| Menai Meats (Wales) Limited |
| Strategic Report |
|
| REVIEW AND ANALYSIS OF THE BUSINESS DURING THE CURRENT YEAR |
|
| Development and financial performance during the year and at the reporting date |
|
Sales turnover during the year was £12,479,251 compared with £ 14,331,484 last year. Trading margins were 8.05% and the company's gross profit margin has decreased by 2.13 % compared to the previous year (2017:10.18%).
The directors are of the view that the decrease in profit margin is due to an increase in the cost of purchases of Sheep and Lamb Stock. Secondly during the year the subcontractors were hired to provide the contract kill services. The service charges charged were all inclusive of FSA charges, labour cost and waste management expenses. In previous year waste management charges were expensed as premises cost and not included in gross profit margin calculation.
If the waste management costs were reclassified as cost of sales, the revised Gross profit margin for last year would be 9.5%.A decrease in 1.45% could be attributed for higher labour cost paid to out sourcing contract kill services than standard in-house direct labour.
Directors are optimistic that the future margins will be more stable due to tighter cost cutting exercise and better internal controls in purchasing and selling activities. |
|
| Key performance indicators |
| Directors consider the key performance indicators to be turnover and profit margins. |
|
| Principal Risk and Uncertainties Facing the Business |
|
| Competitor risks |
| Currently there is significant competition from other market leaders but due to the current standing of Menai Meats (Wales) Ltd.'s Parent company and it directors reputation this reduces competitor risk. |
|
| Liquidity Risk |
| The Company actively manages its cash flow to ensure that there are adequate financial resources to allow the company to trade successfully while meeting the expectations of its stakeholders. |
|
| Credit Risk |
| The company manages credit risk by checking potential credit term customers and monitoring the trading activity in line with stringent credit policy. |
|
| Financial Risk Management |
| The company is exposed to a number of financial risks including price and foreign exchange risk. The company has put in place financial instruments and policies in order to reduce the adverse effect of this type of exposure including entering in to short term forward exchange contracts. |
|
| Reliance on Key Suppliers |
| The company does not rely on any one key supplier due to the company's purchases being sourced from all over the United Kingdom. |
|
| Economic downturn |
| The demand for meat products will always remain strong in any economic climate and the directors are confident that the success of the company will remain no matter what state the economy is in. |
|
| Loss of key personnel |
| The structure of the company is robust enough to be able to compensate for any loss in key personnel. The company has been arranged in such a way that all key staff have in place a number of support staff that are competent enough to carry out and share all tasks that fall upon each department in the event of a loss of a head of department. |
|
| Financial Instruments |
| Currently the company uses Bank loans and overdraft that are secured on the assets of the company. Apart from the standard banking arrangements and short term forward currency exchange contracts no complex financial instruments are used. |
|
| Political Donations and Expenditure |
| During the year the company made no political or charitable donations to any third parties. |
|
| This report was approved by the board on 30 May 2019 and signed on its behalf. |
|
|
|
| Mohammed Akram |
| Director |
|
|
| Basis of 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 |
| We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: |
| ● |
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or |
| ● |
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. |
|
| Other information |
| The other information comprises the information included in the report and financial statements, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. |
| We have nothing to report in this regard. |
|
| Opinions on other matters prescribed by the Companies Act 2006 |
| In our opinion, based on the work undertaken in the course of the 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. |
|
| Matters on which we are required to report by exception |
|
|
Stocks |
|
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in first out method. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. |
|
|
Debtors |
|
Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
|
|
Creditors |
|
Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
|
|
Taxation |
|
A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
|
|
Provisions |
|
Provisions (i.e. liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
|
|
Foreign currency translation |
|
Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transaction.
