Registered number: SC091923
MCGILL’S SCOTLAND EAST LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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MCGILL’S SCOTLAND EAST LIMITED
COMPANY INFORMATION
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G Ballantyne (appointed 21 September 2022)
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C Napier (appointed 21 September 2022)
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R Roberts (appointed 21 September 2022)
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C Brown (resigned 21 September 2022)
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D Cameron (resigned 21 September 2022)
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A Campbell (appointed 23 September 2022, resigned 6 December 2023)
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A Jarvis (resigned 21 September 2022)
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G MacFarlan (resigned 21 September 2022)
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D Murray (resigned 3 July 2022)
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D Phillips (appointed 21 September 2022, resigned 14 April 2023)
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G West (appointed 21 September 2022)
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Armstrong Watson Audit Limited
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Chartered Accountants & Statutory Auditors
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1st Floor 24 Blythswood Square
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MCGILL’S SCOTLAND EAST LIMITED
CONTENTS
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Independent Auditors' Report
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Statement of Comprehensive Income
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Statement of Changes in Equity
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Notes to the Financial Statements
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MCGILL’S SCOTLAND EAST LIMITED
STRATEGIC REPORT
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
The company's principal activities are the provision of bus and coach operations in the Central Belt and Lothians of Scotland.
The company was acquired by McGill’s Bus Service Limited on 21st September 2022 and was required to change its year end to December.
As shown in the company's profit and loss account, the company's turnover was £6.3 million compared to £12.2 million in the prior period. Business activity continued to be affected by Government policy designed to limit the spread of COVID-19 and by lower than normal passenger volumes as customer work patterns and recreational activity was reduced.
An operating loss of £11.4m was reported after a heavy write down of the company’s bus fleet in order to better reflect the true value of vehicles held at the year end.
The balance sheet shows the company's financial position at the period end. Net assets are stated after write offs of various balances due to and from the old owners under the deal agreed to sell the company to McGill’s.
Page 1
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MCGILL’S SCOTLAND EAST LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
Principal risks and uncertainties
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There are several potential risks and uncertainties that could have an impact on the company's long-term performance. The directors have established an ongoing process for identifying, evaluating and managing the significant risks and uncertainties faced by the company and continue to assess these on a regular basis in the light of internal and external events.
Specific business risks faced by the company include the following:
Competition risk
The company faces the risk of loss of customers through other bus companies providing improved services or more competitive pricing. Management mitigate the competitive pressure by monitoring competitors' behaviour and strategies to ensure that the company acts appropriately under current market conditions.
Legal and regulatory risk
The directors are aware of the continual change in laws and other regulations and the increasing costs of compliance. The directors conduct regular reviews of safety procedures, equipment specifications, employment requirements, environmental procedures, insurance coverage and other areas to ensure they are appropriate and operating effectively.
Litigation and claims risk
The company has three main insurance risks: third party claims arising from vehicle and general operations; employee injuries; and property damage.
Fuel cost risk
Fuel costs represent a significant proportion of the company's cost base. Fuel prices are directly influenced by international, political and economic circumstances as well as natural disasters. Wherever possible, the company seek to minimise the operational and financial impact of such events through fixed price forward contracts and other operational efficiency measures.
Labour cost and employee relations and retention risk
Labour costs represent the most significant element of the company's operating costs. The directors continue to monitor employee recruitment, training, personal development and remuneration to ensure the company attracts and retains the right people.
To retain the right people, the company believes that good communication with employees is effected through regular briefing and negotiating meetings between the directors, the senior management and employee representatives on the central and depot negotiating committees. The briefing meetings enable senior management to consult employees and to ascertain their views on matters likely to affect their interests.
Environmental risk (including climate change)
The company recognises the importance of its environmental policies, monitors its impact on the environment, and designs and implements policies to reduce any damage that might be caused by its activities. Initiatives designed to minimise the company's impact on the environment include safe disposal of waste, recycling and reducing energy consumption.
Through our core business activities, we are committed to providing a safe, good quality, reliable and cost-effective public transport to all our customers. Our core business strategy is to increase customer numbers and encourage a greater move towards the use of bus transport. This will support the needs of society to achieve more sustainable travel. We recognise the environmental impacts arising from our business activities and are committed to reducing these through effective environmental management.
