MEA UK Limited
Annual report and financial statements
For the year ended 31 December 2023
MEA UK Limited
Company information
Directors
Mr F Vinson
Mr D T Tiemann
Secretary
Mrs N Hughes
Company number
02854985
Registered office
Rectors Lane
Pentre
Deeside
Flintshire
Wales
CH5 2DH
Auditor
DJH Audit Limited
Chester House
LLoyd Drive
Ellesmere Port
Cheshire
United Kingdom
CH65 9HQ
MEA UK Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Income statement
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 24
MEA UK Limited
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
At the beginning of 2023, it was forecast that some sectors of the construction industry would struggle to steer the course through an unprecedented mix of economic headwinds. The industry has, however, remained resilient in the face of falling demand. The year started with uncertainty but ended with confidence in the robustness of the industry. As an organisation; MEA UK have embraced structural change, adjusted our working practices and built a foundation for future growth.
The Market Economy
KPMG report that the UK economy staged an early recovery from a technical recession in the second half of 2023, with real GDP growth expected to be 0.3% in 2024. According to the Office for National Statistics, there has been modest growth in construction output of 2.0% in 2023 compared with 2022. The annual increase reflects steady levels of maintenance and repair work, which rose 8.3%, rather than new projects which decreased by 2.1%.
The main negative contributor to annual growth was private new housing, which saw falls in 10 out of the 12 months of 2023. It is believed that part of the reason is that project participants are struggling to shake off the long-term effects of the past: the pandemic and Brexit as well as the ongoing impact of the war in Ukraine. These appear in the obvious inflationary pressures, particularly energy and product costs affecting projects. The UK economy and construction industry remained vulnerable to geopolitical forces throughout the year. This was further exacerbated by the conflict in the Middle East, which continues to disrupt shipping, oil and gas supplies.
In a recent article, Travis Perkins stated that the UK construction sector is unlikely to see any serious recovery until after the government is installed in 2024. They believe that the construction industry is waiting to see if a potential new government will announce support for the sector and where interest rates will go. That said, despite the challenging economic pressures, the overall construction output in 2023 was positive.
Strategy and Approach
The retirement of Management in 2023 saw a restructuring of the UK organisation. The strong structure of the existing long-standing employees meant that the transition was managed well. MEA UK continued to maximise its effectiveness by offering project engineers invaluable technical support; providing hydraulic calculations and layout drawings where required. Our CRM is sales driven and is continually developed and improved to optimise; customer service, relationships and retention. It is the core to the efficiency of our daily working practices. The restructuring enabled us to strengthen our internal sales team in terms of elevating our B2B marketing. This has increased our online presence and targeted contractors and end users, promoting product awareness and selling benefits.
Inventory levels
In terms of product supply, availability has been good across all products and regions. The stock value for the MEALINE channel systems was increased in the 1st half of 2023 in-line with a reduction in container prices. This was essentially a 2 year supply and was impacted further by the UK housing markets reduced demand for such product lines. Final stock value at count was £330k which included an increase on previous year for MEALINE of £80k. A return to the targeted ’90 day’ stock holding is anticipated by end of 2024.
Lead Times
The generally published lead time for standard products was ‘within 3 to 5 working days from receipt of order’ for goods held in UK stock and extended to ‘within 3 to 4 working weeks from receipt of order’ for non-stocked items which had to be shipped in from MEA production facilities in France and the Czech Republic.
MEA UK Limited
Strategic report (continued)
For the year ended 31 December 2023
- 2 -
Cashflow
According to an analysis by Mazars, The UK construction sector experienced the highest number of insolvencies in any industry with a 7% increase on the previous year. The Builders Merchants Federation noted that throughout 2023 Builders’ merchants, who provide a financial bridge between manufacturers and contractors, have experienced slower payments from customers and more bad debts. Despite this, the constant monitoring of our merchant accounts, together with our excellent lines of communication meant that MEA UK managed the impact to a minimum, with one account going into administration owing £1,700. The daily sales outstanding continued to be approximately 70 days for the UK customers.
Conclusion
2023 saw the construction industry face many challenges with the intensifying of significant economic pressures. As a company we faced the external challenges and embraced our structural changes head on. The BMF stated that volume sales through builders’ merchants fell during 2023. This is in line with the performance of the wider UK economy and the effects of this on the housing market with falling volume sales dropping by -13.1%.
The impact of the housebuilding sector affected MEA UK’s turnover in 2023. Sales of our MEALINE product range in 2022 made up 21% of overall turnover whereas in 2023 only 6.4%. This result was driven by the loss of a major customer in 2022 and impacted further by the markets reduced demand for this product line. 2023 saw MEA UK pursue more lucrative routes to market achieving an increased gross profit compared to the previous year.
