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Lothian Electric Machines Limited
Registered number: SC036737
Annual report and
financial statements
For the year ended 30 September 2024
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LOTHIAN ELECTRIC MACHINES LIMITED
COMPANY INFORMATION
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MFMAC Secretaries Limited
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Chartered Accountants & Statutory Auditor
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LOTHIAN ELECTRIC MACHINES LIMITED
CONTENTS
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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LOTHIAN ELECTRIC MACHINES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The director presents the Strategic Report for the year ended 30 September 2024.
The principal activity of the Company in the period under review continued to be the manufacture of stairlift carriages.
Financial key performance indicators
Management use a range of performance measures to monitor and manage the business. These are split into financial and non-financial key performance indicators, as set out below:
Financial key performance indicators
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Balance sheet net current assets
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Development and financial performance during the year
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As reported in the Company’s Statement of Comprehensive Income, turnover decreased from £47.0m to £42.3m in year ended 30 September 2024 due to the decrease in sales volume compared to the previous year.
Gross profit and margin decreased during the year from £2.5m to £1.6m (5.4% to 3.7%) as a direct result of the increasing costs of raw materials, global shipping and energy.
Operating margins have also decreased from 2.0% to (0.39)%.
Financial position at the reporting date
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Net assets have decreased from £13.0m at the start of the year to £12.7m at the year end. This is primarily due to total comprehensive loss for the year of £(0.3)m.
Principal risks and uncertainties
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The principal risks and uncertainties facing the Company are as follows:
Operational Risk
The key operational challenge facing the business is to ensure that its supply chain has appropriate depth and breadth of capacity whilst at the same time maintaining component quality. Our technical and purchase teams visit, and audit, both existing and prospective suppliers worldwide to ensure adherence to standards and to facilitate contingency planning should the need arise. Detailed and regular inventory and sales forecast meetings are held with customers and suppliers to ensure the Company remains able to respond to the growth requirements. The Company is accredited to ISO 9001 Quality Management and ISO 14001 Environmental Management.
- 1 -
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LOTHIAN ELECTRIC MACHINES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
Directors’ Statement of Compliance with duty to promote the success of the Company
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The Director considers that for the year ended 30 September 2024 he has acted in good faith, in order to promote the success of the Company, both in the short and long term, for the benefit of the Company’s shareholder by giving specific regard to a range of matters set out in Section 172(1) as listed below:
a)The likely consequences of any decision in the long term;
b)The interests of the Company’s employees;
c)The need to foster the Company’s business relationships with suppliers, customers and others;
d)The impact of the Company’s operations on the community and the environment;
e)The desirability of the Company maintaining a reputation for high standards of business conduct; and
f)The need to act fairly between members of the Company
(a)The likely consequences of any decision in the long term;
The Director operates with a layered approach with regards to any decisions being made within the Company and any wider business strategy, whilst retaining a high level of regard for the Company values, culture and the wider community that it may influence.
Within the Company’s core strategy, it continually seeks to invest in developing its manufacturing products, processes, employees and Company facilities. It will continue to successfully deliver on quality of products and on value to ultimately ensure the success of both the Company and its shareholder.
(b)The interests of the Company’s employees;
The Company draws emphasis on the importance of its people and their impact they have in helping deliver the mission; whilst upholding the values of the business. We ensure that the highest standards of training and development are available to all employees and recognise high performance through reward and recognition.
The Company strives to continue support and build upon the values and culture of our already established business and strongly encourage employee engagement and feedback to the management team.
(c)The need to foster the Company’s business relationship with suppliers, customers and others;
The Company is driven to deliver upon its core principles in manufacturing high-quality, reliable and safe products which ultimately go on to aid and assist the end users of our goods. We understand and draw emphasis on the importance of the role that key suppliers play in our manufacturing process.
We strive to create and maintain positive, constructive relationships with all businesses within our supply-chain which includes supporting important working partnerships (both domestic and international) to achieve our business objectives and support growth.
(d)The impact of the Company’s operations on the community and the environment;
We are proud to be part of our local, and of wider communities, and acknowledge the role that the Company has played over the years in being a source of local employment which includes offering apprenticeships and internships. We also demonstrate our commitment through donations with various local charities and support employees within our business who wish to raise funds for causes close to them, their families and their local communities.
