Company registration number SC362931 (Scotland)
J & W CARPETS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
J & W CARPETS LTD
COMPANY INFORMATION
Directors
Mr R Baillie
Mr W Baillie
Secretary
Mr G Andrew
Company number
SC362931
Registered office
Warehouse 1
Bonnyton Road
Kilmarnock
Ayrshire
KA1 2QP
Auditor
William Duncan + Co (Audit) Ltd
44 Bank Street
Kilmarnock
Ayrshire
KA1 1HA
Bankers
Bank of Scotland
123 High Street
Ayr
KA7 1QP
Solicitors
MacRoberts
Capella Building (10th Floor)
60 York Street
Glasgow
G2 8JX
J & W CARPETS LTD
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Profit and loss account
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 22
J & W CARPETS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

The directors present their strategic report together with the audited financial statements for the year ended 31 March 2023.

Business review & future prospects

The company experienced the affects of current market difficulties resulting in a drop in turnover. However the drop in demand for its goods led to better buying terms and gross margin increased.

 

Overheads continue to increase resulting in challenging trading conditions.

 

The balance sheet remains strong and the directors have considered the principal risk and uncertainties below.

Principal risks and uncertainties

The main risks to the company's performance are a drop in customer confidence, weakness of the pound sterling against the euro and increasing overheads. The company continues to monitor the effect of these in order to mitigate risks as much as possible.

 

Higher interest rates and inflation affect the company’s market place. House moves are good for business and as long as interest rates remain high trade from this source is unlikely to be as buoyant as in past years.

 

In previous years operations across the company were affected by lockdowns as and when enforced by government. Outwith the lockdowns, procedures were put in place to promote the health of customers, employees and stakeholders. We also put in place appropriate sanitising and social distancing guidelines. The management team monitor the operational situation regularly and have contingency plans in place should an outbreak occur in a store that could result in a short term shutdown at worst.

 

The strength of the company’s balance sheet may give it opportunities to expand in new areas and a few have been identified. Management continues to look for buying opportunities to improve margins and the company is well placed to take advantage of any upturn in the economy.

 

The company finances its working capital from retained earnings and has traditionally been cash positive. The company has a shareholder loan at the year end. The shareholders have confirmed this will not be re-called in full during the 12 months following sign off of these accounts. During the COVID-19 crisis, the company bolstered its funding by utilising a government backed CBILS loan of £250,000, which is being repaid on a monthly basis.

 

The company has a simple cashflow model given its low fixed cost base. A reverse stress test is not considered appropriate given the headroom in place. Based on the above, the directors are confident that the actions and strategies in place and available to them, results in the company being able to mitigate threats as they arise.

By order of the board

Mr G Andrew
Secretary
4 October 2023
J & W CARPETS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -

The directors present their annual report and financial statements for the year ended 31 March 2023.

Principal activities

The principal activity of the company continued to be that of the sale of carpet products.

Results and dividends

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

Ordinary dividends were paid amounting to £400,000. The directors do not recommend payment of a further dividend.

Directors

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

Mr R Baillie
Mr W Baillie
Auditor

William Duncan + Co (Audit) Ltd were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

By order of the board
Mr G Andrew
Secretary
4 October 2023
J & W CARPETS LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

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.

J & W CARPETS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF J & W CARPETS LTD
- 4 -
Opinion

We have audited the financial statements of J & W Carpets Ltd (the 'company') for the year ended 31 March 2023 which comprise the profit and loss account, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

J & W CARPETS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF J & W CARPETS LTD
- 5 -
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 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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's 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 an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

 

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. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

J & W CARPETS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF J & W CARPETS LTD
- 6 -

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Mr Graeme Bryson CTA, ACA
Senior Statutory Auditor
For and on behalf of William Duncan + Co (Audit) Ltd
4 October 2023
Chartered Accountants
Statutory Auditor
44 Bank Street
Kilmarnock
Ayrshire
KA1 1HA
J & W CARPETS LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
12,061,146
13,963,644
Cost of sales
(7,163,482)
(9,528,454)
Gross profit
4,897,664
4,435,190
Distribution costs
(514,645)
(460,660)
Administrative expenses
(3,609,014)
(3,190,642)
Other operating income
29,884
81,615
Operating profit
4
803,889
865,503
Interest payable and similar expenses
6
(7,138)
(1,154)
Profit before taxation
796,751
864,349
Tax on profit
7
(159,604)
(184,841)
Profit for the financial year
637,147
679,508

The profit and loss account has been prepared on the basis that all operations are continuing operations.