Looking ahead to 2024, it clearly will not be without its challenges, but the construction industry has proved to be resilient and will no doubt benefit from the boost of an upcoming election. MEA UK will utilise the foundation built in 2023 and move forward to build a stronger sales team and strive towards operational excellence.
Sales Budget 2024
By improving our service levels and putting emphasis on operational excellence, we have set a budget which is reflected below:
UK domestic turnover ... £2,171 (GPM 35%)
Mr F Vinson
Director
13 May 2024
MEA UK Limited
Directors' report
For the year ended 31 December 2023
- 3 -
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 supply of drainage channels and gratings.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr F Vinson
Mr D T Tiemann
All the directors who are eligible offer themselves for re-election at the forthcoming Annual General Meeting.
Supplier payment policy
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Auditor
In accordance with the company's articles, a resolution proposing that DJH Audit Limited be reappointed as auditor of the company will be put at a General Meeting.
Statement of disclosure to auditor
Each director in office at the date of approval of this annual report confirms that:
so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware, and
the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415a of the Companies Act 2006.
MEA UK Limited
Directors' report (continued)
For the year ended 31 December 2023
- 4 -
On behalf of the board
Mr F Vinson
Mr D T Tiemann
Director
Director
13 May 2024
MEA UK Limited
Directors' responsibilities statement
For the year ended 31 December 2023
- 5 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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, International Accounting Standard 1 requires that directors:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
make an assessment of the company's ability to continue as a going concern.
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.
MEA UK Limited
Independent auditor's report
To the members of MEA UK Limited
- 6 -
Opinion
We have audited the financial statements of MEA UK Limited (the 'company') for the year ended 31 December 2023 which comprise the income statement, 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 UK adopted international accounting standards.
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 UK adopted international accounting standards; 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 directors are responsible for the other information. The other information comprises the information included in the annual report , other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
MEA UK Limited
Independent auditor's report (continued)
To the members of MEA 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 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 directors' 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.
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 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. The extent to which our procedures are capable of detecting irregularities including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company and management.
Explanation as to what extent the audit was considered capable of detecting irregularities including fraud
We assessed the susceptibility of the company's financial statements to material misstatement including how fraud might occur. The risk of fraud associated with management override of controls is always deemed high and we performed audit procedures to address this specific risk including testing journal entries and other adjustments for appropriateness; also assessing whether judgements and assumptions used in accounting estimates were indicative of potential bias.
MEA UK Limited
Independent auditor's report (continued)
To the members of MEA UK Limited
- 8 -
Our approach was as follows
We obtained an understanding of the legal and regulatory framework that is applicable to the company and determined that the most significant having a direct material effect on the financial statements of the company include those that relate to:-
- the reporting framework IFRS; the Companies Act 2006 and UK taxation legislation
- employment and health and safety matters
We assessed how the company is complying with those frameworks by:-
- making enquiries of management
- testing to supporting documentation to assess compliance with applicable laws and regulations; and
- reviewing the financial statement disclosures together with the use of an appropriate software package to check the disclosures required by the relevant accounting standards and legislation.
A further description of our responsibilities for the audit of the financial statements is located on the website of the Financial Reporting Council at: http://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.
Desirie Lea FCA FCCA (Senior Statutory Auditor)
For and on behalf of DJH Audit Limited
11 July 2024
Accountants
Statutory Auditor
Chester House
LLoyd Drive
Ellesmere Port
Cheshire
United Kingdom
CH65 9HQ
MEA UK Limited
Income statement
For the year ended 31 December 2023
- 9 -
2023
2022
Notes
£
£
Revenue
3
2,125,150
2,412,859
Cost of sales
(1,351,007)
(1,686,973)
Gross profit
774,143
725,886
Other operating expenses
(875)
84,285
Distribution costs
(125,420)
(210,005)
Administrative expenses
(608,911)
(572,624)
Operating profit
4
38,937
27,542
Finance costs
6
(4,141)
(4,567)
Profit before taxation
34,796
22,975
Income tax expense
7
(6,643)
(3,361)
Profit and total comprehensive income for the year
28,153
19,614
The income statement has been prepared on the basis that all operations are continuing operations.
