Company Registration No. SC212755 (Scotland)
HIGHLAND COLOUR COATERS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
HIGHLAND COLOUR COATERS LIMITED
COMPANY INFORMATION
Directors
R Sheils
L Reed
R G Steel
G Bulloch
I Boyle
J Macintosh
Secretary
R G Steel
Company number
SC212755
Registered office
Pinefield Industrial Estate
ELGIN
IV30 6FG
Auditor
Johnston Carmichael LLP
Commerce House
South Street
ELGIN
IV30 1JE
HIGHLAND COLOUR COATERS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 7
Profit and loss account
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
HIGHLAND COLOUR COATERS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2021
- 1 -
The directors present the strategic report for the year ended 31 March 2021.
Fair review of the business
The year ended 31 March 2021 saw a 16.7% decrease in overall turnover from £6.77m to £5.64m this being due to the closure of the plant for 4 weeks together with reduced levels of business for a period after the closure as employees gradually returned to work and the market recovered. Thereafter, business levels were very positive for the remainder of the financial year and for powder coating in particular turnover increased to the extent of being slightly ahead of the previous year.
The small decrease in gross margin (from 39.7% to 39.2%) is due to the period of closure, with operational improvements and controls ensuring that trading margins for the remainder of the year reflected very satisfactory increases.
These operational improvements also enabled the Company to record an increase in profit before taxation from £0.43m to £0.68m despite poorer results in the early part of the year.
The company’s balance sheet reflects a very healthy financial position with net assets at 31 March 2021 of £4.3m.
Principal risks and uncertainties
Although the recovery following the initial period of shutdown has been very positive, a degree of uncertainty remains due to the Covid 19 pandemic and the impact of this together with the impact of Brexit is being seen particularly in the increasing costs of certain materials and services.
The extreme volatility in the energy supply market is also a risk in that substantial increases in cost cannot always be recovered quickly through selling prices to the customer base.
Through close contact with the market and with principal suppliers, together with tight operational control, the directors are confident that these risks to the business can be successfully managed.
Key performance indicators
The directors manage the main areas of the business using a broad range of key financial performance indicators designed to ensure regular, tight monitoring and control of all operational activity. These financial indicators focus mainly on revenue growth and operating margin and with regard to the latter, specific ratios to measure the effectiveness of labour and raw material consumption are analysed in detail, allowing real time management and control of key aspects of operational performance.
There are also non-financial key performance indicators used to ensure continuous improvement in Health & Safety, Quality and Environmental performance.
Future developments
As referred to above, the recovery in the market following the initial period when the plants were closed has been very positive. The directors are continuing the strategy to grow and develop both the galvanizing and the powder coating businesses to take advantage of this and are confident that the company will strengthen its position over the forthcoming financial year and beyond.
R G Steel
Director
25 October 2021
HIGHLAND COLOUR COATERS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2021
- 2 -
The directors present their report and financial statements for the year ended 31 March 2021.
Principal activities
The principal activity of the company is that of the supply of galvanizing, powder coating and the duplex service combining these processes, "Colourgalv".
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
G S Crowley
(Resigned 31 January 2021)
R Sheils
L Reed
R G Steel
G Bulloch
I Boyle
J Macintosh
Auditor
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company'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.
HIGHLAND COLOUR COATERS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 3 -
On behalf of the board
R G Steel
Director
25 October 2021
HIGHLAND COLOUR COATERS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HIGHLAND COLOUR COATERS LIMITED
- 4 -
Opinion
We have audited the financial statements of Highland Colour Coaters Limited
(the 'company')
for the year ended 31 March 2021 which comprise
of the profit and loss account
,
balance sheet
, 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
Financial Reporting
S
tandard
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 31 March 2021 and of its profit 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.
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 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 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
HIGHLAND COLOUR COATERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HIGHLAND COLOUR COATERS LIMITED
- 5 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors'
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in
Directors'
R
esponsibilities
s
tatement
, set out within the Directors' Report on pages 2-3
, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
directors are
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors
either
intend
to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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
.
Extent to which an audit is considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below
.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant 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.
HIGHLAND COLOUR COATERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HIGHLAND COLOUR COATERS LIMITED
- 6 -
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management. We corroborated these enquiries through our review of external inspections, relevant correspondence with regulatory bodies and reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by meeting with management to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management 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.
