Company registration number SC084590 (Scotland)
SCOTIA DOUBLE GLAZING LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SCOTIA DOUBLE GLAZING LIMITED
CONTENTS
Page
Company information
1
Strategic report
2 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 23
SCOTIA DOUBLE GLAZING LIMITED
COMPANY INFORMATION
- 1 -
Directors
Mr G F Smith
Mr M A Smith
Mr M Woods
Mr A Bone
Mr A Campbell
(Appointed 30 October 2023)
Company number
SC084590
Registered office
Unit 2
Moorfield Park
Kilmarnock
Scotland
KA2 0FJ
Auditor
Consilium Audit Limited
169 West George Street
Glasgow
Scotland
G2 2LB
SCOTIA DOUBLE GLAZING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
The directors present the strategic report for the year ended 30 June 2023.
Review of Business and Key Performance Indicators
The corrosive effects of inflationary pressures were the primary focus during the course of the year as higher raw material prices in the wider economy ultimately applied a dampener to consumer spending. The government’s policy to meet a 2% inflation target was breached by the near-doubling of wholesale gas prices over the summer, which ultimately fed through into retail energy charges and exacerbated the fall in real incomes for UK households. The eventual slowdown in demand for new houses flattened the strength accrued in the first half of the year with overall revenues holding up at £28.1m (2022: £28.1m).
Continued cost pressures were brought to bear by suppliers over the course of the year and, again, a large proportion of these had to be absorbed by the Company owing to sales prices already established with customers to ensure stability. Capital expenditure in excess of £1m over the two financial years 2022 and 2023 helped deliver the production efficiencies that afforded a degree of protection against these cost increases and achieved a modest reduction in overall spend. Additionally, these improvements offered up beneficial changes to working patterns and helped to minimise the impact of increases to direct pay rates across all divisions driven by competition for labour and the Company’s continued commitment to the Real Living Wage. Against this challenging backdrop, these measures combined to improve the net margin percentage to 8.91% (2022: 7.33%) and in turn ensure that customers were guaranteed security and continuity of supply.
The Company’s own exposure to high energy and fuel costs as a consequence of the ongoing war in Ukraine, resulted in a significant increase in the costs of transport and distribution. However, a proportion of the fleet had the flexibility to be scaled back towards the end of the year as demand for housing began to weaken. Elsewhere, utility supply contracts remain in place until Q2 2024 by which time the hope is that energy prices will have fallen further.
A renewed focus on stock and quality management during the year brought further investment in new tracking systems which, together with improved control of hardware storage and distribution, have created better working practices and a reduction in loss and wastage. Recycling initiatives also continued and the Company expects to have all its waste glass returned to the manufacturing loop from early 2024, significantly reducing its output to landfill and further improving its environmental credentials. Training in preventative maintenance and repair of production equipment has continued to extend the Company’s engineering resource, reducing downtime and protecting the lifespan of assets, and the associated savings of all these measures have contributed to offset against the proportion of material price increases that could not be passed on.
The design and manufacture of aluminium products at the Moorfield Park campus has been expanded to address increasing demand from existing new build customers as well as from commercial and residential projects from new sources. The Company was awarded its first local authority contract for a new primary school in East Ayrshire and has since been appointed to supply and install windows and doors at the first of three new schools in Edinburgh. All this has required significant investment in tooling and training, and this will continue so that the skills base rises to meet the technical expertise which lends itself to securing projects with energy efficient design requirements. This knowledge bank puts the Company in a position of strength with the advent of the Future Homes Standard which will require all new housing in the UK to be built to the highest energy efficiency standards.
The growing incidence of cyber-attacks and business interruption in general prompted a review of storage and back-up systems during the year and, as part of the works towards achieving Cyber Essentials accreditation, the Company has migrated to cloud hosting as a more robust alternative to on-premises electronic file sharing and archiving.
SCOTIA DOUBLE GLAZING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
Principal Risks and Uncertainties
Despite uncertainty in the wider economy and pressures on the housebuilding sector in particular, the directors continue to consider the main risk facing the Company to come from competition within the industry. Whilst reputation, and high standards of quality and service all contribute towards mitigating this in part, the board took the decision in Q3 to create a new, senior role in Operations to further develop the management structure and drive processes to achieve efficiencies whilst continuing to deliver improvements in output. This was augmented at the year end with the appointment of a Commercial Analyst to support the Finance team to ensure revenues and production costs are analysed for accuracy and properly allocated between divisions across the business.
