The directors present the strategic report and financial statements for the year ended 31 March 2021. These financial statements represent Glacier Energy Services Holdings Limited ("the company") and its subsidiaries (collectively "the group").
During the year, the group continued to operate in its core markets of Offshore Wind and Oil & Gas, along with an increasing diversification into other sectors, notably the emerging Alternative Energy markets.
These markets were affected by the global Covid 19 pandemic, as well as by a reduction in the Oil price, which resulted in a reduction in Revenue from Continuing Operations in the year to 31 st March 2021 from £22.5m to £19.6m. Specifically, the adverse market conditions impacting the group were :
Clients with operating facilities, onshore and off, limited repair & maintenance activities to those vital to maintain ongoing production;
Travel restrictions limited movement of personnel for onsite scopes, both domestically and internationally;
Importing of materials moved at a much slower pace, especially from heavily locked down jurisdictions;
Capital projects were postponed or cancelled due to the prevailing uncertainty.
From a profitability perspective, the group's primary performance metric is EBITDA and , as shown in the table below, EBITDA from the group's continuing operations have decreased to £0. 8 m from £1.5m in the prior year, principally as a result of the drop in Revenue. This decrease has been somewhat mitigated as a result of :
A significant reduction in Overheads following the streamlining of the organisational structure and the closure of loss-making Glacier Whiteley Read business;
Margins largely being maintained across the businesses due to a high focus on operational efficiency and technician utilisation; and
Utilisation of the UK Government’s Job Retention Scheme.
During the year the group closed the Glacier Whitely Read Limited subsidiary and the Birmingham division of Glacier Energy Services Limited, which have been classified as discontinued operations in the current year.
In addition, the Group incurred substantial one off costs of £0.75m during the year relating mainly to its restructuring, mothballed facilities and Covid related expenditure, and, adjusting for these, the underlying performance at the EBITDA level was around £1.6m, down from £2m in the prior year.
|
31 March 2021 £’000 |
31 March 2020 £’000 |
Operating Loss |
(1,582) |
(2,141) |
Depreciation / Amortisation / Impairment |
1,643 |
1,807 |
EBITDA |
60 |
(334) |
EBITDA from discontinued businesses |
(771) |
(1,834) |
EBITDA from continuing businesses |
831 |
1,500 |
One off costs |
757 |
499 |
EBITDA from continuing businesses before one off costs |
1,588 |
1,999 |
From the Balance Sheet perspective, the group had Net Liabilities of £17.1m at 31 March 2021 compared to £14.1m at the previous year end, but it should be noted that this results from total liabilities under its Institutional Loan Notes of £16.9m (2020: £16.1m) and Scottish Loan Fund loan of £3.0m (2020: £3.0m), which are classified as Long-term Debt on the Balance Sheet. The Scottish Loan Fund was partially repaid post year end (£0.3m), with the balance of £2.7m being repayable by 31 st December 2022. Further detail is given within note 1.3 of these financial statements.
The Loan Notes represent the majority of the Institutional shareholders’ investment in the group, with a redemption date of 31 st March 2023, though the shareholders are unlikely to seek repayment of the Loan Notes until a change of control event occurs.
Cash In-Flow from Operations has improved during the year, being £1.6m (2020: £1.0m) as a result of the actions noted above.
Risk Review
The principal risks and uncertainties affecting the business include the following :
Health & Safety : the group places paramount importance on Health & Safety, which is a key part of its culture, with established policies and regular management review.
Market Factors : the group operates primarily within the Oil & Gas and Offshore Wind sectors, which provides good diversification, while it continues to expand in various onshore markets in the UK such as refineries, chemicals and power generation plants, as well as the emerging Alternative Energies markets.
Commercial Relationships : the group has mainly blue chip customers and so payment risk is generally low, although payments from customers have generally become longer as they emerge out of the Covid 19 pandemic, therefore, requiring tight working capital management.
Funding Risks : the group’s core funding in terms of Institutional Loan Notes and a Term Loan from the Scottish Loan Fund were extended during the year, with the Institutional Loan Notes now having a maturity of 31 st March 2023 and the Scottish Loan Fund of 31 st December 2022.
Covid 19 Pandemic : whilst the risk of interruption to the group’s workshop related activities in the United Kingdom has reduced, there remains ongoing risk related to onsite activities, especially in international locations, and this will continue to be closely monitored.
Brexit : where the main risks relate to the greater requirements relating to the movement of personnel and equipment to and from the EU, which continues to receive management attention to ensure compliance with local requirements.
