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Registered number: 05956820
The Meliora Group Limited
Annual report and consolidated financial statements
for the year ended 31 January 2023
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The Meliora Group Limited
Company Information
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Statutory Auditor & Chartered Accountants
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Thames Gateway South Commercial Centre
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The Meliora Group Limited
Contents
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Independent auditor's report
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Consolidated statement of comprehensive income
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Consolidated balance sheet
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Consolidated statement of changes in equity
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Company statement of changes in equity
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Consolidated statement of cash flows
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Notes to the financial statements
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The Meliora Group Limited
Group Strategic Report
for the year ended 31 January 2023
The directors have pleasure in presenting their strategic report for the year ended 31 January 2023. The directors aim to present a balanced and comprehensive review of the development and performance of the group’s business during the year and its position at the year end. The review is consistent with the size and nature of the business and is written in the context of the risks and uncertainties that the group faces.
The directors are delighted to be able to report significant turnover growth in this financial year (27.5%) resultant from a concerted effort to actively invest in, and thus able to develop, market share as the impact of COVID-19 upon the economy and the client base generally lessened.
For the second year running, the group was able to report a significant improvement in the level of gross profit margins reported (to 42.6% from 38.1%), reflecting the board’s ongoing efforts to restructure the business to deliver greater operational efficiencies through investment in both processes and innovation.
The improvement in turnover levels and gross profit margins reported has led the group to report a significant change in profitability at £517,102 before tax (3.2%) as compared to, in itself, a strong performance in a COVID impacted year last year of £183,768 (1.4%).
The directors recognise that market and economic conditions may necessitate some consolidation upon recent growth levels delivered, but with investment in enhanced CRM systems, direct sales and marketing management the board are confident that recent profitability trends are attainable.
Principal risks and uncertainties
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The directors recognise that risk is inherent in any business and seek to manage risk in a controlled manner.
The key business risks are set out as follows:
Economic – the group is subject to many of the same general economic risks faced by other businesses especially during periods of economic downturn. The group seeks to mitigate this risk by having a diverse geographical and sector mix of customers.
Commercial – the group operates in a competitive marketplace and faces competition from other manufacturers. The group seeks to mitigate this risk by continually developing and expanding their product range, and offering an extensive range of high quality products.
Financing – the group’s funding requirements are met through a combination of medium term loans and short term invoice discounting facilities.
Financial – the group has a specific exposure to credit risk, liquidity risk, and interest rate fluctuations. The group has established a number of policies and management tools to mitigate the risks presented.
Page 1
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The Meliora Group Limited
Group Strategic Report (continued)
for the year ended 31 January 2023
Financial key performance indicators
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The key performance indicators are as follows:
The directors monitor a range of KPIs on a regular basis including operating efficiency, asset utilisation, liquidity and asset ratios, as well as extensive short and medium term cash flow forecasting systems.
This report was approved by the board on 24 October 2023 and signed on its behalf.
Page 2
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The Meliora Group Limited
Directors' Report
for the year ended 31 January 2023
The directors present their report and the financial statements for the year ended 31 January 2023.
Directors' responsibilities statement
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The directors are responsible for preparing the group strategic report, the directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments 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 Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The company acted as a holding company to its wholly owned subsidiaries, Delga Press Limited, Collector Set Printers Limited and Delga Labels Limited, all engaged in the printing industry, and Martin Paper Sales Limited engaged in paper supply.
There are three further subsidiaries, Scarbutts Printers Limited, Boxable Limited (formerly Six Sides Packaging Limited) and TT Litho Limited that are all dormant.
The profit for the year, after taxation, amounted to £339,219 (2022 - £163,365).
Dividends paid during the period totalled £329,033 (2022: £Nil).
The directors who served during the year were:
The board is focused upon the delivery of organic and acquisitive growth.
Page 3
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The Meliora Group Limited
Directors' Report (continued)
for the year ended 31 January 2023
Disclosure of information to auditor
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Each of the persons who are directors at the time when the directors' report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the company and the Group's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company and the Group's auditor is aware of that information.
