A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
SC188199
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
MHA
12 CARDEN PLACE
ABERDEEN
AB10 1UR
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
COMPANY INFORMATION
Directors
A W James
G Alexander
Secretary
Mrs A I James
Company number
SC188199
Registered office
12 Carden Place
Aberdeen
AB10 1UR
Auditors
MHA
12 Carden Place
Aberdeen
AB10 1UR
Business address
25 West Road
Greshop Industrial Estate
Forres
IV36 2GW
Bankers
The Royal Bank of Scotland plc
29 Harbour Road
Inverness
IV1 1NU
Solicitors
R & R Urquhart LLP
117 - 121 High Street
Forres
IV36 1AB
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Profit and loss account
8
Group statement of comprehensive income
9
Group balance sheet
10
Company balance sheet
11
Group statement of changes in equity
12
Company statement of changes in equity
13
Group statement of cash flows
14
Company statement of cash flows
15
Notes to the financial statements
16 - 34
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -

The directors present the strategic report for the year ended 31 March 2024.

Review of the business

The principal activity of the group continues to be engineering and construction. Over the past year we have further developed our customer base and are now operating and trading through-out the UK. We now have sales and marketing representation in England allied to experienced project managers and we are therefore winning work which is niche and profitable and better suited to our expertise in terms of site performance and quality. We are continuing to develop and foster long term relationships with our customers where service and technical support are appreciated.

Our trading results are very good and the difficult period that was experienced in 2022, due to the sudden steel section price increases and the Ukraine War, has stabilised. Our investment in fabrication equipment and machine tools is vindicated and allowing us to be more efficient and profitable. This investment is also helping us to meet the increasing demand from our customers and consequently we are growing to meet that need.

We are also continuing to invest in craft and graduate apprentices so that we have a sustainable supply of future technically skilled employees who are accustomed to our products and customer focus. Continuous training for all our staff is also ongoing and essential to improve the company's performance and our employees' health and safety.

Principal risks and uncertainties

To ensure that we have a continued profitable workflow we have increased our marketing and sales in niche markets. We have also increased our trading in UK infrastructure rather than local and short-term peak and trough projects.

The company is actively monitoring credit risk and where possible is trading with known key customers to maintain cash flow and certainty of payment.

We have increased our professional quantity surveying function to better manage project risk including terms and conditions, penalties and monthly cash flow.

With regard to health and safety we have the services of an experienced consultant who makes unannounced site and workshop visits and provides weekly reports to the directors for any subsequent actions.

With regard to the national skilled labour shortage, we are continuing to interview young people as prospective apprentices. We are also interviewing any skilled/semi-skilled engineers, and erectors/cladders, that become available.

Key performance indicators

The directors monitor performance using key performance indicators which include comparison with previous periods. The main indicators for the business are turnover and profit after tax. The directors are satisfied that the performance of these indicators is in line with expectations and as reported in these accounts.

Employee involvement

The company has regular meetings with employees whether tool box talks or information sharing to ensure best practice and encourages the free flow of ideas and opinions for mutual benefit.

Coporate social responsibility

The company has clear and definite standards of ethical behaviour throughout all areas of the business. The company takes responsibility for creating wider benefits both within and around our business and endeavour to make our impact a positive one, which improves the lives of others and reduces the risk of harm to people and the environment that we operate in.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -

On behalf of the board

A W James
Director
25 July 2024
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -

The directors present their annual report and financial statements for the year ended 31 March 2024.

Principal activities

The principal activity of the group continues to be centred around engineering and construction and we have a diverse range of associated products. This gives the group a broad customer base and this is now finding favour with customers though-out the UK. To meet the various needs of our existing and new customers we are continuing to invest in updating and modernising our plant and equipment allied to continuous training for our apprentices and staff.

Results and dividends

The results for the year are set out on page 8.

 

Due to the year end of the company previously being extended the comparatives reflect a 15 month period to 31 March 2023.

 

AJ Engineering & Construction Services Limited (AJECS) group have had a very successful year as can be determined from page 8.

