Company Registration No. SC272007 (Scotland)
DEESIDE TIMBERFRAME LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
DEESIDE TIMBERFRAME LIMITED
COMPANY INFORMATION
Directors
D Crawford
S Ferguson
M B Robertson
D W Wann
K Bell
K J McColgan
A H Tweedie
Company number
SC272007
Registered office
Banchory Business Centre
Burn O'Bennie Road
Banchory
Aberdeenshire
AB31 5ZU
Auditor
Johnston Carmichael LLP
Bishop's Court
29 Albyn Place
Aberdeen
AB10 1YL
DEESIDE TIMBERFRAME LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14 - 24
DEESIDE TIMBERFRAME LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present the strategic report and financial statements for the year ended 31 March 2023. The company was part of the Bancon Developments Holdings Limited group ("the group") throughout the year.
Fair review of the business
The principal activity of the company is the design, manufacture and supply of timberframe structures for use in the housebuilding and construction industry.
The company has delivered another extremely strong performance in the year, despite facing significant cost increases.
Turnover of £37.1m (2022: £39.9m) was slightly lower than the prior year which reflected the wider market slowdown as customers slowed build programmes in light of the prevailing economic uncertainty. Current levels of enquiry and quotation levels give confidence that the slowdown is temporary and whilst the first half of the new financial year has remained suppressed, volumes are expected to start to recover in the second half of the new financial year. The medium and long-term fundamentals of the timberframe market remain strong as the industry increasingly moves towards offsite manufacture with a lower carbon footprint.
The company maintained strong margin performance in the year despite the continued raw materials cost increases experienced over the period. Gross profit of £6.7m (2022: £6.1m) was 10.9% ahead of the previous year.
Administrative expenses of £4.4m (2022: £3.9m) were held in line with the previous year despite inflationary cost pressures. The prior year had also benefited from a receipt from business interruption insurance of £0.3m.
Operating profit of £2.3m (2022: £2.4m) was in line with the previous year and represented another very strong year for the business. The company's profit after tax for the financial period was in line with last year at £1.9m (2022: £1.9m).
The positive trading result and significant cash generation in the year allowed net assets to remain in line with the prior year at £6.3m (2022: £6.4m). This also factors in a dividend payment of £2.0m (2022: £2.0m) to the parent company in the year.
The strong forward order book and positive enquiry levels give the directors confidence that the business will deliver another strong trading result in the new financial year although this is expected to be at a lower level than the year to 31 March 2023. The business remains well positioned and continues to invest in the longer term with a programme of investment in production efficiency.
Principal risks and uncertainties
The management of the business and the execution of the company's strategy are subject to a number of risks.
Key business risks and uncertainties affecting the company are considered to relate to the continuing uncertainty within the economy, housing market confidence, competitively priced imported raw materials and availability of skilled subcontractors. Further disruption as a result of a pandemic also remains a risk.
Economic uncertainty and housing market confidence could impact overall activity levels and profitability and the business constantly assesses the latest market and economic data to ensure our product and service offerings reflect the current market conditions and remain competitive as mitigation for this risk.
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DEESIDE TIMBERFRAME LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Principal risks and uncertainties (continued)
Raw material price increases are likely to continue to impact margins and with a substantial proportion of raw material being imported, prices can be impacted by foreign currency fluctuations in addition to commodity price dynamics. To mitigate this risk the company will, where possible, forward buy raw material and will, where appropriate, seek price increases from customers.
The availability of skilled subcontractors could limit the company's ability to meet demand and have an adverse impact on margins. The company constantly reviews its supply chain to ensure appropriate resources are available to satisfy forecast demand in mitigation of this risk.
As regards the risk of business disruption from the likes of a further pandemic, the business has contingency plans in place to mitigate against potential disruptions to activities.
Key performance indicators
The directors of Deeside Timberframe Limited review detailed management reports on a monthly basis and consider the key performance indicators as turnover, gross profit, profit after tax, net assets and health and safety scores.