Post balance sheet events
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There have been no significant events affecting the group since the year end.
The auditor, Kreston Reeves LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 24 October 2023 and signed on its behalf.
Page 4
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The Meliora Group Limited
Independent Auditor's Report to the Members of The Meliora Group Limited
We have audited the financial statements of The Meliora Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 January 2023, which comprise the Group statement of comprehensive income, the Group and Company balance sheets, the Group statement of cash flows, the Group and Company statement of changes in equity and the related notes, 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 Group's and of the parent Company's affairs as at 31 January 2023 and of the Group's 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.
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 Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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
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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 Group's or the parent 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.
Page 5
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The Meliora Group Limited
Independent Auditor's Report to the Members of The Meliora Group Limited (continued)
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.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the group 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 group strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the group strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent Company 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
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As explained more fully in the directors' responsibilities statement set out on page 3, 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 Group's and the parent 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 Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Page 6
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The Meliora Group Limited
Independent Auditor's Report to the Members of The Meliora Group Limited (continued)
Auditor's responsibilities for the audit of the financial statements
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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 Group 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:
Capability of the audit in detecting irregularities, including fraud
The objectives of our audit are to identify and assess the risks of material misstatement of the financial statements due to fraud or error; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud or error; and to respond appropriately to those risks.
Based on our understanding of the Group and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and taxation legislation. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure and management bias in accounting estimates and judgemental areas of the financial statements such as the valuation of stock and other provisions. Audit procedures performed by the engagement team included:
∙discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations (including health and safety) and fraud;
∙challenging assumptions and judgments made by management in its significant accounting estimates;
∙performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
∙reading minutes of meetings of those charged with governance, and reviewing correspondence with relevant tax authorities; and
∙identifying and testing journal entries, in particular any manual entries made at the year end for financial statement preparation.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. 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.
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
Page 7
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The Meliora Group Limited
Independent Auditor's Report to the Members of The Meliora Group Limited (continued)
are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the group's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the group to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
∙Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
This report is made solely to the group'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 group'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 group and the group's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Allan Pinner FCCA (senior statutory auditor)
for and on behalf of
Kreston Reeves LLP
Statutory Auditor
Chartered Accountants
Chatham Maritime
24 October 2023
Page 8
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The Meliora Group Limited
Consolidated Statement of Comprehensive Income
for the year ended 31 January 2023
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Exceptional administrative expenses
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit for the financial year
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All profit is attributable to the owners of the parent company.
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There was no other comprehensive income for 2023 (2022: £NIL).
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The notes on pages 15 to 37 form part of these financial statements.
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Page 9
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The Meliora Group Limited
Registered number: 05956820
Consolidated Balance Sheet
as at 31 January 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 24 October 2023.
The notes on pages 15 to 37 form part of these financial statements.
Page 10
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The Meliora Group Limited
Registered number: 05956820
Company Balance Sheet
as at 31 January 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Creditors: amounts falling due after more than one year
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Capital redemption reserve
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Profit and loss account brought forward
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Profit/(loss) for the year
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Other changes in the profit and loss account
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 24 October 2023.
The notes on pages 15 to 37 form part of these financial statements.
Page 11
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The Meliora Group Limited
Consolidated Statement of Changes in Equity
for the year ended 31 January 2023
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Capital redemption reserve
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Shares issued during the year
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Shares redeemed during the year
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Transfer to/from profit and loss account
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Share capital
This represents the nominal value of shares that have been issued by the company.
Share premium account
This reserve records the amount above the nominal value received for shares issued by the company. Share premium may only be utilised to write-off any expenses incurred or commissions paid on the issue of those shares, or to pay up new shares to be allotted to members as fully paid bonus shares.
Capital redemption reserve
This reserve records the nominal value of shares repurchased by the company.
Profit and loss account
This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the company's shareholders.
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Page 12
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The Meliora Group Limited
Company Statement of Changes in Equity
for the year ended 31 January 2023
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Capital redemption reserve
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Shares issued during the year
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Shares redeemed during the year
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Transfer to/from profit and loss account
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Share capital
This represents the nominal value of shares that have been issued by the company.