Interest rate rises over the course of the year, and cost of living pressures impacting mortgage affordability combined latterly to defuse the heat from the new build market. This has brought pressure on the sub-contracting community from housebuilders to reduce prices and, despite a healthy pipeline of tendered work awarded, call-off volumes will be the main barometer of the sector’s stability as the economy looks ahead to a general election in 2024.
Exposure to the failure of companies within our customer portfolio and the resulting challenge faced in recovering monies owed remains a risk to the business. Subsequent to the financial year under review, the Stewart Milne Group of companies entered administration to which the Company was exposed. It is still uncertain what the outcome of this case will be and whilst adequate provision has been made it will still have a resultant impact on cash. As a direct consequence credit lines across the Company's entire customer base are being tightened to reduce the associated risk.
Financial Risk Management
The focus on cash collection continued during the year as a prudent approach to the market slowdown, whilst reduction of the Company’s debt position with HSBC, through the two Government-backed loans, and the conventional debt facility (due to be fully repaid in 2024), continued apace.
Mr G F Smith
Director
4 March 2024
SCOTIA DOUBLE GLAZING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The principal activity of the Company in the year under review was that of manufacture and installation of windows and doors to both the new build and trade markets.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £1,500,000 (2022: £1,100,000). 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 G F Smith
Mr M A Smith
Mr M Woods
Mr A Bone
Mr A Campbell
(Appointed 30 October 2023)
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees, through meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
Auditor
The auditor, Consilium Audit Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
SCOTIA DOUBLE GLAZING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 5 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement 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.
On behalf of the board
Mr G F Smith
Director
4 March 2024
SCOTIA DOUBLE GLAZING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SCOTIA DOUBLE GLAZING LIMITED
- 6 -
Opinion
We have audited the financial statements of Scotia Double Glazing Limited (the 'company') for the year ended 30 June 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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:
give a true and fair view of the state of the company's affairs as at 30 June 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
SCOTIA DOUBLE GLAZING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCOTIA DOUBLE GLAZING LIMITED
- 7 -
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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the 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.
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
SCOTIA DOUBLE GLAZING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCOTIA DOUBLE GLAZING LIMITED
- 8 -
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
We ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.
We identified the laws and regulations applicable to the company through discussions with directors and management and from our knowledge of the regulatory environment relevant to the company.
We assessed the extent of compliance with laws and regulations through making enquiries of management and inspecting legal correspondence.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by making enquiries of management as to where they considered there was susceptibility to fraud and their knowledge of actual, suspected and alleged fraud.
To address the risk of fraud through management bias and override of controls, we tested journal entries to identify unusual transactions, we assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias and we investigated the rationale behind significant or unusual transactions.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
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.
David Holt
Senior Statutory Auditor
For and on behalf of Consilium Audit Limited
Statutory Auditor
169 West George Street
Glasgow
Scotland
G2 2LB
4 March 2024
SCOTIA DOUBLE GLAZING LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 9 -
2023
2022
Notes
£
£
Turnover
28,137,603
28,088,924
Cost of sales
(21,297,282)
(21,997,121)
Gross profit
6,840,321
6,091,803
Distribution costs
(772,802)
(719,397)
Administrative expenses
(3,484,328)
(3,275,769)
Other operating income
29,255
40,585
Operating profit
3
2,612,446
2,137,222
Interest payable and similar expenses
6
(103,774)
(77,064)
Profit before taxation
2,508,672
2,060,158
Tax on profit
7
(543,011)
(450,966)
Profit for the financial year
1,965,661
1,609,192
The profit and loss account has been prepared on the basis that all operations are continuing operations.
The notes on pages 12 to 24 form part of these financial statements.
SCOTIA DOUBLE GLAZING LIMITED
BALANCE SHEET
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
9
2,256,209
2,151,469
Current assets
Stocks
10
836,387
1,337,375
Debtors
11
6,408,245
8,535,733
Cash at bank and in hand
2,071,904
1,226,471
9,316,536
11,099,579
Creditors: amounts falling due within one year
12
(5,788,298)
(7,675,068)
Net current assets
3,528,238
3,424,511
Total assets less current liabilities
5,784,447
5,575,980
Creditors: amounts falling due after more than one year
13
(807,498)
(1,134,757)
Provisions for liabilities
Deferred tax liability
16
405,653
335,588
(405,653)
(335,588)
Net assets
4,571,296
4,105,635
Capital and reserves
Called up share capital
19
6,000
6,000
Profit and loss reserves
4,565,296
4,099,635
Total equity
4,571,296
4,105,635
The notes on pages 12 to 23 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 4 March 2024 and are signed on its behalf by:
Mr A Bone
Director
Company Registration No. SC084590
SCOTIA DOUBLE GLAZING LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 July 2021
6,000
3,590,443
3,596,443
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
1,609,192
1,609,192
Dividends
8
-
(1,100,000)
(1,100,000)
Balance at 30 June 2022
6,000
4,099,635
4,105,635
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
1,965,661
1,965,661
Dividends
8
-
(1,500,000)
(1,500,000)
Balance at 30 June 2023
6,000
4,565,296
4,571,296
The notes on pages 12 to 23 form part of these financial statements.
