The directors present the strategic report for the year ended 31 March 2024.
The principal activity of the company is that of an investment holding company.
The principal activity of the group is the provision of both products and services in the optical and audiology retail sectors. The group operates under three distinct operating divisions: Retail, Corporate and Manufacturing and is the largest privately-owned optical group in Scotland and the only one with its own proprietary lens manufacturing capability.
The retail division operates 43 practices located throughout Scotland, with a footprint covering the Borders, Central Belt, the North East and the Highlands, trading as Duncan and Todd, 20 20 Opticians, Douglas Dickie, JM McDonald, Browns and James Hughes.
The group’s manufacturing facilities, at Caledonian Optical, provide optical lenses to the group’s own retail practices, third party laboratories and other independent opticians across the UK. Caledonian continues on its growth journey to support both internal group supply as well as ever increasing numbers of external customers. The growth is enabled with further investment for capacity and applications of new technologies, together with a refocused customer service, account management and sales team.
The Corporate division, Smart Employee EyeCare (SEE), operates throughout the UK and is a market leading provider of Visual Display User (VDU), safety and general eye-care services to corporate customers.
The trading results for the financial year show a revenue of £28.7m (prior year £25.0m) with a loss for the year of £5.3m (2023: loss of £3.8m). The year includes significant costs for amortisation of intangibles £2.2m (2023: £2.3m) and interest on loan notes £2.6m (2023: £2.4m), which is reflective of the shareholders’ choice of acquisition funding arrangement and not the operational performance of the group.
The group’s principal KPI that is used to monitor performance is EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) excluding Exceptional costs as it is the fundamental measure of operational performance. This adjusted EBITDA performance was £2.6m in the year to 31 March 2024 and £3.0m in the year to 31 March 2023. Exceptional costs in 2024 were £1.2m (2023: £1.1m) and represent costs associated with closure of certain branches, non recurring restructuring and professional fees. Although adjusted EBITDA has reduced, the group has repositioned during the year, focusing on operational efficiency both within the Retail and Manufacturing business, ensuring it is well placed for future growth. In addition, during the year Caledonian Optical moved to a new Manufacturing facility which impacted profitability in the short term however delivers significantly increased capability and capacity for future years.
The directors view the balance sheet and cash-flow generation of the group as strong underpinned by the operational performance and selective acquisitions added to the group. Although the group balance sheet continues to have a net liability position this reflects the shareholders’ choice of funding arrangement and not the operational performance and the group can meet all debt repayments due to external parties as scheduled. The group has a net current liabilities position at year end of £1.5m (2023: £0.2m net current assets) however sensitised forecasts have been prepared showing the group can continue to meet all external obligations including compliance with terms associated with the existing lending facilities. External Net debt, excluding shareholder loan notes closed the year at £4.4m (2023: £4.4m), which represents 1.69x Adjusted EBITDA (2023 1.46x) which further supports this position. The group’s year-end cash position of £0.7m (net of overdrafts) (2023: £1.3m) highlights the continuing financial strength of the group.
The Group made Capex investments in Tangible Fixed Assets of £1.4m (2023: £2.6m), mainly driven by additional Plant, Machinery and Equipment for the manufacturing facility at Caledonian Optical. This increases the Groups Capability and Capacity to support future growth. In addition, the Company invested £0.3m (2023: £0.9m) in acquisition of additional branches for the group.
During the year, the group also appointed Mat Norris as its new CEO. This strategic move is part of the company’s commitment to driving growth and excellence in eye and hearing care services. Frances Rus, the outgoing CEO, has transitioned to Non-Executive Director, continuing to serve on the Board of Directors. Under Frances Rus' guidance, the Duncan and Todd Group has experienced significant growth, and established a strong footprint across Scotland.
In addition, post year end the group has further strengthened the leadership team, appointing Kevin Sutherland as its new CFO, and Karen Sharpe in the newly created role of CCO.
Principle risks and uncertainties
The principal risks facing the business come from increasing price and promotional competition from existing, national and new entrants to the optical sector, particularly within the retail environment.