Share premium account
This reserve records the amount above the nominal value received for shares issued by the company. Share premium may only be utilised to write-off any expenses incurred or commissions paid on the issue of those shares, or to pay up new shares to be allotted to members as fully paid bonus shares.
Capital redemption reserve
This reserve records the nominal value of shares repurchased by the company.
Profit and loss account
This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the company's shareholders.
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Page 13
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The Meliora Group Limited
Consolidated Statement of Cash Flows
for the year ended 31 January 2023
Cash flows from operating activities
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Profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Loss on disposal of tangible assets
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Decrease/(increase) in stocks
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(Increase)/decrease in debtors
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Increase/(decrease) in creditors
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Net cash from investing activities
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Cash flows from financing activities
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Repayment of/new finance leases
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Movement in invoice discounting facility
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Net cash used in financing activities
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Net increase/(decrease) in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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Page 14
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
The Meliora Group Limited is a limited liability company incorporated in England and Wales, registration number 05956820. The address of the registered office and principal place of business is Seaplane House, Sir Thomas Longley Road, Medway City Estate, Rochester, Kent, ME2 4DP. The principal activity of the group can be found in the Directors' report.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with UK GAAP, the group annually assesses whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the ability of the group to continue as a going concern and meet its obligations as they become due, for at least one year after the date that the financial statements are issued. The evaluation is based on relevant conditions and events that are known or reasonably knowable at this date.
The financial statements have been prepared on the going concern basis.
Page 15
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
2.Accounting policies (continued)
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Sale of goods
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of turnover can be measured reliably;
∙it is probable that the Group will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of turnover can be measured reliably;
∙it is probable that the Group will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
The Group is also contracted to provide certain printing over various periods and hold a level of three months stock at any one time which the customer is contracted to buy. Revenue on such items is therefore recognised at the point that the Group is entitled to the revenue, i.e. upon production.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the consolidated statement of comprehensive income in the same period as the related expenditure.
Page 16
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
2.Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the consolidated statement of comprehensive income over its useful economic life, this is considered to be fifteen years since its inception in 2007. Goodwill acquired since 2007 is being amortised over a period of ten years.
The useful economic life of the goodwill has been determined by considering the build up of the goodwill and the expected period from which revenue will be generated from each constituent part included within.
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.
Depreciation is provided on the following bases:
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Leasehold land and buildings
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Over the period of the lease
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3 - 10 years straight line or 10% to 50% reducing balance
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17% to 33% reducing balance
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Fixtures, fittings and equipment
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15% to 50% reducing balance / 33% straight line
|
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Page 17
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
2.Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
In the consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the balance sheet.
The Group enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities such as trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, such as the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and 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 consolidated statement of comprehensive income.
Page 18
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is pound sterling.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Page 19
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
2.Accounting policies (continued)
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
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Operating leases: the Group as lessee
|
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
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Leasing and hire purchase
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Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the Consolidated statement of comprehensive income so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the Group in independently administered funds.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.
Page 20
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
2.Accounting policies (continued)
Interest income is recognised in profit or loss using the effective interest method.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
The group has an agreement with HSBC Bank Plc whereby the majority of its trade debtors are invoice discounted, with recourse after 60 days. On the basis that the benefits and risks attaching to the debts remain with the company, a separate presentation has been adopted, in accordance with FRS102 section 2. On this basis the gross debts are included as an asset within trade debtors and the proceeds received are included separately within creditors as a liability.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders.
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Judgments in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires the directors to make judgments, estimates and assumptions that can affect the amounts reported for assets and liabilities, and the results for the period. The nature of estimation is such though that actual outcomes could differ significantly from those estimates.
Page 21
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
3.Judgments in applying accounting policies (continued)
The following judgments have had the most significant impact on amounts recognised in the financial statements:
Lease commitments
The Group has entered into a range of lease commitments in respect of property, plant and equipment. The classification of these leases as either financial or operating leases requires the directors to consider whether the terms and conditions of each lease are such that the Group has acquired the risks and rewards associated with the ownership of the underlying assets.
