Company registration number 00894340 (England and Wales)
MERGON UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
MERGON UK LIMITED
COMPANY INFORMATION
Directors
Mr P Wareing
Mr T Mullen
Ms A Beirne
Mr S O'Keeffe
Mr P S Mcginn
(Appointed 17 November 2023)
Company number
00894340
Registered office
Centurion Way, Roman Road Industrial Estate
Roman Road
Blackburn
BB1 2LD
Auditor
MHA
Richard House
9 Winckley Square
Preston
PR1 3HP
MERGON UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 22
MERGON UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -

The directors present the strategic report for the year ended 31 March 2024.

Review of the business

The business continues a strategy of customer and product diversification to mitigate the risks associated with significant customer dependence. The main risks to achieving the business strategy are continually assessed by the directors and actions taken to mitigate wherever necessary.

Principal risks and uncertainties

The ongoing disruptions to the supply chain and the employment market caused by Brexit and the Russian invasion of Ukraine continue to present challenges to the business.

 

Significant inflationary pressures have also been experienced of late although the impact of these has now started to decrease.

 

These remain significant risks to the business as does the inherent risk of price escalation and availability of material supplies, which although not currently evident are at the start of the new period once again becoming evident.

 

The business will mitigate any financial risk of these by increased customer pricing as appropriate with the understanding that this in itself is a risk to the continuation of current customer activity levels.

Development and performance

Since it’s acquisition by Westcastle Topco Limited and as part of the Mergon Group of companies, a global leader in plastics manufacturing with operations in Ireland, USA, Czechia and Mexico, the company has enhanced its capabilities and management processes to further enable the business to withstand the inherent risks within the market place and develop the profitability and stability of the company.

Key performance indicators

 

 

 

 

With ongoing global pressures the business seeks to continue to strengthen its position and to build on previous improvements to maintain profitability in the coming year and the directors continue to be confident that this can be achieved.

Other performance indicators

The continued welfare and safety of all employees is of major importance to the business. The company achieved the Health and Safety standard ISO 45001 (formerly ISO 18000) a number of years ago. This has been a significant influence in the setting of internal processes and controls targeted at annual reductions in the occurrence of employee accidents or injury.

 

MERGON UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -

On behalf of the board

Mr P Wareing
Director
26 July 2024
MERGON UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -

The directors present their annual report and financial statements for the year ended 31 March 2024.

Principal activities

The principal activity of the company continued to be the manufacture and supply of blow moulded plastic items.

Results and dividends

The results for the year are set out on page 8.

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 P Wareing
Mr P Beirne
(Resigned 17 November 2023)
Mr T Mullen
Ms A Beirne
Mr S O'Keeffe
Mr P S Mcginn
(Appointed 17 November 2023)
Auditor

Following the merger of MHA Moore & Smalley with MHA, the company's independent auditor has now become MHA. A resolution to reappoint MHA as independent auditor will be proposed at the next Annual General Meeting.

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.

On behalf of the board
Mr P Wareing
Mr S O'Keeffe
Director
Director
26 July 2024
MERGON UK LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
- 4 -

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:

 

 

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.

MERGON UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MERGON UK LIMITED
- 5 -
Opinion

We have audited the financial statements of Mergon UK Limited (the 'company') for the year ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the 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.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

MERGON UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MERGON UK LIMITED (CONTINUED)
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

 

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.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of 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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:

MERGON UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MERGON UK LIMITED (CONTINUED)
- 7 -

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's 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.

Paul Locker BSc(Hons) FCA
Senior Statutory Auditor
For and on behalf of MHA, Statutory Auditor
Preston, United Kingdom
26 July 2024
2024-07-26
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)
MERGON UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
18,293,048
13,346,590
Cost of sales
(14,688,305)
(10,700,235)
Gross profit
3,604,743
2,646,355
Distribution costs
(271,953)
(211,523)
Administrative expenses
(2,689,041)
(2,227,542)
Operating profit
4
643,749
207,290
Interest payable and similar expenses
7
(140,366)
(47,284)
Profit before taxation
503,383
160,006
Tax on profit
8
(127,082)
(28,870)
Profit for the financial year
376,301
131,136

The profit and loss account has been prepared on the basis that all operations are continuing operations.

