Company registration number 02632823 (England and Wales)
MECHLINE DEVELOPMENTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
MECHLINE DEVELOPMENTS LIMITED
COMPANY INFORMATION
Directors
P Galliford
A Farrell
C Small
N Falco
Secretary
A Farrell
Company number
02632823
Registered office
One Brudenell Drive
Brinklow
Milton Keynes
Buckinghamshire
MK10 0DE
Auditor
Mercer & Hole LLP
The Pinnacle
170 Midsummer Boulevard
Milton Keynes
Buckinghamshire
MK9 1BP
MECHLINE DEVELOPMENTS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 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
MECHLINE DEVELOPMENTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2024
- 1 -
The directors present the strategic report for the year ended 31 July 2024.
Fair review of the business
The financial year ending 31st July 2024, saw a small increase in revenue of 1.7% (2023 - 8%), a result of a continued emphasis on high standards of quality and customer service.
Following the significant efforts we have made in cost management and continuous improvement, 2024 sees us a step closer to the historical average profitability achieved prior to the Covid-19 pandemic.
Principal risks and uncertainties
The company maintains a comprehensive risk register, which is reviewed periodically by the senior management team and suitable mitigating strategies are actioned where appropriate. A summary of the principal risks, are detailed below.
A downturn in economic conditions and increased employment costs could lead to the closure of end user customer sites which will limit our customer market and delay possible projects.
Mechline Developments sales pipeline is across a diversified range of sectors and is further diversifying in other countries. The company also has cash reserves and lending facilities to support it through downturns should they occur.
Significant changes in foreign exchange rates could lead to unstable pricing of imported components. Primary exposure is limited by reasonable levels of inventory with additional products and components and sustainability driving new product development being sourced from more local manufacturers.
Market risk
Market risk encompasses two types of risk, being currency risk and interest rate risk. The company does not ordinarily enter into derivative transactions such as currency or interest rate swaps, as the directors consider the risk is adequately managed without the use of such instruments. The currency rate is further mitigated by the increasing volume of international business and selling and receiving funds in Euros and US dollars. However, the directors will continue to monitor these risks and the appropriateness of such instruments.
Credit risk
The company continues to trade with reputable companies with long term trading relationships and trading history. Risk is further mitigated by a stringent credit control process.
Despite the difficult economic conditions the company has suffered limited exposure to bad debts. The directors are confident that the procedures in place and the constant vigilance of the credit control team will ensure that the company’s exposure is minimised.
Liquidity risk
The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
Key performance indicators
Mechline Developments reviews and monitors business performance through a number of KPI’s, such as financial performance, customer satisfaction, quality performance, operational efficiency and sustainability. Principal among these are the measures of sales and profitability.
MECHLINE DEVELOPMENTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 2 -
Key performance indicators (continued)
Sales at £11.0m were up from £10.8m in the prior year. The company made an operating profit in the current year as a result of cost management and continuous improvement.
2024 2023 Change
£’000 £’000 %
Turnover 11,007 10,825 1.7%
Gross profit 4,416 4,086 8.1%
Operating profit 1,439 1,088 32.3%
Another key performance indicator is considered to be employee productivity and efficiency, where performance against revenue, gross profit and profit before tax per employee are reviewed:
2024 2023 Change Pre-Covid
£’000 £’000 % £’000
Turnover 229 216 6% 200
Gross Profit 92 82 12% 95
Profit before tax 31 22 41% 39
C Small
Director
10 March 2025
MECHLINE DEVELOPMENTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2024
- 3 -
The directors present their annual report and financial statements for the year ended 31 July 2024.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £629,500. 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:
P Galliford
A Farrell
C Small
N Falco
Auditor
The auditor, Mercer & Hole LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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; and
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.
MECHLINE DEVELOPMENTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
C Small
Director
10 March 2025
MECHLINE DEVELOPMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MECHLINE DEVELOPMENTS LIMITED
- 5 -
Opinion
We have audited the financial statements of Mechline Developments Limited (the 'company') for the year ended 31 July 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:
give a true and fair view of the state of the company's affairs as at 31 July 2024 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.
MECHLINE DEVELOPMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MECHLINE DEVELOPMENTS LIMITED (CONTINUED)
- 6 -
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.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. These included, but were not limited to, the Companies Act 2006 and tax legislation.
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure and management bias in accounting estimates.
Audit procedures performed by the engagement team included:
discussions with management, including considerations of known or suspected instances of non- compliance with laws and regulations and fraud;
gaining an understanding of management's controls designed to prevent and detect irregularities; and
identifying and testing journal entries.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non- compliance and cannot be expected to detect non-compliance with all laws and regulations.
MECHLINE DEVELOPMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MECHLINE DEVELOPMENTS LIMITED (CONTINUED)
- 7 -
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.
