Company registration number 01841649 (England and Wales)
McNealy Brown Limited
Annual Report And Financial Statements
For The Year Ended 31 July 2024
McNealy Brown Limited
Company Information
Directors
Mr R P Brown
Mr V G McNealy
Company number
01841649
Registered office
Units 14-17 Craft Marsh Trading Estate
Gas Road
Sittingbourne
Kent
ME10 2QB
Auditor
Loucas
The Carriage House
Mill Street
Maidstone
Kent
ME15 6YE
Business address
Units 14-17 Craft Marsh Trading Estate
Gas Road
Sittingbourne
Kent
ME10 2QB
Bankers
Natwest
65 Peckham High Street
London
SE15 5RZ
McNealy Brown Limited
Contents
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 20
McNealy Brown Limited
Strategic Report
For The Year Ended 31 July 2024
Page 1
The directors present the strategic report for the year ended 31 July 2024.
Fair review of the business
McNealy Brown Ltd operates within the construction industry sector, it manufactures and installs structural steelwork and architectural metalwork to a wide range of customers including the rail industry, London Underground and major construction projects.
The company places significant importance on Quality Assurance (Being ISO 9001 accredited) and recognises the importance of training and compliance with Health & Safety and Environmental requirements.
The company has a stable workforce and acknowledges the importance of keeping employees informed about all matters relating to the business and their welfare.
Despite the fall in turnover the Directors were pleased with the level of profit generated and the strong cash position at the year end. Performance for year ended 31st July 2025 is expected to return to 2023 levels given the strength of the company’s order book.
Principal risks and uncertainties
The ongoing economic slowdown effecting the UK and its impact on public and private funded investment in UK construction projects remains the key risk. In order to minimise this risk the company continues to seek and develop new working relationships within the industry.
The directors consider proper risk management to be crucial to the group's future success and give a high priority to ensuring that adequate systems and structures are in place to measure, analyse and limit exposure to risk. The directors have established key procedures to ensure that internal controls are effective and are commensurate with a group of this size. A key control is the day to day supervision of the business by the directors. Other internal controls continue to be developed.
Key performance indicators
In the light of market conditions, the key performance indicators used by the company are turnover per production employee, gross profit per production employee and gross margin percentage.
2024
2023
Turnover per production employee
253,800
289,122
Gross profit per production employee
32,867
39,823
Gross margin percentage
12.95%
13.77%
Mr R P Brown
Director
24 April 2025
McNealy Brown Limited
Directors' Report
For The Year Ended 31 July 2024
Page 2
The directors present their annual report and financial statements for the year ended 31 July 2024.
Principal activities
The principal activity of the company continued to be that of specialist fabricators and architectural metalworkers.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £90,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr R P Brown
Mr V G McNealy
Auditor
The auditor, Loucas, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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 R P Brown
Director
24 April 2025
McNealy Brown Limited
Directors' Responsibilities Statement
For The Year Ended 31 July 2024
Page 3
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.
McNealy Brown Limited
Independent Auditor's Report
To The Member Of McNealy Brown Limited
Page 4
Opinion
We have audited the financial statements of McNealy Brown Limited (the 'company') for the year ended 31 July 2024 which comprise the profit and loss account, 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.
McNealy Brown Limited
Independent Auditor's Report (Continued)
To The Member Of McNealy Brown Limited
Page 5
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements, including how fraud may occur by enquiring of management's own consideration of fraud. In particular we assessed whether judgements made in making accounting estimates are indicative of potential bias, and evaluated the business rationale of significant transactions outside the normal course of business. We also addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and other adjustments. We also considered potential financial or other pressures, opportunities and motivations for fraud. As part of discussions with management we identified the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations and how management monitor these processes.
We obtained an understanding of the legal and regulatory environment applicable to the company and established the most relevant laws and regulations are FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice), Companies Act 2006, direct and indirect taxation legislation in the United Kingdom, and operational laws and regulations including health and safety, employment law, anti-money laundering, anti-bribery and corruption, and GDPR rules.
Additionally we also identified ISO 9001, ISO 14001, ISO 45001 and RISQS as being regulations that could reasonably be expected to have a material effect on the financial statements. This has been identified through our experience of the sector in which the entity operates, and through discussions with the directors and management.
