The directors present the strategic report for the year ended 31 March 2024.
The directors are pleased with the level of increased turnover and profit before tax in the year. The group turnover has increased in 2024 to £62.3m (2023 - £58.5m). Profit before tax increased to £6.22m in 2024 (2023 - £3.03m). Continued investment in company infrastructure, training and development will ensure a solid foundation on which continued and sustainable growth can be achieved.
The management of the business is subject to various evolving risks and uncertainties. The directors regularly review the risks and uncertainties posed on the business and manage these to minimise business exposure.
Credit risk
The group has no significant exposure to credit risk. Credit risk is managed by the group through credit checks and continued assessment of customers financial status where necessary. The group have minimal history of bad debts.
Liquidity risk
The group maintains a strong balance sheet which includes sufficient cash reserves for the needs of the business. Management assess cashflow on a regular basis to ensure cash efficiency is maximised.
The group considers key performance indicators to be:
Safety;
Quality;
Profitability; and
Turnover.
The KPIs are reviewed in conjunction with management accounts on a monthly basis.
Safe and efficient self delivery will remain core to all trading activities, reducing risk and maximising control achieved through training, devlopment and promotion from within. A positive group culture will be maintained through consultation, engagement and empowerment. An ethos of continous improvement and collaborative working is promoted at all levels within the group with a focus on sharing knowledge both internally and externally with our supply chain, key stakeholders and client base.
The group continues to benefit from long term framework contracts, with key clients and service levels will be subject to continuous improvement to ensure the renewal of current and the awarding of future framework contracts. The growth strategy of the group includes provisions for the widening of the group’s client base, increased geographical coverage and both additional and enhanced office working space.
The group has in place a Business Plan for the next five years with a focus on the group’s commitment to Net Zero, People Excellence and Innovation.
The Board of Directors believe that they have acted in the way they consider to be both in good faith and would be most likely to promote the success of the Group for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Act) in the decisions taken during the year ended 31st March 2024; and in so having regard, amongst other matters to;
(a) the likely consequences of any decision in the long term.
(b) the interests of the Group’s employees.
(c) the need to foster the Group's business relationships with suppliers, customers, and others.
(d) the impact of the Group's operations on the community and the environment.
(e) the desirability of the Group maintaining a reputation for high standards of business conduct, and
(f) the need to act fairly between members of the Group.
The directors are following a business plan to achieve the Group’s long-term objective including being very successful in areas of operation.
The Directors understand the importance of engaging and discussing issues concerning employees, clients, customers, suppliers, subcontractors, the community and environment, regulators, and shareholders as part of its decision-making processes.
Employees
Our employees are key to the success and growth of the business. We continue to review training and development needs to drive productivity and enhance skills whilst ensuring we are a responsible employer in our approach to remuneration and benefits. The Group encourages diversity and inclusion of employees of all backgrounds. The directors believe that employee physical and mental health and wellbeing are essential in ensuring the success of the Group and both current and future initiatives focused on employee health and wellbeing will continue to be given the importance they deserve.
Customers
We continue to engage closely with our customers to ensure that their needs are met, and service levels achieved efficiently and in line with specifications.
Suppliers and subcontractors
We value the Group's key suppliers and subcontractors and their overall contribution to the continued success of the business. One of our primary goals is to develop and enter strong stable working relationships with them. We seek to be fair and transparent in our dealings with them and we ensure that we honour our arrangements with them.
Environment and community
The Group remain committed to environmental issues with particular reference to carbon reduction with dedicated internal resources allocated to work with our clients, key stakeholders, and supply chain in working towards a carbon net-zero economy.
Governance and regulation
The Board’s intention is to behave responsibly and to ensure that the management team operates the business in a responsible manner, acting with the high standards of business conduct and good governance expected of a business of our nature and size and in full alignment with the rules and regulations. We also operate to the highest levels of safety and high-quality standards. In doing so, we believe we will achieve our long-term business strategy and further develop our reputation in our sector.
Members
The Board of Directors and shareholders of the Group work closely together to share information and ensure the long term strategic goals of the group are met.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 12.
Ordinary dividends were paid amounting to £1,358,762. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's policy is to consult and discuss with employees at meetings matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report was undertaken in accordance with the Streamlined Energy and Carbon (“SECR”) Reporting requirements outlined in the Companies Act (2006) for large quoted and unlisted companies which requires SLM MacKenzie Limited to report on its Greenhouse Gas (GHG) emissions.
This report contains details on annual GHG emissions, total energy consumption for SLM MacKenzie Limited covering our office, group owned vehicles and energy efficiency actions implemented during the financial year. This report contains our SECR disclosure for our 2023/24 Financial Year.
Scope of analysis and data collection
Over FY 2023/24 we have collected primary data for our office, site, and business travel activities including: electricity consumption (kWh), diesel and HVO consumption on site (litres), vehicle fuel (litres) and business travel (flights).
