Mec Com Limited - Limited company accounts 23.1
Mec Com Limited - Limited company accounts 23.1
| REGISTERED NUMBER: |
| Strategic Report, Report of the Directors and |
| Financial Statements |
| for the Year Ended 31st December 2022 |
| for |
| Mec Com Limited |
| Mec Com Limited (Registered number: 03954360) |
| Contents of the Financial Statements |
| for the Year Ended 31st December 2022 |
| Page |
| Company Information | 1 |
| Strategic Report | 2 |
| Report of the Directors | 6 |
| Report of the Independent Auditors | 8 |
| Statement of Comprehensive Income | 12 |
| Statement of Financial Position | 13 |
| Statement of Changes in Equity | 14 |
| Statement of Cash Flows | 15 |
| Notes to the Statement of Cash Flows | 16 |
| Notes to the Financial Statements | 18 |
| Mec Com Limited |
| Company Information |
| for the Year Ended 31st December 2022 |
| DIRECTORS: |
| SECRETARY: |
| REGISTERED OFFICE: |
| REGISTERED NUMBER: |
| AUDITORS: |
| Chartered Accountants |
| Statutory Auditors |
| 14a Market Place |
| Uttoxeter |
| Staffordshire |
| ST14 8HP |
| Mec Com Limited (Registered number: 03954360) |
| Strategic Report |
| for the Year Ended 31st December 2022 |
| The directors present their strategic report for the year ended 31st December 2022. |
| PRINCIPAL ACTIVITY |
| The principal activity of the company in the year under review was as a key provider of a comprehensive range of electromechanical components as well as an assembly and test service for customers requiring TMS (Total Manufacturing Solutions). |
| Key disciplines include sheet metal fabrication, electromechanical assembly and test. |
| REVIEW OF BUSINESS |
| The company recorded sales turnover of £14,466,342, an increase of 10.3% from the previous year. P.B.I.T. (Profit before Interest and Taxation) increased from 1.9% in 2021 to 3% for 2022. |
| Sales order intake figures remained strong with orders received in the year totalling £15.1M down slightly from £15.4M in 2021. |
| Review of 2022 Results: |
| Turnover in the year was £14,466,342, an increase of 10.3% from the £13,114,877 achieved in the previous year. |
| Raw Materials and Consumables costs increased by £755,436 from 2021 to £9,189,193 and represented 63.5% of Sales, a decrease from the previous year of 0.8%. |
| Staff Costs (Payroll) increased by £277,877 to £3,222,853 and represented 22.3% of Sales, a decrease of 0.2% from 2021. |
| The average number of employees increased by 1 to stand at 104 employees during the year. |
| Profit before Taxation on continuing trade activities increased by £158,414 to £367,122 from the previous year (2021 - £208,708). |
| KEY PERFORMANCE INDICATORS |
| The board of directors recognise Key Performance Indicators as an integral part of monitoring the progress of the business. |
| Performance indicators are identified in the Annual Business Plan and appropriate targets set. |
| It is the responsibility of the management team to regularly monitor and review these figures and report the results and any corrective actions to the board. |
| The key performance indicators used to monitor the financial performance of the company include, profit before interest and taxation (P.B.I.T.) as a % of sales which closed the year on 3% up from 1.9% in the previous year. |
| Sales per employee increased from £127,000 to £139,000, whilst Net Profit before taxation per employee increased from £2,000 to stand at £3,500 during 2022. |
| Mec Com Limited (Registered number: 03954360) |
| Strategic Report |
| for the Year Ended 31st December 2022 |
| Other Balance Sheet indicators showed the following movements: |
| Inventory days increased by 11 days from 130 days at the end of 2021 to close on 141 days, Trade receivables/debtor days decreased by 11 days to close on 42 days during the year with Trade payables/average creditor days decreasing by 1 day to close on 46 days average by the end of the year. |
| RESEARCH AND DEVELOPMENT ACTIVITIES |
| Ongoing capital investment and the implementation of lean manufacturing techniques have created a truly flexible and cost-effective manufacturing environment. Included within this the company undertakes regular activities to innovate and introduce new manufacturing processes, techniques and solution requirements, including building prototypes and testing in-house. |
| PRINCIPAL RISKS AND UNCERTAINTIES |
| Commercial Relationships |