Ordinary dividends were paid amounting to £80,560 (2023: £90,000). 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:

A W James
G Alexander
Auditor

Following the merger between our auditors Meston Reid & Co and MacIntyre Hudson LLP, trading under the name MHA, Meston Reid & Co resigned as auditors effective 30 September 2023. MHA were appointed as auditors effective 1 October 2023 under section 485 of the Companies Act 2006.

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 group and company, and of the profit or loss of the group 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 group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 4 -
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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
A W James
Director
25 July 2024
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
- 5 -
Opinion

We have audited the financial statements of AJ Engineering & Construction Services Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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 group and parent 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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

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

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.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

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

 

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

Matters on which we are required to report by exception

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 parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent 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 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 mis-statements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We assessed the susceptibility of the company's financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements.

 

We have gained an understanding of the entity’s activities and noted that, in addition to the requirements of UK GAAP, Companies Act 2006 and tax reporting obligations including the VAT domestic reverse charge for construction industry and the Construction Industry Scheme, the company has key obligations and responsibilities in respect of Health and Safety Executive rules, planning regulations and adherence to quality standards.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
- 7 -

We assessed the susceptibility of the financial statements, including fraud, and considered the fraud risks to be management override of controls and revenue recognition including the application of the accounting policy for amounts due under contracts. Our tests 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. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

 

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

Use of our 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.

Mark Brown BA CA (Senior Statutory Auditor)
For and on behalf of MHA
Statutory Auditor
Aberdeen
United Kingdom
25 July 2024
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership based in England and Wales (registered number OC312313).
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2024
- 8 -
Year
Period
ended
ended
31 March
31 March
2024
2023
Notes
£
£
Turnover
3
20,534,299
20,699,227
Cost of sales
(13,479,326)
(15,122,268)
Gross profit
7,054,973
5,576,959
Administrative expenses
(5,123,632)
(5,489,683)
Other operating income
3
16,989
53,868
Operating profit
4
1,948,330
141,144
Interest receivable and similar income
7
87
-
0
Interest payable and similar expenses
8
(33,708)
(28,604)
Fair value gains and losses on investment properties
11
-
0
343,931
Profit before taxation
1,914,709
456,471
Tax on profit
9
(496,260)
60,723
Profit for the financial year
1,418,449
517,194
Profit for the financial year is all attributable to the owner of the parent company.

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

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
- 9 -
Year
Period
ended
ended
31 March
31 March
2024
2023
£
£
Profit for the year
1,418,449
517,194
Other comprehensive income
-
-
Total comprehensive income for the year
1,418,449
517,194
Total comprehensive income for the year is all attributable to the owners of the parent company.
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
GROUP BALANCE SHEET
AS AT
31 MARCH 2024
31 March 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
11
3,069,282
2,902,627
Current assets
Stocks
13
284,758
267,414
Debtors
14
3,774,984
3,004,610
Cash at bank and in hand
933,059
1,293
4,992,801
3,273,317
Creditors: amounts falling due within one year
15
(3,303,113)
(2,722,220)
Net current assets
1,689,688
551,097
Total assets less current liabilities
4,758,970
3,453,724
Creditors: amounts falling due after more than one year
16
(512,807)
(596,133)
Provisions for liabilities
Deferred tax liability
20
474,448
423,766
(474,448)
(423,766)
Net assets
3,771,715
2,433,825
Capital and reserves
Called up share capital
22
25,000
25,000
Profit and loss reserves
3,746,715
2,408,825
Total equity
3,771,715
2,433,825