Page 2
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MCGILL’S SCOTLAND EAST LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
Economic risk
The less certain economic outlook as a result of emerging from the coronavirus pandemic coupled with inflated costs of living could have a negative impact on our businesses in terms of reduced demand and reduced opportunities for growth. The uncertainty around appetite for return to travel post-pandemic and consumer means may result in reduced demand for public transportation due to people travelling less for both business and pleasure. Whilst we have considered that volumes will not return to pre-pandemic numbers, there remains a significant risk of reduced service demand if our local markets don't rebound as anticipated. To an extent, the company is able to modify services to react to market changes and to focus on controlling costs to ensure it remains competitive.
Financial key performance indicators
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The key performance indicators for the company are turnover, net assets and operating profit, which have been discussed above. The company's directors believe that further key performance indicators for the company are not necessary or appropriate for an understanding of the development, performance or position of the business.
Directors' statement of compliance with duty to promote the success of the Company
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The directors acknowledge and understand their duties and responsibilities, including that of section 172, of the Companies Act 2006. A director of a company must act in the way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
- the likely consequences of any decision in the long term
- the interest of the company's employees
- the need to foster the company's business relationships with suppliers, customers and others
- the impact of the company's operating on the local community and the environment
- the desirability of the company maintaining a reputation for high standards of business conduct, and
- the need to act fairly as members of the company
This report was approved by the board and signed on its behalf.
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R Roberts
Director
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MCGILL’S SCOTLAND EAST LIMITED
DIRECTORS' REPORT
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
The directors present their report and the financial statements for the 9 months ended 1 January 2023.
Directors' responsibilities statement
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The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the 9 months, after taxation, amounted to £11,115,926 (2022 - loss £698,913).
The directors who served during the 9 months were:
G Ballantyne (appointed 21 September 2022)
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C Napier (appointed 21 September 2022)
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R Roberts (appointed 21 September 2022)
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C Brown (resigned 21 September 2022)
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D Cameron (resigned 21 September 2022)
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A Campbell (appointed 23 September 2022, resigned 6 December 2023)
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A Jarvis (resigned 21 September 2022)
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G MacFarlan (resigned 21 September 2022)
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D Murray (resigned 3 July 2022)
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D Phillips (appointed 21 September 2022, resigned 14 April 2023)
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G West (appointed 21 September 2022)
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The trading environment for the next 12 months is likely to remain relatively challenging as the economy and customers re-establish their normal patterns of activity and behaviour. The directors will review all aspects of performance on a continuous basis and tailor the company’s activity to balance achievable revenue levels with available Government support while giving due consideration to all stakeholder groups.
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MCGILL’S SCOTLAND EAST LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
Disclosure of information to auditors
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
Post balance sheet events
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There have been no significant events affecting the Company since the year end.
The auditors, Armstrong Watson Audit Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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R Roberts
Director
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MCGILL’S SCOTLAND EAST LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MCGILL’S SCOTLAND EAST LIMITED
We were engaged to audit the financial statements of McGill's Scotland East Limited (the 'Company') for the year ended 1 January 2023, which comprise the Statement of Comprehensive Income, the Balance sheet, Statement of Changes in Equity and the related notes, including a summary of 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).
We do not express an opinion on the accompanying financial statements of the company. Because of the significance of the matters described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for disclaimer of opinion
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The prior period financial statements contained a qualified opinion as a result of the previous auditors being appointed after the prior year, year-end date and therefore not being able to observe the counting of the physical stock as at 26th March 2022.
We were not appointed as auditor of the company until after 1 January 2023 and thus did not observe the counting of physical inventories at the end of the year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 1 January 2023, which are included in the balance sheet at £314,496, by using other audit procedures. Consequently we were unable to determine whether any adjustment to this amount was necessary.
Furthermore, the parent entity acquired Midland Bluebird Limited in September 2022. However management have been unable to access the books and records for the first two quarters of the period ended 1 January 2023. Therefore we have been unable to gain assurance over the profit and loss account and balance sheet. Furthermore we have been unable to gain the necessary assurance over opening balances.
As a result, we were unable to determine whether any adjustments might have been found necessary in respect of recorded or unrecorded items, and the elements making up the statement of financial position, statement of comprehensive income and statement of changes in equity.