| The Company benefits from close commercial relationships with a number of key customers and suppliers. The loss of any of these key customers or suppliers, or a significant worsening in commercial terms could have a material impact on results. |
| The Company devotes significant resources to supporting these relationships to ensure they continue to operate satisfactorily. Wherever practical, the Company endeavours to maintain more than one source of a particular supply. |
| Competitors |
| The Company faces fierce competition from low cost countries namely China, India and from those located in Eastern Europe. |
| The Company continually works to streamline its cost base to ensure it remains competitive. Part of this ongoing initiative is the expansion of a global supply chain involving the procurement of high volume parts from China as well as medium to high volume products from facilities in Romania. |
| Maintaining High Quality |
| As the Company primarily supplies products into the protection and control systems of major electrical distribution networks, maintaining high quality standards are essential. Failure to comply with the necessary standards could significantly damage the Company's reputation and performance. |
| The Company has established policies and operating procedures which are periodically subject to both internal and external audit. The Company is accredited under ISO 9001 and ISO 14001 Environmental standard. |
| Health and Safety |
| A significant number of the Company's employees work in a manufacturing environment near machinery. In addition to the possible injury to individuals, serious accidents could result in prosecution and fines and damage the reputation and performance of the Company. |
| The Company works to identify and minimise all Health and Safety risks in order to provide a safe and healthy workplace for employees and visitors. Risk assessments and workplace training is undertaken in all areas of the business. |
| Mec Com Limited (Registered number: 03954360) |
| Strategic Report |
| for the Year Ended 31st December 2022 |
| Energy and Raw Materials |
| The Company's products contain a number of raw materials and its operations require significant levels of energy; notably gas and electricity. Any increases or volatility in prices or any prolonged interruption in supply could have a material impact on the Company's results. |
| The Company regularly undertakes purchasing reviews and uses forward buying or other contractual means where appropriate to manage the risks. |
| Other Risks |
| Other external risks include global, political and economic conditions, foreign exchange, interest rates, credit risk and business continuity. |
| The company seeks to mitigate exposure to all forms of risk, where practicable, and to transfer risk to insurers, where cost effective. |
| FINANCIAL INSTRUMENTS |
| The directors are constantly reviewing the objectives of the business operations to identify areas where it is able to reduce financial risk without hindrance to on site operations. |
| Credit |
| To counteract the risk of bad debts the business has increased the use of credit checking facilities to assess the risk to the company of contracting with each customer. |
| The Company also insures its debtor book against any potential bad debts. |
| Liquidity |
| The business has a very strong relationship with its banking team. The company has the facilities to meet its needs on an ongoing basis, namely using an invoice discounting facility to factor its debtor book. |
| Hedging Forecast Transactions |
| A proportion of the Company's sales are denominated in currencies other than Sterling (Euros) which are only partially matched by expenses denominated in those currencies. A significant weakening of these currencies against sterling could materially impact the Company's performance. |
| The Company sets internal exchange rates for determining pricing and enters into forward contracts based on forecast transactions to achieve or better these rates. |
| Cash flow |
| Cash flow forecasts are prepared weekly and any facilities reviewed to cover any foreseeable funding requirements with an allowance for unforeseen events. |
| Mec Com Limited (Registered number: 03954360) |
| Strategic Report |
| for the Year Ended 31st December 2022 |
| FUTURE DEVELOPMENTS |
| The company is expecting to see a significant increase in demand for new products over the next 12 months, particularly from customers in its traditional core market of Power & Distribution. |