All primary data used within this report is from 1st April 2023 – 31st March 2024 covering our financial year. The scope of our GHG emissions calculation covers all of Mackenzie Construction’s operations. We have also chosen to report additional Scope 3 GHG emissions sources (water, waste, paper use). To maintain consistency year-on-year comparisons have been reported for Scope 1 and Scope 2 emissions sources.
Calculation Methodology
We have used the BEIS and Greenhouse Gas Protocol Corporate Reporting Standard (GHG Protocol) methodology for compiling this GHG data and have calculated our GHG emissions in accordance with the UK Government’s reporting guidelines for Company Reporting.
To ensure consistency in our reporting we are reporting all GHG emissions in units of CO2e (carbon dioxide equivalent) and have used 2023 GHG Conversion Factors for Company Reporting, published annually by Defra and BEIS.
GHG Emissions Scopes
The following reporting scopes (as outlined by the Greenhouse Gas Protocol) are included within this disclosure:
Scope 1 Emissions: direct emissions from sources which Mackenzie Construction owns or controls. Includes fuel consumed by our company vehicles and plant machinery, and diesel and HVO consumption across sites.
Scope 2 Emissions: indirect emissions relating solely to the generation of purchased electricity that is consumed by Mackenzie Construction.
Scope 3 GHG Emissions: indirect emissions relating solely to the transmission and distribution of purchased electricity, water consumption, and waste disposal from our offices. In addition we have also included business travel undertaken by employees (air travel), and paper used in our operations.
Energy Consumption
The table below displays our annual energy consumption for electricity, natural gas and business travel for the 2023/24 financial year (1st April 2023 - 31st March 2024). As per SECR reporting requirements this information is presented in kilowatt hours (kWh). Please note that suitable energy conversations for air travel, water, waste and paper use are not yet available and have been recorded as zero.
Emissions Source | GHG Scope (GHG Protocol) | Reporting Units | 2022/23 (1st April - 31st March) | 2023/24 (1st April - 31st March) | Y.o.Y% change | ||
Vehicle Fleet | Scope 1 | Kilowatt hour (kWh) | 10,239,512 | 7,814,962 | -23.7% | ||
Gas Oil | Scope 1 | Kilowatt hour (kWh) | 4,487,008 | - |
| ||
Site HVO | Scope 1 | Kilowatt hour (kWh) | - | 1,937,539
|
| ||
Site Diesel
Electricity
Business Travel - Air
Water supply & Treatment
Waste
Paper Use | Scope 1
Scope 2 & 3
Scope 3
Scope 3
Scope 3
Scope 3
Scope 3 | Kilowatt hour (kWh) Kilowatt hour (kWh) Kilowatt hour (kWh) Kilowatt hour (kWh) Kilowatt hour (kWh) Kilowatt hour (kWh) Kilowatt hour (kWh) | -
95,619
-
-
-
-
-
| 2,414,714
58,282
-
-
-
-
- |
| ||
Total Energy Consumption (kWh)
|
| 14,822,139 | 12,225,497 | -17.5% |
GHG Emissions Reporting
In accordance with the SECR Emissions Reporting requirements our GHG disclosure for the 2023/24 financial year is listed below. Results have been split by GHG Emissions Scope as outlined by the GHG Protocol calculation methodology.
GHG Emissions Scope | Result Units | 2022/23 (1st April - 31st March) | 2023/24 (1st April - 31st March) |
| ||
Scope 1 |
| tonnes CO2e | 3,610.78 | 2,433.21 | -32.6% | |
Scope 2 |
| tonnes CO2e | 18.49 | 13.52 | -26.9% | |
Scope 3 |
| tonnes CO2e | 46.32 | 28.27 | -39.0% | |
Total GHG Emissions | tonnes CO2e | 3,675.39 | 2,475 | -32.7% | ||
GHG Emissions Intensity 1 | tonnes CO2e/£M turnover | 59.28 | 38.08 | -35.8% | ||
GHG Emissions Intensity 2 | tonnes CO2e/employee | 13.37 | 7.98 | -40.3% |
Total GHG Emissions for Scope 1, Scope 2, and Scope 3 for the twelve-month period 1st April 2023 to 31st March 2024 are 2,475 tonnes CO2e. Of our total GHG emissions, Scope 1 accounts for 98.3%, Scope 2 accounts for 0.5%, and Scope 3 counts for 1.1%. Our GHG Emissions CO2e Intensity per £M turnover is 38.08 tonnes CO2e, and per employee is 7.98 tonnes CO2e which have shown a 25% decrease and 10% increase respectively, compared to our 2020/21 baseline year.
The group has been actively undertaking several initiatives to reduce our greenhouse gas (GHG) emissions footprint. These initiatives include:
Cutting our gas oil consumption by using HVO for site set ups. These Eco site set ups now use hybrid battery packs, eco welfare units and HVO fuel. This change has resulted in a 97% reduction in CO2 emissions as reported by Wernick power solutions (our generator & temporary power suppliers).
Utilisation of conveyor belts to transport materials across sites instead of the traditional methods and telehandlers. This has led to emissions reduction as well as reduction in manual handling, costs and waste generation.
Utilisation of hydrogen cell security cameras on site.