J & W CARPETS LTD
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
944,042
979,228
Current assets
Stocks
11
5,202,049
4,941,774
Debtors
12
974,642
386,644
Cash at bank and in hand
290,715
173,299
6,467,406
5,501,717
Creditors: amounts falling due within one year
13
(3,033,673)
(2,286,000)
Net current assets
3,433,733
3,215,717
Total assets less current liabilities
4,377,775
4,194,945
Creditors: amounts falling due after more than one year
14
(64,815)
(118,518)
Provisions for liabilities
Deferred tax liability
16
65,927
66,541
(65,927)
(66,541)
Net assets
4,247,033
4,009,886
Capital and reserves
Called up share capital
18
100
100
Profit and loss reserves
4,246,933
4,009,786
Total equity
4,247,033
4,009,886
The financial statements were approved by the board of directors and authorised for issue on 4 October 2023 and are signed on its behalf by:
Mr R Baillie
Mr W Baillie
Director
Director
Company Registration No. SC362931
J & W CARPETS LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 April 2021
100
4,480,278
4,480,378
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
679,508
679,508
Dividends
8
-
(1,150,000)
(1,150,000)
Balance at 31 March 2022
100
4,009,786
4,009,886
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
637,147
637,147
Dividends
8
-
(400,000)
(400,000)
Balance at 31 March 2023
100
4,246,933
4,247,033
J & W CARPETS LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
142,191
868,349
Interest paid
(7,138)
(1,154)
Income taxes paid
(178,957)
(171,297)
Net cash (outflow)/inflow from operating activities
(43,904)
695,898
Investing activities
Purchase of tangible fixed assets
(91,135)
(78,205)
Net cash used in investing activities
(91,135)
(78,205)
Financing activities
Proceeds from borrowings
707,981
(25,000)
Repayment of bank loans
(55,554)
(55,556)
Dividends paid
(400,000)
(1,150,000)
Net cash generated from/(used in) financing activities
252,427
(1,230,556)
Net increase/(decrease) in cash and cash equivalents
117,388
(612,863)
Cash and cash equivalents at beginning of year
173,299
786,162
Cash and cash equivalents at end of year
290,687
173,299
Relating to:
Cash at bank and in hand
290,715
173,299
Bank overdrafts included in creditors payable within one year
(28)
-
0
J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
1
Accounting policies
Company information

J & W Carpets Ltd is a private company limited by shares incorporated in Scotland. The registered office is Warehouse 1, Bonnyton Road, Kilmarnock, Ayrshire, KA1 2QP.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.4
Intangible fixed assets - goodwill

Goodwill represented the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It was initially recognised as an asset at cost and was subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings
5% straight line
Leasehold land and buildings
10% straight line
Fixtures and fittings
25% reducing balance
Computers
25% straight line
Motor vehicles
25% reducing balance
J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 12 -

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.6
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

1.7
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.9
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 13 -
Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
1.10
Equity instruments

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

1.11
Taxation

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.12
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

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

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.13
Retirement benefits

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

1.14
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

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

J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
1.15
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.16
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of carpet products
12,061,146
13,963,644
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
12,061,146
13,963,644
2023
2022
£
£
Other revenue
Grants received
-
81,615
J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 16 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
94,058
21,803
Government grants
-
(81,615)
Fees payable to the company's auditor for the audit of the company's financial statements
33,080
33,202
Depreciation of owned tangible fixed assets
126,321
155,352
Operating lease charges
360,329
131,405
5
Employees

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

2023
2022
Number
Number
Sales and administration
71
75

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
2,171,363
2,094,313
Social security costs
219,763
203,143
Pension costs
44,661
44,824
2,435,787
2,342,280
6
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
7,138
1,154
7
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
159,671
178,410
Adjustments in respect of prior periods
547
(2,732)
Total current tax
160,218
175,678
J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
7
Taxation
2023
2022
£
£
(Continued)
- 17 -
Deferred tax
Origination and reversal of timing differences
(614)
9,163
Total tax charge
159,604
184,841

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
796,751
864,349
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
151,383
164,226
Tax effect of expenses that are not deductible in determining taxable profit
354
1,841
Tax effect of income not taxable in determining taxable profit
-
0
(184)
Effect of change in corporation tax rate
(147)
15,970
Depreciation on assets not qualifying for tax allowances
9,964
9,505
Under/(over) provided in prior years
547
(2,733)
Enhanced capital allowances
(2,497)
(3,784)
Taxation charge for the year
159,604
184,841
8
Dividends
2023
2022
£
£
Final paid
400,000
1,150,000
J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 18 -
9
Intangible fixed assets
Goodwill
£
Cost
At 1 April 2022
145,000
Disposals
(145,000)
At 31 March 2023
-
0
Amortisation and impairment
At 1 April 2022
145,000
Disposals
(145,000)
At 31 March 2023
-
0
Carrying amount
At 31 March 2023
-
0
At 31 March 2022
-
0

In year ended 31 March 2023 an annual impairment review was undertaken on the carrying value of goodwill. Goodwill has been written down accordingly in line with its considered net realisable value.