| So far during 2023 YTD Sales Order Intake figures have continued to rise with YTD orders up over 40% on the daily average achieved in 2022. |
| ON BEHALF OF THE BOARD: |
| Mec Com Limited (Registered number: 03954360) |
| Report of the Directors |
| for the Year Ended 31st December 2022 |
| The directors present their report with the financial statements of the company for the year ended 31st December 2022. |
| DIVIDENDS |
| The total distribution of dividends for the year ended 31st December 2022 will be £ |
| DIRECTORS |
| The directors shown below have held office during the whole of the period from 1st January 2022 to the date of this report. |
| DISCLOSURE IN THE STRATEGIC REPORT |
| Information regarding financial instruments and future developments is contained within the strategic report included in these financial statements. |
| 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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. |
| Mec Com Limited (Registered number: 03954360) |
| Report of the Directors |
| for the Year Ended 31st December 2022 |
| AUDITORS |
| The auditors, Rice & Co Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
| ON BEHALF OF THE BOARD: |
| Report of the Independent Auditors to the Members of |
| Mec Com Limited |
| Opinion |
| We have audited the financial statements of Mec Com Limited (the 'company') for the year ended 31st December 2022 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Statement of Cash Flows, 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 31st December 2022 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 |
| 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 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 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. |
| Report of the Independent Auditors to the Members of |
| Mec Com Limited |
| 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 six, 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. |
| Report of the Independent Auditors to the Members of |
| Mec Com Limited |
| 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. |
| The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
| 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. |
| We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud. |
| In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we performed procedures which included: |
| - | Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud. |
| - | Reviewing minutes of meetings of those charged with governance. |
| - | Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection. |
| - | Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations. |
| - | Performing audit work over the risk of management bias and override of controls including testing of journal entries and other adjustments for appropriateness and reviewing accounting estimates for indicators of potential bias. |
| Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to material misstatement in the financial statements or non-compliance with laws and regulations. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error, as fraud may include collusion, forgery, intentional omissions, misrepresentations, or override of the internal control. |
| 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. |
| Report of the Independent Auditors to the Members of |
| Mec Com Limited |
| 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. |
| for and on behalf of |
| Chartered Accountants |
| Statutory Auditors |
| 14a Market Place |
| Uttoxeter |
| Staffordshire |
| ST14 8HP |
| Mec Com Limited (Registered number: 03954360) |
| Statement of Comprehensive |
| Income |
| for the Year Ended 31st December 2022 |
| 2022 | 2021 |
| Notes | £ | £ | £ | £ |
| TURNOVER | 4 |
| Cost of sales |
| GROSS PROFIT |
| Distribution costs |
| Administrative expenses |
| 2,379,183 | 2,359,915 |
| 418,900 | 180,299 |
| Other operating income |
| OPERATING PROFIT | 6 |
| Interest payable and similar expenses | 7 |
| PROFIT BEFORE TAXATION |
| Tax on profit | 8 | ( |
) | ( |
) |
| PROFIT FOR THE FINANCIAL YEAR |
| OTHER COMPREHENSIVE INCOME | - | - |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
| Mec Com Limited (Registered number: 03954360) |
| Statement of Financial Position |
| 31st December 2022 |
| 2022 | 2021 |
| Notes | £ | £ | £ | £ |
| FIXED ASSETS |
| Tangible assets | 10 |
| CURRENT ASSETS |
| Stocks | 11 |
