Manchester Drinks Company Ltd - Limited company accounts 18.2

REGISTERED NUMBER: 05475848 (England and Wales)

MANCHESTER DRINKS COMPANY LTD

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2019

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Income Statement

6

Other Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Cash Flow Statement

10

Notes to the Cash Flow Statement

11

Notes to the Financial Statements

12

DIRECTORS:

R M Benjamin

B C Levine

SECRETARY:

B C Levine

REGISTERED OFFICE:

Suite 412

Warth Road Business Centre

Warth Road

Manchester

Lancashire

BL9 9TB

REGISTERED NUMBER:

05475848 (England and Wales)

AUDITORS:

Corporate Audit Solutions, Statutory Auditor

Georges Court

Chestergate

Macclesfield

Cheshire

SK11 6DP

The directors present their strategic report for the year ended 30th June 2019.

REVIEW OF BUSINESS

Turnover increased during the year by 43%, to £17,372,935 (2018: £12,127,148).

Cost of Sales increased by 40% to £15,820,210 (2018: £11,287,795).

The Profit and Loss Account on page 6 shows a Gross Profit Margin of 9% (2018: 7%), and an Operating Profit Margin

for the year of 6.8% (2018: 5.4%), an increase of 25%.

The increase in Turnover and Gross Profit Margin can largely be attributed to new product lines in the year, as well as

an improvement in sales in some existing lines. Higher margins on the new product lines contributed to an improvement

in Gross Profit Margin.

The Operating Profit Margin also improved as a result of the above, as well as the fact that Administrative Expenses

only increased by 3.3%.

The Net Assets of the company have decreased to £4,487,523 (2018: £4,541,139), a reduction of 1%, as shown on the

Balance Sheet on page 8. This decrease was as a result of a one-off write down of amounts due from participating

interests.

During the year the company continued to supply retailers with alcoholic beverages. The company has no branches

outside of the UK.

The directors are satisfied with the financial results achieved and are optimistic about the future performance of the

company. There have been no significant post balance sheet events.

ON BEHALF OF THE BOARD:

B C Levine - Director

15th January 2020

The directors present their report with the financial statements of the company for the year ended 30th June 2019.

DIVIDENDS

No interim dividend was paid during the year. The directors recommend a final dividend of £582 per share.

The total distribution of dividends for the year ended 30th June 2019 will be £ 70,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1st July 2018 to the date of this report.

R M Benjamin

B C Levine

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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;

-	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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken

as a director in order to make himself aware of any relevant audit information and to establish that the company's

auditors are aware of that information.

AUDITORS

The auditors, Corporate Audit Solutions, Statutory Auditor, will be proposed for re-appointment at the forthcoming

Annual General Meeting.

ON BEHALF OF THE BOARD:

B C Levine - Director

15th January 2020

Opinion

We have audited the financial statements of Manchester Drinks Company Ltd (the 'company') for the year ended

30th June 2019 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of

Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements,

including a summary of 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 30th June 2019 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditors' 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 directors are responsible for the other information. The other information comprises the information in the Strategic

Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors

thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing

so, consider whether the other information is materially inconsistent with the financial statements or our knowledge

obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or

apparent material misstatements, we are required to determine whether there is a material misstatement in the financial

statements or a material misstatement of the other information. If, based on the work we have performed, we conclude

that there is a material misstatement of this other information, we are required to report that fact. We have nothing to

report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

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 Report of the Directors.

We have nothing to report in respect of the following matters where 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 Statement of Directors' Responsibilities set out on page three, 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 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.

Auditors' 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 a Report of the Auditors 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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those

matters we are required to state to them in a Report of the Auditors 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.