Streamlined energy and carbon reporting
Streamlined energy and carbon reporting requirements have been disclosed on a group basis within the financial statements of the company's ultimate parent, Bancon Developments Holdings Limited, which includes the relevant energy and carbon information for the company. As such, the company is not obliged and has not reported their energy and carbon information here. The financial statements of Bancon Developments Holdings Limited are accessible via UK Companies House.
Section 172 (1) Statement
As directors of the company we have acted, and continue to act, in a way that we consider to be most likely to promote the continuing success of the company for the benefit of its members. In doing so we have had regard, amongst other matters, to:
The likely consequences of any decision in the long term;
The interests of the company's employees;
The need to foster the company's business relationships with suppliers, customers, and others;
The impact of the company's operations on the community and environment;
The desirability of the company maintaining a reputation for high standards of business conduct; and
The need to act fairly between members of the company.
The following are some examples as to how the directors have had regard to the matters set out above when discharging our section 172 duties:
The key strategic objective is to build a sustainable business for the benefit of current and future stakeholders. This involves us taking decisions both for the present and future benefit of the business. The executive directors work within the business on a daily basis, ensuring that key internal and external relationships are maintained directly and employees, suppliers and customers have appropriate access to us. Our management structure and reporting and communication lines are also organised in such a way that the impact and implications of key decisions are well understood throughout the organisation, with the appropriate level of input at all levels throughout the structure.
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DEESIDE TIMBERFRAME LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Section 172 (1) Statement (continued)
The employees are critical to the continued success of the business and it is key we effectively engage with them. Examples of how this is achieved include:
Concerted focus on appraisal and personal development process;
Regular business updates through various channels;
Offering the opportunity for professional and career development through relevant training;
Linking an element of employee reward to the financial success of the group and the company; and
Having appropriate whistleblowing procedures.
We also ensure there is a wider understanding of, and alignment on key strategic objectives through regular formal and informal communication forums.
We maintain strong relationships with our suppliers and customers through the following practices:
Regular contact and meetings with our key suppliers;
Encouraging our customers and suppliers to raise any issues or concerns they have regarding their relationship;
Continuing to focus on the qualities that appeal to our customer base and differentiate us from our competitors; and
Offering dedicated points of contact within our team to promote the building of long-term relationships with our customers and suppliers.
We are committed to supporting the communities that we work in and being environmentally responsible. Corporate Social Responsibility is a key area of management focus and is reported on at a Board level. We undertake various initiatives to improve contributions to these communities and promote the effective use of resources to avoid the unnecessary generation of waste and pollution, with a focus on sustainability and compliance with environmental standards and targets.
We are also committed to conducting our business in an ethical manner. These values are engrained in the culture and encompass our commitment to ensure the highest standard of ethics in the way we conduct our business.
The company's ultimate controlling party is J C A Burnett of Leys and his family and as such no conflicts exist between shareholders in relation to the company.
On behalf of the board
..............................
A H Tweedie
Director
13/11/2023
.........................
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DEESIDE TIMBERFRAME LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and financial statements for the year ended 31 March 2023.
Directors
The following directors have held office since 1 April 2022 unless otherwise stated:
D Crawford (appointed 31 March 2023)
D W Wann (appointed 31 March 2023)
K Bell (appointed 3 August 2023)
K J McColgan (appointed 29 September 2023)
S Ferguson
M B Robertson
A H Tweedie
J C Irvine (resigned 29 September 2023)
J Wright (resigned 31 March 2023)
L M Taylor (resigned 16 June 2023)
Financial risk management
The company's activities expose it mainly to liquidity, credit and price risks. The company does not use derivatives to manage financial risk or for speculative purposes.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing and future operations, the company has access to bank debt facilities which are agreed on a group wide basis. These debt facilities are linked to the base rate. This will present no significant interest rate risk to the business, with intragroup borrowings being interest free.
Credit risk
The company operates procedures that require appropriate credit checks on potential customers are carried out before contracts are concluded and will seek to obtain credit insurance on all customers. For sales to private individuals and small development companies, the company insists on pro forma payments ahead of timberframe structures being manufactured.