MERGON UK LIMITED
BALANCE SHEET
AS AT
31 MARCH 2024
31 March 2024
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
9
2,391,699
2,556,723
Current assets
Stocks
10
2,417,238
1,840,246
Debtors
11
4,965,193
4,805,580
Cash at bank and in hand
731,719
601,752
8,114,150
7,247,578
Creditors: amounts falling due within one year
12
(5,442,050)
(5,243,885)
Net current assets
2,672,100
2,003,693
Total assets less current liabilities
5,063,799
4,560,416
Provisions for liabilities
Deferred tax liability
14
407,490
280,408
(407,490)
(280,408)
Net assets
4,656,309
4,280,008
Capital and reserves
Called up share capital
16
1,371,250
1,371,250
Share premium account
2,965
2,965
Profit and loss reserves
3,282,094
2,905,793
Total equity
4,656,309
4,280,008

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 26 July 2024 and are signed on its behalf by:
Mr P  Wareing
Mr S  O'Keeffe
Director
Director
Company registration number 00894340 (England and Wales)
MERGON UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 April 2022
1,371,250
2,965
2,774,657
4,148,872
Year ended 31 March 2023:
Profit and total comprehensive income
-
-
131,136
131,136
Balance at 31 March 2023
1,371,250
2,965
2,905,793
4,280,008
Year ended 31 March 2024:
Profit and total comprehensive income
-
-
376,301
376,301
Balance at 31 March 2024
1,371,250
2,965
3,282,094
4,656,309
MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 11 -
1
Accounting policies
Company information

Mergon UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Centurion Way, Roman Road Industrial Estate, Roman Road, Blackburn, BB1 2LD.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Westcastle Topco Limited. These consolidated financial statements are available from The International Stock Exchange Group, Tisegroup.com.

1.2
Going concern

The directors have considered all known relevant factors in preparing forecasts based on different scenarios which indicate that there are no material uncertainties over there being sufficient funds in place to meet all known liabilities as they are projected to fall due for payment over the next 12 months.true

 

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised as 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.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 12 -

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Plant and machinery
5 - 25 years straight line
Fixtures, fittings, tools and equipment
4 - 12 years straight line
Motor vehicles
4 years straight line
Moulds
12 years 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.

1.5
Impairment of fixed assets

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

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

 

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

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

1.6
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 held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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.

MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 13 -
1.7
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.8
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's 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 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.

MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 14 -
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 and bank loans, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

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

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

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

1.9
Equity instruments

Equity instruments issued by the company are recorded as the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.10
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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.

MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 15 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated using the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.11
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.12
Retirement benefits

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

1.13
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.

1.14
Foreign exchange

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

MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 16 -
2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Provision for slow moving and obsolete stock

The provision is calculated on an individual stock line basis, with due regard to previous and expected stock movements. The provision is reviewed and updated at each reporting date.

Provision for engineering stock

The provision is calculated as a proportion of total engineering stock, on the basis that the stock is slow moving, given its nature being for repairs of machinery that are rarely replaced. The provision is reviewed and updated at each reporting date.

MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 17 -
3
Turnover
2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
15,459,251
12,369,631
Export
2,833,797
976,959
18,293,048
13,346,590
4
Operating profit
2024
2023
Operating profit for the year is stated after charging:
£
£
Exchange losses
11,151
15,442
Fees payable to the company's auditor for the audit of the company's financial statements
13,500
12,700
Depreciation of owned tangible fixed assets
239,912
216,378
Depreciation of tangible fixed assets held under finance leases
-
13,806
5
Employees

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

2024
2023
Number
Number
Production
127
107
Selling, distribution and administration
20
16
Total
147
123

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
4,901,243
3,587,898
Social security costs
463,769
346,462
Pension costs
164,941
140,261
5,529,953
4,074,621
MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 18 -
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
96,785
100,050
Company pension contributions to defined contribution schemes
8,227
7,835
105,012
107,885

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2023 - 1).