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

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:
25 July 2024
A W James
Director
Company registration number SC188199 (Scotland)
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
COMPANY BALANCE SHEET
AS AT 31 MARCH 2024
31 March 2024
- 11 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
11
2,946,155
2,781,388
Investments
12
2
2
2,946,157
2,781,390
Current assets
Stocks
13
192,412
175,701
Debtors
14
3,253,545
2,292,870
Cash at bank and in hand
721,525
1,137
4,167,482
2,469,708
Creditors: amounts falling due within one year
15
(3,033,708)
(2,187,933)
Net current assets
1,133,774
281,775
Total assets less current liabilities
4,079,931
3,063,165
Creditors: amounts falling due after more than one year
16
(512,807)
(596,133)
Provisions for liabilities
Deferred tax liability
20
444,436
400,329
(444,436)
(400,329)
Net assets
3,122,688
2,066,703
Capital and reserves
Called up share capital
22
25,000
25,000
Profit and loss reserves
3,097,688
2,041,703
Total equity
3,122,688
2,066,703

As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The Company's profit for the year was £1,136,545 (2023 period - £217,902 profit).

 

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

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:
25 July 2024
A W James
Director
Company registration number SC188199 (Scotland)
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
25,000
1,981,630
2,006,630
Period ended 31 March 2023:
Profit and total comprehensive income for the year
-
517,194
517,194
Dividends
10
-
(90,000)
(90,000)
Balance at 31 March 2023
25,000
2,408,824
2,433,824
Period ended 31 March 2024:
Profit and total comprehensive income for the year
-
1,418,449
1,418,449
Dividends
10
-
(80,560)
(80,560)
Balance at 31 March 2024
25,000
3,746,713
3,771,713
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
25,000
1,913,801
1,938,801
Period ended 31 March 2023:
Profit and total comprehensive income for the period
-
217,902
217,902
Dividends
10
-
(90,000)
(90,000)
Balance at 31 March 2023
25,000
2,041,703
2,066,703
Year ended 31 March 2024:
Profit and total comprehensive income
-
1,136,545
1,136,545
Dividends
10
-
(80,560)
(80,560)
Balance at 31 March 2024
25,000
3,097,688
3,122,688
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
- 14 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
29
2,567,789
181,860
Interest paid
(33,708)
(28,604)
Income taxes refunded
114
-
0
Net cash inflow from operating activities
2,534,195
153,256
Investing activities
Purchase of tangible fixed assets
(333,934)
(37,729)
Proceeds from disposal of tangible fixed assets
4,320
26,121
Repayment of loans
10,560
(10,560)
Interest received
87
-
0
Net cash used in investing activities
(318,967)
(22,168)
Financing activities
Repayment of bank loans
(179,167)
(62,500)
Payment of finance leases obligations
(285,515)
24,021
Dividends paid to equity shareholders
(80,560)
(90,000)
Net cash used in financing activities
(545,242)
(128,479)
Net increase in cash and cash equivalents
1,669,986
2,609
Cash and cash equivalents at beginning of year
(863,497)
(866,106)
Cash and cash equivalents at end of year
806,489
(863,497)
Relating to:
Cash at bank and in hand
933,059
1,293
Bank overdrafts included in creditors payable within one year
(126,570)
(864,790)
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
- 15 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
30
2,079,063
373,167
Interest paid
(33,594)
(28,604)
Net cash inflow from operating activities
2,045,469
344,563
Investing activities
Purchase of tangible fixed assets
(314,024)
(11,949)
Proceeds from disposal of tangible fixed assets
570
26,121
Inflow/(outflow) from other investments and loans
10,560
(10,560)
Net cash (used in)/generated from investing activities
(302,894)
3,612
Financing activities
Proceeds from borrowings
-
0
200,000
Repayment of bank loans
(179,167)
(62,500)
Payment of finance leases obligations
(285,515)
(175,979)
Dividends paid to equity shareholders
(80,560)
(90,000)
Net cash used in financing activities
(545,242)
(128,479)
Net increase in cash and cash equivalents
1,197,333
219,696
Cash and cash equivalents at beginning of year
(602,378)
(822,074)
Cash and cash equivalents at end of year
594,955
(602,378)
Relating to:
Cash at bank and in hand
721,525
1,137
Bank overdrafts included in creditors payable within one year
(126,570)
(603,515)
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 16 -
1
Accounting policies
Company information

A J Engineering & Construction Services Limited (“the Company”) is a limited company domiciled and incorporated in Scotland. The registered office is 12 Carden Place, Aberdeen, AB10 1UR. The principal place of business is 25 West Road, Greshop Industrial Estate, Forres, IV36 2GW.