Andrew Lawes MA MSc FCA (Senior Statutory Auditor)
For and on behalf of Mercer & Hole LLP, Statutory Auditor
Chartered Accountants
The Pinnacle
170 Midsummer Boulevard
Milton Keynes
Buckinghamshire
MK9 1BP
11 March 2025
MECHLINE DEVELOPMENTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2024
- 8 -
2024
2023
£
£
Turnover
2
11,007,030
10,824,531
Cost of sales
(6,591,094)
(6,738,983)
Gross profit
4,415,936
4,085,548
Administrative expenses
(2,977,251)
(2,997,363)
Operating profit
3
1,438,685
1,088,185
Interest receivable and similar income
7
43,540
10,634
Interest payable and similar expenses
8
(15,564)
(16,337)
Profit before taxation
1,466,661
1,082,482
Tax on profit
9
(291,564)
(143,193)
Profit for the financial year
1,175,097
939,289
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MECHLINE DEVELOPMENTS LIMITED
BALANCE SHEET
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Intangible assets
11
19,673
25,163
Tangible assets
12
283,521
358,009
303,194
383,172
Current assets
Stocks
13
2,060,198
3,030,313
Debtors
14
7,632,273
7,651,922
Cash at bank and in hand
3,475,337
1,596,974
13,167,808
12,279,209
Creditors: amounts falling due within one year
15
(1,726,958)
(1,466,468)
Net current assets
11,440,850
10,812,741
Total assets less current liabilities
11,744,044
11,195,913
Provisions for liabilities
Provisions
16
189,300
175,800
Deferred tax liability
17
24,529
35,495
(213,829)
(211,295)
Net assets
11,530,215
10,984,618
Capital and reserves
Called up share capital
19
230,230
230,230
Share premium account
20
116,681
116,681
Capital redemption reserve
20
144,814
144,814
Profit and loss reserves
20
11,038,490
10,492,893
Total equity
11,530,215
10,984,618
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 10 March 2025 and are signed on its behalf by:
C Small
Director
Company registration number 02632823 (England and Wales)
MECHLINE DEVELOPMENTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2024
- 10 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 August 2022
230,230
116,681
144,814
10,357,604
10,849,329
Year ended 31 July 2023:
Profit and total comprehensive income
-
-
-
939,289
939,289
Dividends
10
-
-
-
(804,000)
(804,000)
Balance at 31 July 2023
230,230
116,681
144,814
10,492,893
10,984,618
Year ended 31 July 2024:
Profit and total comprehensive income
-
-
-
1,175,097
1,175,097
Dividends
10
-
-
-
(629,500)
(629,500)
Balance at 31 July 2024
230,230
116,681
144,814
11,038,490
11,530,215
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
- 11 -
1
Accounting policies
Company information
Mechline Developments Limited is a private company limited by shares incorporated in England and Wales. The registered office is One Brudenell Drive, Brinklow, Milton Keynes, Buckinghamshire, MK10 0DE.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Mechline Holdings Limited. These consolidated financial statements are available from its registered office,
1.2
Going concern
The financial statements have been prepared on a going concern basis. In making this assessment, the directors have prepared detailed trading and cash flow forecasts to 31 July 2026. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence over this period and have therefore adopted the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Revenue is recognised to the extent that the company obtains the right to consideration in exchange for its performance. Revenue is measured at the fair value of the consideration receivable, excluding discounts, rebates and value added tax. 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 delivery of the goods.
1.4
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.
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
1
Accounting policies
(Continued)
- 12 -
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
Over the estimated useful life of 5 years
1.5
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:
Leasehold improvements
Straight line over the life of the lease
Plant and machinery
20% Straight line
Fixtures, fittings & equipment
20% Straight line
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.
1.6
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.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
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.
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
1
Accounting policies
(Continued)
- 13 -
1.8
Cash at bank and in hand
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.
1.9
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.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
1
Accounting policies
(Continued)
- 14 -
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 receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
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.
1.11
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
1
Accounting policies
(Continued)
- 15 -
1.12
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.13
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.
1.14
Retirement benefits
The pension costs in the financial statements represent the contribution payable by the company during the year.
1.15
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
1.16
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.17
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.