(e)The desirability of the Company maintaining a reputation for high standards of business conduct;
We will strive in our pursuit to deliver the highest quality of manufactured product to help support the growth of our key customers.
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LOTHIAN ELECTRIC MACHINES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The Company actively seeks continuous improvement in all factions of the business in order to maintain our high standards and to produce the key deliverables within our core business strategy.
Our values uphold the integrity of our business; acting responsibly and honestly to deliver on our promises. The ambition in taking pride in all we do and achieve in pushing the business forward in a positive direction.
All employees receive inductions and appropriate training promoting these values and have access to our handbook which includes the Company’s procedures and codes of conduct, and understand the requirement to comply with high standards of business conduct at all times.
(f)The need to act fairly as between stakeholders of the Company;
Our Company actively promotes inter-departmental collaboration on a continual basis in order to achieve our business objectives. We understand the processes involved and importance of acting fairly across all departments and the value of working together as one, organisational team.
We encourage and support all communication within our core business, subsidiaries and all commonly controlled parties, within a wider group, to ensure greater value is achieved between all stakeholders.
This report was approved by the board on 23 May 2025 and signed on its behalf.
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LOTHIAN ELECTRIC MACHINES LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The director presents his report and the financial statements for the year ended 30 September 2024.
Director's responsibilities statement
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The director is responsible for preparing the Strategic Report, the Director's Report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director is 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 director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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 year, after taxation, amounted to £117,370 (2023 - profit £949,723).
Dividends reflected in the financial statements for the financial year amounted to £Nil (2023 - £Nil).
The director who served during the year was:
The director has a strong commitment to growing the business in the future. Continued capital investment should allow the Company to continue to support the ambitious growth plans of its key distribution partners.
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LOTHIAN ELECTRIC MACHINES LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Research and development activities
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The Company continues to invest in research and development to continuously innovate and technologically advance the products of its distribution partners. During the year £180,233 (2023 - £490,812) was spent on research and development projects.
Qualifying third party indemnity provisions
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The Company had Director's and Officers' insurance in place throughout the year.
Matters covered in the Strategic report
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Certain information not shown in the Directors' Report is shown in the Strategic Report on pages 1 and 2 instead in accordance with Section 414C(11) of the Companies Act 2006. This includes a business review and principal risks and uncertainties.
Going concern
The financial statements have been prepared on a going concern basis. Having given careful consideration to the anticipated future performance and financial position of the Company, the Director has not identified any material uncertainties which might cast doubt on the going concern assumption.
The director has prepared forecasts for a period in excess of 12 months from the date of approval of these financial statements which indicate that the Company and the Group will have sufficient funds to meet their liabilities as they fall due for that period.
Greenhouse gas emissions, energy consumption and energy efficiency action
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The Company has not disclosed information in respect of greenhouse gas emissions, energy consumption and energy efficiency action. The Company is the subsidiary of Lothian Electric Machines No.2 Limited, as such its greenhouse gas emissions for the Group are reported on a consolidated basis.
Disclosure of information to auditor
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The person who is the director at the time when this Director's Report is approved has confirmed that:
∙so far as he is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙he 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 auditor is aware of that information.
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LOTHIAN ELECTRIC MACHINES LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The auditor, Forvis Mazars LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 23 May 2025 and signed on its behalf.
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LOTHIAN ELECTRIC MACHINES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LOTHIAN ELECTRIC MACHINES LIMITED
Opinion
We have audited the financial statements of Lothian Electric Machines Limited (the ‘Company’) for the year ended 30 September 2024 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and notes to the financial statements, 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 FRS 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:
∙give a true and fair view of the state of the Company’s affairs as at 30 September 2024 and of its loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
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 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 director's 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 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 director 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 director is 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.