 

The Group consists of A J Engineering & Construction Services Limited and all of its subsidiaries.

1.1
Accounting convention

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

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

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

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company AJ Engineering & Construction Services Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 17 -

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

 

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

1.4
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.

1.5
Turnover

Turnover represents amounts receivable for engineering, fabrication and general construction services net of VAT and trade discounts.

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 long-term contracts for the provision of construction and engineering work is recognised by reference to the stage of completion. 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 are recoverable. Where amounts received exceed revenue to recognise this is recorded as a payment on account.

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business 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 5 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.

1.7
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.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 18 -

Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

 

Freehold land and buildings
2% straight line
Plant and equipment
24% 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.

1.8
Fixed asset investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.9
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.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 19 -
1.10
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.

1.11
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.

1.12
Financial instruments

The group 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 group's balance sheet when the group 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 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.

 

Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

 

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 20 -
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 group 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 group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies 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

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 group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

Equity instruments issued by the group 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 group.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 21 -
1.14
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 group’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 if, and only if, there is 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.

1.15
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.

1.16
Retirement benefits

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

1.17
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 22 -
1.18
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.

 

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.

1.19
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 group’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 probably 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
Turnover and other revenue

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

2024
2023
£
£
Turnover analysed by class of business
Fabrication
5,346,355
10,174,571
Cladding
858,522
1,713,179
General engineering
14,329,422
8,811,477
20,534,299
20,699,227
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
3
Turnover and other revenue
(Continued)
- 23 -
2024
2023
£
£
Other revenue
Interest income
87
-
Grants received
15,213
53,868
Other income
1,776
-
4
Operating profit
2024
2023
£
£
Operating profit for the year is stated after charging/(crediting):
Government grants
(15,213)
(53,868)
Depreciation of owned tangible fixed assets
157,627
189,479
Impairment of owned tangible fixed assets
-
0
(343,931)
Loss/(profit) on disposal of tangible fixed assets
5,332
(939)
Cost of stocks recognised as an expense
7,320,430
7,667,792
Operating lease charges
194,653
227,486
5
Employees

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

Group
Company
2024
2023
2024
2023
Number
Number
Number
Number
Productive labour
90
88
68
65
Management and office
28
27
28
27
Total
118
115
96
92

Their aggregate remuneration comprised:

Group
Company
2024
2023
2024
2023
£
£
£
£
Wages and salaries
5,859,570
6,544,296
4,819,911
5,397,812
Social security costs
280,306
310,133
171,899
190,168
Pension costs
200,185
201,857
173,535
173,395
6,340,061
7,056,286
5,165,345
5,761,375
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 24 -
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
234,333
211,462
Company pension contributions to defined contribution schemes
34,500
32,250
268,833
243,712

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).

Remuneration disclosed above includes the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
132,614
111,927
Company pension contributions to defined contribution schemes
5,737
32,250
7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
87
-
0
2024
2023
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
87
-
8
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
3,196
15,118
Other finance costs:
Interest on finance leases and hire purchase contracts
30,398
13,486
Other interest
114
-
Total finance costs
33,708
28,604
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 25 -
9
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
442,243
-
0
Adjustments in respect of prior periods
3,335
(21,057)
Total current tax
445,578
(21,057)
Deferred tax
Origination and reversal of timing differences
50,682
(39,666)
Total tax charge/(credit)
496,260
(60,723)

The charge for the year can be reconciled to the loss per the profit and loss account as follows:

2024
2023
£
£
Profit before taxation
1,914,709
456,471
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
478,677
86,729
Tax effect of expenses that are not deductible in determining taxable profit
47,646
42,210
Tax effect of income not taxable in determining taxable profit
(3,803)
(74,157)
Tax effect of utilisation of tax losses not previously recognised
-
0
(53,628)
Unutilised tax losses carried forward
-
0
12,135
Permanent capital allowances in excess of depreciation
(80,277)
(7,881)
Other permanent differences
-
0
(5,408)
Under/(over) provided in prior years
3,335
(21,057)
Deferred tax adjustments in respect of prior years
50,682
(39,666)
Taxation charge/(credit)
496,260
(60,723)
10
Dividends
2024
2023
Recognised as distributions to equity holders:
£
£
Interim paid
80,560
90,000
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 26 -
11
Tangible fixed assets
Group
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 April 2023
1,695,264
2,659,001
197,446
121,697
4,673,408
Additions
-
0
298,935
-
0
34,999
333,934
Disposals
-
0
(8,995)
(162,962)
(6,500)
(178,457)
At 31 March 2024
1,695,264
2,948,941
34,484
150,196
4,828,885
Depreciation and impairment
At 1 April 2023
595,264
901,206
191,782
82,529
1,770,781
Depreciation charged in the year
-
0
144,506
2,744
10,377
157,627
Eliminated in respect of disposals
-
0
(1,690)
(162,962)
(4,153)
(168,805)
At 31 March 2024
595,264
1,044,022
31,564
88,753
1,759,603
Carrying amount
At 31 March 2024
1,100,000
1,904,919
2,920
61,443
3,069,282
At 31 March 2023
1,100,000
1,757,795
5,664
39,168
2,902,627
Company
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 April 2023
1,695,264
2,503,677
172,882
80,107
4,451,930
Additions
-
0
279,025
-
0
34,999
314,024
Disposals
-
0
-
0
(162,962)
-
0
(162,962)
At 31 March 2024
1,695,264
2,782,702
9,920
115,106
4,602,992
Depreciation and impairment
At 1 April 2023
595,264
852,782
169,139
53,357
1,670,542
Depreciation charged in the year
-
0
137,774
2,005
9,478
149,257
Eliminated in respect of disposals
-
0
-
0
(162,962)
-
0
(162,962)
At 31 March 2024
595,264
990,556
8,182
62,835
1,656,837
Carrying amount
At 31 March 2024
1,100,000
1,792,146
1,738
52,271
2,946,155
At 31 March 2023
1,100,000
1,650,895
3,743
26,750
2,781,388
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
11
Tangible fixed assets
(Continued)
- 27 -

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2024
2023
2024
2023
£
£
£
£
Plant and equipment
534,750
1,022,960
534,750
1,022,960
Motor vehicles
-
0
15,066
-
0
15,066
534,750
1,038,026
534,750
1,038,026

The carrying value of freehold property has been arrived at on the basis of open market valuation carried out by independent valuers J&E Shepherd Chartered Surveyors on 29 December 2022.

12
Fixed asset investments
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Investments in subsidiaries
26
-
0
-
0
2
2
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 April 2023 and 31 March 2024
2
Carrying amount
At 31 March 2024
2
At 31 March 2023
2
13
Stocks
Group
Company
2024
2023
2024
2023
£
£
£
£
Raw materials and consumables
284,758
267,414
192,412
175,701
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 28 -
14
Debtors
Group
Company
2024
2023
2024
2023
Amounts falling due within one year:
£
£
£
£
Trade debtors
1,740,038
1,763,753
1,302,584
1,076,458
Amounts owed by contract customers
1,304,737
1,156,148
1,277,321
1,156,148
Other debtors
21,158
10,560
21,158
10,560
Prepayments and accrued income
709,051
74,149
652,482
49,704
3,774,984
3,004,610
3,253,545
2,292,870
15
Creditors: amounts falling due within one year
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Bank loans and overdrafts
17
126,570
914,790
126,570
653,515
Obligations under finance leases
18
100,800
210,515
100,800
210,515
Payments received on account
1,307,565
119,472
1,307,565
-
0
Trade creditors
967,386
1,083,905
874,570
986,532
Corporation tax payable
445,692
-
0
344,099
-
0
Other taxation and social security
185,510
217,178
132,827
176,022
Government grants
19
28,360
15,214
28,360
15,214
Other creditors
56,392
86,162
48,829
80,960
Accruals and deferred income
84,838
74,984
70,088
65,175
3,303,113
2,722,220
3,033,708
2,187,933
16
Creditors: amounts falling due after more than one year
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Bank loans and overdrafts
17
-
0
129,167
-
0
129,167
Obligations under finance leases
18
117,600
293,400
117,600
293,400
Government grants
19
395,207
173,566
395,207
173,566
512,807
596,133
512,807
596,133
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 29 -
17
Loans and overdrafts
Group
Company
2024
2023
2024
2023
£
£
£
£
Bank loans
-
0
179,167
-
0
179,167
Bank overdrafts
126,570
864,790
126,570
603,515
126,570
1,043,957
126,570
782,682
Payable within one year
126,570
914,790
126,570
653,515
Payable after one year
-
0
129,167
-
0
129,167