MEA UK Limited
Statement of financial position
As at 31 December 2023
- 10 -
2023
2022
Notes
£
£
Non-current assets
Property, plant and equipment
9
85,217
80,845
Deferred tax asset
17
124,702
131,345
209,919
212,190
Current assets
Inventories
11
334,892
303,476
Trade and other receivables
10
412,882
447,897
Cash and cash equivalents
170,760
36,616
918,534
787,989
Current liabilities
Trade and other payables
15
322,475
224,057
Lease liabilities
16
49,157
41,937
371,632
265,994
Net current assets
546,902
521,995
Non-current liabilities
Lease liabilities
16
41,977
47,494
Net assets
714,844
686,691
Equity
Called up share capital
19
1,000,001
1,000,001
Share premium account
20
1,409,452
1,409,452
Retained earnings
(1,694,609)
(1,722,762)
Total equity
714,844
686,691
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 13 May 2024 and are signed on its behalf by:
Mr F Vinson
Mr D T Tiemann
Director
Director
Company registration number 02854985 (England and Wales)
MEA UK Limited
Statement of changes in equity
For the year ended 31 December 2023
- 11 -
Share capital
Share premium account
Retained earnings
Total
£
£
£
£
Balance at 1 January 2022
1,000,001
1,409,452
(1,742,376)
667,077
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
19,614
19,614
Balance at 31 December 2022
1,000,001
1,409,452
(1,722,762)
686,691
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
28,153
28,153
Balance at 31 December 2023
1,000,001
1,409,452
(1,694,609)
714,844
MEA UK Limited
Statement of cash flows
For the year ended 31 December 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
24
183,477
(196,057)
Interest paid
(4,141)
(4,567)
Net cash inflow/(outflow) from operating activities
179,336
(200,624)
Investing activities
Purchase of property, plant and equipment
(46,895)
(8,592)
Net cash used in investing activities
(46,895)
(8,592)
Financing activities
Payment of lease liabilities
1,703
(28,412)
Net cash generated from/(used in) financing activities
1,703
(28,412)
Net increase/(decrease) in cash and cash equivalents
134,144
(237,628)
Cash and cash equivalents at beginning of year
36,616
274,244
Cash and cash equivalents at end of year
170,760
36,616
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information
MEA UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Rectors Lane, Pentre, Deeside, Flintshire, Wales, CH5 2DH. The company's principal activities and nature of its operations are disclosed in the directors' report.
1.1
Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.
1.2
Going concern
The company is dependent on the continued support of the parent company, MEA Bautechnik Gmbh. The accounts have been prepared on the going concern basis which assumes that this support will be forthcoming.true
1.3
Revenue
Turnover represents net invoiced sales of goods, excluding value added tax.
1.4
Goodwill
Goodwill, being the amount paid in connection with the acquisition of customer lists to generate future revenue streams, is being amortised evenly over its estimated useful life of 6 or 7 years, and has been fully amortised at 31 December 2021.
1.5
Property, plant and equipment
Property, plant and equipment 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:
Land and buildings
Straight Line over 7 years
Right of use assets
4% straight line
Plant and machinery
25%/15% on reducing balance and 20% on cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
1.6
Impairment of tangible and intangible assets
At each reporting 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.
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
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.
1.7
Inventories
Stocks are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow moving items. Stock purchased in a foreign currency is translated into sterling at the exchange rate in operation on the date on which the transaction occurred. At the year end, stock is valued on a First In First Out (F.I.F.O.) basis. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
1.8
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the company uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards.
1.9
Cash and cash equivalents
Cash and cash equivalents 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.
1.10
Financial assets
Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Loans and receivables
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 measured at fair value through profit or 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 of the investment has been affected.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
1.11
Financial liabilities
Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price. Financial liabilities classified as payable within one year are carried at face value.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and continue to be measured at face value.
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
1.12
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.13
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
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 is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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.
1.14
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.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the fair value of the assets at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position 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.
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.17
Foreign exchange
Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate ruling on the date of the transactions. Exchange differences are taken into account in arriving at the operating profit.