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MCGILL’S SCOTLAND EAST LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MCGILL’S SCOTLAND EAST LIMITED (CONTINUED)
Opinion on other matters prescribed by the Companies Act 2006
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Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the 9 months for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the Strategic report or the Directors' report.
Arising from the limitation of our work referred to above:
∙we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
∙we were unable to determine whether adequate accounting records have been kept.
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:
∙returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of Directors' remuneration specified by law are not made.
Responsibilities of directors
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As explained more fully in the Directors' Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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MCGILL’S SCOTLAND EAST LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MCGILL’S SCOTLAND EAST LIMITED (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
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Our responsibility is to conduct an audit of the company’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report.
However, because of the matters described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Other Matters
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and knowledge of the Company to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other management and review of appropriate industry knowledge. Key laws and regulations we identified during the audit were the UK Companies Act 2006 and tax legislation and UK employment legislation;
∙we assessed the extent of compliance with the laws and regulations identified above by making enquiries of management; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures as a risk assessment tool to identify any unusual or unexpected relationships;
∙tested journal entries recorded on the Company’s finance system to identify unusual transactions that may indicate override of controls;
∙reviewed key judgements and estimates for any evidence of management bias; and
∙reviewed the application of accounting policies with focus on those with heightened estimation uncertainty.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation; and
∙enquiring of management to identify actual and potential litigation and claims.
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MCGILL’S SCOTLAND EAST LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MCGILL’S SCOTLAND EAST LIMITED (CONTINUED)
Due to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, as with any audit, there remains a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing fraud or non-compliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.
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 Auditors' 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.
Martin Johnston (Senior Statutory Auditor)
for and on behalf of
Armstrong Watson Audit Limited
Chartered Accountants & Statutory Auditors
Glasgow
2 August 2024
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MCGILL’S SCOTLAND EAST LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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As restated
52 weeks ended
26 March
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Exceptional administrative expenses
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Interest receivable and similar income
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Interest payable and similar expenses
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Loss for the financial 9 months
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Other comprehensive income for the 9 months
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Remeasurement gain recognised on net defined pension liability
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Movement on deferred tax relating to pension liability
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Other comprehensive income for the 9 months
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Total comprehensive income for the 9 months
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The notes on pages 14 to 31 form part of these financial statements.
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Page 10
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MCGILL’S SCOTLAND EAST LIMITED
REGISTERED NUMBER: SC091923
BALANCE SHEET
AS AT 1 JANUARY 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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R Roberts
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The notes on pages 14 to 31 form part of these financial statements.
Page 11
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MCGILL’S SCOTLAND EAST LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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Capital redemption reserve
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At 27 March 2022 (as previously stated)
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Prior year adjustment - correction of error
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At 27 March 2022 (as restated)
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Comprehensive income for the 9 months
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Other comprehensive income for the 9 months
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Total comprehensive income for the 9 months
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Total transactions with owners
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The notes on pages 14 to 31 form part of these financial statements.
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Page 12
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MCGILL’S SCOTLAND EAST LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE 9 MONTHS ENDED 26 MARCH 2022
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Capital redemption reserve
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Comprehensive income for the period
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Remeasurement gain recognised on net defined pension liability
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Movement on deferred tax relating to pension liability
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Other comprehensive income for the period
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Total comprehensive income for the period
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Contributions by and distributions to owners
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Total transactions with owners
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The notes on pages 14 to 31 form part of these financial statements.
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
McGill's Scotland East Limited is a private company, limited by shares, registered in Scotland. The Company's registration number is SC091923 and its registered office address is Carmuirs House, 300 Stirling Road, Larbert, Stirlingshire, FK5 3NJ.
The Company's principal activities are the provision of bus and coach operations in the Central Belt and Lothian regions of Scotland.
These financial statements have been prepared in pounds sterling, rounded to the nearest pound, as this is the currency of the primary economic environment in which the Company operates.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of McGill's Bus Service Limited as at 1 January 2023 and these financial statements may be obtained from Companies House.
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Exemption from preparing consolidated financial statements
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The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
2.Accounting policies (continued)
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. Thus the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The information used to make this assessment is the preparation of forecasts to at least twelve months from the date of the financial statements approval. These showed that the Company has a sufficient cash position for the foreseeable future and has sufficient funding facilities available.
