of stock, assessing net realisable value of stock items sold after the year end was above cost or assessing their value with reference to cost card data provided by the client against 3rd party sources.
in assessing the risk of fraud through management override of controls, testing the appropriateness of journal entries and assessing whether judgements made in making accounting estimates are indicative of potential bias.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through 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 members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Kevin Blakemore FCCA
Senior Statutory Auditor
For and on behalf of UHY Hacker Young Manchester LLP
11 September 2024
Chartered Accountants
Statutory Auditor
St James Building
79 Oxford Street
Manchester
M1 6HT
MANCHESTER DRINKS COMPANY LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
Year
Period
ended
ended
31 December
31 December
2023
2022
Notes
£
£
Turnover
3
23,507,301
41,614,074
Cost of sales
(19,114,515)
(33,748,397)
Gross profit
4,392,786
7,865,677
Distribution costs
(479,630)
(658,480)
Administrative expenses
(791,192)
(892,647)
Operating profit
4
3,121,964
6,314,550
Interest receivable and similar income
7
101,966
35,588
Interest payable and similar expenses
8
(12,460)
(32,474)
Fair value changes on investments
9
20,905
(108,455)
Profit before taxation
3,232,375
6,209,209
Tax on profit
10
(769,319)
(1,163,452)
Profit for the financial year
2,463,056
5,045,757
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MANCHESTER DRINKS COMPANY LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Year
Period
ended
ended
31 December
31 December
2023
2022
£
£
Profit for the year
2,463,056
5,045,757
Other comprehensive income
-
-
Total comprehensive income for the year
2,463,056
5,045,757
MANCHESTER DRINKS COMPANY LTD
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
13
1,378,507
1,578,851
Investments
14
266,540
245,635
1,645,047
1,824,486
Current assets
Stocks
15
4,487,777
5,136,327
Debtors
16
2,977,854
4,529,342
Cash at bank and in hand
8,130,061
5,924,341
15,595,692
15,590,010
Creditors: amounts falling due within one year
17
(2,147,458)
(2,828,445)
Net current assets
13,448,234
12,761,565
Total assets less current liabilities
15,093,281
14,586,051
Creditors: amounts falling due after more than one year
18
(175,673)
(211,398)
Provisions for liabilities
Deferred tax liability
21
294,716
318,817
(294,716)
(318,817)
Net assets
14,622,892
14,055,836
Capital and reserves
Called up share capital
23
120
120
Other reserves
(38,992)
(59,897)
Profit and loss reserves
14,661,764
14,115,613
Total equity
14,622,892
14,055,836
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 11 September 2024 and are signed on its behalf by:
B Levine
Director
Company registration number 05475848 (England and Wales)
MANCHESTER DRINKS COMPANY LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 July 2021
120
36,418
9,708,416
9,744,954
Period ended 31 December 2022:
Profit and total comprehensive income
-
-
5,045,757
5,045,757
Dividends
11
-
-
(734,875)
(734,875)
Transfers
-
(96,315)
96,315
-
Balance at 31 December 2022
120
(59,897)
14,115,613
14,055,836
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
2,463,056
2,463,056
Dividends
11
-
-
(1,896,000)
(1,896,000)
Transfers
-
20,905
(20,905)
-
Balance at 31 December 2023
120
(38,992)
14,661,764
14,622,892
MANCHESTER DRINKS COMPANY LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
4,642,224
3,957,070
Interest paid
(12,460)
(32,474)
Income taxes paid
(582,681)
(1,038,420)
Net cash inflow from operating activities
4,047,083
2,886,176
Investing activities
Purchase of tangible fixed assets
(11,604)
(1,189,294)
Proceeds from disposal of investments
(99,997)
Interest received
84,627
27,273
Dividends received
17,339
8,315
Net cash generated from/(used in) investing activities
90,362
(1,253,703)
Financing activities
Payment of finance leases obligations
(35,725)
(18,740)
Dividends paid
(1,896,000)
(734,875)
Net cash used in financing activities
(1,931,725)
(753,615)
Net increase in cash and cash equivalents
2,205,720
878,858
Cash and cash equivalents at beginning of year
5,924,341
5,045,483
Cash and cash equivalents at end of year
8,130,061
5,924,341
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Manchester Drinks Company Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Suite 30, Imperial House, 79-81 Hornby Street, Bury, BL9 5BN.