| Debtors | 12 |
| Cash at bank and in hand |
| CREDITORS |
| Amounts falling due within one year | 13 |
| NET CURRENT ASSETS |
| TOTAL ASSETS LESS CURRENT LIABILITIES |
| CREDITORS |
| Amounts falling due after more than one year |
14 |
( |
) |
| PROVISIONS FOR LIABILITIES | 18 | ( |
) | ( |
) |
| NET ASSETS |
| CAPITAL AND RESERVES |
| Called up share capital | 19 |
| Capital redemption reserve | 20 |
| Retained earnings | 20 |
| SHAREHOLDERS' FUNDS |
| The financial statements were approved by the Board of Directors and authorised for issue on |
| Mec Com Limited (Registered number: 03954360) |
| Statement of Changes in Equity |
| for the Year Ended 31st December 2022 |
| Called up | Capital |
| share | Retained | redemption | Total |
| capital | earnings | reserve | equity |
| £ | £ | £ | £ |
| Balance at 1st January 2021 |
| Changes in equity |
| Dividends | - | ( |
) | - | ( |
) |
| Total comprehensive income | - |
| Balance at 31st December 2021 |
| Changes in equity |
| Dividends | - | ( |
) | - | ( |
) |
| Total comprehensive income | - |
| Balance at 31st December 2022 |
| Mec Com Limited (Registered number: 03954360) |
| Statement of Cash Flows |
| for the Year Ended 31st December 2022 |
| 2022 | 2021 |
| Notes | £ | £ |
| Cash flows from operating activities |
| Cash generated from operations | 1 | ( |
) |
| Interest paid | ( |
) | ( |
) |
| Interest element of hire purchase payments paid |
( |
) |
( |
) |
| Tax paid | ( |
) |
| Dividends paid | ( |
) | ( |
) |
| Net cash from operating activities | ( |
) |
| Cash flows from investing activities |
| Purchase of tangible fixed assets | ( |
) | ( |
) |
| Sale of tangible fixed assets |
| Net cash from investing activities | ( |
) |
| Cash flows from financing activities |
| Hire purchase repayments | ( |
) | ( |
) |
| Movement in directors' current accounts | 11,325 | - |
| Movement in associated company balances | ( |
) |
| Net cash from financing activities | ( |
) |
| (Decrease)/increase in cash and cash equivalents | ( |
) |
| Cash and cash equivalents at beginning of year |
2 |
78,072 |
| Cash and cash equivalents at end of year |
2 |
209,754 |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Statement of Cash Flows |
| for the Year Ended 31st December 2022 |
| 1. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
| 2022 | 2021 |
| £ | £ |
| Profit before taxation |
| Depreciation charges |
| Profit on disposal of fixed assets | ( |
) | ( |
) |
| Finance costs | 71,778 | 37,258 |
| 699,870 | 627,301 |
| (Increase)/decrease in stocks | ( |
) |
| Decrease/(increase) in trade and other debtors | ( |
) |
| (Decrease)/increase in trade and other creditors | ( |
) |
| Cash generated from operations | ( |
) |
| 2. | CASH AND CASH EQUIVALENTS |
| The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts: |
| Year ended 31st December 2022 |
| 31.12.22 | 1.1.22 |
| £ | £ |
| Cash and cash equivalents | 335,700 | 209,754 |
| Bank overdrafts | ( |
) |
| 180,715 | 209,754 |
| Year ended 31st December 2021 |
| 31.12.21 | 1.1.21 |
| £ | £ |
| Cash and cash equivalents | 209,754 | 140,990 |
| Bank overdrafts | ( |
) |
| 209,754 | 78,072 |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Statement of Cash Flows |
| for the Year Ended 31st December 2022 |
| 3. | ANALYSIS OF CHANGES IN NET DEBT |
| At 1.1.22 | Cash flow | At 31.12.22 |
| £ | £ | £ |
| Net cash |
| Cash at bank and in hand | 209,754 | 125,946 | 335,700 |
| Bank overdrafts | - | (154,985 | ) | (154,985 | ) |
| 209,754 | ( |
) | 180,715 |
| Debt |
| Finance leases | (134,605 | ) | 78,065 | (56,540 | ) |
| Debts falling due within 1 year | (1,137,066 | ) | (223,391 | ) | (1,360,457 | ) |
| (1,271,671 | ) | (145,326 | ) | (1,416,997 | ) |
| Total | (1,061,917 | ) | (174,365 | ) | (1,236,282 | ) |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements |
| for the Year Ended 31st December 2022 |
| 1. | STATUTORY INFORMATION |
| Mec Com Limited is a |
| The presentation currency of the financial statements is the Pound Sterling (£). |
| 2. | STATEMENT OF COMPLIANCE |
| 3. | ACCOUNTING POLICIES |
| Basis of preparing the financial statements |
| Turnover |
| Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. |
| Turnover is recognised when the significant risks and rewards of ownership of the goods has transferred to the buyer. This is usually at the point the customer has signed for the delivery of the goods. |
| Tangible fixed assets |