At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non-monetary items that are measured at historical cost are translated at the rate ruling at the date of the transaction. All differences are charged to profit or loss. |
|
|
Leased assets |
|
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. The rights of use and obligations under finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments. Minimum lease payments are apportioned between the finance charge and the reduction in the outstanding liability using the effective interest rate method. The finance charge is allocated to each period during the lease so as to produce a constant periodic rate of interest on the remaining balance of the liability. Leased assets are depreciated in accordance with the company's policy for tangible fixed assets. If there is no reasonable certainty that ownership will be obtained at the end of the lease term, the asset is depreciated over the lower of the lease term and its useful life. Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
|
| 2 |
Analysis of turnover |
2018 |
|
2017 |
| £ |
£ |
|
|
Sale of goods |
12,479,251 |
|
14,331,484 |
|
|
|
|
|
|
|
|
|
|
By geographical market: |
|
|
UK |
12,479,251 |
|
14,331,484 |
|
|
|
|
|
|
|
|
|
|
No further analysis of Turnover is provided as the directors consider that such disclosure would be severely detrimental to the interest of the company. |
|
| 3 |
Operating profit |
2018 |
|
2017 |
| £ |
£ |
|
This is stated after charging: |
|
|
Depreciation of owned fixed assets |
76,780 |
|
99,514 |
|
Depreciation on Building Improvements |
3,334 |
|
- |
|
Operating lease rentals - land and buildings |
15,290 |
|
11,000 |
|
Auditors' remuneration for audit services |
5,000 |
|
5,000 |
|
Auditors' remuneration for other services |
5,000 |
|
5,000 |
|
Key management personnel compensation (including directors' emoluments) |
|
2,593 |
|
12,175 |
|
Carrying amount of stock sold |
11,043,944 |
|
12,288,029 |
|
|
|
|
|
|
|
|
|
|
| 4 |
Directors' emoluments |
2018 |
|
2017 |
| £ |
£ |
|
|
Emoluments |
2,593 |
|
12,175 |
|
|
|
|
|
|
|
|
|
|
| 5 |
Staff costs |
2018 |
|
2017 |
| £ |
£ |
|
|
Wages and salaries |
21,606 |
|
170,334 |
|
Social security costs |
1,744 |
|
10,982 |
|
|
|
|
|
|
23,350 |
|
181,316 |
|
|
|
|
|
|
|
|
|
|
Average number of employees during the year |
Number |
Number |
|
|
Administration |
2 |
|
4 |
|
Distribution |
2 |
|
4 |
|
Manufacturing |
4 |
|
4 |
|
|
|
|
|
|
8 |
|
12 |
|
|
|
|
|
|
|
|
|
|
| 6 |
Interest payable |
2018 |
|
2017 |
| £ |
£ |
|
|
Bank loans and overdrafts |
10,166 |
|
17,060 |
|
|
|
|
|
|
|
|
|
|
| 7 |
Taxation |
2018 |
|
2017 |
| £ |
£ |
|
Analysis of charge in period |
|
Deferred tax: |
|
Origination and reversal of timing differences |
182,837 |
|
27,202 |
|
Effect of increased tax rate on opening liability |
- |
|
13,296 |
|
|
|
|
|
|
182,837 |
|
40,498 |
|
Tax on profit on ordinary activities |
182,837 |
|
40,498 |
|
|
|
|
|
|
|
|
|
|
|
Factors affecting tax charge for period |
|
The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
|
|
|
|
|
|
|
2018 |
|
2017 |
| £ |
£ |
|
Profit on ordinary activities before tax |
502,960 |
|
129,066 |
|
|
|
|
|
|
|
|
|
|
Standard rate of corporation tax in the UK |
19% |
|
19% |
|
| £ |
£ |
|
Profit on ordinary activities multiplied by the standard rate of corporation tax |
|
95,562 |