1.1
Reporting period
The current financial reporting period covers the 12 months to the 31 December 2023. The comparative financial reporting period is for the 18 months to 31 December 2022.
1.2
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, modified to include the revaluation of certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.3
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.
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
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.
1.5
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
1.6
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation 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:
Software
33% straight line
Patents & licences
10% straight line
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.7
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and equipment
10% reducing balance
Fixtures and fittings
25% reducing balance
Motor vehicles
25% straight line
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.
1.8
Fixed asset investments
Investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
1.9
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.10
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks are recognised as inventory when the company has obtained legal title to the goods, the risks and rewards of ownership have been transferred to the company, the stock is identifiable and that its cost can be reliably measured.
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.11
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.
1.12
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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.13
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.
1.14
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The 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.
1.15
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense. 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.
1.16
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.17
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 leases asset are consumed.
1.18
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
The directors have not identified any significant estimates and judgements in the financial statements.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
22,823,063
40,700,931
Europe
664,024
771,444
Rest of the world
20,214
141,699
23,507,301
41,614,074
2023
2022
£
£
Other revenue
Interest income
84,627
27,273
Dividends received
17,339
8,315
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
27,953
(7,617)
Research and development costs
7,205
-
Fees payable to the company's auditor for the audit of the company's financial statements
19,500
17,500
Depreciation of owned tangible fixed assets
145,482
111,916
Depreciation of tangible fixed assets held under finance leases
66,466
13,764
Operating lease charges
18,811
22,161
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Operations staff
7
4
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
164,539
116,889
Social security costs
8,286
2,958
Pension costs
53,163
75,600
225,988
195,447
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
45,808
51,741
Company pension contributions to defined contribution schemes
50,400
75,600
96,208
127,341
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
84,089
27,273
Other interest income
538
Total interest revenue
84,627
27,273
Other income from investments
Dividends received
17,339
8,315
Total income
101,966
35,588
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
84,089
27,273
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on invoice finance arrangements
29,594
Other finance costs:
Interest on finance leases and hire purchase contracts
12,356
1,524
Other interest
104
1,356
12,460
32,474
9
Fair value changes on investments
2023
2022
£
£
Fair value gains/(losses) on financial instruments
Gain/(loss) on financial assets held at fair value through profit or loss
20,905
(108,455)
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
791,512
932,246
Adjustments in respect of prior periods
1,908
(14,810)
Total current tax
793,420
917,436
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
2023
2022
£
£
(Continued)
- 19 -
Deferred tax
Origination and reversal of timing differences
(24,101)
246,016
Total tax charge
769,319
1,163,452
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
3,232,375
6,209,209
Expected tax charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
759,608
1,179,750
Tax effect of expenses that are not deductible in determining taxable profit
5,708
6,218
Tax effect of income not taxable in determining taxable profit
(4,078)
(1,580)
Adjustments in respect of prior years
1,908
(14,810)
Effect of changes in tax rates
(1,856)
Other
8,029
(6,126)
Taxation charge for the year
769,319
1,163,452
11
Dividends
2023
2022
£
£
Final paid
1,896,000
734,875
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
12
Intangible fixed assets
Software
Patents & licences
Total
£
£
£
Cost
At 1 January 2023 and 31 December 2023
38,180
1,463
39,643
Amortisation and impairment
At 1 January 2023 and 31 December 2023
38,180
1,463
39,643
Carrying amount