The bank overdraft is secured by a floating charge over all of the 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 company. AJ Engineering & Construction Services Limited and its subsidiary, Northern Engineering & Welding Company Limited, have also provided an unlimited guarantee to The Royal Bank of Scotland plc.

The company had a bank loan under the Coronavirus Business Interruption Loan Scheme, interest during the first 12 months was paid by the UK Government, thereafter interest was payable by the company at 3.96% p.a. over base rate.

 

The loan was repaid during the year.

18
Finance lease obligations
Group
Company
2024
2023
2024
2023
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
100,800
210,515
100,800
210,515
In two to five years
117,600
293,400
117,600
293,400
218,400
503,915
218,400
503,915

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery.

 

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 30 -
19
Government grants
Group
Company
2024
2023
2024
2023
£
£
£
£
Arising from government grants
423,567
188,780
423,567
188,780
423,567
188,780
423,567
188,780

Deferred income is included in the financial statements as follows:

Current liabilities
28,360
15,214
28,360
15,214
Non-current liabilities
395,207
173,566
395,207
173,566
423,567
188,780
423,567
188,780

During the year the company received grant income of £250,000 which is to be used for capital expenditure. Amounts spent in relation to capital expenditure have been included within deferred income and are released to the profit and loss over the expected useful life of the grant assisted assets purchased.

20
Deferred taxation

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2024
2023
Group
£
£
ACAs
474,448
423,766
Liabilities
Liabilities
2024
2023
Company
£
£
ACAs
444,436
400,329
Group
Company
2024
2024
Movements in the year:
£
£
Liability at 1 April 2023
423,766
400,329
Charge to profit or loss
50,682
44,107
Liability at 31 March 2024
474,448
444,436

 

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 31 -
21
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit and loss in respect of defined contribution schemes
200,185
201,857

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. At the year end a total of £30,482 (2023 - £23,964) was payable in relation to defined contribution schemes.

22
Share capital
Group and company
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
25,000 ordinary shares of £1 each
25,000
25,000
25,000
25,000
23
Directors' transactions

Dividends totalling £80,560 (2023 - £90,000) were paid in the year in respect of shares held by the company's directors.

24
Operating lease commitments
Lessee

 

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

Group
Company
2024
2023
2024
2023
£
£
£
£
Within one year
192,050
90,550
126,050
33,550
Between two and five years
421,500
104,250
394,000
18,750
In over five years
72,000
-
72,000
-
685,550
194,800
592,050
52,300
25
Related party transactions
Transactions with related parties

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

2024
2023
£
£
Group
Other related parties
192,050
218,100
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
25
Related party transactions
(Continued)
- 32 -
Other information

The sole director of AJ Engineering & Construction Services 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 AJ Engineering & Construction Services Limited and its subsidiary Northern Engineering & Welding Company Limited was released during the year and is no longer in place at the year end.