Inflation presents a risk to the group’s cost base through increased salaries and other inputs across the supply chain. Additionally, within Retail it may impact customer demand in certain areas due to heightened economic uncertainty. However, it also represents an opportunity for the group to enhance cost management and improve operational efficiencies.
Future developments
The business intends to further improve the financial and operational performance of the retail network, and continue to extend the provision of audiology services. In addition, the business continues to invest in the manufacturing capability of the Caledonian Optical business. Within the Corporate division, there is continued focus on expansion of the opinion network to improve service to both new and existing customers.
In doing so, the group will look to provide opportunities to all employees fairly and operate in both a socially and environmentally responsible manner.
The directors are required, as stated in section 172 of the Companies Act 2006, to take actions which, in good faith, promote the success of each company in the group 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 interests 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 operations on the community and the environment
the desirability of the company maintaining a reputation for high standards of business conduct
the need to act fairly between members of the company
The following provides an overview of how the directors have met their obligations under section 172 in promoting the success of the Duncan and Todd group of companies.
Purpose
Our purpose is to be one of the leading UK optical and hearing care providers delivering exceptional and consistent customer service over the long term, offering the latest in high-quality ophthalmic lenses manufactured in-house with new product development initiatives and supplying superior standard hearing care products.
Shareholders
The directors of the company recognise their responsibility to deliver attractive returns to its shareholders and enact strategic plans for the long-term creation of value in a responsible and sustainable manner.
Employees
Our high-quality employees engaged across the group of companies are fundamental to the delivery of leading services and products to our customer base and, by extension, cornerstone to the delivery of the long-term strategy. Accordingly, the group has a people and performance focus, driven by the management team that aims to keep employees engaged, motivated and rewarded, which in turn leads to higher levels of performance. The company is committed to equality of opportunity that focuses on treating all employees fairly in all aspects of employment, which includes recruitment, training, development (encompassing professional qualifications) and promotion.
Promoting company success - section 172 statement (continued)
Customers
The long-term strategy can only be delivered with excellent relationships across the customer base underpinned by the ability to deliver high-quality services and products consistently on time. The reputation of Duncan and Todd and all of its high-quality brands, and their ability to deliver a market-leading offering, is built on the professional and close working relationships with customers delivered across the full spectrum of the practice, laboratory, office and management teams.
Furthermore, the group of companies has many years of experience providing optical and audiology services and products that has been recognised both informally and formally by both customers and industry bodies.
Attention to safety, health and environmental concerns is paramount to the continued success with customers and so the directors seek to ensure continued high standards.
Suppliers
The Duncan and Todd Group recognises that its suppliers are an essential part of the group’s ability to provide high-quality, safe and dependable products and services to customers. Positive, enduring supplier relationships are important and as part of that Duncan and Todd aims to pay all suppliers within agreed payment terms. Any disputes are resolved as quickly as possible.
The group also has an Anti-Bribery and Corruption policy, which every employee is expected to read, understand and comply with.
Community and Environment
The group has extensive operations across many parts of Scotland often operating at the centre of local communities. As a result, the directors carefully consider the impact of the group’s operations on these local communities and are committed to ensure its services and products have a positive impact on its employees, neighbours and the environment.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 12.
No ordinary dividends were paid (2023: £nil). The directors do not recommend payment of a dividend (2023: £nil).
Information on the fostering of business relationships with suppliers, customers and others, and the impact on principal decisions taken during the year can be found in the Strategic Report and form part of this report through cross-reference.
The Group's Energy and Carbon reporting is as follows:
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2023 UK Government’s Conversion Factors for Company Reporting.
The chosen intensity measurement ratio is total gross emissions in tonnes CO2 equivalent per £M Turnover.
The Duncan and Todd Group continue to strive for energy and carbon reduction arising from their activities. Although no specific principal energy efficiency actions were taken during this year, they continue to use more efficient LED lighting in displays and as ongoing replacement on lamp failure. The company has also moved all possible contracts to a 100% renewable energy and will move the last few remaining when they complete their current contract. 95% of sites are supplied by 100% renewable energy reinforcing their commitment to environmental, social and corporate governance.