During the course of projects, credit control procedures are in place to minimise any credit risk to the business. The amount of exposure to any individual counterparty is subject to a limit, either agreed with our credit insurance providers or by the directors.
Price risk
The company can be exposed to commodity price risk as a result of its operations. To mitigate this risk the company will, where possible, forward buy raw material and will, where appropriate, seek price increases from customers.
Future developments
The business delivered ahead of expectations in the year to March 2023 and showed a positive improvement in gross margins as it adjusted to the marked uplift in raw material prices felt in the prior year in particular.
The business is anticipating increased activity from group companies in addition to targeted expansion where appropriate. This growth strategy is being actively supported by further investment in people development, systems enhancements, and factory capacity in the coming year.
The forward order book, containing a broad geographic spread of work, balanced across a variety of sectors, continues to give the directors confidence in delivering another good trading performance in the coming year.
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DEESIDE TIMBERFRAME LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Engagement with employees, suppliers, customers and others and streamlined energy and carbon reporting
As noted within the Strategic Report, section 172 requirements including engagement with employees, suppliers, customers, and others, have been disclosed. Energy usage and greenhouse gas emissions are also detailed in the Strategic Report for Bancon Developments Holdings Limited. As such this information is not reported here although this note serves as a cross-reference to the Strategic Report.
Reappointment of auditor
Johnston Carmichael LLP have indicated their willingness to be reappointed for another term and appropriate arrangements have been put in place for them to be deemed reappointed as auditor in the absence of an Annual General Meeting.
Results and dividends
The results for the year are set out on page 11. Dividends of £2,000,000 were declared during the year (2022: £2,000,000), to its parent company.
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.
On behalf of the board
..............................
A H Tweedie
Director
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DEESIDE TIMBERFRAME LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
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 of 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;
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 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.
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DEESIDE TIMBERFRAME LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DEESIDE TIMBERFRAME LIMITED
Opinion
We have audited the financial statements of Deeside Timberframe Limited (the ‘company') for the year ended 31 March 2023 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
•
give a true and fair view of the state of the company's affairs as at 31 March 2023, 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.
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 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.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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DEESIDE TIMBERFRAME LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DEESIDE TIMBERFRAME LIMITED
Matters on which we are required to report by exception
In the 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 and the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept, 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 directors' 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 the directors' responsibilities statement set out on page 6, 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 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit is considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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DEESIDE TIMBERFRAME LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DEESIDE TIMBERFRAME LIMITED
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to the 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 identified include:
UK GAAP
Companies Act 2006
UK Tax legislation
Health and Safety legislation
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:
Revenue recognition
Margin recognition on contracts
Management override of controls
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:
For a sample of customer contracts, we verified work completed to date and appropriateness of revenue raised in line with contract progress. For product sales, we tested a sample of sales from point of initiation through to recording on the sales ledger. Across all revenue streams, we conducted appropriate cut-off procedures;
For a sample of contract margins, we verified costs and revenue to source documentation to confirm actual margins achieved and for a sample of contracts across the year end, we enquired with management as to their outlook and reviewed post year-end financial performance to ensure no erosion of margin recognised;
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;
Review of internal Health & Safety register for evidence of incidents or potential and actual litigation;
Reviewing level and reasoning behind the company's procurement of legal and professional services;
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
Completion of appropriate checklists and use of our experience to assess the company's compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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DEESIDE TIMBERFRAME LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DEESIDE TIMBERFRAME LIMITED
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Stephen McIlwaine (Senior Statutory Auditor)
for and on behalf of Johnston Carmichael LLP
Chartered Accountants
Statutory Auditor
Bishop's Court
29 Albyn Place
Aberdeen
AB10 1YL
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DEESIDE TIMBERFRAME LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
2023
2022
Notes
£'000
£'000
Turnover
3
37,109
39,926
Cost of sales
4
(30,376)
(33,854)
Gross profit
6,733
6,072
Administrative expenses
4
(4,420)
(3,942)
Other operating income
5
-
280
Operating profit before tax
6
2,410
2,313
Taxation
9
(421)
(472)
Profit and total comprehensive income for the financial year
1,892
1,938
The statement of comprehensive Income has been prepared on the basis that all operations are continuing operations.
