Company registration number SC046562 (Scotland)
EDWARDS ENGINEERING (PERTH) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
EDWARDS ENGINEERING (PERTH) LIMITED
COMPANY INFORMATION
Directors
David Alexander
Benjamin Carter
Company number
SC046562
Registered office
Glenearn Road
PERTH
PH2 0NJ
Auditor
MMG Chartered Accountants
4 Albert Place
PERTH
PH2 8JE
Business address
Glenearn Road
PERTH
PH2 0NJ
Bankers
Barclays
197 High Street
PERTH
PH1 5PB
Solicitors
MacRoberts LLP
Excel House
30 Semple Street
EDINBURGH
EH3 8BL
EDWARDS ENGINEERING (PERTH) LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 27
EDWARDS ENGINEERING (PERTH) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Review of Business

The directors aim to present a balanced and comprehensive review of the development and performance of the business during the year and its position at the year end. The directors review is consistent with the size and non-complex nature of the business and is written in the context of the risks and uncertainties faced.

The company’s core business is in steel fabrication, mechanical, electrical and structural engineering. Trading for the period remained strong and sales increased from £8.77 million to £9.15 million during the period, continuing to be mainly driven from larger projects in maltings and general industrial sectors.

After having experienced difficult trading from one large project in 2022, the profitability improved considerably in 2023 with gross and net margins showing significant growth resulting in a £1.18 million profit after tax. This fed through to the balance sheet with total equity improving by £1.34 million.

 

The business is now working on a number of larger projects for customers which will either complete in 2024 or fall into H1 2025. The company’s markets generally remain positive with strong enquiry levels.

 

The directors are not aware at this date of this report, of any material changes in the company’s activities in the next year

Principal risks and uncertainties

Exposure has reduced to any one sector by diversification, however, the uncertainty and softening of the macro-economic environment remains a risk. Post Brexit availability of skilled labour is also a key risk as is the impact of both Brexit and world conflicts on the global supply chain.

Development and performance

Future projects and developments include Maltings projects in Scotland, a large animals feeds project and a number of larger grain handling projects. The order book is satisfactory and current enquiry levels remain buoyant.

 

Key performance indicators

There was a increase in turnover from the previous year of approximately 4.3%. The profit after tax of £1.18 million follows the prior year where this was a loss of £4.55 million. Following 2022 when reserves were negative, the closing reserve position in 2023 is £554,492.

On behalf of the board

David Alexander
Director
10 April 2024
EDWARDS ENGINEERING (PERTH) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

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

Principal activities
The principal activities of the company in the year under review were those of general engineering including structural steelwork, industrial mechanical handling and grain drying.
Results and dividends

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

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

David Alexander
Benjamin Carter
Auditor

MMG Chartered Accountants were appointed auditor to the company and in accordance with section 385 of the Companies Act 1985, a resolution proposing that they be re-appointed will be put to the annual 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.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
David Alexander
Director
10 April 2024
EDWARDS ENGINEERING (PERTH) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 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.

EDWARDS ENGINEERING (PERTH) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF EDWARDS ENGINEERING (PERTH) LIMITED
- 4 -
Opinion

We have audited the financial statements of Edwards Engineering (Perth) Limited (the 'company') for the year ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, 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:

EDWARDS ENGINEERING (PERTH) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF EDWARDS ENGINEERING (PERTH) LIMITED
- 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

EDWARDS ENGINEERING (PERTH) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF EDWARDS ENGINEERING (PERTH) LIMITED
- 6 -

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 considered the opportunities that may exist within the organisation for fraud and identified the greatest risk in relation to revenue recognition, valuation of work in progress and management override of internal controls. Our audit procedures to respond to these risks included, but were not limited to;

 

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. As a result of these, we considered the opportunities that may exist within the organisation for fraud and audit procedures were designed in response to the risks identified, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve, for example, forgery, deliberate concealment, or collusion.

 

As part of an audit in accordance with ISAs (UK), professional judgement was exercised, and professional scepticisms was maintained throughout the audit.

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 member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.

James McEwen FCCA CA
Senior Statutory Auditor
For and on behalf of MMG Chartered Accountants
11 April 2024
Chartered Accountants
Statutory Auditor
4 Albert Place
PERTH
PH2 8JE
EDWARDS ENGINEERING (PERTH) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
9,154,231
8,770,361
Cost of sales
(6,176,332)
(11,886,935)
Gross profit/(loss)
2,977,899
(3,116,574)
Administrative expenses
(2,029,255)
(1,771,707)
Other operating income
73,603
56,388
Operating profit/(loss)
1,022,247
(4,831,893)
Interest receivable and similar income
6
256
-
0
Interest payable and similar expenses
7
(28,971)
(28,371)
Profit/(loss) before taxation
993,532
(4,860,264)
Tax on profit/(loss)
8
188,167
301,378
Profit/(loss) for the financial year
1,181,699
(4,558,886)