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 16 -
2
Turnover and other revenue
An analysis of the company's turnover is as follows:
2024
2023
£
£
Turnover analysed by class of business
Sales of products
11,007,030
10,824,531
2024
2023
£
£
Turnover analysed by geographical market
UK
10,001,798
10,117,097
Europe
522,678
495,452
Rest of the world
482,554
211,982
11,007,030
10,824,531
2024
2023
£
£
Other revenue
Interest income
43,540
10,634
3
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
63,759
25,249
Depreciation of owned tangible fixed assets
82,766
102,642
Loss/(profit) on disposal of tangible fixed assets
5,128
(25,221)
Amortisation of intangible assets
5,490
2,287
Operating lease charges
222,787
212,080
4
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
20,000
19,500
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Sales and administration
48
50
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
2,041,756
2,163,530
Social security costs
221,161
240,811
Pension costs
109,866
36,907
2,372,783
2,441,248
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
530,345
637,603
Company pension contributions to defined contribution schemes
76,794
5,284
607,139
642,887
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2023 - 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
225,044
216,516
Company pension contributions to defined contribution schemes
1,321
1,321
7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
43,540
10,634
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 18 -
8
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
15,564
16,337
9
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
292,724
147,435
Adjustments in respect of prior periods
9,806
Total current tax
302,530
147,435
Deferred tax
Origination and reversal of timing differences
(10,966)
(4,242)
Total tax charge
291,564
143,193
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
1,466,661
1,082,482
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 21.01%)
366,665
227,429
Tax effect of expenses that are not deductible in determining taxable profit
7,992
3,725
Effect of change in corporation tax rate
(678)
Research and development tax credit
(92,899)
(87,283)
Under/(over) provided in prior years
9,806
Taxation for the year
291,564
143,193
10
Dividends
2024
2023
£
£
Interim paid
629,500
804,000
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 19 -
11
Intangible fixed assets
Software
£
Cost
At 1 August 2023 and 31 July 2024
27,450
Amortisation and impairment
At 1 August 2023
2,287
Amortisation charged for the year
5,490
At 31 July 2024
7,777
Carrying amount
At 31 July 2024
19,673
At 31 July 2023
25,163
12
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 August 2023
324,165
474,486
121,853
217,594
1,138,098
Additions
13,406
13,406
Disposals
(14,750)
(14,750)
At 31 July 2024
324,165
474,486
120,509
217,594
1,136,754
Depreciation and impairment
At 1 August 2023
131,910
461,518
76,794
109,867
780,089
Depreciation charged in the year
22,103
11,346
10,656
38,661
82,766
Eliminated in respect of disposals
(9,622)
(9,622)
At 31 July 2024
154,013
472,864
77,828
148,528
853,233
Carrying amount
At 31 July 2024
170,152
1,622
42,681
69,066
283,521
At 31 July 2023
192,255
12,968
45,059
107,727
358,009
13
Stocks
2024
2023
£
£
Finished goods and goods for resale
2,060,198
3,030,313
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 20 -
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
2,151,432
2,031,791
Amounts due from fellow group undertakings
5,254,650
5,443,500
Other debtors
19,608
5,305
Prepayments and accrued income
206,583
171,326
7,632,273
7,651,922
15
Creditors: amounts falling due within one year
2024
2023
£
£
Bank loans and overdrafts
64,650
Trade creditors
565,486
481,867
Corporation tax
292,697
147,401
Other taxation and social security
456,876
445,451
Other creditors
300,864
218,985
Accruals and deferred income
111,035
108,114
1,726,958
1,466,468
16
Provisions for liabilities
2024
2023
£
£
Dilapidations provision
162,600
145,800
Warranty provision
26,700
30,000
189,300
175,800
Movements on provisions:
Dilapidations provision
Warranty provision
Total
£
£
£
At 1 August 2023
145,800
30,000
175,800
Additional provisions in the year
16,800
-
16,800
Utilisation of provision
-
(3,300)
(3,300)
At 31 July 2024
162,600
26,700
189,300
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 21 -
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
24,529
35,495
2024
Movements in the year:
£
Liability at 1 August 2023
35,495
Credit to profit or loss
(10,966)
Liability at 31 July 2024
24,529
The deferred tax liability set out above is expected to reverse within 5 years and relates to accelerated capital allowances that are expected to mature within the same period.
18
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
109,866
36,907
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
2024
2023
£
£
Ordinary share capital
Issued and fully paid
460,373 Ordinary shares of 50p each
230,186
230,186
88 "A" Ordinary shares of 50p each
44
44
230,230
230,230
During 2019 options over 3,500 Ordinary shares of £1 each and 7 Ordinary B shares of £1 each were granted by Mechline Holdings Limited, the company's parent undertaking, to certain employees of the company at an option price of £1 per share. The options can be exercised after 9.5 years or on a sale or flotation of Mechline Holdings Limited if earlier. Based on conditions at 31 July 2024, no material share based payments charge arises in the current year.
MECHLINE DEVELOPMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
- 22 -
20
Reserves
Share premium
This reserve records the amount above the nominal value received for shares sold.
Profit and loss reserves
This reserve includes all current and prior period retained profits and losses.
Capital redemption reserve
This reserve records the nominal value of shares repurchased by the company.
21
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:
2024
2023
£
£
Within one year
231,428
232,032
Between two and five years
387,567
615,801
618,995
847,833
22
Ultimate controlling party
The company's immediate and ultimate parent undertaking is Mechline Holdings Limited.
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