Manchester Drinks Company Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 05475848 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 30th June 2020

for

Manchester Drinks Company Ltd

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

14

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:

Hammond McNulty LLP

Statutory Auditor

Bank House

Market Square

Congleton

Cheshire

CW12 1ET

The directors present their strategic report for the year ended 30th June 2020.

REVIEW OF BUSINESS

Turnover increased during the year by 33%, to £23,224,189 (2019: £17,372,935).

Cost of Sales increased by 22% to £19,419,128 (2019: £15,820,725).

The Profit and Loss Account on page 6 shows a Gross Profit Margin of 16% (2019: 9%), and an Operating Profit Margin for the year of 13.8% (2019: 6.8%), an increase of 7.3%.

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.

The Net Assets of the company have increased to £7,097,548 (2019: £4,487,523), an increase of 49%, as shown on the Balance Sheet on page 8.

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

18th March 2021

The directors present their report with the financial statements of the company for the year ended 30th June 2020.

DIVIDENDS

No interim dividend was paid during the year. The directors recommend a final dividend of £83.33 per share.

The total distribution of dividends for the year ended 30th June 2020 will be £ 10,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1st July 2019 to the date of this report.

R M Benjamin

B C Levine

DISCLOSURE IN THE STRATEGIC REPORT

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.

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, Hammond McNulty LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

B C Levine - Director

18th March 2021

Opinion

We have audited the financial statements of Manchester Drinks Company Ltd (the 'company') for the year ended 30th June 2020 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 2020 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.

Colin Higginson FCCA (Senior Statutory Auditor)

for and on behalf of Hammond McNulty LLP

Statutory Auditor

Bank House

Market Square

Congleton

Cheshire

CW12 1ET

19th March 2021

TURNOVER

3

23,246,168

17,372,935

Cost of sales

19,406,103

15,820,725

GROSS PROFIT

3,840,065

1,552,210

Administrative expenses

629,483

375,276

3,210,582

1,176,934

Other operating income

13,278

12,528

OPERATING PROFIT

5

3,223,860

1,189,462

Income from fixed asset investments

3,650

6,413

Interest receivable and similar income

6

6,232

89,327

9,882

95,740

3,233,742

1,285,202

Amounts due from participating

interests

7

-

1,033,095

PROFIT BEFORE TAXATION

3,233,742

252,107

Tax on profit

8

613,717

235,723

PROFIT FOR THE FINANCIAL YEAR

2,620,025

16,384

PROFIT FOR THE YEAR

2,620,025

16,384

OTHER COMPREHENSIVE INCOME

Investment revaluation

Transfer investment revaluation to fair

value reserve

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,620,025

16,384

FIXED ASSETS

Intangible assets

10

-

38,180

Tangible assets

11

141,062

99,944

Investments

12

139,395

88,200

280,457

226,324

CURRENT ASSETS

Stocks

13

2,595,152

2,631,055

Debtors

14

5,619,122

5,429,881

Cash at bank and in hand

2,529,173

310,383

10,743,447

8,371,319

CREDITORS

Amounts falling due within one year

15

3,734,963

4,093,323

NET CURRENT ASSETS

7,008,484

4,277,996

TOTAL ASSETS LESS CURRENT LIABILITIES

7,288,941

4,504,320

CREDITORS

Amounts falling due after more than one year

16

(166,666

)

-

PROVISIONS FOR LIABILITIES

20

(24,727

)

(16,797

)

NET ASSETS

7,097,548

4,487,523

CAPITAL AND RESERVES

Called up share capital

21

120

120

Revaluation reserve

22

19,023

19,023

Fair value reserve

22

33,082

31,887

Retained earnings

22

7,045,323

4,436,493

SHAREHOLDERS' FUNDS

7,097,548

4,487,523

The financial statements were approved by the Board of Directors and authorised for issue on 18th March 2021 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 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

Changes in equity

Dividends

-

(10,000

)

-

-

(10,000

)

Total comprehensive income

-

2,618,830

-

1,195

2,620,025

Balance at 30th June 2020

120

7,045,323

19,023

33,082

7,097,548

Cash flows from operating activities

Cash generated from operations

1

2,879,273

(836,311

)

Tax paid

(229,116

)

(143,399

)

Net cash from operating activities

2,650,157

(979,710

)