Julian Roylance BSc ACA (Senior Statutory Auditor)

for and on behalf of Corporate Audit Solutions, Statutory Auditor

Georges Court

Chestergate

Macclesfield

Cheshire

SK11 6DP

15th January 2020

TURNOVER

17,372,935

12,127,148

Cost of sales

15,820,725

11,287,795

GROSS PROFIT

1,552,210

839,353

Administrative expenses

375,276

363,066

1,176,934

476,287

Other operating income

12,528

183,290

OPERATING PROFIT

4

1,189,462

659,577

Income from fixed asset investments

6,413

6,175

Interest receivable and similar income

89,327

77,692

95,740

83,867

1,285,202

743,444

Amounts due from participating

interests

6

1,033,095

-

PROFIT BEFORE TAXATION

252,107

743,444

Tax on profit

7

235,723

133,794

PROFIT FOR THE FINANCIAL YEAR

16,384

609,650

PROFIT FOR THE YEAR

16,384

609,650

OTHER COMPREHENSIVE INCOME

Investment revaluation

(8,093

)

(31,350

)

Transfer investment revaluation to fair

value reserve

8,093

31,350

Income tax relating to components of other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

16,384

609,650

FIXED ASSETS

Intangible assets

9

38,180

38,329

Tangible assets

10

99,944

89,176

Investments

11

88,200

190,950

226,324

318,455

CURRENT ASSETS

Stocks

12

2,631,055

1,701,841

Debtors

13

5,429,881

3,729,589

Cash at bank

310,382

544,495

8,371,318

5,975,925

CREDITORS

Amounts falling due within one year

14

4,093,322

1,743,051

NET CURRENT ASSETS

4,277,996

4,232,874

TOTAL ASSETS LESS CURRENT LIABILITIES

4,504,320

4,551,329

PROVISIONS FOR LIABILITIES

17

16,797

10,190

NET ASSETS

4,487,523

4,541,139

CAPITAL AND RESERVES

Called up share capital

18

120

120

Revaluation reserve

19

19,023

19,023

Fair value reserve

19

31,887

39,980

Retained earnings

19

4,436,493

4,482,016

SHAREHOLDERS' FUNDS

4,487,523

4,541,139

The financial statements were approved by the Board of Directors on 15th January 2020 and were signed on its behalf by:

B C Levine - Director

Called up

Fair

share

Retained

Revaluation

value

Total

capital

earnings

reserve

reserve

equity

£

£

£

£

£

Balance at 1st July 2017

120

3,841,016

19,023

71,330

3,931,489

Changes in equity

Total comprehensive income

-

641,000

-

(31,350

)

609,650

Balance at 30th June 2018

120

4,482,016

19,023

39,980

4,541,139

Changes in equity

Dividends

-

(70,000

)

-

-

(70,000

)

Total comprehensive income

-

24,477

-

(8,093

)

16,384

Balance at 30th June 2019

120

4,436,493

19,023

31,887

4,487,523

Cash flows from operating activities

Cash generated from operations

1

(836,313

)

90,779

Tax paid

(143,399

)

(224,963

)

Net cash from operating activities

(979,712

)

(134,184

)

Cash flows from investing activities

Purchase of intangible fixed assets

-

(4,895

)

Purchase of tangible fixed assets

(21,304

)

(24,757

)

Sale of fixed asset investments

156,194

-

Interest received

89,327

77,692

Dividends received

6,413

6,175

Net cash from investing activities

230,630

54,215

Cash flows from financing activities

Equity dividends paid

(70,000

)

-

Net cash from financing activities

(70,000

)

-

Decrease in cash and cash equivalents

(819,082

)

(79,969

)

Cash and cash equivalents at beginning of year

2

544,495

624,464

Cash and cash equivalents at end of year

2

(274,587

)

544,495

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

Profit before taxation

252,107

743,444

Depreciation charges

10,685

11,790

Profit on disposal of fixed assets

(61,537

)

-

Fair value gain/(loss) on investment

8,093

31,350

Finance income

(95,740

)

(83,867

)

113,608

702,717

(Increase)/decrease in stocks

(929,214

)

176,923

(Increase)/decrease in trade and other debtors

(1,700,292

)