2
Critical accounting estimates and judgements
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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
3
Revenue
2023
2022
£
£
Revenue analysed by class of business
United Kingdom
1,891,418
2,298,122
Europe and other
233,732
114,737
2,125,150
2,412,859
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
9,155
10,085
Depreciation of property, plant and equipment
42,523
37,038
Cost of inventories recognised as an expense
1,351,007
1,686,973
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
8
8
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
5
Employees
(Continued)
- 18 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
311,719
262,596
Social security costs
42,817
45,941
Pension costs
13,304
15,649
367,840
324,186
6
Finance costs
2023
2022
£
£
Interest on lease liabilities
4,141
3,602
Other interest payable
965
Total interest expense
4,141
4,567
7
Income tax expense
2023
2022
£
£
Deferred tax
Origination and reversal of temporary differences
6,643
3,361
The charge for the year can be reconciled to the profit per the income statement as follows:
2023
2022
£
£
Profit before taxation
34,796
22,975
Expected tax charge based on a corporation tax rate of 19.00% (2022: 19.00%)
6,611
4,365
Effect of expenses not deductible in determining taxable profit
27
Unutilised tax losses carried forward
(6,131)
(4,435)
Depreciation on assets not qualifying for tax allowances
8,079
7,037
Other non-reversing timing differences
6,643
3,361
Leasing costs capitalised
(8,586)
(6,967)
Taxation charge for the year
6,643
3,361
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
8
Intangible assets
Goodwill
£
Cost
At 1 January 2022
312,637
At 31 December 2022
312,637
At 31 December 2023
312,637
Amortisation and impairment
At 1 January 2022
312,637
At 31 December 2022
312,637
At 31 December 2023
312,637
Carrying amount
At 31 December 2023
At 31 December 2022
At 31 December 2021
-
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
9
Property, plant and equipment
Land and buildings
Right of use assets
Plant and machinery
Total
£
£
£
£
Cost
At 1 January 2022
209,101
23,820
232,921
Additions
8,592
8,592
At 31 December 2022
209,101
8,592
23,820
241,513
Additions
46,895
46,895
At 31 December 2023
209,101
55,487
23,820
288,408
Accumulated depreciation and impairment
At 1 January 2022
100,240
23,390
123,630
Charge for the year
36,287
505
246
37,038
At 31 December 2022
136,527
505
23,636
160,668
Charge for the year
36,288
6,065
170
42,523
At 31 December 2023
172,815
6,570
23,806
203,191
Carrying amount
At 31 December 2023
36,286
48,917
14
85,217
At 31 December 2022
72,574
8,087
184
80,845
At 31 December 2021
108,861
-
430
109,291
10
Trade and other receivables
2023
2022
£
£
Trade receivables
405,441
433,478
Other receivables
-
904
Prepayments
7,441
13,515
412,882
447,897
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost. All receivables are classed as short term, and as such no interest is recognised.
11
Inventories
2023
2022
£
£
Finished goods
334,892
303,476
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
12
Credit risk
Credit risk arises when one party to a financial instrument causes loss for the other party by failing to discharge an obligation.
The directors consider that the carrying amount of trade and other receivables is the same as fair value and as such the exposure to credit risk is considered to be minimal.
13
Liquidity risk
Liquidity risk management
The ultimate responsibility for liquidity risk management lies with the board of directors, which has developed an appropriate liquidity management framework for the management of the company's liquidity risk. The company manages liquidity risk by maintaining inter-company borrowing facilities.
Liquidity risk arises from the company's ongoing financial obligations being amounts owed to group undertakings of £114,019 (2022 - £40,031) which is all payable within one year.
14
Market risk
Market risk management
Foreign exchange risk
Foreign exchange risk arises from the necessity to purchase goods in euros rather than sterling. As payment terms are short, the directors consider that the currency risk is low.
15
Trade and other payables
2023
2022
£
£
Trade payables
30,669
32,342
Amount owed to parent undertaking
114,019
40,032
Accruals
98,293
73,340
Social security and other taxation
77,204
78,343
Other payables
2,290
322,475
224,057
16
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
49,157
41,937
In two to five years
41,977
47,494
Total undiscounted liabilities
91,134
89,431
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
16
Lease liabilities
(Continued)
- 22 -
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
2023
2022
£
£
Current liabilities
49,157
41,937
Non-current liabilities
41,977
47,494
91,134
89,431
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
4,141
3,602
Other leasing information is included in note .
Deferred tax assets are expected to be recovered after more than one year
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Tax losses
£
Asset at 1 January 2022
(134,706)
Deferred tax movements in prior year
Charge/(credit) to profit or loss
3,361
Asset at 1 January 2023
(131,345)
Deferred tax movements in current year
Charge/(credit) to profit or loss
6,643
Asset at 31 December 2023
(124,702)
Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
13,304
15,649
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.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
1,000,001
1,000,001
1,000,001
1,000,001
20
Share premium account
2023
2022
£
£
At the beginning and end of the year
1,409,452
1,409,452
21
Capital risk management
The company is not subject to any externally imposed capital requirements.
22
Related party transactions
During the year the company entered into the following transactions with related parties:
Sale of goods
Purchase of goods
2023
2022
2023
2022
£
£
£
£
Parent company
140,356
41,750
259,123
487,521
Included within purchase of goods were administrative costs of £140,356 (2022 - £41,750) and interest charges of £nil (2022 - £965).
2023
2022
Amounts due to related parties
£
£
Parent company
114,019
40,031
MEA UK LIMITED
MEA UK Limited
Notes to the financial statements (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
23
Controlling party
MEA Bautechnik GmbH has the direct interest by virtue of its 100% shareholding.
The ultimate controlling party is Adcuram Invest GmbH.
24
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit for the year before income tax
34,796
22,975
Adjustments for:
Finance costs
4,141
4,567
Depreciation and impairment of property, plant and equipment
42,523
37,038
Movements in working capital:
Increase in inventories
(31,416)
(45,810)
Decrease in trade and other receivables
35,015
73,966
Increase/(decrease) in trade and other payables
98,418
(288,793)
Cash generated from/(absorbed by) operations
183,477
(196,057)
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