On this basis, the Directors are confident that the company will continue to meet its liabilities as they fall due for at least twelve months from the date of approval of the financial statements and the Company will continue as a going concern for at least this twelve month period.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Page 15
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
2.Accounting policies (continued)
All borrowing costs are recognised in profit or loss in the 9 months in which they are incurred.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
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Current and deferred taxation
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The tax expense for the 9 months comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Page 16
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Company shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Statement of Comprehensive Income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Investments in listed company shares are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in profit or loss for the period.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Page 17
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
2.Accounting policies (continued)
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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Provisions for liabilities
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Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Increases in provisions are generally charged as an expense to profit or loss.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” 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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the
Page 18
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In the application of the Company's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying 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 if the revision affects both current and future periods.
Management do not consider there to be any key judgements or significant estimates in the current or prior year.
Page 19
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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An analysis of turnover by class of business is as follows:
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Provision of passenger transport services
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Analysis of turnover by country of destination:
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Government grants receivable
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Insurance claims receivable
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Page 20
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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During the 9 months, the Company obtained the following services from the Company's auditors and their associates:
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Fees payable to the Company's auditors and their associates for the audit of the Company's financial statements
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The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the 9 months was as follows:
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Page 21
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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Company contributions to defined contribution pension schemes
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Other interest receivable
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Interest payable and similar expenses
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Page 22
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Adjustment in respect of prior periods
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Page 23
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
11.Taxation (continued)
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Factors affecting tax charge for the 9 months/period
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The tax assessed for the 9 months/period is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 19% (2022 - 19%). The differences are explained below:
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Loss on ordinary activities before tax
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Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022 - 19%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Adjustments to tax charge in respect of prior periods
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Short-term timing difference leading to an increase (decrease) in taxation
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Impact on opening deferred tax arising from a rate change
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Movement in deferred tax not recognised
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Total tax charge for the 9 months/period
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Factors that may affect future tax charges
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There were no factors that may affect future tax charges.
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Write off of intercompany loans
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Page 24
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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Charge for the 9 months on owned assets
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Page 25
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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At 27 March 2022 (as previously stated)
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At 27 March 2022 (as restated)
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Transfers between classes
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At 27 March 2022 (as previously stated)
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At 27 March 2022 (as restated)
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Charge for the 9 months on owned assets
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Transfers between classes
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At 26 March 2022 (as restated)
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Page 26
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
14.Tangible fixed assets (continued)
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The net book value of land and buildings may be further analysed as follows:
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Depreciation is not provided of the land element of freehold property. The value of the land element of freehold property amounts to £100,000 (2022: £100,000).
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Investments in subsidiary companies
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Page 27
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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Raw materials and consumables
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Amounts owed by group undertakings
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Page 28
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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Creditors: Amounts falling due after more than one year
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Accruals and deferred income
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Charged to profit or loss
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The provision for deferred taxation is made up as follows:
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Accelerated capital allowances
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Page 29
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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Allotted, called up and fully paid
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26,000,010 (2022 - 26,000,010) Ordinary shares of £1.00 each
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Capital redemption reserve
The capital redemption reserve represents monies held to maintain the non-distributable reserves position on the repurchase of shares.
Profit and loss account
The profit and loss account reserve represents cumulative profits and losses net of dividends paid.
An opening balance adjustment has been posted to the financial statements to correct the brought forward cost and depreciation of tangible fixed assets. The brought forward reserves have decreased by £64,771 as a result of this adjustment.
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £75,685 (2022 - £217,000). Contributions totalling £140,189 (2022 - £Nil) were payable to the fund at the balance sheet date and are included in creditors.
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Commitments under operating leases
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At 1 January 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Page 30
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MCGILL’S SCOTLAND EAST LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTHS ENDED 1 JANUARY 2023
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Related party transactions
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The Company has taken advantage of the exemption, under the terms of Financial Reporting 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.
During the period, the Company was charged £27,945 (2022: £NIL) by an associated company for management charges. At the balance sheet date, included in other creditors are amounts owed to associated companies of £27,945 (2022: £NIL).
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The Company's immediate parent is McGill's Bus Service Limited.
McGill's Bus Service Limited is a wholly owned subsidiary of Arranglen Limited and Arranglen Limited is a wholly owned subsidiary of Dalglen (No. 1812) Limited.
Dalglen (No 1812) Limited is a private limited company and it does not have a controlling party.
Page 31
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