The significant action that the group took in 2020 when the Covid 19 pandemic occurred in terms of reducing its cost base and focusing on its core operations has stood it in good stead during 2021, and the business is well placed to capitalise on improving market conditions in 2022 and beyond. Whilst there is ongoing uncertainty due to Covid 19, there is greater positivity in the markets in which the group operates as follows :
Offshore Wind : market continues to grow at pace, and long term macro factors are very positive, while the group’s key clients have strong order books for the next few years.
Oil & Gas : the increase in the Oil price over the last year, with the current level above $80 per barrel, has created a strong environment with great repair & maintenance activity occurring, as well as capital projects on a global basis being sanctioned at a high level than the previous year.
The Alternative Energy markets as stated above are moving at great pace, with significant government support, and the group is already bidding into various projects in these markets.
In addition, the group is working on certain strategic developments to broaden its offering in its core markets, as well as continuing with its ongoing diversification into new ones, and this, along with the market dynamics above, gives the Directors confidence in the ongoing prospects of the business. Therefore, the developments in these markets, along with the group’s positioning in them, gives the Directors confidence in the prospects of the business.
Key Performance Indicators
The following represent the main financial key performance indicators used by the group for its continuing business :
KPI |
2021 |
2020 |
Measure
|
Gross Margin |
38% |
39% |
Gross Profit as a % of Turnover from Continuing Operations |
EBITDA |
£831k |
£1,500k |
Earnings before Interest, Tax, Depreciation and Amortisation from Continuing Operations |
EBITDA Before One Off Costs |
£1,588k |
£1,999k |
Earnings before Interest, Tax, Depreciation and Amortisation from Continuing Operations before One Off Costs |
EBITDA Margin |
4.2% |
6.7% |
Earnings before Interest, Tax, Depreciation and Amortisation as a percentage of Turnover from Continuing Operations. |
EBITDA Margin Before One Off Costs |
8.1% |
8.9% |
Earnings before Interest, Tax, Depreciation and Amortisation from Continuing Operations before One Off Costs as a percentage of Turnover from Continuing Operations |
Cash Flow From Operations |
£1,647k |
£1,039k |
Cash Flow From Continuing Operations (before Interest income and expenditure) |
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2021.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 11.
No ordinary dividends were paid (20 20 : £nil). The directors do not recommend payment of a final dividend (20 20 : £nil).
Members of the group have conducted research and development activities in relation to the development of bespoke components to be used in relation to engineered solutions across its operations in onsite machining, weld overlay and heat exchangers in particular. Successful R&D claims have been submitted to HMRC for the projects for the 2018, 2019 and 2020 year ends.
The group has chosen in accordance with Companies Act 2006 s.414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the director's report. It has done so in respect of future developments.
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
As outlined further in note 1.3, the directors are comfortable that the group remains a going concern.
The group does not use derivatives for either financial risk management or for speculative purposes. The group's financial risk management objectives. policies and exposure to financial risks are not considered material for the assessment of the group's assets, liabilities, financial position or result for the year and as such, no further disclosure is considered necessary.
We have audited the financial statements of Glacier Energy Services Holdings Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 March 2021 which comprise the Group Profit and Loss Account, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).
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 group 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 group and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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.
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.
In the light of the knowledge and understanding of the group and the parent 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
As explained more fully in the statement of d irectors' r esponsibilities s tatement 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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
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 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 obtained an understanding of the legal and regulatory frameworks that are applicable to the group, 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 Generally Accepted Accounting Practice
Companies Act 2006
Corporation Tax legislation
Employment legislation
Health and safety legislation
VAT legislation
We gained an understanding of how the group is complying with these laws and regulations by making enquiries of management. We corroborated these enquiries through our review of submitted returns and relevant correspondence with regulatory bodies.
We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management 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:
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; and
Performing audit procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias.
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.
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.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s loss for the year was £2,427,488 (2020 - £2,881,901 loss).
Glacier Energy Services Holdings Limited (“the company”) is a private limited company domiciled and incorporated in Scotland . The registered office is Blackwood House, Union Grove Lane, Aberdeen, AB10 6XU.
The group consists of Glacier Energy Services Holdings Limited and all of its subsidiaries, collectively known as "the group."
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 pound.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s loss for the year was £2,427,488 (2020 - £2,881,901 loss).
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the 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 has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
- Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ : Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income ;
- Section 33 ‘Related Party Disclosures’ : Compensation for key management personnel .
In the current year the group has recorded a consolidated loss of £3.0m (2020 – £3.6m), with net current liabilities of £2.0m (2020 – £0.9m) and net liabilities of £17.1m (2020 – net liabilities of £14.1m).