The company has merged their manufacturing and head office facilities at a new location at Dyce further improving efficiencies across the group. Many of their sites have upgraded their energy meters to ‘Smart’ meters to help manage energy consumption proactively with the few remaining to happen in due course. The company plan to outsource invoice validation which will capture consumption information allowing further analysis of individual site performance and target reductions.
As part of an initiative to raise awareness of the need to conserve energy across its portfolio of sites management are considering a scheme to encourage minimising energy usage across all sites which has the potential to reduce energy consumption across the group by up to 5-10%.
We have audited the financial statements of Duncan and Todd Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the Group Profit and Loss Account, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements:
Basis for opinion
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
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.
Extent to which the audit is 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, 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.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and parent company. focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
UK GAAP;
Companies Act 2006;
Corporation Tax legislation;
VAT legislation; and
Employment legislation.
We gained an understanding of how the group and parent company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, and relevant correspondence with regulatory bodies.
We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:
Management override of controls; and
Revenue recognition.
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Performing audit work procedures confirming the completeness, occurrence and accuracy of revenue recognised within the financial statements, including reconciliation of sales from the till systems to the sales ledger ensuring sales have been accurately recorded and also performing appropriate cut-off procedures at year-end;
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
Performing audit work procedures over the risk of management 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 judgements made by management in their calculation of accounting estimates for potential management bias;
Completion of appropriate checklists and use of our experience to assess the Company’s compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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 loss for the period was £2,328,224 (2023: £1,889,717 loss).
Duncan and Todd Holdings Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 6 Queens Road, Aberdeen, AB15 4ZT.
The group consists of Duncan and Todd Holdings Limited and all of its subsidiaries (note 13).
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The parent company is a qualifying entity for the purposes of FRS 102, being a member of a group that prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The parent company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated financial statements incorporate those of Duncan and Todd Holdings Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 March 2024.
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.
At the time of approving the financial statements, the directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future.
The company has made a net loss of £2,328k (2023: £1,890k) but has net current assets of £10,645k (2023: £11,425k) with net liabilities of £11,015k (2023: £8,687k). The group has made a loss for the year of £5,321k (2023: £3,835k), has net current liabilities of £1,567k (2023: £201k net current assets) and net liabilities of £18,536k (2023: £13,215k). The group had net cash of £692k at the year-end (a decline of £583k) and strong operating cash generation in the year that demonstrates the financial strength of the group with the decline in cash due to scheduled bank debt repayments along with significant capital expenditure made in the year.
In making their assessment, the directors have reviewed cashflow and trading forecasts through 12 months following the date of approval of these financial statements, which include sensitivities for different scenarios, and consideration of the compliance with terms associated with the existing lending facilities. The group’s senior borrowing facilities remain in place, with the group’s debt with its shareholders not due for repayment until 2026 and all amounts are accrued until that date rather than paid out in cash.
Based on their assessment, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount of turnover 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.
Turnover from the sale of services is recognised at the time of the related services.
Where payments are received in advance of the sale of goods, turnover is deferred to future periods and reverses when the above criteria is met.
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.
In the parent company financial statements, investments in subsidiaries 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 and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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 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.
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, bank loans, loans from fellow group companies and loan notes, 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, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Government grants, including those received under the Coronavirus Job Retention Scheme, are recognised within other operating income 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.
VAT
The company makes both taxable and exempt supplies to customers. Where costs cannot be directly linked to related turnover, the company applies partial exemption rules in accordance with VAT notice 706.
Irrecoverable VAT is recognised in administrative expenses at the time of related expense. Where the VAT on assets or liabilities recorded on the balance sheet has not been or will not be fully recoverable, it is incorporated into individual asset or liability carrying values.
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.
Key sources of estimation uncertainty
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.
Depreciation
Depreciation is provided based on the estimated useful economic life of each class of asset, which is a judgement exercised by management. Depreciation is taken to the profit and loss in order to write off the asset over its useful economic life.