338,522

Increase/(decrease) in trade and other creditors

1,679,585

(1,127,383

)

Cash generated from operations

(836,313

)

90,779

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these

Balance Sheet amounts:

Year ended 30th June 2019

30/6/19

1/7/18

£

£

Cash and cash equivalents

310,382

544,495

Bank overdrafts

(584,969

)

-

(274,587

)

544,495

Year ended 30th June 2018

30/6/18

1/7/17

£

£

Cash and cash equivalents

544,495

624,464

1.	STATUTORY INFORMATION

Manchester Drinks Company Ltd is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Significant judgements and estimates

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 revision and future periods where the revision affects both current and future periods.

Accounting estimates included within the financial statements are depreciation and provisions for bad debts and

obsolete stock. All estimates are made on a line-by-line basis using the directors' knowledge and expertise.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates,

value added tax and other sales taxes.

Intangible assets - software

Software assets are initially measured at cost and subsequently measured at cost, net of amortisation and any

impairment losses.

Computer software has not been amortised in the current year as the asset is not yet in use. The development of

this bespoke software is not yet complete.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Plant and machinery

-

10% on reducing balance

Fixtures and fittings

-

25% on reducing balance

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow

moving items.

Financial instruments

The following assets and liabilities are classified as financial instruments - trade debtors, trade creditors, bank

loans, and directors' loans.

Bank loans are initially measured at the present value of future payments, discounted at a market rate of interest,

and subsequently at amortised cost using the effective interest method.

Directors' loans (being payable on demand), trade debtors and trade creditors are measured at the undiscounted

amount of the cash consideration expected to be paid or received.

Financial assets that are measured at amortised cost are assessed at the end of each reporting period for objective

evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the

Income Statement.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to

the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that

have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the

timing difference.

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.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension

scheme are charged to profit or loss in the period to which they relate.

3.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

98,400

98,400

Social security costs

1,863

1,594

100,263

99,994

The average number of employees during the year was as follows:

2019

2018

Number of Operations Staff

4

4

2019

2018

£

£

Directors' remuneration

24,000

24,000

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

2

2

4.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2019

2018

£

£

Other operating leases

140,114

84,918

Depreciation - owned assets

10,536

11,644

Profit on disposal of fixed assets

(61,537

)

-

Patents and licences amortisation

149

146

Director's pension costs

50,400

50,400

Auditor's remuneration

6,000

6,000

Exchange rate (profit)/loss

(9,176

)

(22,265

)

5.	EXCEPTIONAL ITEMS

2019

2018

£

£

Insurance claim received

-

183,290

6.	AMOUNTS DUE FROM PARTICIPATING

INTERESTS

2019

2018

£

£

Amounts due from participating interests written off

1,033,095

-

7.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2019

2018

£

£

Current tax:

UK corporation tax

229,116

143,399

Deferred tax

6,607

(9,605

)

Tax on profit

235,723

133,794

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is

explained below:

2019

2018

£

£

Profit before tax

252,107

743,444

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

47,900

141,254

Effects of:

Expenses not deductible for tax purposes

196,288

-

Income not taxable for tax purposes

(1,218

)

(1,173

)

Capital allowances in excess of depreciation

(7,247

)

(2,639

)

Previous year effective tax rate 19.75%

-

(3,648

)

Total tax charge

235,723

133,794

Tax effects relating to effects of other comprehensive income

2019

Gross

Tax

Net

£

£

£

Investment revaluation

(8,093

)

-

(8,093

)

Transfer investment revaluation to fair

value reserve

8,093

-

8,093

-

-

-

2018

Gross

Tax

Net

£

£

£

Investment revaluation

(31,350

)

-

(31,350

)

Transfer investment revaluation to fair

value reserve

31,350

-

31,350

Revaluation reserve movement on

revaluation of plant & machinery

-

-

-

8.

DIVIDENDS

2019

2018

£

£

Ordinary shares of £1 each

Final

70,000

-