Within current liabilities is an invoice discounting facility balance of £2.6m (2020 - £3.3m) and included within net liabilities are institutional loan notes and accrued interest of £16.9m (2020 –£16.1m), formally extended and due for repayment by 31 March 2023, plus a loan from the Scottish Loan Fund of £3.0m (2020 - £3.0m), of which £300,000 has been repaid post year end, with a final bullet repayment due by 31 December 2022 (£2.7m). Management are confident in undertaking the refinancing of the Scottish Loan Fund debt during 2022, however a letter of comfort has also been received from the Scottish Loan Fund confirming to the directors that no repayment will be sought of any amount within 12 months of the approval of these financial statements, where it would call into question the group’s going concern status. Longer term, management will work with the institutional loan note holders to agree an appropriate refinancing of this as a separate strategic exercise. Excluding this combined debt and accrued interest of £19.9m (2020 - £19.1m), the group has significant net assets.
Furthermore, the group has now put in place new working capital arrangements with IGF Business Credit Limited, which has taken on the £4m Confidential Invoice Discounting (“CID”) facility from the Clydesdale Bank and also provided an additional £1m loan under the Coronavirus Recovery Loan Scheme (“CRLS”), from 23 December 2021. The CID facility runs for a minimum of 3 years and the CRLS loan is repayable over 4 years. Management are satisfied this strengthens the group’s working capital funding arrangements for the foreseeable future.
As noted within the group strategic report, group financial performance in the current year was adversely impacted by the losses incurred by Glacier Whitely Read Limited, with this subsidiary being closed during the year and presented as a discontinued operation within these financial statements.
One of the critical financial key performance indicators used by the directors in measuring the group financial performance, is Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”), which, excluding Glacier Whitely Read Limited performance, contributed EBITDA for the group of £0.8m for the current financial year (2020 - £1.5m). As such, the directors are confident in the continuing strength of the underlying business of the group and will continue to focus on growing EBITDA.
As part of the directors’ assessment of going concern, detailed projections have been prepared for the forthcoming 12 months beyond the anticipated signing date of these financial statements, which demonstrate the group is able to generate sufficient cashflow to allow for adequate headroom within its CID facility. As part of these projections, the directors have also considered the impact of the global COVID-19 pandemic, which continues to create uncertainty for global economies, coupled with the ongoing fluctuations to oil price. The group has continued to trade through the associated disruption and, while impacted, has appropriately managed the risks from the pandemic, both financial and non-financial, including undertaking a reduction of the group overheads, utilisation of government support schemes and adoption of robust working environments for employees, following government guidance. The directors are confident that they can continue to manage any further short term operational or commercial challenges presented by the pandemic and oil price. Whilst the directors are confident in these projections, it should be noted that projections by their very nature are uncertain and require a degree of estimation.
Based on the above considerations, the directors have reasonable assurance over the group’s financial resilience going forward and as such, have adopted the going concern basis of accounting in preparing these financial statements.
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 dispatch 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.
Revenue from contracts for the provision of engineering services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recover ed .
When the outcome of a contract can be assessed with reasonable certainty, profit is recognised as the difference between revenue and related costs. Any foreseeable loss is recognised immediately in profit or loss.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated .
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account .
Equity in vest ments are measured at fair value through profit or loss , except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably , which are recognised at cost less impairment until a reliable measure of fair value becomes available.
I n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit and loss account.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) prior years. A reversal of an impairment loss is recognised immediately in the profit and loss account.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include trade and other debtors, cash and bank balances and amounts due from fellow group companies (parent company only), are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest m ethod unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss , are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including trade and other creditors , bank loans and similar debt and amounts due to fellow group companies (parent company only) , are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
R&D tax credits are recognised at the fair value of the asset received or receivable when there is reasonable assurance that claims will be successful.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account , except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets .
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to 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.
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.
A grant that specifies performance conditions is recognised in income when the performance conditions are met . Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable . A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the perio d.
Transactions with foreign subsidiaries are r ecorded at the rates of exchange prevailing at the dates of the transactions and balances with foreign subsidiaries are retranslated at the rates prevailing on the reporting end date . Gains and losses arising on translation are included in the statement of other comprehensive income for the perio d.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the group to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The directors have concluded that the carrying value of goodwill is supportable at the year end.
Tangible fixed assets are measured at cost and then depreciated over the estimated useful life of the asset. The group have used estimation to determine a useful life for each asset, and as such the depreciation charge is based on this estimation. The directors have concluded that the carrying value of tangible fixed assets is supportable at the year end.
Determining whether investments held by the company are impaired requires an estimation of the value in use of the cash generating units to which the investments relate. The value in use calculation requires the company to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The carrying amount of investments at the reporting end date is £11,217,087(2020 - £11,217,087) set out in note 13. The directors have concluded that the carrying value of investments is supportable at the year end.