McNealy Brown Limited
Independent Auditor's Report (Continued)
To The Member Of McNealy Brown Limited
Page 6
We considered the extent of compliance with these laws and regulations as part of our procedures on the related financial statement lines. We made enquiries of management with regards to compliance with the above laws and regulations and corroborated any necessary evidence, for example, review and inspection of legal invoices and correspondence with the relevant authorities and the entity's solicitors. With regards to ISO 9001, ISO 14001, ISO 45001 and RISQS we also reviewed inspection documents from audits carried out by external auditors, Alcumus ISOQAR and the Railway Industry Supplier Qualification Scheme.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that 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, misrepresentation or through collusion. There are inherent limitations in the audit procedures performed as non-compliance with laws and regulations may not necessarily be reflected in transactions reported in the financial statements, and therefore we may be less likely to become aware of it. Management and those charged with governance of the entity have the primary responsibility for the prevention and detection of fraud.
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 member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
Mr Athos Louca FCCA, ICPAC
Senior Statutory Auditor
For and on behalf of Loucas
28 April 2025
Chartered Certified Accountants
Statutory Auditor
The Carriage House
Mill Street
Maidstone
Kent
ME15 6YE
McNealy Brown Limited
Profit And Loss Account
For The Year Ended 31 July 2024
Page 7
2024
2023
Notes
£
£
Turnover
3
12,436,181
13,877,863
Cost of sales
(10,825,673)
(11,966,367)
Gross profit
1,610,508
1,911,496
Administrative expenses
(1,364,715)
(1,469,264)
Operating profit
4
245,793
442,232
Interest receivable and similar income
6
20,062
700
Profit before taxation
265,855
442,932
Tax on profit
7
(77,448)
(31,676)
Profit for the financial year
188,407
411,256
The profit and loss account has been prepared on the basis that all operations are continuing operations.
McNealy Brown Limited
Statement Of Comprehensive Income
For The Year Ended 31 July 2024
Page 8
2024
2023
£
£
Profit for the year
188,407
411,256
Other comprehensive income
-
-
Total comprehensive income for the year
188,407
411,256
McNealy Brown Limited
Balance Sheet
As At 31 July 2024
Page 9
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
10
22,666
23,333
Current assets
Stocks
11
230,895
138,303
Debtors
12
3,007,293
3,289,720
Cash at bank and in hand
1,853,912
988,462
5,092,100
4,416,485
Creditors: amounts falling due within one year
13
(3,724,104)
(3,147,563)
Net current assets
1,367,996
1,268,922
Net assets
1,390,662
1,292,255
Capital and reserves
Called up share capital
15
2,000
2,000
Profit and loss reserves
1,388,662
1,290,255
Total equity
1,390,662
1,292,255
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 28 April 2025 and are signed on its behalf by:
Mr V G McNealy
Director
Company registration number 01841649 (England and Wales)
McNealy Brown Limited
Statement Of Changes In Equity
For The Year Ended 31 July 2024
Page 10
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 August 2022
2,000
1,078,004
1,080,004
Year ended 31 July 2023:
Profit and total comprehensive income
-
411,256
411,256
Dividends
8
-
(199,005)
(199,005)
Balance at 31 July 2023
2,000
1,290,255
1,292,255
Year ended 31 July 2024:
Profit and total comprehensive income
-
188,407
188,407
Dividends
8
-
(90,000)
(90,000)
Balance at 31 July 2024
2,000
1,388,662
1,390,662
McNealy Brown Limited
Notes To The Financial Statements
For The Year Ended 31 July 2024
Page 11
1
Accounting policies
Company information
McNealy Brown Limited is a private company limited by shares incorporated in England and Wales. The registered office is Units 14-17 Craft Marsh Trading Estate, Gas Road, Sittingbourne, Kent, ME10 2QB.
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 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 33 'Related Party Disclosures': Disclosure of key management personnel compensation;
The financial statements of the company are consolidated in the financial statements of McNealy Brown Group Ltd. These consolidated financial statements are available from its registered office, Units 14-17 Craft Marsh Trading Estate, Gas Road, Sittingbourne, Kent, ME10 2QB.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Revenue comprises sales of goods or services provided to customers net of value added tax and other sales taxes, less an appropriate deduction for actual and expected returns and discounts. Revenue is recognised when performance obligations are satisfied and the control of goods or services is transferred to the buyer. Where the performance obligation is satisfied over time, revenue is recognised in accordance with its progress towards complete satisfaction of that performance obligation.
When cash inflows are deferred and represent a financing arrangement, the promised consideration is adjusted for the effects of the time value of money, which is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
1
Accounting policies
(Continued)
Page 12
1.4
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
Over the period of the lease
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 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.
1.6
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.
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
1
Accounting policies
(Continued)
Page 13
1.7
Construction contracts
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.
1.8
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.