|
24,523 |
|
|
Effects of: |
|
Expenses not deductible for tax purposes |
8,412 |
|
3,511 |
|
Group Loss relief |
78,863 |
|
- |
|
Capital allowances for period in excess of depreciation |
(182,837) |
|
(28,034) |
|
|
Current tax charge for period |
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Factors that may affect future tax charges |
|
There were no factors that may affect future tax charges. |
|
|
| 8 |
Building Improvements on Lease Hold Property |
£ |
|
|
|
Cost |
|
At 1 September 2017 |
166,675 |
|
At 31 August 2018 |
166,675 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
At 1 September 2017 |
11,327 |
|
Provided during the year |
3,334 |
|
At 31 August 2018 |
14,661 |
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
At 31 August 2018 |
152,014 |
|
At 31 August 2017 |
155,348 |
|
|
|
|
|
|
|
|
|
|
Improvements is being written off in equal annual instalments over its estimated economic life of 50 years. |
|
|
| 9 |
Tangible fixed assets |
|
|
Long Term Leasehold Property |
|
Plant and machinery |
|
Fixtures, fittings, tools and equipment |
|
Total |
|
|
At cost |
|
At cost |
|
At cost |
| £ |
£ |
£ |
£ |
|
Cost or valuation |
|
At 1 September 2017 |
435,000 |
|
412,007 |
|
96,240 |
|
943,247 |
|
At 31 August 2018 |
435,000 |
|
412,007 |
|
96,240 |
|
943,247 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
At 1 September 2017 |
21,896 |
|
181,219 |
|
39,758 |
|
242,873 |
|
Charge for the year |
4,959 |
|
57,700 |
|
14,121 |
|
76,780 |
|
At 31 August 2018 |
26,855 |
|
238,919 |
|
53,879 |
|
319,653 |
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
At 31 August 2018 |
408,145 |
|
173,088 |
|
42,361 |
|
623,594 |
|
At 31 August 2017 |
413,104 |
|
230,788 |
|
56,482 |
|
700,374 |
|
|
|
|
|
|
|
|
|
|
Leasehold building is based in Cibyn industrial Estate .This is long term lease hold property agreement covers 88 years of term period and with annual rent of £6750 payable in monthly instalments. This Lease hold building is depreciated over the lease period. |
|
| 10 |
Stocks |
2018 |
|
2017 |
| £ |
£ |
|
|
Raw materials and consumables |
59,843 |
|
155,643 |
|
Finished goods and goods for resale |
- |
|
45,200 |
|
|
|
|
|
|
59,843 |
|
200,843 |
|
|
|
|
|
|
|
|
|
| 11 |
Debtors |
2018 |
|
2017 |
| £ |
£ |
|
|
Trade debtors |
1,650,509 |
|
1,764,719 |
|
Deferred tax asset (see note 15) |
|
|
|
|
42,548 |
|
225,385 |
|
Other debtors |
80,776 |
|
80,318 |
|
|
|
|
|
|
1,773,833 |
|
2,070,422 |
|
|
|
|
|
|
|
|
|
| 12 |
Creditors: amounts falling due within one year |
2018 |
|
2017 |
| £ |
£ |
|
|
Bank overdrafts |
198,524 |
|
444,380 |
|
Bank loans |
17,373 |
|
17,376 |
|
Trade creditors |
709,500 |
|
1,101,544 |
|
Amounts owed to group undertakings and undertakings in which the company has a participating interest |
|
1,663,648 |
|
1,840,763 |
|
Other taxes and social security costs |
1,388 |
|
1,460 |
|
Directors Account |
87,733 |
|
87,733 |
|
Other creditors |
455,830 |
|
425,601 |
|
Accruals and deferred income |
27,000 |
|
30,750 |
|
|
|
|
|
|
3,160,996 |
|
3,949,607 |
|
|
|
|
|
|
|
|
|
|
| 13 |
Creditors: amounts falling due after one year |
2018 |
|
2017 |
| £ |
£ |
|
|
Bank loans |
216,342 |
|
227,017 |
|
|
|
|
|
|
|
|
|
|
| 14 |
Loans |
2018 |
|
2017 |
| £ |
£ |
|
Loans not wholly repayable within five years: |
|
Loan - Expires May 2021 |
240,190 |
|
244,393 |