There are no recognised gains and losses other than this passing through the statement of comprehensive income and as such no statement of comprehensive income is presented.
Profit and total comprehensive income for the financial year are attributable to the shareholder.
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DEESIDE TIMBERFRAME LIMITED
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
2023
2022
Notes
£'000
£'000
£'000
£'000
Fixed assets
Tangible assets
11
701
357
Current assets
Stocks
13
891
1,804
Debtors
14
13,415
12,318
Cash at bank and in hand
4,250
3,769
18,556
17,891
Creditors: amounts falling due within one year
15
(12,700)
(11,463)
Net current assets
5,856
6,428
Total assets less current liabilities
6,557
6,785
Provisions for liabilities
16
(283)
(403)
Net assets
6,274
6,382
Capital and reserves
Called up share capital
18
-
-
Profit and loss reserves
19
6,274
6,382
Total equity
6,274
6,382
The financial statements were approved by the board of directors and authorised for issue on
13/11/2023
13 November 2023
and are signed on its behalf by:
..............................
..............................
D Crawford
A H Tweedie
Director
Director
Company Registration No. SC272007
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DEESIDE TIMBERFRAME LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
Share capital
Profit and loss reserves
Total
Note
£'000
£'000
£'000
Balance at 1 April 2021
-
6,444
6,444
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
1,938
1,938
Dividends
10
)
-
(2,000)
(2,000
Balance at 31 March 2022
-
6,382
6,382
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
1,892
1,892
Dividends
10
)
-
(2,000)
(2,000
Balance at 31 March 2023
-
6,274
6,274
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DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
Company information
Deeside Timberframe Limited ("the company") is a private company limited by shares, incorporated and domiciled in Scotland. The principal activities of the company and the nature of the operations are set out in the Strategic Report on page 1. The company's trading address is Broomhill Road, Spurryhillock Industrial Estate, Stonehaven, AB39 2NH.
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 amounts in these financial statements are rounded to the nearest thousand pounds, unless otherwise indicated.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
FRS 102 reduced disclosure framework
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the ultimate parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company's ultimate parent company is Bancon Development Holdings Limited and the company has taken advantage of the following disclosure exemptions under FRS102:
The requirements of Section 7 Statement of Cash Flows and Section 3 Financial Statement Presentation paragraph 3.17 (d);
The requirement of Section 11 Basic Financial Instruments paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c); and
The requirement of Section 33 Related Party Disclosures paragraph 33.7.
Group accounts
The financial statements contain information about Deeside Timberframe Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under section 400 of the Companies Act 2006 from the requirement to prepare consolidated financial statements as it and its subsidiary undertakings are included by full consolidation in the consolidated financial statements of its ultimate parent company, Bancon Developments Holdings Limited, a company registered in Scotland.
1.2
Going concern
When approving these financial statements the directors have performed an assessment of the company's ability to continue as a going concern. When performing this assessment the directors have considered a period of at least twelve months from the date of approving the financial statements. During this going concern basis period the directors have had regard to the company's future order book, the strength of activity in its core sector and the expected cashflows from those activities. The directors have also considered the potential impact on the business and its cashflows of reasonably plausible downside risks. Based on these analyses the directors are satisfied it is appropriate to continue to adopt the going concern basis of accounting in preparing the financial statements.
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DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies (continued)
1.3
Turnover
Turnover can arise primarily from either the supply of timberframe structures or the supply and build of the timberframe structures. The former is treated as a supply of goods and turnover is recognised when the structure is physically delivered to the customer. The latter is treated as a construction contract and turnover is recognised as described below. Turnover is stated net of VAT and trade discounts.