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
1
Accounting policies
Company information
Scotia Double Glazing Limited is a private company limited by shares incorporated in Scotland. The registered office is Unit 2, Moorfield Park, Kilmarnock, Scotland, KA2 0FJ. The company's registration number is SC084590.
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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of GMSS Holdings (2) Limited. These consolidated financial statements are available from its registered office, Unit 2 Moorfield North Industrial Park, Kilmarnock, Scotland, KA2 0FJ.
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
The turnover shown in the Statement of Comprehensive Income represents the value of all goods sold during the year exclusive of Value Added Tax. Sales are recognised at the point at which the Company has fulfilled its contractual obligations and the risks and rewards attaching to the product have been transferred to the customer.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Over the term of the lease
Plant and equipment
10% straight line
Office equipment
10% to 33% straight line
Motor vehicles
10% straight line
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.
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
1.5
Stocks
Stocks are valued at the lower of cost and net realisable value. Cost consists of purchase invoice costs. Work in progress is valued based on the costs incurred plus an attributable value of profit to reflect the stage of completion. Cost consists of direct materials, labour and attributable overheads. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal.
1.6
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.
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 the profit and loss account, 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.
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets
Financial assets, other than those held at fair value through the profit and loss account 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 the profit and loss account.
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 the profit and loss account.
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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in the profit and loss account in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit and loss account. Debt instruments may be designated as being measured at fair value through the profit and loss account to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.7
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.
1.8
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.
1.9
Retirement benefits
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. Contributions to the Company's defined contribution scheme are charged to the Statement of Comprehensive Income in the year in which they become payable.
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 16 -
1.10
Leases
Assets held under hire purchase contracts or finance lease agreements are capitalised and disclosed under tangible fixed assets at their fair value, and are depreciated in accordance with the above depreciation policies.
Future instalments payable under such agreements, net of finance charges, are included within creditors. Rentals payable are apportioned between the capital element, which reduces the outstanding obligation included within creditors, and the finance element, which is charged to the profit and loss account on a straight line basis.
Rentals payable under operating leases, including any lease incentives received, are charged to the profit and loss account 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.
1.11
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.
1.12
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 the profit and loss account.
2
Judgements and key sources of estimation uncertainty
Preparation of the financial statements requires management to make significant judgements and estimates. In preparing the financial statements the directors have made the following judgements:
Determine whether leases entered into by the Company as a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.
Determine whether there are indicators of impairment of the Company's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
Determine whether any bad debt provision is required via review of trade debtors, with debts provided for on a specific basis. Factors considered include customer payment history and agreed credit terms.
Determine whether contract revenue and contract costs have been estimated and recognised according to the concepts of prudence and realisation of profits.
Determine whether any stock provision is required via a review of the stock holding for obsolete, damaged and slow moving stock.
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 17 -
3
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(29,255)
(40,585)
Fees payable to the company's auditor for the audit of the company's financial statements
19,800
16,800
Depreciation of owned tangible fixed assets
226,584
208,776
Depreciation of tangible fixed assets held under finance leases
152,764
93,114
Operating lease charges
275,278
282,847
Included within government grants is the release of the deferred government grant of £24,996 (2022: £24,996) plus government grants received in the year of £4,259 (2022: £15,589).
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Management and administration
64
64
Production, installation and sales
188
190
Total
252
254
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
5,619,888
5,422,510
Social security costs
623,645
570,886
Pension costs
171,577
168,952
6,415,110
6,162,348
5
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
319,400
281,956
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
90,000
80,000
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
6
Interest payable and similar expenses
2023
2022
£
£
Bank overdraft interest
18,887
24,867
Loan interest
61,078
34,198
Interest on finance leases and hire purchase contracts
23,809
17,999
103,774
77,064
7
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
467,726
293,137
Adjustments in respect of prior periods
5,220
(4,353)
Total current tax
472,946
288,784
Deferred tax
Origination and reversal of timing differences
70,065
162,182
Total tax charge
543,011
450,966
During the year, the main rate of corporation tax changed from 19% to 25%. Deferred tax has been calculated at a rate of 25%.
