The directors present the strategic report for the year ended 31 December 2024.
We aim to present a balanced and comprehensive review of the development and performance of our business during the financial year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.
The principal activity of the company is an investment holding company. The group trades as plumbing and heating merchants supplying building, plumbing businesses and Council’s across the Central Belt of Scotland. 2024 was a difficult trading year as the downturn in the market we saw in the last 4 months of 2023 continued into 2024. This reflected the general trend across our sector. We saw a general decline in business across our branch network but an increase heat pump sales from our Sustainable Homes and heat pumps division. The last twelve months have resulted in a 16% decline in turnover year on year and despite an increase in trading margin % and a cost reduction program mid-year we have reported an operating loss in 2024.
Trading conditions have remained challenging into 2025 and the directors continue to take relevant steps to review and manage the company’s sales channels and cost base.
In 2024 we consolidated our cost infrastructure and have implemented a new IT system in 2025 with a positive view of moving forward and growing the business in future years.
For many businesses of our size, the business environment in which we operate continues to be challenging. In general, we have seen price increases driven by market conditions, political uncertainty, higher inflation rates, and the cost of imported material increasing. We face continued competition from various nationally based groups which are operating from an extensive branch network to attract sales from our local area, new specialist entrants to the market and the internet. However, we remain confident in our ability to compete by giving our customers excellent service backed with high stock levels and experienced staff. We also compete with the nationals through being active members of a buying group and keeping our overheads low. We are of course subject to the general level of consumer spending on home repairs and improvements and the activity levels of the housing markets. We continue to credit insure our debts to decrease our bad debt exposure.
With these risks and uncertainties in mind, we are aware that any plans for the future development of the business may be subject to unforeseen future events outside our control. However, we will stay vigilant and continue with our policy of focusing on the day to day running of our business, remaining well placed to react quickly to any changes in the market.
Key performance indicators
We consider that our key financial performance indicators are those that measure the financial performance and strength of the company as a whole; these are turnover, operating profit and return on capital employed.
Turnover has decreased from £15,747,946 in 2023 to £13,255,811 in 2024 (-15.8%). This is driven by a general downturn in trading across the sector.
Overall, the operating loss for 2024 is £346,462 (FY23: operating profit £356,249). Loss before tax is £358,323 (FY23: profit £332,395). After tax and dividends, reserves have decreased by £379,225.
Return on capital employed in the year is -11.7% (FY23: 10.7%). Return on capital employed is calculated as operating profit divided by capital employed, which constitutes total assets less current liabilities, less investments, less cash, plus overdrafts and other short term borrowings.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £107,520 (2023: £115,200). The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company does not use derivatives for either financial risk management or for speculative purposes. The company's financial risk management objectives, policies and exposure to financial risks are not considered material for the assessment of the company's assets, liabilities, financial position or result for the year and as such, no further disclosure is considered necessary.
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments.
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Strathcairn Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024, which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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 or 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 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.
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.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and the parent company and the sector in which they operate, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
Companies Act 2006;
UK Tax legislation; and
UK Generally Accepted Accounting Practice.
We gained an understanding of how the group and the parent company are complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the group and parent company’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. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:
Management override of controls;
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:
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 group’s procurement of legal and professional services;
Performing audit 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 assessing judgements made by management in their calculation of accounting estimates for potential management bias;
Performing audit procedures over the recognition of revenue at the year end by agreeing sales to invoices and delivery notes, ensuring they were recorded in the correct period;
Completion of appropriate checklists and use of our experience to assess the group and parent 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 would become aware of it.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
There were no items of other comprehensive income in the current or prior year and therefore no separate statement of other comprehensive income has been prepared.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £85,875 (2023 - £67,432 profit).
Strathcairn Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 15-17 Carnoustie Place, Glasgow, G5 8PA.
The group consists of Strathcairn Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified in respect of the parent company to include investment properties carried at fair value. The principal accounting policies adopted are set out below.
The parent company is a qualifying entity for the purposes of FRS 102 and has taken advantage of the exemption available from the requirement to present a company only cash flow statement and related notes and disclosures.
The consolidated group financial statements consist of the financial statements of the parent company Strathcairn Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Group reconstructions
Group reconstructions are accounted for using the merger accounting method where ultimate equity holders and non-controlling interest remain the same, the rights of each equity holder are unchanged and use of the merger accounting method is not prohibited by company law or other relevant legislation.