Turnover is only recognised on a construction contract where the outcome can be estimated reliably. Variations to, and claims arising in respect of, construction contracts, are included in revenue to the extent that they have been agreed with the customer. Turnover and costs are recognised by reference to the stage of completion of contract activity at the balance sheet date. This is normally measured by surveys of work performed to date. An estimate of the profit attributable to work completed is recognised once the outcome of the contract can be assessed with reasonable certainty. Contracts are only treated as construction contracts when they have been specifically negotiated for the supply, manufacture and erection of timberframe structures. When it is probable that the total costs on a construction contract will exceed total contract revenue, the expected loss is recognised as an expense in the profit and loss account immediately.
Revenue received in relation to contract retentions is recognised when it is probable that the economic benefits associated with the transaction will flow to the company.
1.4
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Tenant's improvements
10 years
Plant and machinery
3-7 years
Motor vehicles
4 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.
Expenditure incurred after the asset is put to use, such as repairs and maintenance costs are expenses in the period incurred while other expenses that are expected to generate future economic benefits are capitalised.
1.6
Fixed asset investments
Investments 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.
- 15 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies (continued)
1.7
Impairment of fixed assets
At each reporting period 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) by comparing this to the asset's carrying value. The recoverable amount of the asset is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of future cash flows before interest and tax, obtained as a result of the asset's continued use.
1.8
Stocks
Stock and work in progress is stated at the lower of cost and net realisable value. Cost comprises raw materials, consumables and direct labour plus attributable overheads based on a normal level of activity. Net realisable value is based on estimated selling price less anticipated costs to completion and disposal. Provision is made for all foreseeable losses.
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.
1.9
Construction contracts
Amounts recoverable on construction contracts, which are included in debtors, are stated at the net sales value of the work done after provision for contingencies and anticipated future losses on contracts, less amounts received as progress payments on contracts, less amounts received as progress payments on account.
The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.
1.10
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.11
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 trade and other receivables, amounts due from group undertakings 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. The effective interest rate is the rate that exactly discounts estimated future cash receipts/payments through the expected life of the investment to the net carrying amount on initial recognition. Financial assets classified as receivable within one year are not amortised.
- 16 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies (continued)
1.11
Financial instruments (continued)
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in the profit and loss account.
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 profit and loss account.
Basic financial liabilities
Basic financial liabilities, including trade and other payables and amounts due to group undertakings, 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.
Basic financial liabilities are subsequently carried at amortised cost, using the effective interest rate method.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
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, using the full liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. The deferred tax position is calculated using the rates enacted or substantially enacted at the balance sheet date. Tax losses are surrendered or claimed in the form of group relief with consideration being received or paid accordingly. The group relief amount is recorded separately within the debtors and creditors amounts in the balance sheet, as applicable, and is calculated by applying the tax rate enacted or substantively enacted at the balance sheet date to the loss amount.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
- 17 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies (continued)
1.13
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.
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.
1.14
Retirement benefits
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the period they are payable.
Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to 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 lease asset are consumed.
1.16
Exceptional items
Exceptional items comprise costs which the directors consider as material to the statement of comprehensive income, that their separate disclosure is necessary for an appropriate understanding of the company's financial performance.
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.
The following are considered to be either judgements that have had the most significant effect on amounts recognised in the financial statements, or estimates that are dependent upon the assumptions which could change in the next financial year and have a material effect on the carrying amounts of assets and liabilities recognised at the balance sheet date:
Recognition of retention revenue
Management consider the recoverability of construction contract retentions in relation to timberframe supplies to be fundamentally uncertain and as such these are recognised when it is deemed that it is probable that the economic benefits associated with the transaction will flow to the company rather than as part of construction contract revenue as the job progresses. Management consider this treatment to be appropriate on the basis that the company generally acts as subcontractor on contracts and is normally beholding to the main contractor, which creates significant uncertainty around the receipt of retentions.
