NORTHERN ENGINEERING & WELDING CO. LIMITED
SC510074
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
PAGES FOR FILING WITH REGISTRAR
MHA
12 CARDEN PLACE
ABERDEEN
AB10 1UR
NORTHERN ENGINEERING & WELDING CO. LIMITED
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 9
NORTHERN ENGINEERING & WELDING CO. LIMITED
BALANCE SHEET
AS AT
31 MARCH 2024
31 March 2024
- 1 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
5
120,048
118,160
120,048
118,160
Current assets
Stocks
92,346
91,713
Debtors
6
536,676
719,582
Cash at bank and in hand
204,250
156
833,272
811,451
Creditors: amounts falling due within one year
7
(277,358)
(542,129)
Net current assets
555,914
269,322
Total assets less current liabilities
675,962
387,482
Provisions for liabilities
(30,012)
(23,437)
Net assets
645,950
364,045
Capital and reserves
Called up share capital
10
1
1
Profit and loss reserves
645,949
364,044
Total equity
645,950
364,045

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 25 July 2024 and are signed on its behalf by:
2024-07-25
A W James
Director
Company Registration No. SC510074
NORTHERN ENGINEERING & WELDING CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
1
Accounting policies
Company information

Northern Engineering & Welding Co. Limited is a private company, limited by shares in the United Kingdom and incorporated in Scotland. The registered office is 12 Carden Place, Aberdeen, AB10 1UR. The company operates from its business address at Glen Nevis Business Park, Fort William, PH33 6RX.

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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

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, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.

1.2
Going concern

At 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. The directors and parent company have confirmed that the company will continue to receive financial support, including the receipt of additional funds, to ensure the company continues to trade for at least the next 12 months. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

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

 

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

Revenue from 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.

1.4
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is five years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

NORTHERN ENGINEERING & WELDING CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 3 -
1.5
Tangible fixed assets

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

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

Plant and equipment
6 - 10 years straight line
Fixtures and fittings
24% straight line
Motor vehicles
24% 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.

1.6
Impairment of fixed assets

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

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

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

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.

1.7
Stocks

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

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

1.8
Cash and cash equivalents

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

NORTHERN ENGINEERING & WELDING CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 4 -
1.9
Financial instruments

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

 

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

 

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

Basic financial assets

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

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.

1.10
Equity instruments

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

1.11
Taxation

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

Current tax

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

NORTHERN ENGINEERING & WELDING CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 5 -
Deferred tax

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

 

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

1.12
Employee benefits

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

 

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

 

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

1.13
Retirement benefits

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

1.14
Leases

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

1.15
Government grants

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

 

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

1.16
Foreign exchange

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

NORTHERN ENGINEERING & WELDING CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 6 -
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.

 

When the outcome of a contract can be estimated reliably, the contract revenue is highly probable and the contract will be profitable, contract revenue and costs are recognised over the period of the contract, usually by reference to the stage of completion using the “percentage-of-completion method” to determine the appropriate amount to recognise in a given period. When it is probable that total contract costs will exceed total contract revenue, the realised loss based on the “percentage-of-completion method” is recognised as an expense immediately, while the future expected loss is included in a provision for onerous contracts. When the outcome of a contract cannot be estimated reliably but it is expected that the cost incurred in satisfying the performance obligation under the contract will be recovered, then revenue will be recognised to the extent of the cost incurred, until the outcome of a contract can be reliably measured.

 

In determining the stage of completion, co-ordinated systems are in place for cost estimating. The system also requires a consistent judgement (forecast) of the final outcome of the project. Estimates are an inherent part of this assessment and actual future outcome may deviate from the estimated outcome, specifically for major and complex contracts. However, historical experience has also shown that estimates are, on the whole, sufficiently reliable.

 

 

3
Employees

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

2024
2023
Number
Number
Total
22
23
4
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
98,144
-
0
Adjustments in respect of prior periods
3,335
(19,257)
Total current tax
101,479
(19,257)
Deferred tax
Origination and reversal of timing differences
6,575
4,113
Total tax charge/(credit)
108,054
(15,144)
NORTHERN ENGINEERING & WELDING CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 7 -
5
Tangible fixed assets
Plant and machinery etc
£
Cost
At 1 April 2023
210,873
Additions
19,910
Disposals
(15,495)
At 31 March 2024
215,288
Depreciation and impairment
At 1 April 2023
92,713
Depreciation charged in the year
8,370
Eliminated in respect of disposals
(5,843)
At 31 March 2024
95,240
Carrying amount
At 31 March 2024
120,048
At 31 March 2023
118,160
6
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
452,691
695,137
Gross amounts owed by contract customers
27,416
-
0
Prepayments and accrued income
56,569
24,445
536,676
719,582
7
Creditors: amounts falling due within one year
2024
2023
£
£
Bank loans and overdrafts
8
-
0
261,275
Payments received on account
-
0
119,472
Trade creditors
100,769
105,215
Corporation tax
101,593
-
0
Other taxation and social security
52,683
41,156
Other creditors
7,563
5,202
Accruals and deferred income
14,750
9,809
277,358
542,129
NORTHERN ENGINEERING & WELDING CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 8 -
8
Loans and overdrafts
2024
2023
£
£
Bank overdrafts
-
0
261,275
Payable within one year
-
0
261,275

The bank overdraft was secured by a floating charge over all of the parent company's property, undertaking, assets (including uncalled capital) and rights owned now or in the future together with a standard security over the freehold property of the parent company. Northern Engineering & Welding Co. Limited and its parent company AJ Engineering & Construction Services Limited, have also provided and unlimited guarantee to The Royal Bank of Scotland plc. The loan was fully repaid in the year (2023: £261,275).

 

9
Provisions for liabilities
2024
2023
£
£
Deferred tax liabilities
30,012
23,437
10
Called up share capital
2024
2023
£
£
Ordinary share capital
Issued and fully paid
1 ordinary share of £1 each
1
1
11
Non-distributable profits reserve

At the year end, non-distributable reserves amount to £29,864 (2023 - £34,849). This balance represents the revaluation reserve as a result of the independent valuation of the company's assets and also reflects the change in depreciation charge on the revalued assets.

 

12
Audit report information

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

The senior statutory auditor was Mark Brown BA CA.
The auditor was MHA.
NORTHERN ENGINEERING & WELDING CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 9 -
13
Operating lease commitments
Lessee

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

2024
2023
£
£
Within one year
66,000
57,000
Between two and five years
27,500
85,500
93,500
142,500
14
Capital commitments

At 31 March 2024 the company had committed to spending £539,700 in order to extend and refurbish the existing workshop. Additionally the company expects to receive capital grants of funding towards the cash of this project.

15
Related party transactions

The sole director of Northern Engineering & Welding Company Limited, A W James, is a partner in AWJ Properties. His wife, A I James, is the other partner in this partnership.

 

The guarantee in place granted by the Firm of AWJ Properties over two of their properties as standard security for the facilities of Northern Engineering & Welding Company Limited and its parent AJ Engineering & Construction Services Limited was released during the year and is no longer in place at the year end.

 

During the period, the company paid £66,000 (2023 - £71,250) rent to AWJ Properties, with no amounts outstanding at the year end.

In accordance with the exemption allowed by section 33.1A of FRS 102, no disclosure is made of transactions with wholly owned member companies of the AJ Engineering & Construction Services Limited Group. The consolidated group accounts can be found at the registered office of the parent company, A J Engineering & Construction Services Limited, 12 Carden Place, Aberdeen, AB10 1UR.

16
Parent company

The ultimate controlling party throughout the current and previous year was Alan James who own 100% of the holding company's share capital.

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