| Improvements to property | - |
| Plant and machinery | - |
| Fixtures and fittings | - |
| Motor vehicles | - |
| Computer equipment | - |
| Tangible fixed assets are reviewed annually to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset is estimated and compared with its carrying amount. If estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss. |
| Stocks |
| Stocks are valued at the lower of cost, using the first in first out method, and selling price less costs to complete and sell. Provision is made for obsolete and slow moving items. |
| Research and development |
| Expenditure on research and development is written off in the year in which it is incurred. |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 3. | ACCOUNTING POLICIES - continued |
| Foreign currencies |
| Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the reporting date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
| Hire purchase and leasing commitments |
| Assets obtained under hire purchase contracts or finance leases are capitalised in the statement of financial position. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter. |
| The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability. |
| 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. |
| Debtors |
| Short term debtors are measured at transaction price, less any impairment. |
| Creditors |
| Short term trade and other creditors are measured at transaction price. Other financial liabilities, including bank loans, are initially measured at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method. |
| Derivative financial instruments |
| Derivative financial instruments are recognised at fair value with any gains or losses being reported in profit or loss. |
| Government grants |
| Grants received as a contribution towards capital expenditure are credited to income over the useful economic life of the related asset. |
| Grants relating to revenue are recognised in income on a systematic basis over the periods in which the entity recognises the related costs for which the grant is intended to compensate. |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 3. | ACCOUNTING POLICIES - continued |
| Taxation |
| Current tax is recognised for the amount payable in respect of the taxable profit for the current or past reporting periods using the tax rates and laws that have been enacted or substantively enacted by the reporting date. |
| Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the reporting date where transactions or events have occurred at that date that will result in an obligation to pay more tax in the future, or a right to pay less tax in the future. Timing differences are temporary differences between the company's taxable profits and its results as stated in the financial statements. |
| Deferred tax is measured on an undiscounted basis at the tax rates that are anticipated to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the reporting date. |
| 4. | 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: |
| 2022 | 2021 |
| £ | £ |
| UK | 7,235,649 | 7,166,916 |
| Europe | 6,494,756 | 4,519,710 |
| Rest of the World | 735,937 | 1,428,251 |
| 5. | EMPLOYEES AND DIRECTORS |
| 2022 | 2021 |
| £ | £ |
| Wages and salaries |
| Social security costs |
| Other pension costs |
| The average number of employees during the year was as follows: |
| 2022 | 2021 |
| Directors | 2 | 2 |
| Administration | 46 | 46 |
| Production | 56 | 55 |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 5. | EMPLOYEES AND DIRECTORS - continued |
| 2022 | 2021 |
| £ | £ |
| Directors' remuneration |
| 6. | OPERATING PROFIT |
| The operating profit is stated after charging/(crediting): |
| 2022 | 2021 |
| £ | £ |
| Plant hire |
| Depreciation - owned assets |
| Depreciation - assets on hire purchase contracts |
| Profit on disposal of fixed assets | ( |
) | ( |
) |
| Auditors' remuneration |
| Foreign exchange differences |
| Operating lease payments |
| Research and development expenditure |
| Government grants | ( |
) |
| 7. | INTEREST PAYABLE AND SIMILAR EXPENSES |
| 2022 | 2021 |
| £ | £ |
| Bank interest |
| Hire purchase interest |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 8. | TAXATION |
| Analysis of the tax credit |
| The tax credit on the profit for the year was as follows: |
| 2022 | 2021 |
| £ | £ |
| Current tax: |
| UK corporation tax |
| Adjustments in respect of |
| prior years | (17,581 | ) | (9,775 | ) |