- 18 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
2
Judgements and key sources of estimation uncertainty (continued)
Long term contract accounting - construction contracts
Long term contract accounting impacts a number of significant account balances within the company's financial statements, including: turnover, cost of sales, amounts recoverable on construction contracts within trade receivables and stock and work in progress. Turnover, cost and ultimately profit recognition in respect of construction contracts require the directors and management to make estimations on the outcome of long term contracts which require assessments and judgements to be made. These include the stage of completion of the individual construction contracts based on percentage of completion methodology, the recoverability of construction costs, any variations in the construction contract and any changes in contract costs. All of the factors have been considered by the directors and management in concluding on the appropriate profit and loss presentation of long term contracts for the year ended 31 March 2023.
The recoverability of amounts recoverable on construction contracts and other receivables are regularly reviewed in light of available economic information specific to each receivable and provisions are recognised for balances considered to be irrecoverable. At 31 March 2023, the directors and management concluded their reviews and are satisfied that amounts recoverable on construction contracts and other receivables are appropriately stated within the financial statements.
With respect to stock and work in progress, key judgements and estimates in determining the appropriateness of its carrying value are:
An estimation of costs to complete; and
An estimation of the remaining revenues.
The assessments include a degree of uncertainty and therefore if the key judgements and estimates change unfavourably, write-downs of stock and work in progress may be necessary. At 31 March 2023, the directors and management concluded their reviews and are satisfied that the stock and work in progress are appropriately stated within the financial statements.
The directors consider that there are no other judgements, estimates and underlying assumptions which have a significant risk of causing material adjustment to the carrying amounts of the assets and liabilities.
3
Turnover
The directors believe the company has one class of business, which is the design, manufacture and supply of timberframe structures. Turnover consists of revenue originated and delivered in the United Kingdom.
4
Income from Job Retention Scheme (JRS)
Income received from the Government's Job Retention Scheme was included in Cost of Sales and Administrative expenses for the year ended 31 March 2022 totalling £9k (£5k in Cost of Sales and £4k in Administrative Expenses). This has been aggregated within headline expense captions as the directors believe this presents a true and fair view of these cost categories in the period.
There was no JRS income received for the year ended 31 March 2023.
5
Other operating income
2023
2022
£'000
£'000
Gain on disposal of fixed assets
-
20
Business interruption receipt
-
260
-
280
- 19 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
6
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£'000
£'000
Depreciation of owned tangible fixed assets
125
104
Operating lease charges
225
207
The audit fee has been borne by the ultimate parent company Bancon Developments Holdings Limited in the current and prior years. For the current year, the portion of the group audit fee relating to this company's audit was £11k (2022: £10k). Non-audit fees in respect of the company were £3k (2022: £3k).
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors and management
9
6
Administration staff
34
31
Weekly paid production employees
45
46
87
83
Their aggregate remuneration comprised:
2023
2022
£'000
£'000
Wages and salaries
3,590
3,267
Social security costs
393
323
Pension costs
181
164
4,164
3,754
8
Directors' remuneration
2023
2022
£'000
£'000
Remuneration for qualifying services
314
250
Company pension contributions to defined contribution schemes
62
54
376
304
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022: 3).
Remuneration paid to the highest paid director during the year was £143k (2022: £116k).
- 20 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
9
Taxation
2023
2022
£'000
£'000
Current tax
UK corporation tax
-
204
Group relief paid for
415
269
Adjustments in respect of prior periods
(1)
(68)
Total current tax charge
347
472
Deferred tax
Origination and reversal of timing differences
74
-
Total deferred tax charge
74
-
421
472
The actual charge for the year can be reconciled to the expected charge for the year based on the profit and the standard rate of tax as follows:
2023
2022
£'000
£'000
Profit before taxation
2,313
2,410
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
439
458
Tax effect of expenses that are not deductible in determining taxable profit
6
2
Fixed asset differences
(6)
-
Group relief received
(415)
(269)
Deferred tax movement not recognised
44
21
Effects of changes in tax rates and laws
6
(8)
Group relief paid for
415
269
Adjustments in respect of prior periods
(68)
-
Taxation charge for the year
421
472
The UK corporation tax rate remains at 19% for the full year (2021: 19%). On 3 March 2021, the government announced that with effect from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. This increase in the corporation tax rate was substantively enacted on 24 May 2021. The deferred tax liability as at 31 December 2022 is therefore calculated based on the 25% rate, in so far as it is not expected to reverse prior to 1 April 2023.