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LOTHIAN ELECTRIC MACHINES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LOTHIAN ELECTRIC MACHINES LIMITED
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 the audit:
∙the information given in the Strategic Report and the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Director's Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Director's 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, or 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 director's remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
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LOTHIAN ELECTRIC MACHINES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LOTHIAN ELECTRIC MACHINES LIMITED
Responsibilities of Director
As explained more fully in the Director's Responsibilities Statement set out on page 4, the director is 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 director determines 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 director is 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 director intends either to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the Company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, and health and safety regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the Company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as, tax legislation, pension legislation, the Companies Act 2006.
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LOTHIAN ELECTRIC MACHINES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LOTHIAN ELECTRIC MACHINES LIMITED
In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to assumptions made in relation to the defined benefit pension scheme, revenue recognition (which we pinpointed to the cut off assertion), and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit 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.
Christopher Hudson (Senior Statutory Auditor)
for and on behalf of
Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
5th Floor
3 Wellington Place
Leeds
LS1 4AP
23 May 2025
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LOTHIAN ELECTRIC MACHINES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Interest receivable and similar income
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Net interest on defined benefit pension scheme liability
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(Loss)/profit for the financial year
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Other comprehensive income for the year
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Actuarial gains on defined benefit pension scheme
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Pension scheme asset ceiling
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Other comprehensive income for the year
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Total comprehensive income for the year
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There were no recognised gains and losses for 2024 or 2023 other than those included in the statement of comprehensive income.
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The notes on pages 14 to 36 form part of these financial statements.
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LOTHIAN ELECTRIC MACHINES LIMITED
REGISTERED NUMBER: SC036737
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
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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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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 on 23 May 2025.
The notes on pages 14 to 36 form part of these financial statements.
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LOTHIAN ELECTRIC MACHINES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Capital redemption reserve
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Comprehensive income for the year
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Actuarial gains on pension scheme
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Adjustment to pension scheme asset ceiling
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Total comprehensive income for the year
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Comprehensive income for the year
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Actuarial gains on pension scheme
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Adjustment to pension scheme asset ceiling
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Total comprehensive income for the year
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LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
Lothian Electric Machines Limited ("the Company") is a limited company incorporated in Scotland, registered number SC036737.
The legal form of the Company is that of a company limited by shares.
The address of the registered office and principal place of business is:
Hospital Road
Haddington
East Lothian
EH41 3PD
The principal activity of the Company is the manufacture of stairlift carriages.
These financial statements have been presented 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 Lothian Electric Machines No. 2 Limited as at 30 September 2024 and these financial statements may be obtained from Companies House, Crown Way, Cardiff CF14 3UZ.
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LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
The financial statements have been prepared on a going concern basis. Having given careful consideration to the anticipated future performance and financial position of the Company, the Director has not identified any material uncertainties which might cast doubt on the going concern assumption.
The director has prepared forecasts for a period in excess of 12 months from the date of approval of these financial statements which indicate that the Company and the Group will have sufficient funds to meet their liabilities as they fall due for that period.
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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.
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:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Company has transferred the significant risks and rewards of ownership to the buyer;
∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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.
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LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
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Tangible fixed assets (continued)
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Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, as detailed in the table below.
Depreciation is provided on the following basis:
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Freehold property & leasehold
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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.
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 standard cost basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting 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.
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Cash and cash equivalents
|
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.
- 16 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Company's Statement of Financial Position 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.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
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 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.
- 17 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
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Financial instruments (continued)
|
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 receipts 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.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
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.
- 18 -
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|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
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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Foreign currency translation
|
Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
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Operating leases: the Company as lessor
|
Rental income from operating leases is credited to profit or loss on a straight-line basis over the lease term.
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Operating leases: the Company as lessee
|
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the reporting date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the reporting date.
- 19 -
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|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Interest income is recognised in profit or loss using the effective interest method.
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Provisions for liabilities
|
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.
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 Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
- 20 -
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LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Defined benefit pension plan
The Company operates a defined benefit plan for certain employees. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including but not limited to age, length of service and remuneration. A defined benefit plan is a pension plan that is not a defined contribution plan.
The liability recognised in the Statement of Financial Position in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the reporting date less the fair value of plan assets at the reporting date (if any) out of which the obligations are to be settled.
The defined benefit obligation is calculated using the projected unit credit method. Annually the Company engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating to the estimated period of the future payments ('discount rate').