| Total current tax |
| Deferred tax: Origination and reversal of timing differences |
( |
) |
( |
) |
| Tax on profit | ( |
) | ( |
) |
| UK corporation tax has been charged at 19% . |
| Reconciliation of total tax credit included in profit and loss |
| The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below: |
| 2022 | 2021 |
| £ | £ |
| Profit before tax |
| Profit multiplied by the standard rate of corporation tax in the UK of |
| Effects of: |
| Expenses not deductible for tax purposes | ( |
) |
| Research and development tax relief | (77,581 | ) | (54,775 | ) |
| Increase in tax rate | 4,741 | - |
| Total tax credit | (4,287 | ) | (13,955 | ) |
| 9. | DIVIDENDS |
| 2022 | 2021 |
| £ | £ |
| Ordinary A shares of £1 each |
| Dividends paid |
| Ordinary B shares of £1 each |
| Dividends paid |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 10. | TANGIBLE FIXED ASSETS |
| Improvements | Fixtures |
| to | Plant and | and |
| property | machinery | fittings |
| £ | £ | £ |
| COST |
| At 1st January 2022 |
| Additions |
| Disposals |
| At 31st December 2022 |
| DEPRECIATION |
| At 1st January 2022 |
| Charge for year |
| Eliminated on disposal |
| At 31st December 2022 |
| NET BOOK VALUE |
| At 31st December 2022 |
| At 31st December 2021 |
| Motor | Computer |
| vehicles | equipment | Totals |
| £ | £ | £ |
| COST |
| At 1st January 2022 |
| Additions |
| Disposals | ( |
) | ( |
) |
| At 31st December 2022 |
| DEPRECIATION |
| At 1st January 2022 |
| Charge for year |
| Eliminated on disposal | ( |
) | ( |
) |
| At 31st December 2022 |
| NET BOOK VALUE |
| At 31st December 2022 |
| At 31st December 2021 |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 10. | TANGIBLE FIXED ASSETS - continued |
| Fixed assets, included in the above, which are held under hire purchase contracts are as follows: |
| Plant and |
| machinery |
| £ |
| COST |
| At 1st January 2022 |
| Transfer to ownership | (71,750 | ) |
| At 31st December 2022 |
| DEPRECIATION |
| At 1st January 2022 |
| Charge for year |
| Transfer to ownership | (44,246 | ) |
| At 31st December 2022 |
| NET BOOK VALUE |
| At 31st December 2022 |
| At 31st December 2021 |
| 11. | STOCKS |
| 2022 | 2021 |
| £ | £ |
| Raw materials |
| Work-in-progress |
| Stock recognised as an expense in cost of sales during the year was £9,189,193 (2021 - £8,433,757). |
| 12. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
| 2022 | 2021 |
| £ | £ |
| Trade debtors |
| Other debtors |
| Prepayments and accrued income |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 13. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
| 2022 | 2021 |
| £ | £ |
| Bank loans and overdrafts (see note 15) |
| Hire purchase contracts (see note 16) |
| Trade creditors |
| Tax |
| Social security and other taxes |
| VAT | 65,342 | 137,694 |
| Other creditors |
| Debt factoring | 655,353 | 917,551 |
| Directors' current accounts | 12,555 | 1,230 |
| Accrued expenses |
| 14. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
| 2022 | 2021 |
| £ | £ |
| Hire purchase contracts (see note 16) |
| 15. | LOANS |
| An analysis of the maturity of loans is given below: |
| 2022 | 2021 |
| £ | £ |
| Amounts falling due within one year or on demand: |
| Bank overdrafts |
| Bank loans |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 16. | LEASING AGREEMENTS |
| Minimum lease payments fall due as follows: |
| Hire purchase | contracts |
| 2022 | 2021 |
| £ | £ |
| Gross obligations repayable: |
| Within one year |
| Between one and five years |
| Finance charges repayable: |
| Within one year |
| Between one and five years |
| Net obligations repayable: |
| Within one year |
| Between one and five years |
| Non-cancellable | operating leases |
| 2022 | 2021 |
| £ | £ |
| Within one year |
| Between one and five years |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 17. | SECURED DEBTS |
| The following secured debts are included within creditors: |
| 2022 | 2021 |
| £ | £ |
| Bank overdraft |
| Bank loans |
| Hire purchase contracts | 56,540 | 134,605 |
| Debt factoring | 655,353 | 1,195,480 |
| Bank overdrafts, bank loans and debt factoring are secured by a charge over all assets. Hire purchase liabilities are secured by the assets to which they relate. |
| 18. | PROVISIONS FOR LIABILITIES |
| 2022 | 2021 |
| £ | £ |
| Deferred tax |
| Accelerated capital allowances | 19,753 | 47,772 |
| Deferred |
| tax |
| £ |