An analysis of the group's turnover is as follows:
Grants receivable are amounts received from the Government's Coronavirus Job Retention Scheme.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The operations of subsidiary Glacier Whitely Read have been presented as discontinued as the operations of the business ceased during the year to 31 March 2021.
The operations of the Birmingham division of subsidiary Glacier Energy Services Limited have been presented as discontinued as the operations of the division ceased during the year to 31 March 2021.
The actual charge for the year can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:
The prior year adjustment above reflects the correction of historic fixed asset category misallocations which have arisen as part of consolidation. The adjustments have been processed to ensure the group position matches the fixed assets as recorded in the individual subsidiaries. The adjustments above have no impact on the overall carrying amount of the group's fixed assets as included on the balance sheet.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
The above addition and subsequent impairment represents amounts due from subsidiary undertakings no longer recoverable
Details of the company's subsidiaries at 31 March 2021 are as follows:
1) LLC Business Centre - Logistics City, Dubai Aviation City, PO Box - 390667
2) Blackwood House, Union Grove Lane, Aberdeen, AB10 6XU
3) 60 Paya Lebar Square, #08-43 Paya Lebar Square, Singapore 409051
4) Unit 66 Gravelly Industrial Park, Walker Drive, Birmingham, B24 8T Q
5) Koppholen 25, 4313 Sandnes, Norway
Amounts owed by group undertakings are unsecured, interest free and repayable on demand.
Amounts due to group undertakings are unsecured, interest free and repayable on demand.
Bank loans and overdrafts above relate to a confidential invoice discounting facility. See note 19.
Amounts due to group undertakings are unsecured, interest free and repayable on demand.
The bank holds a floating charge over all of the assets of the company.
Simmons Parallel Private LP hold a floating charge over all of the assets of the company.
Maven Capital Partners UK LLP hold a floating charge over all of the assets of the company.
Scottish Loan Fund hold a floating charge over all of the assets of the company.
Net obligations under finance leases are secured over the assets financed.
Loans
The company has a £3m loan from the Scottish Loan Fund. £300k of this loan has been paid post year end, with the balance repayable on 31 December 2022.
Loan notes
The group had four tranches of loan notes in issue at the year end. Firstly there are £3,500,000 of loan notes which are repayable in one instalment on 31 March 2023. Interest is charged on these loan notes at 12.43%. The loan notes also carry a redemption premium of 10%.
Secondly there are £900,000 of loan notes which are repayable in one instalment on 31 March 2023 and attract interest of 12.43%. There is a fixed redemption premium of 10%.
Thirdly there are £2,093,750 of loan notes which are repayable in one instalment on 31 March 2023 and attract interest of 10.75%. There is a fixed redemption premium of 10%.
Fourthly there are £3,350,000 of loan notes which are repayable in one instalment on 31 March 2023 and attract interest of 10.75%. There is a fixed redemption premium of 10%.
The Loan Notes represent the majority of the Institutional shareholders’ investment in the group, with a redemption date of 31 st March 2023, though the shareholders are unlikely to seek repayment of the Loan Notes until a change of control event occurs.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
All classes of ordinary shares carry one vote per share. Ordinary A shares have a right to dividend and ranking rights to participate on release of capital. Deferred shares hold no voting rights.
The share premium account represents the premiums received on the issue of share capital in the company.
The profit and loss reserve represents accumulated comprehensive profits/losses for current and prior periods.
The company has provided an unlimited cross guarantee to the company's bankers between itself and its subsidiary undertakings , Glacier Welding Solutions Limited , Glacier Machining Solutions Limited, Glacier Energy Services Limited , Glacier Inspection Services Limited, Aberdeen Radiators Limited and Glacier Whiteley Read Limited . At 31 March 20 21 the potential liability to the company under this guarantee was £ 2,704,470 (20 20 - £ 3,448,038) .
The group is engaged in an on-going dialogue with Belgian tax authorities in respect of the group's operations in this country. The directors believe that the group has no liability to settle and as discussions are still on-going, no provision has been included in these financial statements.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group
During the year, the group incurred monitoring fees of £120,222 (2020 - £120,222), loan note interest of £1,132,175 (2020 - £1,132,175). The balance due to these parties at the year end was £16,898,505 (2020 - £16,489,048).
Key management personnel compensation for the group is not disclosed on the basis there is no difference between key management personnel and the directors, with directors remuneration disclosed at note 7.
Company
During the year the company had a loan owed from three shareholders totalling £267,500 (2020: £267,500).
The company has taken advantage of the exemption available within FRS 102 Section 33 whereby it has not disclosed transactions with any wholly owned subsidiary undertaking.
Interest free loans have been granted by the group to its directors as follows: