MCLEAN_&_APPLETON_LIMITED - Accounts

The directors present the strategic report for the year ended 31 January 2021.

The company employs head office staff and is responsible for costs appropriate to the group as a whole including the costs of funding. Management charges are rendered and other income is received to cover those costs. Key performance indicators are:

Regulatory compliance risk

The company is subject to regulatory compliance risk being failure to comply with laws, regulations and codes set by the Health and Safety Executive, Financial Conduct Authority and local authorities. Non-compliance could lead to fines, public reprimand or the suspension from selling general insurance and consumer credit products.

Management risk

The company is dependent on the members of its senior management team and the loss of such individuals could have an adverse effect on the business. Furthermore, failure to attract, develop and retain staff of a sufficient calibre could affect the ability of the business to grow.

Information risk

The company is dependent on the continuous operation of its information technology and computer systems which are vulnerable to damage, failure and sabotage. Whilst safeguards, such as insurance, anti-virus software and employee awareness, are in place such a disaster could have a detrimental effect on the business.

Financial risk

The company is funded by substantial loans from its directors. It is not therefore exposed to the level and types of borrowing that in the event of anticipated interest rate rises would significantly affect the stability of the business, nor is it subject to the financial risks relevant to a trade.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 January 2021.

The principal activities of the company are the provision of management services and the holding of property and investments.

The results for the year are set out on page 7.

Ordinary dividends were paid amounting to £1,576,000. The directors do not recommend payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).

The company's current policy concerning the payment of trade creditors is to:

• settle the terms of payment with suppliers when agreeing the terms of each transaction;

• ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and

• pay in accordance with the company's contractual and other legal obligations.

As a business we do not have standard payment terms for qualifying contracts. The most frequently used payment terms for purchase ledger are 30 days from the end of the month of the invoice date.

The directors intend that the group continues to evaluate each opportunity to grow the business. The geographical location being the logical driver.

In accordance with the company's articles, a resolution proposing that Barlow Andrews LLP be reappointed as auditor of the company will be put at a General Meeting.

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.

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;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; 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.

We have audited the financial statements of McLean & Appleton Limited (the 'company') for the year ended 31 January 2021 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and 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 101 ‘Reduced Disclosure Framework’ (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 January 2021 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 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.

Other information

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.

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 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.

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.

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.

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.

We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals and reviewing accounting estimates for biases.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations.     

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.

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 an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.

McLean & Appleton Limited is a private company limited by shares domiciled and incorporated in England and Wales. The registered office is Hatfields, Calder Island Way, Denby Dale Road, Wakefield.

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

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 on the historical cost convention, modifed to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101:

•    Cash flow statement and related notes

•    Comparative period reconciliations for property and equipment under operating leases, other     property and equipment and intangible assets

•    Disclosures in respect of transactions with wholly owned subsidiaries

•    Disclosures in respect of capital management

•    The effects of new but not yet effective IFRSs

•    Disclosures in respect of the compensation of Key Management Personnel

•    Disclosures of key assumptions (including sensitivities) and valuation technique used in the     determination of     recoverable amount for impairment purposes

As the consolidated financial statements of the ultimate parent undertaking include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures:

•    Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by     IFRS 7     Financial Instrument Disclosure.

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

McLean & Appleton Limited is a wholly owned subsidiary of McLean and Appleton (Holdings) Limited and the results of McLean & Appleton Limited are included in the consolidated financial statements of McLean and Appleton (Holdings) Limited which are available from their registered office, Hatfields, Calder Island Way, Denby Dale Road, Wakefield.

The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The directors have given consideration to the impact of Covid 19 and there are no indications that the current uncertainties surrounding the pandemic in terms of trading and cashflow will have an adverse effect on going concern. On this basis the directors consider it appropriate to prepare the accounts on a going concern basis.true

Revenue is measured based on the consideration specified in the contract with a customer. The company recognises revenue when (or as) it satisfies a performance obligation by transferring control of the promised services to the customer.

Revenue from management charges is recognised when the service has been performed.

Property, plant and equipment 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:

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 recognised in the statement of comprehensive income.

Investment property, which is property held to earn rentals and/or for capital appreciation, is measured using the fair value model and stated at its fair value as at the reporting end date. The surplus or deficit on revaluation is recognised in the statement of comprehensive income.

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting end date, the company reviews the carrying amounts of its tangible 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.

Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially recognised at their fair value plus directly attributable transaction costs for all financial assets or financial liabilities not classified at fair value through profit or loss.

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when the company has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or when the entity transfers the financial asset and the transfer qualifies for derecognition. Financial liabilities are derecognised when they are extinguished. This occurs when the obligation specified in the contract is discharged, cancelled or expires.