1.9
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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
1
Accounting policies
(Continued)
Page 14
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
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, including interest rate swaps and forward foreign exchange contracts, 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.
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
1
Accounting policies
(Continued)
Page 15
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.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
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.
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
Page 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.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2024
2023
£
£
Turnover analysed by class of business
Sales
12,436,181
13,877,863
2024
2023
£
£
Other revenue
Interest income
20,062
700
4
Operating profit
2024
2023
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
8,925
9,100
Depreciation of owned tangible fixed assets
667
666
Operating lease charges
288,717
234,000
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Directors
2
2
Managers
46
47
Administrative labour
2
1
Productive labour
49
48
Total
99
98
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
5
Employees
(Continued)
Page 17
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
4,555,839
4,668,422
Social security costs
507,064
539,726
Pension costs
109,663
101,663
5,172,566
5,309,811
6
Interest receivable and similar income
2024
2023
£
£
Interest income
Other interest income
20,062
700
7
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
77,448
80,806
Adjustments in respect of prior periods
(49,130)
Total current tax
77,448
31,676
The applicable tax rate has increased from 19% in 2023 to 25% in 2024. This is in accordance with rates set by HM Revenue & Customs.
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
265,855
442,932
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
66,464
84,157
Tax effect of expenses that are not deductible in determining taxable profit
10,984
1,506
Tax effect of utilisation of tax losses not previously recognised
(12,572)
Adjustments in respect of prior years
(49,130)
Effect of change in corporation tax rate
7,715
Taxation charge for the year
77,448
31,676
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
Page 18
8
Dividends
2024
2023
£
£
Final paid
90,000
199,005
9
Intangible fixed assets
Goodwill
£
Cost
At 1 August 2023 and 31 July 2024
10,000
Amortisation and impairment
At 1 August 2023 and 31 July 2024
10,000
Carrying amount
At 31 July 2024
At 31 July 2023
10
Tangible fixed assets
Leasehold improvements
£
Cost
At 1 August 2023 and 31 July 2024
328,199
Depreciation and impairment
At 1 August 2023
304,866
Depreciation charged in the year
667
At 31 July 2024
305,533
Carrying amount
At 31 July 2024
22,666
At 31 July 2023
23,333
11
Stocks
2024
2023
£
£
Work in progress
216,745
124,953
Finished goods and goods for resale
14,150
13,350
230,895
138,303
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
Page 19
12
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
2,144,685
2,486,801
Gross amounts owed by contract customers
215,811
162,939
Other debtors
143,782
164,585
Prepayments and accrued income
412,554
343,845
2,916,832
3,158,170
2024
2023
Amounts falling due after more than one year:
£
£
Trade debtors
90,461
131,550
Total debtors
3,007,293
3,289,720
13
Creditors: amounts falling due within one year
2024
2023
£
£
Payments received on account
1,345,502
919,672
Trade creditors
784,653
980,999
Amounts owed to group undertakings
1,046,732
781,689
Corporation tax
77,448
80,806
Other taxation and social security
141,007
145,181
Other creditors
137,190
138,583
Accruals and deferred income
191,572
100,633
3,724,104
3,147,563
14
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
109,663
101,663
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.
15
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
2,000
2,000
2,000
2,000
McNealy Brown Limited
Notes To The Financial Statements (Continued)
For The Year Ended 31 July 2024
Page 20
16
Financial commitments, guarantees and contingent liabilities
The company is a wholly owned subsidiary of McNealy Brown Group Limited, which is controlled by McNealy Brown Group Trustee Limited acting on behalf of the Employee Ownership Trust. On creation of the Employee Ownership Trust, a fixed and floating charge over all assets of the company was registered as guarantee of the consideration due to the selling shareholders. At the balance sheet date the amount due was £4,879,990.
17
Operating lease commitments
As 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 1 year
341,800
230,000
Years 2-5
472,901
548,219
814,701
778,219
18
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Rent paid
2024
2023
£
£
Other related parties
226,217
171,500
Other information
The company has taken advantage of the exemption available in Section 33.1A of FRS 102 whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group.
19
Ultimate controlling party
The parent company is McNealy Brown Group Ltd company number 04306185, a company incorporated in the UK. The ultimate controlling party is McNealy Brown Group Trustee Limited acting on behalf of the Employee Ownership Trust.
The results of the company are consolidated into McNealy Brown Group Ltd. Copies of the consolidated accounts are available from the registered office, 14-17 Craft Marsh Trading Estate, Gas Road, Sittingbourne, Kent, ME10 2QB.
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