At 31 December 2023
At 31 December 2022
13
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2023
1,546,079
24,460
265,863
1,836,402
Additions
10,215
1,389
11,604
At 31 December 2023
1,556,294
25,849
265,863
1,848,006
Depreciation and impairment
At 1 January 2023
226,198
17,589
13,764
257,551
Depreciation charged in the year
144,702
780
66,466
211,948
At 31 December 2023
370,900
18,369
80,230
469,499
Carrying amount
At 31 December 2023
1,185,394
7,480
185,633
1,378,507
At 31 December 2022
1,319,881
6,871
252,099
1,578,851
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
£
£
Motor vehicles
185,633
252,099
14
Fixed asset investments
2023
2022
£
£
Listed investments
266,540
245,635
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
14
Fixed asset investments
(Continued)
- 21 -
Movements in fixed asset investments
Investments
£
Cost or valuation
At 1 January 2023
245,635
Valuation changes
20,905
At 31 December 2023
266,540
Carrying amount
At 31 December 2023
266,540
At 31 December 2022
245,635
15
Stocks
2023
2022
£
£
Finished goods and goods for resale
4,487,777
5,136,327
16
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,749,393
2,437,056
Other debtors
910,879
2,011,254
Prepayments and accrued income
317,582
81,032
2,977,854
4,529,342
17
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
19
35,725
35,725
Trade creditors
785,097
1,735,298
Corporation tax
492,984
282,245
Other taxation and social security
508,892
284,507
Other creditors
143,721
364,502
Accruals and deferred income
181,039
126,168
2,147,458
2,828,445
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
18
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
19
175,673
211,398
19
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
35,725
35,725
In two to five years
175,673
211,398
211,398
247,123
Finance lease payments represent rentals payable by the company for motor vehicles. 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.
20
Other provisions and contingent liabilities
Due to the nature of the industry in which the business operates, from time to time, the company is made aware of potential claims or litigation arising in the ordinary course of the company’s business. Provision is made for the Directors best estimate of all known claims and all such legal actions in progress. The company takes legal advice as to the likelihood of success of claims and actions and no provision is made where the Directors consider, based on that advice, that the action is unlikely to proceed or succeed or a sufficiently reliable estimate of the potential obligation cannot be made. The directors are comfortable that sufficient cash/assets would be available to discharge any liabilities arising from these contingent liabilities without an adverse impact on the company or its liquidity. At the year end, no formal legal action was in progress against the company and no provision is made in these financial statements.
21
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
294,716
318,817
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
21
Deferred taxation
(Continued)
- 23 -
2023
Movements in the year:
£
Liability at 1 January 2023
318,817
Credit to profit or loss
(24,101)
Liability at 31 December 2023
294,716
Of the deferred tax liability above £32,720 is expected to reverse within 12 months.
22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
53,163
75,600
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.
23
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
120
120
120
120
24
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
21,492
9,667
25
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
176,800
176,800
Payments totalling £144,640 (2022 - £71,200) in respect of the capital commitments are included in prepayments as at the period end.
MANCHESTER DRINKS COMPANY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
26
Related party transactions
During the period the company transacted with related parties being that of entities under common ownership. At the year end total sums due from these entities totalled £910,129 (2022 - £2,009,754) with sums due to certain related parties totalling £143,403 (2022 - £364,502). Transactions with these entities comprise revenue totalling £582,592 (2022 - £1,354,092) and purchases totalling £510,274 (2022 - £1,998,582).
27
Ultimate controlling party
In the opinion of the directors no one stakeholder has ultimate control of the reporting entity.
28
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
2,463,056
5,045,757
Adjustments for:
Taxation charged
769,319
1,163,452
Finance costs
12,460
32,474
Investment income
(101,966)
(35,588)
Depreciation and impairment of tangible fixed assets
211,948
125,680
Other gains and losses
(20,905)
108,455
Movements in working capital:
Decrease/(increase) in stocks
648,550
(2,196,940)
Decrease in debtors
1,551,488
119,233
Decrease in creditors
(891,726)
(405,453)
Cash generated from operations
4,642,224
3,957,070
29
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
5,924,341
2,205,720
8,130,061
Obligations under finance leases
(247,123)
35,725
(211,398)
5,677,218
2,241,445
7,918,663
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