The fair value of plan assets is measured in accordance with the FRS 102 fair value hierarchy and in accordance with the Company's policy for similarly held assets. This includes the use of appropriate valuation techniques.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income. These amounts together with the return on plan assets, less amounts included in net interest, are disclosed as 'Remeasurement of net defined benefit liability'.
The cost of the defined benefit plan, recognised in profit or loss as employee costs, except where included in the cost of an asset, comprises:
a) the increase in net pension benefit liability arising from employee service during the period; and
b) the cost of plan introductions, benefit changes, curtailments and settlements.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is recognised in profit or loss as a 'Net interest expense'.
- 21 -
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|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
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Current and deferred taxation
|
The tax expense for the year 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 reporting 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 reporting 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 reporting date.
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
- 22 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
|
|
Judgements in applying accounting policies and key sources of estimation uncertainty
|
Critical judgements in applying the Company’s accounting policies
In applying the Company's accounting policies, the director is required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The director's judgements, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.
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 only that period, or in the period of revision and future periods, if the revision affects both current and future periods.
The director does not believe that there are any critical judgements.
Key sources of estimation uncertainty
(i) Defined benefit pension scheme
The pension scheme assets and liabilities are valued using an actuarial valuation incorporating a number of assumptions. The assumptions used can be seen in note 22.
Analysis of turnover by country of destination:
|
|
The whole of the turnover in the year relates to the manufacture and sale of stairlift carriages.
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The operating (loss)/profit is stated after charging/(crediting):
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Research & development charged as an expense
|
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Other operating lease rentals
|
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|
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Depreciation of tangible fixed assets
|
|
|
- 23 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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|
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During the year, the Company obtained the following services from the Company's auditor:
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Fees payable to the Company's auditor 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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|
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Staff costs, including director's remuneration, were as follows:
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Cost of defined contribution scheme
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|
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The average monthly number of employees, including the director, during the year was as follows:
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Company contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to 1 director (2023 - 1) in respect of defined contribution pension schemes.
|
- 24 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
|
|
Other interest receivable
|
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|
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Net interest on defined benefit pension scheme liability
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Net interest on defined benefit pension scheme liability (Note 22)
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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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Taxation on profit on ordinary activities
|
|
|
- 25 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
11.Taxation (continued)
|
|
Factors affecting tax charge for the year
|
|
|
The tax assessed for the year is higher than (2023 - lower than) the standard rate of corporation tax in the UK of25% (2023 - 22%). The differences are explained below:
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(Loss)/profit on ordinary activities before tax
|
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(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 22%)
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Pension scheme contributions
|
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|
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Adjustments in respect of prior periods
|
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Difference between CT rate and DT rate on current year timing differences
|
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|
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Other differences leading to an decrease in the tax charge
|
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|
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Total tax charge for the year
|
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|
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Factors that may affect future tax charges
|
There were no factors that may affect future tax charges.
- 26 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
|
|
Long term Leasehold Property
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- 27 -
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|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
|
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Investments in subsidiary companies
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The following were subsidiary undertakings of the Company:
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Telecom House, Millennium Business Park, Station Road, Steeton, Bradford, West Yorkshire, BD20 6RB
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Lemac Taiwan Incorporated
|
19F.-2, No.629, Sec. 1, Chongde Road, North District, Taichung City 40452, Taiwan, Republic of China
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Raw materials and consumables
|
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Work in progress (goods to be sold)
|
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Finished goods and goods for resale
|
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The difference between purchase price or production cost of stocks and their replacement cost is not material.
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- 28 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
|
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Amounts owed by group undertakings
|
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Amounts owed by connected companies
|
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Prepayments and accrued income
|
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The amounts owed by Group companies are interest free and repayable on demand.
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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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The Company has granted a debenture in the form of a bond and floating charge on its assets to secure all sums and obligations due, or to become due, to Lloyds Bank PLC.
The Company has granted an import guarantee to HM Revenue & Customs to the value of £600,000.
The amounts owed to Group companies are interest free and repayable on demand.