|
|
|
|
|
|
|
|
|
|
Analysis of maturity of debt: |
|
Within one year or on demand |
204,012 |
|
449,653 |
|
Between one and two years |
5,769 |
|
5,543 |
|
Between two and five years |
19,011 |
|
18,266 |
|
After five years |
209,922 |
|
215,311 |
|
|
|
|
|
|
438,714 |
|
688,773 |
|
|
|
|
|
|
|
|
|
|
The bank loans are secured on the Company assets. Bank loans have cross guarantee between parent company Pak Mecca Meats Ltd and Menai Meats (Wales) Ltd on company assets held as security formally charged to the bank . |
|
|
| 15 |
Deferred taxation |
2018 |
|
2017 |
| £ |
£ |
|
|
Accelerated capital allowances |
300,793 |
|
1,131,297 |
|
Tax losses carried forward |
(343,341) |
|
(1,356,682) |
|
|
|
|
|
|
(42,548) |
|
(225,385) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
2017 |
| £ |
£ |
|
|
At 1 September |
(225,385) |
|
(265,883) |
|
Charged to the profit and loss account |
182,837 |
|
40,498 |
|
|
At 31 August |
(42,548) |
|
(225,385) |
|
|
|
|
|
|
|
|
|
|
|
| 16 |
Share capital |
Nominal |
|
2018 |
|
2018 |
|
2017 |
| value |
Number |
£ |
£ |
|
Allotted, called up and fully paid: |
|
Ordinary shares |
£1 each |
|
100 |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
| 17 |
Profit and loss account |
2018 |
|
2017 |
| £ |
£ |
|
|
At 1 September |
(998,171) |
|
(1,086,739) |
|
Profit for the financial year |
320,123 |
|
88,568 |
|
|
At 31 August |
(678,048) |
|
(998,171) |
|
|
|
|
|
|
|
|
|
|
| 18 |
Other financial commitments |
|
|
Total future minimum lease payments under non-cancellable operating leases: |
|
|
|
Long Term Lease hold Building |
|
Long Term Lease hold Building |
Other |
Other |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| £ |
£ |
£ |
£ |
|
Falling due: |
|
within one year |
6,750 |
|
6,750 |
|
- |
|
- |
|
within two to five years |
20,250 |
|
20,250 |
|
- |
|
- |
|
in over five years |
523,688 |
|
530,438 |
|
- |
|
- |
|
|
550,688 |
|
557,438 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
| 19 |
Related party transactions |
2018 |
|
2017 |
| £ |
£ |
|
Pak Mecca Meats Ltd
Parent Company from 01 July 2016
|
|
Assist in Working Capital Requirement |
|
Amount due to the related party |
|
|
|
|
(1,663,648) |
|
(1,840,763) |
|
|
Mr Mohammed Akram
Director of Menai Meats (Wales) Ltd |
|
Amount due to the related party |
|
|
|
|
(87,733) |
|
(87,733) |
|
|
Birmingham Halal Abattoir Ltd |
|
Entity Controlled by a close family member of the directors of Pak Mecca Meats Ltd from 01.11.2017 |
|
Amount due to the related party |
|
|
|
|
(258,004) |
|
|
| 20 |
Controlling party |
|
|
In the opinion of the directors Mr Mohammed Akram is the ultimate controlling party. Due to the fact Mr Akram is also a person with significant control in the parent company Pak Mecca Meats Ltd that holds 100% shareholdings of Menai Meats (Wales) Ltd from 01 July 2016. |
|
|
| 21 |
Presentation currency |
|
|
The financial statements are presented in Sterling. |
|
|
| 22 |
Legal form of entity and country of incorporation |
|
|
Menai Meats (Wales) Limited is a private company limited by shares and incorporated in England. |
|
|
| 23 |
Principal place of business |
|
|
The address of the company's principal place of business and registered office is: |
|
|
168 City Road |
|
Cardiff |
|
CF24 3JE |
|
|
Principal Place of Business |
|
162 |
|
Bishop Street |
|
Birmingham |
|
B5 7EJ |