Cash flows from investing activities

Purchase of tangible fixed assets

(56,280

)

(21,304

)

Purchase of fixed asset investments

(50,000

)

-

Sale of fixed asset investments

-

156,194

Interest received

6,232

89,327

Dividends received

3,650

6,413

Net cash from investing activities

(96,398

)

230,630

Cash flows from financing activities

New loans in year

250,000

-

Amount introduced by directors

10,000

-

Equity dividends paid

(10,000

)

(70,000

)

Net cash from financing activities

250,000

(70,000

)

Increase/(decrease) in cash and cash equivalents

2,803,759

(819,080

)

Cash and cash equivalents at beginning of year

2

(274,586

)

544,494

Cash and cash equivalents at end of year

2

2,529,173

(274,586

)

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

30/6/20

30/6/19

£

£

Profit before taxation

3,233,742

252,107

Depreciation charges

53,341

10,685

Profit on disposal of fixed assets

-

(61,537

)

Fair value gain/(loss) on investment

(1,195

)

8,093

Finance income

(9,882

)

(95,740

)

3,276,006

113,608

Decrease/(increase) in stocks

35,903

(929,214

)

Increase in trade and other debtors

(189,241

)

(1,700,292

)

(Decrease)/increase in trade and other creditors

(243,395

)

1,679,587

Cash generated from operations

2,879,273

(836,311

)

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 2020

30/6/20

1/7/19

£

£

Cash and cash equivalents

2,529,173

310,383

Bank overdrafts

-

(584,969

)

2,529,173

(274,586

)

Year ended 30th June 2019

30/6/19

1/7/18

£

£

Cash and cash equivalents

310,383

544,494

Bank overdrafts

(584,969

)

-

(274,586

)

544,494

3.	ANALYSIS OF CHANGES IN NET (DEBT)/FUNDS

At 1/7/19

Cash flow

At 30/6/20

£

£

£

Net cash

Cash at bank and in hand

310,383

2,218,790

2,529,173

Bank overdrafts

(584,969

)

584,969

-

(274,586

)

2,803,759

2,529,173

Debt

Debts falling due within 1 year

-

(83,333

)

(83,333

)

Debts falling due after 1 year

-

(166,666

)

(166,666

)

-

(249,999

)

(249,999

)

Total

(274,586

)

2,553,760

2,279,174

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.

Going Concern

The directors have considered the potential impact of COVID-19 on the principal activities of the business and they believe that they have sufficient resources in place to operate for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

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 and represents amounts receivable for goods supplied and services rendered stated net of discounts and of Value Added Tax.

Income is recognized when goods have been delivered to customers such that risks and rewards of ownership have transferred to them.

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

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.

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.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

30/6/20

30/6/19

£

£

United Kingdom

23,126,937

17,368,932

Europe

119,231

4,003

23,246,168

17,372,935

4.	EMPLOYEES AND DIRECTORS

30/6/20

30/6/19

£

£

Wages and salaries

48,000

48,000

Social security costs

2,234

1,863

Other pension costs

50,400

50,400

100,634

100,263

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

30/6/20

30/6/19

Number of Operations Staff

4

4

30/6/20

30/6/19

£

£

Directors' remuneration

24,000

24,000

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

Money purchase schemes

2

2

5.	OPERATING PROFIT

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

30/6/20

30/6/19

£

£

Other operating leases

203,096

140,114

Depreciation - owned assets

15,162

10,536

Profit on disposal of fixed assets

-

(61,537

)

Patents and licences amortisation

-

149

Computer software amortisation

38,180

-

Director's pension costs

50,400

50,400

Auditor's remuneration

10,000

6,000

Exchange rate (profit)/loss

41,163

(9,176

)

6.

INTEREST RECEIVABLE AND SIMILAR INCOME

30/6/20

30/6/19

£

£

Deposit account interest

3,578

843

Other interest

2,654

88,484

6,232

89,327

30/06/20

30/06/19

£

£

Interest Income:

Interest on financial assets not measured at fair value through profit or loss

3,578

843

Other Interest on financial assets not measured at fair value through profit or loss

-

88,484

3,578

89,327

7.	AMOUNTS DUE FROM PARTICIPATING

INTERESTS

30/6/20

30/6/19

£

£

Amounts due from participating interests written off

-

1,033,095