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

EDWARDS ENGINEERING (PERTH) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
£
£
Profit/(loss) for the year
1,181,699
(4,558,886)
Other comprehensive income
Revaluation of tangible fixed assets
-
0
180,000
Actuarial gain on defined benefit pension schemes
209,000
565,000
Tax relating to other comprehensive income
(52,250)
(150,370)
Other comprehensive income for the year
156,750
594,630
Total comprehensive income for the year
1,338,449
(3,964,256)
EDWARDS ENGINEERING (PERTH) LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
9
1,432,598
1,470,864
Current assets
Stocks
10
5,575
58,342
Debtors
11
1,079,216
1,216,841
Cash at bank and in hand
138
356
1,084,929
1,275,539
Creditors: amounts falling due within one year
12
(2,835,792)
(4,114,430)
Net current liabilities
(1,750,863)
(2,838,891)
Total assets less current liabilities
(318,265)
(1,368,027)
Creditors: amounts falling due after more than one year
13
(53,243)
(132,930)
Net assets excluding pension surplus
(371,508)
(1,500,957)
Defined benefit pension surplus
15
926,000
717,000
Net assets/(liabilities)
554,492
(783,957)
Capital and reserves
Called up share capital
16
8,000
8,000
Revaluation reserve
552,297
552,297
Other reserves
(694,307)
(537,557)
Profit and loss reserves
688,502
(806,697)
Total equity
554,492
(783,957)

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

The financial statements were approved by the board of directors and authorised for issue on 10 April 2024 and are signed on its behalf by:
David  Alexander
Director
Company registration number SC046562 (Scotland)
EDWARDS ENGINEERING (PERTH) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Revaluation reserve
Other reserves
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 January 2022
8,000
372,297
(122,927)
2,922,929
3,180,299
Year ended 31 December 2022:
Loss
-
-
-
(4,558,886)
(4,558,886)
Other comprehensive income:
Revaluation of tangible fixed assets
-
180,000
-
-
180,000
Actuarial gains on defined benefit plans
-
-
-
565,000
565,000
Tax relating to other comprehensive income
-
-
0
-
(150,370)
(150,370)
Total comprehensive income
-
180,000
-
(4,144,256)
(3,964,256)
Transfers
-
-
0
-
414,630
414,630
Other movements
-
-
(414,630)
-
(414,630)
Balance at 31 December 2022
8,000
552,297
(537,557)
(806,697)
(783,957)
Year ended 31 December 2023:
Profit
-
-
-
1,181,699
1,181,699
Other comprehensive income:
Actuarial gains on defined benefit plans
-
-
-
209,000
209,000
Tax relating to other comprehensive income
-
-
0
-
(52,250)
(52,250)
Total comprehensive income
-
-
-
1,338,449
1,338,449
Transfers
-
-
0
-
156,750
156,750
Other movements
-
-
(156,750)
-
(156,750)
Balance at 31 December 2023
8,000
552,297
(694,307)
688,502
554,492
EDWARDS ENGINEERING (PERTH) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
20
386,032
(1,001,659)
Interest paid
(28,971)
(28,371)
Income taxes refunded/(paid)
33,114
(16,204)
Net cash inflow/(outflow) from operating activities
390,175
(1,046,234)
Investing activities
Purchase of tangible fixed assets
(43,086)
-
0
Interest received
256
-
0
Net cash used in investing activities
(42,830)
-
Financing activities
Repayment of bank loans
(79,688)
212,618
Net cash (used in)/generated from financing activities
(79,688)
212,618
Net increase/(decrease) in cash and cash equivalents
267,657
(833,616)
Cash and cash equivalents at beginning of year
(564,226)
269,390
Cash and cash equivalents at end of year
(296,569)
(564,226)
Relating to:
Cash at bank and in hand
138
356
Bank overdrafts included in creditors payable within one year
(296,707)
(564,582)
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information

Edwards Engineering (Perth) Limited is a company limited by shares incorporated in Scotland. The registered office is Glenearn Road, PERTH, PH2 0NJ.

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

1.2
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.

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.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.3
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:

Heritable property
0% per annum
Plant and machinery
10% per annum straight line
Fixtures, fittings & equipment
25% per annum straight line
Computer equipment
25% per annum straight line
Motor vehicles
10% per annum straight line

Freehold land is not depreciated.

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.

EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.4
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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.5
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.

1.6
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.

1.7
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.

EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.

EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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 profit or loss 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 profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss 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.

Derecognition of financial liabilities

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

1.8
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.

1.9
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

1.10
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.

EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
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.

1.11
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.

1.12
Retirement benefits

The company operates a defined contribution pension scheme which commenced on 1st September 2007. Contributions payable for the year are charged in the profit and loss account.