Tangible fixed assets
The Group has recognised tangible fixed assets with a carrying value of £1,708,325 at the reporting date (see note 14). These assets are stated at their cost less provision for depreciation and impairment. The Group’s accounting policy sets out the approach to calculating depreciation for immaterial assets acquired. For material assets such as land and buildings the Group determines at acquisition reliable estimates for the useful life of the asset, its residual value and decommissioning costs. These estimates are based upon such factors as the expected use of the acquired asset and market conditions. At subsequent reporting dates the directors consider whether there are any factors such as technological advancements or changes in market conditions that indicate a need to reconsider the estimates used.
Where there are indicators that the carrying value of tangible fixed assets may be impaired the Group undertakes tests to determine the recoverable amount of assets. These tests require estimates of the fair value of assets less cost to sell and of their value in use. Wherever possible the estimate of the fair value of assets is based upon observable market prices less incremental cost for disposing of the asset. The value in use calculation is based upon a discounted cash flow model, based upon the Group’s forecasts for the foreseeable future which do not include any restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well expected future cash flows and the growth rate used for extrapolation purposes.
Work in progress
The Group considers the level of work on going at each period end, ensuring that jobs are appropriately accrued, deferred or treated as work in progress, based upon the level of work undertaken. This requires an element of estimation in respect of progress made on jobs at any one point in time.
Taxation
Provision has been made in the financial statements for deferred tax amounting to £327,860 at the reporting date (see notes 11 and 23). This provision is based upon estimates of the availability of future taxable profits, the timing of the reversal of timing differences upon which the provision is based and the tax rates that will be in force at that time together with an assessment of the impact of future tax planning strategies.
Leasehold dilapidations
Provision has been made in the financial statements for the expected cost of leasehold dilapidations amounting to £947,500. This provision is based upon an assessment undertaken by a third party expert of the condition of leasehold properties and their estimate of the cost of the necessary work required to comply with the lease terms.
Page 22
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
The whole of the turnover is attributable to the principal activities.
Analysis of turnover by country of destination:
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Government grants receivable
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The operating profit is stated after charging:
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Other operating lease rentals
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Depreciation of tangible fixed assets
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Amortisation of intangible assets, including goodwill
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Fees payable to the Group's auditor and its associates for the audit of the Group's annual accounts
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Page 23
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Group contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to 4 directors (2022 - 4) in respect of defined contribution pension schemes.
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The highest paid director received remuneration of £127,806 (2022 - £137,649).
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The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £26,321 (2022 - £10,820).
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Page 24
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
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Other interest receivable
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Interest payable and similar expenses
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Finance leases and hire purchase contracts
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Current tax on profits for the year
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Origination and reversal of timing differences
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Taxation on profit on ordinary activities
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Page 25
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
11.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2022 - lower than) the standard rate of corporation tax in the UK of 19% (2022 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
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Non-tax deductible amortisation of goodwill and impairment
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for year in excess of depreciation
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Other differences leading to an increase (decrease) in the tax charge
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Total tax charge for the year
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Factors that may affect future tax charges
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The group has trade losses of £187,312 (2022: £1,334,623) and capital losses of £33,802 (2022: £33,802) to carry forward.
On 24 May 2021, the Finance Bill 2021, was substantively enacted, increasing the main rate of corporation tax to 25% on 1 April 2023, for companies with taxable profits over £250,000.
Page 26
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
|
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The Company has no goodwill.
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Page 27
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
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Leasehold land and buildings
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Fixtures, fittings and equipment
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The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
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Page 28
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
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Investments in subsidiary companies
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The following were subsidiary undertakings of the Company:
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Collector Set Printers Limited
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Martin Paper Sales Limited
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Scarbutts Printers Limited
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Boxable Limited (formerly Six Sides Packaging Limited)
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The registered office address for all subsidiaries is Seaplane House, Sir Thomas Longley Road, Medway City Estate, Rochester, Kent, ME2 4DP.