 

During the period the group paid £173,300 (2023 - £199,350) rent to AWJ Properties, with no amounts outstanding at the year end and paid £18,750 (2023 - £18,750) in rent to A W James' SIPP pension fund in the year, with no amounts outstanding at the year end.

 

Included in other debtors at the period end are amounts due from Alan James, director and sole shareholder, totaling £nil (2023 - £10,560). In accordance with the exemption allowed by section 33.1A of FRS 102, no disclosure is made of transactions with wholly owner member companies of the AJ Engineering & Construction Services Limited Group.

26
Subsidiaries

Details of the company's subsidiaries at 31 March 2024 are as follows:

Name of undertaking and country of
Nature of business
Class of
% Held
incorporation or residency
shareholding
Direct
Indirect
Northern Engineering & Welding Co Limited
Scotland
Engineering
Ordinary
100.00
0
Firscot Limited
Scotland
Dormant
Ordinary
100.00
0
The aggregate capital and reserves and the profit for the year of the subsidiaries noted above was as follows:
Name of undertaking
Profit/(Loss)
Capital and Reserves
£
£
Northern Engineering & Welding Co Limited
262,895
626,940
27
Controlling party

The ultimate controlling party was A W James, director and sole shareholder, throughout the current year and previous period.

28
Non-Distributable Reserves

At the year end, non-distributable reserves in the group amounted to £48,025 (2023 - £59,064) and in the company amounted to £18,161 (2023 - £24,215). This balance represents the revaluation reserve as a result of a 2020 independent valuation of the company's assets and also reflects the 20% straight line depreciation charge on these revalued assets.

A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 33 -
29
Cash generated from group operations
2024
2023
£
£
Profit for the year after tax
1,418,449
517,194
Adjustments for:
Taxation charged/(credited)
496,260
(60,723)
Finance costs
33,708
28,604
Investment income
(87)
-
0
Loss/(gain) on disposal of tangible fixed assets
5,332
(939)
Fair value gain on investment properties
-
0
(343,931)
Depreciation and impairment of tangible fixed assets
157,627
189,479
Movements in working capital:
Increase in stocks
(17,344)
(80,651)
Increase in debtors
(780,934)
(198,478)
Increase in creditors
1,019,991
183,073
Increase/(decrease) in deferred income
234,787
(51,768)
Cash generated from operations
2,567,789
181,860
30
Cash generated from operations - company
2024
2023
£
£
Profit for the year after tax
1,136,545
217,902
Adjustments for:
Taxation charged/(credited)
388,206
(45,579)
Finance costs
33,594
28,604
Gain on disposal of tangible fixed assets
(570)
(939)
Fair value gain on investment properties
-
0
(343,932)
Depreciation and impairment of tangible fixed assets
149,257
180,150
Movements in working capital:
Increase in stocks
(16,711)
(84,609)
(Increase)/decrease in debtors
(971,235)
231,483
Increase in creditors
1,125,190
241,855
Increase/(decrease) in deferred income
234,787
(51,768)
Cash generated from operations
2,079,063
373,167
A J ENGINEERING & CONSTRUCTION SERVICES LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 34 -
31
Analysis of changes in net funds/(debt) - group
1 April 2023
Cash flows
31 March 2024
£
£
£
Cash at bank and in hand
1,293
931,766
933,059
Bank overdrafts
(864,790)
738,220
(126,570)
(863,497)
1,669,986
806,489
Borrowings excluding overdrafts
(179,167)
179,167
-
Obligations under finance leases
(503,915)
285,515
(218,400)
(1,546,579)
2,134,668
588,089
32
Analysis of changes in net funds/(debt) - company
1 April 2023
Cash flows
31 March 2024
£
£
£
Cash at bank and in hand
1,137
720,388
721,525
Bank overdrafts
(603,515)
476,945
(126,570)
(602,378)
1,197,333
594,955
Borrowings excluding overdrafts
(179,167)
179,167
-
Obligations under finance leases
(503,915)
285,515
(218,400)
(1,285,460)
1,662,015
376,555
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