Trialling the use of a net-ero kiosk to replace the current standard tap kiosk on site. We plan to run the site set up on HVO, construct the kiosk with recycled plastic bottles, use a cem-free design with a basalt reinforcement as our kiosk base and use all excavated materials on site.
Continuing with the roll-out of SMARTSURFACE technology to reduce embodied carbon emissions associated with surfacing projects.
Utilisation of electric mobile plant such as mini excavators on site as well as trialling the use of electric vans to support the future incorporation of these into our fleet.
These initiatives collectively demonstrate our commitment to environmental responsibility and the ongoing efforts to mitigate our GHG emissions in order to contribute to a more sustainable future.
We have audited the financial statements of SLM Mackenzie Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise 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 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).
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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 group and 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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
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 £1,358,762 (2023 - £742,463 profit).
SLM Mackenzie Ltd (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is Burnfield Avenue, Thornliebank, Glasgow, G46 7TL .
The group consists of SLM Mackenzie Ltd and all of its subsidiaries.
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, modified to include the revaluation of freehold properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company SLM Mackenzie Ltd 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The group's going concern assessment considers its principal risks, including the continued level of uncertainty in the global market.
The current and future financial position of the group, including its cash flows and liquidity, has been reviewed by the directors. Following this review, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group has strong cash reserves and places no reliance on external debt.
The group's secured pipeline of work and long-term forecast outlook has provided further assurance to the directors regarding its financial position. As such, the directors consider that it is appropriate to prepare the financial statements on the going concern basis.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from 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 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 group 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.
Construction contracts
When the outcome of a construction contract can be estimated reliably, the group shall recognise contract revenue and contract costs associated with the construction contract as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period. The group shall determine the stage of completion of a transaction or contract through performing surveys of the work performed to date.
When the outcome of a construction contract cannot be estimated reliably the group shall recognise revenue only to the extent of contract costs incurred that it is probable will be recovered and the group shall recognise contract costs as an expense in the period in which they occurred. The group will recognise as an expense immediately any costs whose recovery is not probable. When it is probable that total contract costs will exceed total contract revenue on a construction contract, the expected loss shall be recognised as an expense immediately.
Revenues derived from variation on contracts are recognised only when they have been accepted by the customer.
Amounts recoverable on contracts are included in trade debtors. These are stated as turnover recognised less any progress payments made on the contracts, after provision has been made for any foreseeable losses.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
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.
At each reporting period end date, the group 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 group 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.
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 and 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, 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, 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.
Investments in listed company shares are measured to market value at each balance sheet date. Gains and losses on measurement are recognised in profit or loss for the period.
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.
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.
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, including creditors 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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.
The tax expense represents the sum of the tax currently payable and deferred 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 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.
The costs of short-term employee benefits are recognised as a liability and an expense.
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 group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The company participates in a share-based payment arrangement granted to its employees and employees of its subsidiaries. The company has elected to recognise and measure its share-based payment expense on the basis of a reasonable allocation of the expense for the group recognised in its consolidated accounts. The directors consider the number of unvested options granted to the company’s employees compared to the total unvested options granted under the group plan to be a reasonable basis for allocating the expense.
The expense in relation to options over the company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
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.
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.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The group estimates the outcome of its construction contracts. This is measured by surveys performed at regular points throughout the year and calculates the stage of completion as a percentage of total contract revenue.
Estimated total contract costs are based on management’s detailed budgets and projections. Where management judge that the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable they will be recoverable. Any foreseeable losses are provided for immediately.
Turnover represents the value of contracted work carried out during the year excluding Value Added Tax and is attributable to the one principal activity of the company.
All turnover arose within the United Kingdom.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The directors of the group companies are considered as the key management personnel (KMP). The emoluments of KMP (excluding pension contributions and including benefits in kind) were £878,304 (2023 - £797,751). The employers' NI contribution for KMP for the year was £116,215 (2023 - £95,608) and their pension contributions for the year were £20,739 (2023 - £13,950).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
The property owned by the group was externally valued in March 2024 by Graham + Sibbald (Chartered Surveyors) on the basis of the current market value of the freehold interest in the property.
Land and buildings are carried at valuation. If land and buildings were measured using the cost model, the carrying amounts would have been approximately £512,931 (2023 - £352,800), being cost £591,970 (2023 - £420,000) and depreciation £79,039 (2022 - £67,200).
Details of the company's subsidiaries at 31 March 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The bank holds a floating charge over the assets and undertakings of the subsidiary MacKenzie Construction Limited and a standard security over the property at Burnfield Avenue, Thornliebank, Glasgow, G46 7TL.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
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 reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Dividends totalling £1,358,762 (2023 - £742,463) were paid in the year in respect of shares held by the company's directors.
At the year end £1,358,765 (2023 - £742,463) is due to the directors of the group. This is held within other creditors due within one year.
During a prior year, a loan was advanced to a director of the group. The balance owed to the group at the current year end is £179,361 (2023 - £171,744) and this is shown within debtors due after one year in the financial statements. The loan bears interest at 2% per annum, and is repayable by 19 January 2027.