The following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
-
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
-
Performing audit work procedures over the risk of revenue recognition, including testing of the completeness of revenue;
-
Performing audit work procedures over the risk of zinc valuation, including testing of the completeness of stock and the relevant usage adjustments;
-
Reviewing minutes of meetings of those charged with governance;
-
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
-
Reviewing correspondence with relevant authorities and reviewing internal reporting logs.
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 risk due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.
HIGHLAND COLOUR COATERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HIGHLAND COLOUR COATERS LIMITED
- 7 -
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.
Fiona Munro (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
1 November 2021
Chartered Accountants
Statutory Auditor
Commerce House
South Street
ELGIN
IV30 1JE
HIGHLAND COLOUR COATERS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2021
- 8 -
2021
2020
Notes
£
£
Turnover
3
5,642,567
6,772,737
Cost of sales
(3,429,854)
(4,086,952)
Gross profit
2,212,713
2,685,785
Distribution costs
(450,961)
(674,126)
Administrative expenses
(1,429,029)
(1,498,534)
Other operating income
372,628
30,840
Operating profit
4
705,351
543,965
Interest payable and similar expenses
7
(30,000)
(115,000)
Profit before taxation
675,351
428,965
Tax on profit
8
(156,985)
(126,121)
Profit for the financial year
518,366
302,844
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HIGHLAND COLOUR COATERS LIMITED
BALANCE SHEET
AS AT
31 MARCH 2021
31 March 2021
- 9 -
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
9
3,142,579
3,373,783
Investments
10
98
98
3,142,677
3,373,881
Current assets
Stocks
11
524,268
551,483
Debtors
12
1,354,203
1,335,081
Cash at bank and in hand
1,039,351
936,388
2,917,822
2,822,952
Creditors: amounts falling due within one year
13
(1,359,073)
(1,980,242)
Net current assets
1,558,749
842,710
Total assets less current liabilities
4,701,426
4,216,591
Creditors: amounts falling due after more than one year
14
(277,035)
(307,875)
Provisions for liabilities
Deferred tax liability
15
127,268
129,959
(127,268)
(129,959)
Net assets
4,297,123
3,778,757
Capital and reserves
Called up share capital
18
1,000,000
1,000,000
Profit and loss reserves
19
3,297,123
2,778,757
Total equity
4,297,123
3,778,757
The financial statements were approved by the board of directors and authorised for issue on 21 October 2021 and are signed on its behalf by:
G Bulloch
Director
Company Registration No. SC212755
HIGHLAND COLOUR COATERS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 April 2019
1,000,000
2,475,913
3,475,913
Year ended 31 March 2020:
Profit and total comprehensive income for the year
-
302,844
302,844
Balance at 31 March 2020
1,000,000
2,778,757
3,778,757
Year ended 31 March 2021:
Profit and total comprehensive income for the year
-
518,366
518,366
Balance at 31 March 2021
1,000,000
3,297,123
4,297,123
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
- 11 -
1
Accounting policies
Company information
Highland Colour Coaters Limited is a
private
company
limited by shares
incorporated in
Scotland
.
The registered office is
Pinefield Industrial Estate, ELGIN, IV30 6FG.
1.1
Accounting convention
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 a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company has taken advantage of the reduced disclosure framework of FRS 102 available to certain qualifying subsidiaries; namely:
-
The requirement to present a reconciliation of the number of shares outstanding at the beginning and end of the financial period;
-
The requirement to present a Statement of Cash Flows;
-
The disclosure requirements in relation to financial instruments; and
-
The requirement to disclose key management personnel compensation in total.
The company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts. The
financial statements
present information about the company as an individual entity and not about its group
.
Highland Colour Coaters Limited is a wholly owned subsidiary of Highland Metals Limited and the results of Highland Colour Coaters Limited are included in the consolidated financial statements of Highland Metal Developments Limited which is the ultimate parent company.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents amounts receivable for galvanizing and powder coating services net of VAT and trade discounts. Turnover is recognised at the point of despatch.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on despatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
1
Accounting policies
(Continued)
- 12 -
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
- Straight line over 25 years
Plant and machinery
- Straight line over 4 to 10 years
Fixtures, fittings & equipment
- Straight line over 4 to 10 years
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 credited or charged to the profit and loss account
.