 

The company also operates a defined benefit scheme, the pension costs of which are assessed using the projected unit credit method. The cost of providing pensions is charged to the profit and loss account so as to spread the regular costs over the service lives of employees. The pension obligation is measured at the present value of the estimated future cash flows using interest rates on government securities that have terms to maturity approximating the terms of the related liability. The scheme ceased to accrue on the 31st August, 2007.

The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.

 

Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.

The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.

1.13
Leases
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -

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 leased 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.

1.14
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.

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.

 

Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

1.15
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

An analysis of the company's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Contract revenue
9,154,231
8,770,361
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 18 -
2023
2022
£
£
Turnover analysed by geographical market
UK
9,154,231
8,770,361
2023
2022
£
£
Other revenue
Interest income
256
-
Grants received
-
5,609
4
Employees

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

2023
2022
Number
Number
Office & management
21
19
Workshop
30
33
Total
51
52

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
2,145,292
2,295,367
Social security costs
202,220
186,644
Pension costs
82,956
96,519
2,430,468
2,578,530
5
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
131,955
85,443
Company pension contributions to defined contribution schemes
2,651
2,981
134,606
88,424
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
256
-
0
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
256
-
0
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
28,971
25,880
Other interest on financial liabilities
-
0
2,491
28,971
28,371
8
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
(135,917)
(40,516)
Deferred tax
Origination and reversal of timing differences
(52,250)
(260,862)
Total tax credit
(188,167)
(301,378)
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
8
Taxation
(Continued)
- 20 -

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

2023
2022
£
£
Profit/(loss) before taxation
993,532
(4,860,264)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
248,383
(923,450)
Tax effect of expenses that are not deductible in determining taxable profit
-
0
15,887
Losses on discontinued operations not recognised
-
0
(16,204)
Adjustments in respect of prior years
(135,197)
-
0
Permanent capital allowances in excess of depreciation
-
0
(350)
Losses utilised
(301,353)
622,739
Taxation credit for the year
(188,167)
(301,378)

In addition to the amount credited to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£
£
Deferred tax arising on:
Actuarial differences recognised as other comprehensive income
52,250
150,370
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
9
Tangible fixed assets
Heritable property
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost or valuation
At 1 January 2023
1,100,000
428,984
45,677
288,610
327,610
2,190,881
Additions
-
0
1,100
1,658
14,478
25,850
43,086
At 31 December 2023
1,100,000
430,084
47,335
303,088
353,460
2,233,967
Depreciation and impairment
At 1 January 2023
-
0
271,558
45,028
262,329
141,102
720,017
Depreciation charged in the year
-
0
33,490
1,096
16,316
30,450
81,352
At 31 December 2023
-
0
305,048
46,124
278,645
171,552
801,369
Carrying amount
At 31 December 2023
1,100,000
125,036
1,211
24,443
181,908
1,432,598
At 31 December 2022
1,100,000
157,426
649
26,281
186,508
1,470,864

Freehold land and buildings with a carrying amount of £1.1 million (2022 - £1.1 million) have been pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

Land and buildings with a carrying amount of £1.1 million were revalued on 15 September 2021 by Graham & Sibbald, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.

Land and buildings are carried at valuation. If land and buildings were measured using the cost model, the carrying amounts would have been approximately £475,638 (2022 - £487,347), being cost £780,521 (2022 - £780,521) and depreciation £304,883 (2022 - £293,174).

10
Stocks
2023
2022
£
£
Finished goods and goods for resale
5,575
58,342
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
674,273
717,384
Gross amounts owed by contract customers
70,802
147,693
Corporation tax recoverable
119,007
16,204
Amounts owed by group undertakings
84,500
269,993
Other debtors
73,781
2,351
Prepayments and accrued income
56,853
63,216
1,079,216
1,216,841
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
376,394
644,270
Trade creditors
655,957
931,484
Amounts owed to group undertakings
595,724
12,534
Taxation and social security
87,433
368,256
Other creditors
1,003,261
1,983,839
Accruals and deferred income
117,023
174,047
2,835,792
4,114,430
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
53,243
132,930
14
Loans and overdrafts
2023
2022
£
£
Bank loans
132,930
212,618
Bank overdrafts
296,707
564,582
429,637
777,200
Payable within one year
376,394
644,270
Payable after one year
53,243
132,930

The long-term loans are secured by fixed charges over Heritable property.

EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
15
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
82,956
79,851

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.

Defined benefit schemes

The company operates a defined benefit scheme for qualifying employees. The scheme ceased to accrue on 31st August 2007.