10
Tangible fixed assets
Freehold land and buildings
Leasehold land and buildings
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 April 2022
936,838
321,965
883,407
21,051
216,662
2,379,923
Additions
-
0
24,140
66,995
-
0
-
0
91,135
At 31 March 2023
936,838
346,105
950,402
21,051
216,662
2,471,058
Depreciation and impairment
At 1 April 2022
281,283
227,228
718,231
18,801
155,152
1,400,695
Depreciation charged in the year
46,842
3,808
58,043
2,250
15,378
126,321
At 31 March 2023
328,125
231,036
776,274
21,051
170,530
1,527,016
Carrying amount
At 31 March 2023
608,713
115,069
174,128
-
0
46,132
944,042
At 31 March 2022
655,555
94,737
165,176
2,250
61,510
979,228
J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 19 -
11
Stocks
2023
2022
£
£
Finished goods and goods for resale
5,202,049
4,941,774
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
946,803
386,644
Prepayments and accrued income
27,839
-
0
974,642
386,644
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
55,584
57,407
Other borrowings
15
976,646
268,665
Trade creditors
1,384,604
1,564,382
Corporation tax
159,671
178,410
Other taxation and social security
377,121
164,375
Accruals and deferred income
80,047
52,761
3,033,673
2,286,000
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
64,815
118,518

Secured Loan

 

During May 2020 the company received loan funding of £250,000 under the Coronavirus Business Interruption Loan Scheme. The loan is repayable in 54 equal instalments commencing December 2020 and due to be fully repaid by May 2025.

 

During the first 12 months the interest was repaid by the UK Government. Thereafter interest is repayable by the company at 1.84% over base rate.

 

The loan is secured on the assets of the company via a bond and floating charge.

J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 20 -
15
Loans and overdrafts
2023
2022
£
£
Bank loans
120,371
175,925
Bank overdrafts
28
-
0
Loans from related parties
976,646
268,665
1,097,045
444,590
Payable within one year
1,032,230
326,072
Payable after one year
64,815
118,518
16
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
65,927
66,541
2023
Movements in the year:
£
Liability at 1 April 2022
66,541
Credit to profit or loss
(614)
Liability at 31 March 2023
65,927
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
44,661
44,824

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 21 -
19
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
94,440
114,217
Between two and five years
56,403
135,090
150,843
249,307
Lessor

The operating leases represent leases of property to third parties. The leases are negotiated over terms of 10 years and rentals are fixed for 5 years. All leases include a provision for five-yearly upward rent reviews according to prevailing market conditions. There are no options in place for either party to extend the lease terms.

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

2023
2022
£
£
Within one year
33,000
-
0
Between two and five years
99,000
-
0
132,000
-
0
20
Related party transactions

During the year the Company had transactions with J & W Carpets Irvine and J & W Carpets East Kilbride, both unincorporated entities in which the directors of J & W Carpets have an interest. These transactions were carried out on a normal commercial basis.

 

Sales to and expenses met on behalf of J & W Carpets Irvine amounted to £744,733 (2022 - £888,012) and the sum of £318,797 (2022 - £119,356) remained outstanding and due to J & W Carpets Limited as at 31 March 2023. Sales to the sole trader were at original cost.

 

Sales to and expenses met on behalf of J & W Carpets East Kilbride amounted to £1,997,164 (2022 - £1,982,336) and the sum of £499,527 (2022 - £230,242) remained outstanding and due to J & W Carpets Limited as at 31 March 2023. Sales to the sole trader were at original cost.

 

During the year sales to and expenses met on behalf of J & W Carpets Larkhall, a related party unincorporated entity operated by a family member of one of the directors, amounted to £88,803 (2022 - £58,270) and the sum of £114,548 (2022 - £36,947) remained outstanding and due to J & W Carpets Limited as at 31 March 2023. Sales to the sole trader were at original cost.

 

During the year sales of £233,608 (2022 - £366,061) were made to JW Carpet Warehouse Limited, a related party controlled by a family member and the sum of £23,828 (2022 - £Nil) remained outstanding and due to J & W Carpets Limited as at 31 March 2023. Sales to the company were at original cost.

 

Included within creditors due within 1 year is £976,646 (2022 - £268,665) due to the shareholders. These loans have no fixed repayment terms and bears no interest. Certain properties owned by the shareholders are also occupied by the company rent free.

J & W CARPETS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
21
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
637,147
679,508
Adjustments for:
Taxation charged
159,604
184,841
Finance costs
7,138
1,154
Depreciation and impairment of tangible fixed assets
126,321
155,352
Movements in working capital:
Increase in stocks
(260,275)
(595,571)
(Increase)/decrease in debtors
(587,998)
251,908
Increase in creditors
60,254
191,157
Cash generated from operations
142,191
868,349
22
Analysis of changes in net debt
1 April 2022
Cash flows
31 March 2023
£
£
£
Cash at bank and in hand
173,299
117,416
290,715
Bank overdrafts
-
0
(28)
(28)
173,299
117,388
290,687
Borrowings excluding overdrafts
(444,590)
(652,427)
(1,097,017)
(271,291)
(535,039)
(806,330)
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