Dilapidation provision
Included in these accounts is a dilapidation provision of £508,692 (2023: £632,822). During the period, £124,130 of the provision has been utilised (2023: £nil) and a further provision of £nil (2023: £nil) has been made. The amount of this provision is an estimate made by management on the basis of experience of exiting leases in the past.
Valuation of investments
Included within the company only balance sheet, are investments of £9,974,275 (2023: £9,974,275). At the year end management have considered the carrying value and any potential impairment of investments held by Duncan and Todd Holdings Limited.
Recoverability of intercompany debt
Included within the company only balance sheet, is intercompany debt receivable of £14,276,136 (2023: £14,289,373) from other group undertakings. The recoverability of which has been considered by management with reference to future forecasted trading performance.
Carrying value of fixed asset investments and related goodwill
The directors regularly assess the carrying value of fixed asset investments, and related goodwill, and recognise any impairment charge in the profit and loss account if any impairment is identified. The useful life of goodwill (10 years) is also an estimate made by management. No impairment was identified in the current year (2023: £nil) and goodwill amortisation charge of £2,252,884 (2023: £2,320,275) was recorded during the year.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023: 2)
The actual charge/(credit) for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
The group has unrecognised deferred tax assets of £244,143 (2023: £364) in relation to losses carried forward and other timing differences, that have not been recognised as there is no certainty that they will reverse.
Goodwill comprises three elements as follows:
Goodwill arising on the acquisition of several individual operational business being amortised evenly over the directors' estimate of their useful lives of 10 years. In the current year the company invested in new practices in Saltcoats, North Ayrshire as part of their continued strategic growth plans of the group.
Goodwill arising on the acquisition of Duncan and Todd Group Limited. The directors estimate the useful economic life of Duncan and Todd Group Limited as 10 years.
Goodwill arising on the acquisition of nine trading branches from Black and Lizars in April 2019. The directors estimate the useful economic life of this goodwill to be 10 years.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 31 March 2024 are as follows:
All the above-named subsidiaries have the registered office address of Unit 4 Kirkhill Commercial Park Dyce Avenue, Dyce, Aberdeen, Scotland, AB21 0LQ.
Amounts owed by group undertakings are repayable on demand and carry interest at SONIA + 3.25%.
Amounts owed to group undertakings are repayable on demand and carry interest at SONIA + 3.25%.
Borrowings consist of an overdraft facility, two bank loan facilities and loan notes.
The bank overdraft is repayable on demand and has a limit of £1.0m.
Bank loan A has a carrying value of £421,987 (2023: £662,980) and carries interest at a variable rate of SONIA + 3.0% and is repayable in December 2025. Interest is payable quarterly.
Bank loan B has a carrying value of £2,542,875 (2023: £3,322,875) and carries interest at SONIA + 3.0% and is repayable in March 2026.
Bank loan C has a carrying value of £610,989 (2023: £610,989) and carries interest at SONIA + 3.0%. and is repayable in March 2026.
The bank loans are secured by a bond and floating charge over the assets of the group.
The loan notes are repayable in a single payment in March 2026. Interest accrues at a fixed rate of 10% but is not payable until the loan notes are repaid. Accrued interest is included in the carrying value.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 2 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
£124,130 (2023: £10,900) of the provision was utilised within the year. A further provision of £nil (2023: £86,450) was made during the year.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
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.
All shares have equal rights to distributions of income and capital and equal voting rights, except that holders of the A ordinary shares cannot control more than 40% of votes, and holders of the D ordinary shares cannot control more than 12% of votes.
The share premium account represents the premium arising on the issue of shares net of issue costs.
The profit and loss account represents cumulative profits and losses net of dividends and other adjustments.
The Royal Bank of Scotland holds a bond and floating charge over the assets and undertakings of the group as security over group loans and overdrafts totalling £4,605,443 (2023: £5,148,277).
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:
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
The company has taken advantage of the exemption under paragraph 33.1A from the provisions of FRS 102, 'Related party disclosures' from disclosing transactions with other group companies.
During the year the group made lease payments of £64,200 to other related parties (2023: £64,200). The amount owed to other related parties at the year end was £nil (2023: £nil).