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
2,508,672
2,060,158
Expected tax charge based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
514,278
391,430
Tax effect of expenses that are not deductible in determining taxable profit
4,153
2,783
Group relief
(11,012)
(6,670)
Depreciation on assets not qualifying for tax allowances
(39,693)
10,099
Overprovision in prior period
(4,353)
Underprovision in prior period
5,220
Enhanced capital allowances
(23,160)
Change in rate of deferred tax
70,065
80,837
Taxation charge for the year
543,011
450,966
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 19 -
8
Dividends
2023
2022
£
£
Final paid
1,500,000
1,100,000
9
Tangible fixed assets
Leasehold improvements
Plant and equipment
Office equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 July 2022
1,410,082
2,075,683
431,403
42,421
3,959,589
Additions
435,909
48,179
484,088
At 30 June 2023
1,410,082
2,511,592
431,403
90,600
4,443,677
Depreciation and impairment
At 1 July 2022
450,390
1,010,925
342,109
4,696
1,808,120
Depreciation charged in the year
135,846
179,175
43,684
20,643
379,348
At 30 June 2023
586,236
1,190,100
385,793
25,339
2,187,468
Carrying amount
At 30 June 2023
823,846
1,321,492
45,610
65,261
2,256,209
At 30 June 2022
959,692
1,064,758
89,294
37,725
2,151,469
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and equipment
988,665
790,785
Motor vehicles
65,261
37,725
1,053,926
828,510
10
Stocks
2023
2022
£
£
Raw materials and consumables
563,325
595,627
Work in progress and finished goods
273,062
741,748
836,387
1,337,375
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,532,567
4,675,985
Gross amounts owed by contract customers
1,248,356
1,926,649
Amounts owed by group undertakings
253,081
1,527,014
Other debtors
257,238
357,482
Prepayments and accrued income
117,003
48,603
6,408,245
8,535,733
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
14
381,574
382,009
Obligations under finance leases
15
189,246
224,966
Other borrowings
14
31,472
49,083
Trade creditors
2,514,603
3,446,495
Amounts owed to group undertakings
1,068,293
Corporation tax
472,669
282,380
Other taxation and social security
188,115
185,299
Government grants
17
25,000
25,000
Accruals and deferred income
1,985,619
2,011,543
5,788,298
7,675,068
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
351,111
715,989
Obligations under finance leases
15
305,940
213,357
Other borrowings
14
37,929
67,897
Government grants
17
112,518
137,514
807,498
1,134,757
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
14
Loans and overdrafts
2023
2022
£
£
Bank loans
732,685
1,097,998
Other loans
69,401
116,980
802,086
1,214,978
Payable within one year
413,046
431,092
Payable after one year
389,040
783,886
Amounts payable after more than one year relating to the Company's loans are repayable in monthly instalments. Interest is payable on the loans at a rate of between 3.5% - 6%.
The Company's bank loan is secured by a floating charge over all of the assets of the Company.
One of the Company's other loans is secured by a floating charge over all of the assets of the Company.
15
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
189,246
224,966
In two to five years
163,036
104,156
In over five years
142,904
109,201
495,186
438,323
Hire purchase or finance lease liabilities are secured over the assets to which they relate.
16
Deferred taxation
The following are the major deferred tax liabilities recognised by the company and movements thereon:
2023
2022
Balances:
£
£
Accelerated capital allowances
405,653
335,588
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
16
Deferred taxation
(Continued)
- 22 -
2023
Movements in the year:
£
Liability at 1 July 2022
335,588
Charge to profit or loss
70,065
Liability at 30 June 2023
405,653
17
Government grants
2023
2022
£
£
Arising from government grants
137,518
162,514
Deferred income is included in the financial statements as follows:
Current liabilities
25,000
25,000
Non-current liabilities
112,518
137,514
137,518
162,514
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
171,577
168,952
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.
19
Share capital
2023
2022
2023
2022
Number
Number
£
£
Ordinary share capital
Issued and fully paid
Ordinary shares of £1
6,000
6,000
6,000
6,000
SCOTIA DOUBLE GLAZING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 23 -
20
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
357,809
333,454
Between two and five years
1,020,205
1,035,623
In over five years
140,750
392,750
1,518,764
1,761,827
21
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
-
297,000
22
Related party transactions
The Company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.
No other transaction were undertaken such as are required to be disclosed under Financial Reporting Standard 102 'The financial Reporting Standard applicable in the UK and Republic of Ireland'.
23
Ultimate parent company
The Company's immediate parent company is Ayrshire Aluminium Co. Limited and the ultimate parent company is GMSS Holdings (2) Limited.
24
Ultimate controlling party
The Company was under the control of the shareholders in the ultimate parent company GMSS Holdings (2) Limited. No individual shareholder has a controlling interest.
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