| Balance at 1st January 2022 |
| Credit to Statement of Comprehensive Income during year | ( |
) |
| Balance at 31st December 2022 |
| The amount of the net reversal of deferred tax expected to occur in the forthcoming year is £19,753 (2021 - £35,146), relating to the reversal of existing timing differences on tangible fixed assets. |
| 19. | CALLED UP SHARE CAPITAL |
| Allotted, issued and fully paid: |
| Number: | Class: | Nominal | 2022 | 2021 |
| value: | £ | £ |
| Ordinary A | £1 | 1,000 | 1,000 |
| Ordinary B | £1 | 1,000 | 1,000 |
| Ordinary C | £1 | 120 | 120 |
| 2,120 | 2,120 |
| All shares rank pari passu in all respects. |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 20. | RESERVES |
| Capital |
| Retained | redemption |
| earnings | reserve | Totals |
| £ | £ | £ |
| At 1st January 2022 | 2,730,120 |
| Profit for the year | - |
| Dividends | ( |
) | - | ( |
) |
| At 31st December 2022 | 2,902,306 |
| Retained earnings consists of all current and prior period retained profits and losses. |
| Capital redemption reserve is the nominal value of share capital that has been repurchased by the company. |
| 21. | RELATED PARTY DISCLOSURES |
| European Fabrications S.R.L. |
| A company controlled by the directors of Mec Com Limited and with which Mec Com Limited trades on a regular basis. |
| During the year ended 31st December 2022 purchases of £3,733,758 (2021 - £3,363,949) were made from European Fabrications S.R.L. |
| Included in debtors at 31st December 2022 is £427,913 (2021 - £816,018) owed by European Fabrications S.R.L. |
| 22. | SIGNIFICANT JUDGEMENTS AND ESTIMATES |
| Management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying 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 only affects that period, or in the period of the revision and future periods if the revision affects both current and future periods. |
| The key source of estimation uncertainty that has a significant effect on the amounts recognised in the financial statements is the provision for slow-moving and obsolescent stock. |
| Mec Com Limited (Registered number: 03954360) |
| Notes to the Financial Statements - continued |
| for the Year Ended 31st December 2022 |
| 23. | FINANCIAL RISK MANAGEMENT |
| The company has exposures to the main areas of risk of customer credit exposure, liquidity, market and foreign exchange currency exposure. To a lesser extent, the company is exposed to interest rate risk. |
| Customer credit exposure |
| The company offers credit terms to its customers which allow payment of the debt after delivery of the goods. The company is at risk to the extent that a customer may be unable to pay the debt on the specified due date. |
| To mitigate the risk, the company makes use of independent rating agencies and other publicly available financial information. The company's exposure and its customers creditworthiness is continually monitored so that any potential problems are detected at an early stage. |
| Liquidity risk |
| The objective of the company in managing liquidity risk is to ensure that it can meet its financial obligations as and when they fall due. The company expects to meet its financial obligations through operating cash flows. The directors continually monitor both forecast and actual cash flows to identify potential problems at an early stage. |
| Market risk |
| The company faces fierce competition from low cost countries namely China, India and from those located in Eastern Europe. |
| The company continually works to streamline its cost base to ensure it remains competitive. Part of this ongoing initiative is the expansion of a global supply chain involving the procurement of high volume parts from China as well as medium to high volume products from facilities in Romania. |
| Foreign exchange currency exposure |
| A proportion of the company's sales are denominated in currencies other than Sterling which are only partially offset by expenses denominated in those currencies. A significant weakening of these currencies against sterling could materially impact the company's performance. |
| The company sets internal exchange rates for determining pricing and enters into forward contracts based on forecast transactions to achieve or better these rates. |
| Interest rate risk |
| The company borrows from its bankers using overdrafts and debt factoring facilities. Significant changes in interest rates would impact on the company's results. |