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Raw materials and consumables
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Finished goods and goods for resale
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Page 29
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
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Amounts owed by group undertakings
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Prepayments and accrued income
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The group is able to raise finance secured against approved trade debtors. The gross amount of the debts, which are discounted at 31 January 2023 is £1,874,226 (2022: £1,521,554).
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Cash and cash equivalents
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Page 30
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Obligations under finance lease and hire purchase contracts
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Accruals and deferred income
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The bank loan, with the exception of the CBIL are secured by way a charge over all the assets and an undertaking from the Group companies including all present and future freehold and leasehold properties, books and other debts, chattels, goodwill and uncalled capital, both present and future. A guarantee has also been given by the current directors, to secure these bank loans of the company limited to £125,000 for the CBIL.
Invoice discounting relates to amounts owed to an invoice financing company which has been secured on the debts arising from the group.
Obligations under hire purchase agreements are secured by a charge over the individual assets that are subject of the agreement.
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Creditors: Amounts falling due after more than one year
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Net obligations under finance leases and hire purchase contracts
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Page 31
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
|
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Amounts falling due 2-5 years
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Hire purchase and finance leases
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Minimum lease payments under hire purchase fall due as follows:
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Charged to profit or loss
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Page 32
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
23.Deferred taxation (continued)
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Charged to profit or loss
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Accelerated capital allowances
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Tax losses carried forward
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Charged to profit or loss
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Allotted, called up and fully paid
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570 (2022 - 5,700) Ordinary B shares of £1.00 each
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3,990 (2022 - 0) Ordinary A shares of £1.00 each
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570 (2022 - 0) Ordinary C shares of £1.00 each
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570 (2022 - 0) Ordinary D shares of £1.00 each
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Page 33
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
25.Share capital (continued)
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On 31 January 2023 5,130 of the Ordinary B £1 shares were reassigned to 3,990 Ordinary A £1, 570 Ordinary C £1 and 570 Ordinary D £1 shares.
These shares rank pari passu in all respects subject to the division of annual profits through dividends, which may be declared at differing rates across the share classes.
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On 26 July 2016 the company granted options to certain employees in respect of a maximum of 9,600 B Ordinary shares of £1 each, at an exercise price of £3.80 per share. The options have a vesting period of three years before they are able to be exercised. These options lapse on the earlier of the tenth anniversary of the grant date, the date the employee ceases employment with the company and the Option Holder being adjudicated bankrupt. All options were exercised or forfeited during the prior year.
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Weighted average exercise price (pence)
2023
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Weighted average exercise price
(pence)
2022
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Outstanding at the beginning of the year
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Forfeited during the year
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Exercised during the year
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Outstanding at the end of the year
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At the balance sheet date, the Company had the following contingent liability.
The Company is included in group banking facilities. The Company's assets are charged to the Group's bankers to guarantee the total bank indebtedness owing by The Meliora Group Limited and its UK subsidiary undertakings. At 31 January 2023 the total non CBIL bank indebtedness owed by the Group to the bank amounted to £nil (2022: £872,575). Under the terms of the group banking facility, the Company has a contingent liability of £nil (2022: £873,003).
Page 34
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
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At 31 January 2023 the Group and Company had capital commitments as follows:
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Contracted for but not provided in these financial statements
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Commitments under operating leases
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At 31 January 2023 the Group had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Later than 1 year and not later than 5 years
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The Company had no commitments under non-cancellable operating leases at the balance sheet date.
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Related party transactions
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As at 31 January 2023, one of the directors owed the group £66 (2022: £2,166).
Key management personnel
All directors who have authority and responsibility for planning, directing and controlling the activities of the company are considered to be key management personnel. Total remuneration in respect of these individuals is £436,113 (2022: £595,029).
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Page 35
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
The Company is under the control of I M Conetta.
Page 36
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The Meliora Group Limited
Notes to the Financial Statements
for the year ended 31 January 2023
Page 37
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