10
Dividends
During the year dividends of £2,000,000 were paid (2022 - £2,000,000) to the parent company.
- 21 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
11
Tangible fixed assets
Tenant's improvements
Plant and machinery
Motor vehicles
Total
£'000
£'000
£'000
£'000
Cost
At 1 April 2022
565
1,019
138
1,722
Additions
256
220
-
476
Disposals
(451)
(235)
(57)
(743)
At 31 March 2023
370
1,004
81
1,455
Depreciation and impairment
At 1 April 2022
521
713
131
1,365
Depreciation charged in the year
25
93
7
125
Eliminated on disposal
(451)
(228)
(57)
(736)
At 31 March 2023
95
578
81
754
Carrying amount
At 31 March 2023
275
426
-
701
At 31 March 2022
44
306
7
357
12
Subsidiaries
Details of the company's subsidiaries at 31 March 2023 are as follows:
Name of undertaking and country of
Nature of business
Class of
% Held
incorporation or residency
shareholding
Direct
Deeside Homes Limited
Scotland
Dormant
1 ordinary £1 share
100.00
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
Name of undertaking
Profit/(Loss)
Capital and Reserves
£
£
Deeside Homes Limited
-
1
The carrying value of the subsidiary investment was £50 at both the current and prior year ends.
- 22 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
13
Stocks
2023
2022
£'000
£'000
Raw materials, work in progress and consumables
891
1,804
14
Debtors
2023
2022
Amounts falling due within one year:
£'000
£'000
‘
Trade debtors
3,938
5,058
Amounts owed by group undertakings
8,946
5,885
Corporation tax
53
-
Other debtors
348
572
Prepayments and accrued income
130
803
13,415
12,318
Amounts owed by group undertakings are unsecured, have no fixed repayment terms and do not bear interest.
15
Creditors: amounts falling due within one year
2023
2022
£'000
£'000
Payments received on account
3,823
1,172
Trade creditors
3,860
5,497
Amounts owed to Group undertakings
3,917
3,408
Other taxation and social security
109
128
Corporation tax
-
204
Other creditors
340
-
Accruals and deferred income
651
1,054
12,700
11,463
Amounts due to group undertakings are unsecured, have no fixed repayment terms and do not bear interest.
16
Provisions for liabilities
2023
2022
£'000
£'000
Other provisions
129
323
Dilapidation provision
80
80
Deferred tax
74
-
283
403
The deferred tax liability relates to accelerated capital allowances.
- 23 -
DEESIDE TIMBERFRAME LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
17
Retirement benefit schemes
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. The pension cost charge represents contributions payable by the company to the fund and is disclosed within note 7. At the Balance Sheet date £20k (2022: £16k) was payable to the fund and included within creditors.
18
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
1 ordinary share of £1 each
1
1
19
Reserves
The company's profit and loss reserve represents the cumulative historic profits and losses, net of dividends and other adjustments.
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£'000
£'000
Within one year
235
79
Between two and five years
657
151
892
259
21
Financial commitments, guarantees and contingent liabilities
All group companies are party to a cross-company guarantee in respect of bank facilities offered to Bancon Developments Holdings Limited group.
22
Related party transactions
The company has taken advantage of the exemption available in accordance with Section 33 of FRS 102 "Related Party Disclosures" not to disclose transactions entered into between two or more wholly owned members of a group.
23
Controlling party
The company's immediate parent company is Bancon Group Limited, which is registered in Scotland. The ultimate parent undertaking is Bancon Developments Holdings Limited, a company registered in Scotland, and is both the largest and the smallest group of undertakings to which the results of the company are consolidated into.
- 24 -
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