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- 29 -
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|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
|
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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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Tax losses carried forward
|
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Allotted, called up and fully paid
|
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1,742,632 (2023 - 1,742,632) Ordinary shares of £1.00 each
|
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300,000 (2023 - 300,000) Preference shares of £1.00 each
|
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The Preference shares shall rank on a return of capital or liquidation or otherwise in priority to any other shares of the Company. The preference shares have no right to receive notice of, nor attend or vote at any general meeting of the Company.
The Preference shares have a non-cumulative right to a preferential dividend of 8% in priority to all other dividends, which has been waived in the current financial year.
- 30 -
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|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
Capital redemption reserve
The nominal value of shares repurchased by the Company.
Profit & loss account
The accumulated profit for the Company less dividends declared.
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|
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At 30 September 2024 the Company had capital commitments as follows:
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Contracted for but not provided in these financial statements
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- 31 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The Company operates a defined contribution pension scheme separately from the defined benefit scheme. The assets of the defined contribution 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 £274,274 (2023 - £248,198). Contributions totalling £58,222 were owed by the fund at the balance sheet date (2023 - £37,845 owed to) and are included in creditors.
The Company operates a Defined Benefit Pension Scheme.
The defined benefit pension scheme is now closed to new entrants and the future accrual of existing members.
The valuation is based on the most recent Actuarial valuation at 30 September 2024. Scheme assets are stated at their market values at the respective balance sheet dates and overall expected rates of return are established by applying published broker's forecasts to each category of scheme assets.
|
|
Reconciliation of present value of plan liabilities:
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Reconciliation of present value of plan liabilities
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At the beginning of the year
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Reconciliation of present value of plan assets:
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At the beginning of the year
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Adjustment to asset ceiling
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- 32 -
|
|
LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
22.Pension commitments (continued)
|
|
Composition of plan assets:
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Amounts due from pension scheme sponsor
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Adjustment to asset ceiling
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Fair value of plan assets
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Present value of plan liabilities
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Net pension scheme assets
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The amounts recognised in profit or loss are as follows:
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Amounts recognised in other comprehensive income
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The Company expects to contribute £100,000 to its Defined Benefit Pension Scheme in 2025.
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- 33 -
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LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
22.Pension commitments (continued)
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Principal actuarial assumptions at the reporting date (expressed as weighted averages):
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Revaluation of pensions in deferment: CPI max 5.0% p.a.
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Pension increases in payment: RPI min 3.0% p.a. max 5.0% p.a.
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- at 65 for a male aged 45 now
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- for a female aged 65 now
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- at 65 for a female member aged 45 now
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Amounts for the current and previous four periods are as follows:
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Defined benefit pension schemes
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Defined benefit obligation
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Adjustments on scheme liabilities
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Adjustments on scheme assets
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- 34 -
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LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Commitments under operating leases
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At 30 September 2024 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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Related party transactions
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The Company has taken advantage of the exemption conferred by FRS 102 Section 33 not to disclose transactions with wholly owned members of the group headed by Lothian Electric Machines Limited No.2 Limited.
During the year, the Company sold goods and recharged expenses to the value of £42,172,085 (2023: £46,867,637) and purchased goods and services to the value of £Nil (2023: £Nil) to and from entities under common control.
The Company sub-lets land and buildings to an entity under common control for £2,900 per annum.
Costs incurred on behalf of the Company's pension scheme totalled £146,774 (2023: £172,583).
Balances with related parties at the year end are as follows:
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Balances due from entities under common control
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Balances due from the Company pension scheme
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Balances due from the ultimate controlling party
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The Company has commitments under operating leases totalling £1,125,000 as at 30 September 2024 with an entity under common control.
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- 35 -
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LOTHIAN ELECTRIC MACHINES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Ultimate parent undertaking and controlling party
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The ultimate parent company is Lothian Electric Machines No.2 Limited, a company incorporated in Scotland.
Lothian Electric Machines No.2 Limited is the parent undertaking of the largest and smallest group for which financial statements are drawn up and of which the Company is a member. Copies of the group financial statements of Lothian Electric Machines No.2 Limited can be obtained from 1 Hospital Road, Haddington, East Lothian, EH41 3PD.
The ultimate controlling party is J Jakes.
- 36 -
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