The merger method of accounting is applied to group reconstructions as if the entities had always been combined. The total comprehensive income, assets and liabilities of the entities are amended, where necessary, to align the accounting policies. The carrying values of the entities’ assets and liabilities are not adjusted to fair value. Any difference between the nominal value of shares issued and the value of the consideration received is taken to other reserves in equity. Any existing balances on the share premium account or capital redemption reserve of the legal subsidiary are shown as a movement on other reserves.
The directors have prepared the financial statements on a going concern basis, the directors have a reasonable expectation, having prepared detailed trading projections to the end of 2026, that the group and company have adequate resources to continue to operate effectively. Although trading continues to be challenging there is sufficient headroom to continue to trade as a going concern for a minimum period of 12 months from the date of authorising the financial statements. The directors acknowledge that forecasts are by nature forward looking and therefore may vary from actual results. As always, the directors will closely monitor the business and marketplace and react to any changes in a timely manner.
Turnover represents amounts receivable for plumbing and heating supplies net of VAT and trade discounts.
Turnover from the sale of plumbing and heating supplies is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably. The significant risks and rewards of ownership pass either on collection of the goods or on signed receipt of deliveries.
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 statement of comprehensive income.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of comprehensive income.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include certain debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets 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 the statement of comprehensive income.
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 the statement of comprehensive income.
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 certain creditors, other loans and bank loans, 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 statement of comprehensive income 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 statement of comprehensive income, 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.
Rentals payable under operating leases, including any lease incentives received, are charged to statement of comprehensive income 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.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in statement of comprehensive income.
Supplier income
Supplier incentives, rebates and discounts are collectively referred to as supplier income and are recognised as a deduction from cost of sales on an accruals basis, based on the expected entitlement which has been earned up to the balance sheet date for each relevant supplier contract. The accrued incentives, rebates and discounts receivable at the year end are included within trade creditors.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The company impairs inventory which they deem to be obsolete, with the loss recognised in the statement of comprehensive income. Inventory which has been purchased and not sold over the two years preceding the reporting date are deemed to be impaired, unless included within a complete product range which remains on sale. Management utilise their experience and knowledge of the market to periodically assess if any additional items should be impaired.
The value of the inventory provision at the year end is £132k (2023 - £95k).
Investment property in the parent company is carried at fair value which is based on an open market value. In making their open market value assessment, the directors consider secure tenancy and rental yields. The directors acknowledge that there is inherent uncertainty in this assessment.
The balance at the reporting date was £622k (2023 - £622k) within company balance sheet of Strathcairn Limited.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
A change in the UK Corporation tax rate to 25% took effect from 1 April 2023. This change had a consequential effect on the group's tax charge with the standard rate of tax in the prior year reflective of a marginal tax rate arising from the group's period straddling the 19% and 25% tax rates.
Software purchased by the group has not been brought into use before the year end date. As such, no amortisation has been applied.
Investment property held by the parent company comprises land and buildings rented to its subsidiary, Richmonds Plumbing & Heating Merchants Limited. The fair value of the investment property has been arrived at on the basis of a valuation carried out by the directors at the reporting date. The valuation was made on an open market value basis by reference to market evidence of rental yields for similar properties.
In the group financial statements, the land and buildings meet the definition of property, plant and equipment under FRS 102 and are therefore included within tangible fixed assets at note 13, recorded at their depreciated historic cost.
Details of the company's subsidiaries at 31 December 2024 are as follows:
While intragroup loans are outstanding with terms of between 24 and 48 months, they can be recalled with one to three months' notice and are therefore shown as falling due within one year. Interest rates are attaching from 6.3% to 7.5% per annum. £nil (2023: £106,250) of the amount outstanding at 31 December 2024 is secured over certain motor vehicles.
Bank loans and overdrafts are secured by a bond and floating charge over the whole of the property and undertaking of the company's subsidiary, Richmonds Plumbing & Heating Merchants Limited.
Other loans are unsecured.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
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.
The Ordinary shares entitle holders to voting, dividend and distribution rights.
The group's merger reserve was created on consolidation when bringing into account the capital redemption reserve held within the company's subsidiary.
Profit and loss reserves represent accumulated comprehensive income or expenditure for the year and prior periods less dividends paid.
Other reserves (company only)
Other reserves in the parent company relate to cumulative unrealised gains and losses on investment properties carried at fair value through the profit and loss account.
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:
The remuneration of key management personnel is as follows.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
Dividends totalling £107,520 (2023 - £115,200) were paid in the year in respect of shares held by the company's directors.