7
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
140,366
47,284
8
Taxation
2024
2023
£
£
Deferred tax
Origination and reversal of timing differences
127,082
21,941
Changes in tax rates
-
0
6,929
Total deferred tax
127,082
28,870

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:

2024
2023
£
£
Profit before taxation
503,383
160,006
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
125,846
30,401
Tax effect of expenses that are not deductible in determining taxable profit
1,236
677
Effect of change in corporation tax rate
-
0
6,929
Super deduction
-
0
(9,137)
Taxation charge for the year
127,082
28,870
MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 19 -
9
Tangible fixed assets
Plant and machinery
Fixtures, fittings, tools and equipment
Motor vehicles
Moulds
Total
£
£
£
£
£
Cost
At 1 April 2023
10,678,532
686,912
18,049
572,114
11,955,607
Additions
41,148
33,740
-
0
-
0
74,888
At 31 March 2024
10,719,680
720,652
18,049
572,114
12,030,495
Depreciation and impairment
At 1 April 2023
8,225,368
630,842
18,049
524,625
9,398,884
Depreciation charged in the year
207,416
19,882
-
0
12,614
239,912
At 31 March 2024
8,432,784
650,724
18,049
537,239
9,638,796
Carrying amount
At 31 March 2024
2,286,896
69,928
-
0
34,875
2,391,699
At 31 March 2023
2,453,164
56,070
-
0
47,489
2,556,723
10
Stocks
2024
2023
£
£
Raw materials and consumables
1,565,772
1,325,373
Finished goods and goods for resale
851,466
514,873
2,417,238
1,840,246
11
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
3,861,844
3,105,827
Amounts owed by group undertakings
805,899
1,484,723
Other debtors
5,809
-
0
Prepayments and accrued income
291,641
215,030
4,965,193
4,805,580
MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 20 -
12
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Obligations under finance leases
13
-
0
11,463
Trade creditors
2,062,923
2,327,347
Taxation and social security
444,129
428,573
Other creditors
2,018,217
1,822,877
Accruals and deferred income
916,781
653,625
5,442,050
5,243,885

Included within other creditors are amounts advanced under invoice discounting arrangements of £1,897,148 (2023: £1,669,429). The facility within other creditors is secured by a charge over the company’s book debts.

13
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
-
0
11,574
Less: future finance charges
-
0
(111)
-
0
11,463

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

14
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
448,827
459,496
Tax losses
(33,150)
(172,925)
Other short term timing differences
(8,187)
(6,163)
407,490
280,408
MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
14
Deferred taxation
(Continued)
- 21 -
2024
Movements in the year:
£
Liability at 1 April 2023
280,408
Charge to profit or loss
127,082
Liability at 31 March 2024
407,490

 

15
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
164,941
140,261

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

 

At the reporting date £27,508 (2023: £25,952) is included in other creditors.

16
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
1,371,250
1,371,250
1,371,250
1,371,250
17
Operating lease commitments

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:

2024
2023
£
£
Within one year
440,996
423,179
Between two and five years
1,214,460
1,500,122
1,655,456
1,923,301
18
Related party transactions

As a wholly owned subsidiary of Westcastle Topco Limited the directors have taken advantage of the exemption in FRS 102, Section 33 and have not disclosed related party transactions with other wholly-owned group undertakings.

MERGON UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 22 -
19
Ultimate controlling party

The parent company is Westcastle Topco Limited, a company incorporated in Jersey (registration number 130255). Its registered address is 22 Grenville Street, St Helier, Jersey, Channel Islands, JE4 8PX.

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