Classification of financial assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value.

Debt instruments that meet the following conditions are subsequently measured at amortised cost:

•     the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

•     the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The business model

An assessment of business models for managing financial assets is fundamental to the classification of a financial asset. The company determines the business models at a level that reflects how the group of financial assets are managed together to achieve a particular business objective.

The company’s business model does not depend on management’s intentions for an individual instrument, therefore the business model assessment is performed at a higher level of aggregation rather than on an instrument-by-instrument basis.

Debt instruments measured at amortised cost

The following financial assets are classified within this category - trade receivables, other receivables and cash at bank. Appropriate allowances for expected credit losses (‘ECLs’) are recognised in profit or loss.

Financial liabilities and equity

• Trade and other payables are classified with current liabilities and are stated at their nominal value.

• Borrowings are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, with interest recognised on an effective yield basis.

• Ordinary shares issued by the company are classified as equity instruments.

ECLs

The company applies the simplified approach and recognises lifetime ECL on the basis that debt instruments measured at amortised cost do not contain a 'significant financing component'. On applying the lifetime ECL the company considers whether there has been a significant increase in credit risk since initial recognition.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income 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 is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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.

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 income statement, 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.

The costs of short-term employee benefits are recognised as a liability and an expense.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

When the company acts as a lessor, leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees, over the major part of the economic life of the asset. All other leases are classified as operating leases.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

As described in note 13 to the financial statements, land and buildings are stated by the directors at fair value based upon a valuation prepared by an independent professional valuer.

The directors consider the date of completion to be point at which control is established in relation to land acquired. On this basis land that exchanged pre year end but completed post year end has not been accounted for as an addition to fixed assets in the year. Disclosure has been noted within capital commitments.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2020 - 1).

Following substantive enactment of Finance Bill 2021 the rate of corporation tax will remain at 19% for the financial year beginning 1 April 2022 and increase to 25% from 1 April 2023.

The charge for the year can be reconciled to the profit per the income statement as follows:

Included within land and buildings above is land, with an estimated value of £9.6m which is not depreciated.

Investment property has been valued at fair value by the directors. The directors' valuation is based on an independent professional valuation carried out as at 31 March 2017, following which there were no significant changes in conditions between the reporting date and property valuation date. One property has been revalued in the year to reflect the uplift in fair value based on an estates agents valuation and 3rd party offer.

The company has not designated any financial assets that are not classified as held for trading as financial assets at fair value through profit or loss.

The directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

Details of the company's subsidiaries at 31 January 2021 are as follows:

All of the subsidiaries have the same registered office being Hatfields Calder Island Way, Denby Dale Road, Wakefield.

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

Amounts owed from group undertakings are unsecured, interest free and repayable on demand.

The bank overdraft facilities are secured by unscheduled mortgage debentures incorporating a fixed and floating charge over all current and future assets of the group. The bank also holds a first legal charge over a number of the company's properties.

Bank loans are repayable at the end of the applicable interest period, and are on a 5 year revolving credit facility. Interest is charged at 1.25% above three months LIBOR.

Other loans are not subject to interest and have no repayment terms.

The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.

Amounts owed to group undertakings are unsecured, interest free and repayable on demand.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

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.

The total costs charged to income in respect of defined contribution plans is £61,782 (2020 - £182,884).

The holders of ordinary shares are entitled to receive dividends and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company's residual assets.

The company is party to composite guarantees given to its bankers in respect of overdrafts and loans granted to its parent company and fellow subsidiaries. The maximum involved under these guarantees at 31 January 2021 was £nil (2020: £nil).

At 31 January 2021 the company had capital commitments as follows:

The operating leases represent leases of investment properties to third parties. The leases are negotiated over terms of up to 10 years and rentals are fixed for the period of the lease. Movement from the previous years reflects the early cessation of lease agreements due to the 3rd party ceasing to trade in the year.

At the reporting end date the company had contracted with tenants for the following minimum lease payments:

Rent was paid to JSW A&M Settlement (21/11/97) of £231,131. At the year end a balance of £91,857 was owed to the trust (2020: £262,064).

The group owes amounts to the directors and their wives. At the year end these balances totalled £1.5m (2020: £1.6m).

At the year end amounts were owed from companies in which Mr G Williams has significant influence of £4,004,639 (2020: £4,385,572). No interest is payable on the loans which are repayable on demand.

During the year, total management charges of £226,000 were paid to the companies in which Mr G Williams has significant influence.

The company's parent is McLean and Appleton (Holdings) Limited and it is under the ultimate control of Mr G S Williams.

The company is included in the consolidated accounts of McLean and Appleton (Holdings) Limited available from its registered office, Hatfields, Calder Island way, Denby Dale Road, Wakefield.