 

The company has agreed with the Trustees to target the removal the scheme's deficit over a period of 6 years and 1 month from 1 January 2019 by payment of a single contribution of £30,667 during 2019 and then £50,000 p.a., payable by instalments, from 1 January 2020 to 31 January 2025. This was reviewed during the year, and agreed that deficit contributions were no longer required with a new Schedule of Contributions being certified by the scheme actuary on 15th February 2023.

 

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 1st January 2022 by A Thomson, Fellow of the Institute of Actuaries. The present value of the defined benefit obligation, the related current service cost and past service cost were measured using the projected unit credit method.

 

2023
2022
Key assumptions
%
%
Discount rate
4.35
4.75
Expected rate of increase of pensions in payment
2.85
3.00
Mortality assumptions
2023
2022

Assumed life expectations on retirement at age 65:

Years
Years
Retiring today
- Males
20.0
20.5
- Females
22.5
22.9
Retiring in 20 years
- Males
20.9
21.4
- Females
23.6
24.1
2023
2022

Amounts recognised in the profit and loss account

£
£
Net interest on net defined benefit liability/(asset)
(34,000)
(3,000)
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
15
Retirement benefit schemes
(Continued)
- 24 -
2023
2022

Amounts taken to other comprehensive income

£
£
Actual return on scheme assets
(306,000)
562,000
Less: calculated interest element
158,000
78,000
Return on scheme assets excluding interest income
(148,000)
640,000
Actuarial changes related to obligations
(27,000)
(1,202,000)
Total costs/(income)
(175,000)
(562,000)

The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:

2023
2022
£
£
Present value of defined benefit obligations
2,644,000
2,652,000
Fair value of plan assets
(3,570,000)
(3,369,000)
Surplus in scheme
(926,000)
(717,000)
2023

Movements in the present value of defined benefit obligations

£
Liabilities at 1 January 2023
2,652,000
Benefits paid
(105,000)
Actuarial gains and losses
(27,000)
Interest cost
124,000
At 31 December 2023
2,644,000
2023

The defined benefit obligations arise from plans funded as follows:

£
Wholly unfunded obligations
-
Wholly or partly funded obligations
2,644,000
2,644,000
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
15
Retirement benefit schemes
(Continued)
- 25 -
2023

Movements in the fair value of plan assets

£
Fair value of assets at 1 January 2023
3,369,000
Interest income
158,000
Return on plan assets (excluding amounts included in net interest)
148,000
Benefits paid
(105,000)
At 31 December 2023
3,570,000

The actual return on plan assets was £306,000 (2022 - £562,000).

2023
2022

Fair value of plan assets at the reporting period end

£
£
Other
3,570,000
3,369,000
16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
8,000
8,000
8,000
8,000
17
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
5,926
10,233
Between two and five years
2,362
8,288
8,288
18,521
18
Related party transactions
Transactions with related parties

During the year the company entered into the following transactions with related parties:

EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
18
Related party transactions
(Continued)
- 26 -

During the year Edwards Engineering (Perth) Ltd purchased goods and services from Narvida Ltd, amounting to £360,975 (2022 - £10,155). The balance due to Narvida Ltd at 31 December 2023 is £Nil (2022 - £44,418).

 

The company also sold goods and services to Narvida Ltd amounting to £6,657 (2022 - £644,420). The balance due from Narvida Ltd at 31 December 2023 is £406.28 (2022 - £NIL).

 

At 31 December 2023 Edwards Engineering (Perth) Ltd has a loan due to Narvida Ltd of £97,034 (2022 - £12,534). The loan is interest free and repayable on demand.

 

At 31 December 2023 Edwards Engineering (Perth) Ltd has a loan due to(from) Cartalex Ltd of £583,190 (2022 - (£269,993)). The loan is interest free and repayable on demand.

 

 

19
Ultimate controlling party

The parent undertaking of the group for which group accounts are drawn up and of which the company is a member is Cartalex Limited, registered in England.

 

Copies of the accounts of Cartalex Limited can be obtained from the Registrar of Companies (England and Wales), Companies House, Crown Way, CARDIFF CF14 3UZ.

20
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit/(loss) for the year after tax
1,181,699
(4,558,886)
Adjustments for:
Taxation credited
(188,167)
(301,378)
Finance costs
28,971
28,371
Investment income
(256)
-
0
Depreciation and impairment of tangible fixed assets
81,352
81,970
Movements in working capital:
Decrease in stocks
52,767
27,405
Decrease in debtors
240,428
3,386,143
(Decrease)/increase in creditors
(1,010,762)
334,716
Cash generated from/(absorbed by) operations
386,032
(1,001,659)
EDWARDS ENGINEERING (PERTH) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
21
Analysis of changes in net debt
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
356
(218)
138
Bank overdrafts
(564,582)
267,875
(296,707)
(564,226)
267,657
(296,569)
Borrowings excluding overdrafts
(212,618)
79,688
(132,930)
(776,844)
347,345
(429,499)
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