Land is not depreciated.
1.5
Fixed asset investments
Interests in subsidiaries
are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in
the profit and loss account.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.6
Impairment of fixed assets
At each reporting end date, the
company
reviews the carrying amounts of its tangible
assets
to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
1.7
Stocks
Stocks
and work in progress
are stated at the lower of cost and
estimated selling price less costs to complete and sell. Cost comprises
the invoiced price of goods and materials on a first in first out basis. The cost of work in progress comprises materials, direct labour and attributable production overheads.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in
the
profit
and
loss
account
. Reversals of impairment losses are also recognised in
the
profit
and
loss
account.
1.8
Cash and cash equivalents
Cash and cash equivalents include cash in hand
.
1.9
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs
.
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
1
Accounting policies
(Continued)
- 13 -
Other financial assets
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.
Impairment of financial assets
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.
The impairment loss is recognised in the profit and loss account.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
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.
Classification of financial liabilities
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 company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including
creditors and
loans from
fellow group companies, 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 receipts discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade
creditor
s are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. Accounts payable are classified as
current liabilities if payment is due within one year or less
.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company 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 company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
1
Accounting policies
(Continued)
- 14 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not they will be recovered. Deferred tax assets and liabilities are not discounted.
1.12
Employee benefits
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants are recognised in accordance with the accruals model.
Government grants relating to
revenue, including amounts under the Coronavirus Job Retention scheme,
are recognised as income over the periods when the related costs are incurred
. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 15 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’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.
Critical judgements
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.
Stock
The calculation of the value of the zinc held in the kettle of £350,570 (2020 - £350,570) is based on the total quantity held, which remains relatively constant and which in turn is made up of the estimated tonnage of zinc itself (valued at cost) and the estimated tonnage of residues (valued at estimated realisable value).
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2021
2020
£
£
Turnover analysed by class of business
Galvanizing services
4,272,542
5,393,292
Powder coating services
1,370,025
1,379,445
5,642,567
6,772,737
2021
2020
£
£
Other significant revenue
Grants received
372,628
30,840
2021
2020
£
£
Turnover analysed by geographical market
United Kingdom
5,642,567
6,772,737
Grants received consists of £341,788 received from the Government in relation to the COVID-19 Job Retention scheme.
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 16 -
4
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(372,628)
(30,840)
Fees payable to the company's auditor for the audit of the company's financial statements
9,500
9,000
Depreciation of owned tangible fixed assets
317,065
313,286
The company has taken advantage of the exemption from the disclosure of remuneration paid to its auditors for non-audit services. This exemption is available to the company as it prepares consolidated accounts which are required to include such disclosures in those accounts.
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Office
9
9
Factory
58
65
Total
67
74
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
2,038,908
2,150,356
Social security costs
188,529
191,665
Pension costs
76,049
62,645
2,303,486
2,404,666
6
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
228,612
224,533
Company pension contributions to defined contribution schemes
4,852
5,653
233,464
230,186
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2020 - 2).
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
6
Directors' remuneration
(Continued)
- 17 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2021
2020
£
£
Remuneration for qualifying services
67,873
66,174
Qualifying services are invoiced and paid to the directors management services company and included in remuneration for qualifying services. Directors fees amounted to £95,089 (2020 - £103,037) during the year.
7
Interest payable and similar expenses
2021
2020
£
£
Other interest
30,000
115,000
8
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
159,676
115,658
Deferred tax
Origination and reversal of timing differences
(2,691)
10,947
Adjustment in respect of prior periods
(484)
Total deferred tax
(2,691)
10,463
Total tax charge
156,985
126,121
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
8
Taxation
(Continued)
- 18 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
£
£
Profit before taxation
675,351
428,965
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
128,317
81,503
Deferred tax adjustments in respect of prior years
(484)
Deferred tax adjusted to the closing rate
14,002
Ineligible depreciation
28,668
31,100
Taxation charge for the year
156,985
126,121
9
Tangible fixed assets
Freehold land and buildings
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
Cost
At 1 April 2020
4,673,534
2,929,574
41,038
7,644,146
Additions
87,669
87,669
Disposals
(2,646)
(2,646)
At 31 March 2021
4,673,534
3,014,597
41,038
7,729,169
Depreciation and impairment
At 1 April 2020
2,118,982
2,116,349
35,032
4,270,363
Depreciation charged in the year
179,748
134,123
3,194
317,065
Eliminated in respect of disposals
(838)
(838)
At 31 March 2021
2,298,730
2,249,634
38,226
4,586,590
Carrying amount
At 31 March 2021
2,374,804
764,963
2,812
3,142,579
At 31 March 2020
2,554,552
813,225
6,006
3,373,783
Freehold land with a cost of £178,398 (2020 - £178,398) has not been depreciated.
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 19 -
10
Fixed asset investments
2021
2020
Notes
£
£
Investments in subsidiaries
23
98
98
Movements in fixed asset investments
Shares in group undertakings
£
Cost
At 1 April 2020 & 31 March 2021
98
Carrying amount
At 31 March 2021
98
At 31 March 2020
98
11
Stocks
2021
2020
£
£
Raw materials and consumables
515,931
544,743
Work in progress
8,337
6,740
524,268
551,483
12
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
1,323,700
1,280,484
Amounts owed by group undertakings
6,255
Other debtors
24,248
54,597
1,354,203
1,335,081
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 20 -
13
Creditors: amounts falling due within one year
2021
2020
£
£
Trade creditors
481,328
449,833
Amounts owed to group undertakings
126,000
1,063,703
Corporation tax
159,676
115,658
Other taxation and social security
370,954
202,301
Accruals and deferred income
221,115
148,747
1,359,073
1,980,242
14
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Government grants
16
277,035
307,875
15
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2021
2020
Balances:
£
£
Accelerated capital allowances
129,911
119,496
Other timing differences
(2,643)
10,463
127,268
129,959
2021
Movements in the year:
£
Liability at 1 April 2020
129,959
Credit to profit or loss
(2,691)
Liability at 31 March 2021
127,268
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 21 -
16
Deferred grants
2021
2020
£
£
Arising from government grants
277,035
307,875
The company received an initial government grant in 2003 of £480,000, which is amortised over 25 years, with a balance of £164,192 included in the total above at the year end. The conditions of the grant have been satisfied.
A further grant was received in 2012 of £187,500, which has also been amortised over 25 years, with a balance of £11
2
,843 included in the total above at the year end.
17
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
76,049
62,645
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
18
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
120,000
120,000
120,000
120,000
2021
2020
2021
2020
Preference share capital
Number
Number
£
£
Issued and fully paid
Redeemable convertible preference shares of £1 each
880,000
880,000
880,000
880,000
Preference shares classified as equity
880,000
880,000
Total equity share capital
1,000,000
1,000,000
The 10% non voting redeemable convertible preference shares are redeemable at the option of the company and there is no premium on redemption.
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 22 -
19
Profit and loss reserves
2021
2020
£
£
At the beginning of the year
2,778,757
2,475,913
Profit for the year
518,366
302,844
At the end of the year
3,297,123
2,778,757
The profit and loss reserves represents accumulated profits less distributions.
20
Capital commitments
Amounts contracted for but not provided in the financial statements:
2021
2020
£
£
Acquisition of tangible fixed assets
-
55,390
21
Related party transactions
Transactions with related parties
The company has taken advantage of the exemption available within FRS 102 whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group.
22
Ultimate controlling party
The company is a subsidiary of Highland Metals Limited. The ultimate parent company is Highland Metal Developments Limited, which heads the only group for which consolidated financial statements have been prepared. Copies of these results are publicly available and can be obtained from the Registrar of Companies at Companies House, Edinburgh.
23
Subsidiaries
These financial statements are separate company financial statements for Highland Colour Coaters Limited.
Details of the company's subsidiaries at 31 March 2021 are as follows:
Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Indirect
Highland Galvanizers Limited
See below
Dormant
Ordinary
98.00
-
The registered office address of the subsidiaries is Pinefield Industrial Estate, Elgin, IV30 6FG.
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
HIGHLAND COLOUR COATERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
23
Subsidiaries
(Continued)
- 23 -
Name of undertaking
Capital and Reserves
Profit/(Loss)
£
£
Highland Galvanizers Limited
100
2021-03-31
2020-04-01
false
CCH Software
CCH Accounts Production 2021.300
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