Kelvinside Electronics Limited - Limited company accounts 18.2

REGISTERED NUMBER: SC105407 (Scotland)

STRATEGIC REPORT, DIRECTORS' REPORT AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 NOVEMBER 2018

FOR

KELVINSIDE ELECTRONICS LIMITED

Page

Company Information

1

Strategic Report

2

Directors' Report

3

Report of the Independent Auditors

4

Statement of Comprehensive Income

6

Balance Sheet

7

Statement of Changes in Equity

8

Notes to the Financial Statements

9

DIRECTORS:

I Ferguey

D Baird

SECRETARY:

D Baird

REGISTERED OFFICE:

2 Gavell Road

Kilsyth

Glasgow

G65 9BS

REGISTERED NUMBER:

SC105407 (Scotland)

AUDITORS:

Consilium Audit Limited (Statutory Auditor)

169 West George Street

Glasgow

G2 2LB

The directors present their strategic report for the year ended 30 November 2018.

REVIEW OF BUSINESS

The Company generated an operating profit of £513,492 during the year (2017: £312,260). At the year end the Company had

shareholders funds of £2,132,081 (2017: £2,159,606) including distributable profits of £2,055,829 (2017: £2,083,354). The

directors therefore believe the Company's position to be satisfactory.

The directors have seen continuing satisfactory trading results in the year following the accounting period and expect these to

continue going forward.

Key performance indicators

As with many other businesses, the Directors of the Company use a number of key performance indicators to assess performance

of the Company. Those regularly reviewed are:

- Gross profit margin - 33.5% for the year (2017: 40.5%)

- Operating profit margin - 6.2% for the year (2017: 3.4%)

- Quality assurance

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have assessed the main risk facing the Company as being the competition from other companies within the industry.

The directors believe that the reputation of the Company and the quality of the products will mitigate this risk.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company finances its operations through a mixture of retained profits and operational bank accounts, and where necessary to

fund expansion or capital expenditure programmes through bank borrowings and hire purchase. The management's objectives are

to:

-

retain sufficient liquid funds to enable the Company to meet its day to day obligations as they fall due whilst maximising returns on surplus funds;

-

minimise the Company's exposure to exchange rate fluctuations by using a mixture of forward contracts and foreign currency bank accounts.

The Company is exposed to the normal credit risk associated with dealing with customers on commercial credit terms.

The Company is exposed to the normal exchange rate risk associated with dealing with foreign suppliers on commercial credit

terms.

ON BEHALF OF THE BOARD:

I Ferguey - Director

29 August 2019

The directors present their report with the financial statements of the Company for the year ended 30 November 2018.

PRINCIPAL ACTIVITY

The principal activity of the Company during the year was designing, manufacturing and repairing electronic equipment.

DIVIDENDS

Details of dividends paid during the year are included in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 December 2017 to the date of this report.

I Ferguey

D Baird

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the 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), including Financial Reporting Standard 102 'The Financial Reporting Standard

applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless

they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company

for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's

transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure

that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the

Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the

Company's website.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of

which the Company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in

order to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that

information.

AUDITORS

The auditors, Consilium Audit Limited (Statutory Auditor), will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

I Ferguey - Director

29 August 2019

Opinion

We have audited the financial statements of Kelvinside Electronics Limited (the 'Company') for the year ended 30 November 2018

which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial

Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their

preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting 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 30 November 2018 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 Auditors' 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report

and the Directors' Report, but does not include the financial statements and our Report of the Auditors 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.

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 or the Directors' Report.

We have nothing to report in respect of the following matters where 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 Statement of Directors' Responsibilities set out on page three, 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 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.

Auditors' 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 a Report of the Auditors 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 www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

David Holt (Senior Statutory Auditor)

for and on behalf of Consilium Audit Limited (Statutory Auditor)

169 West George Street

Glasgow

G2 2LB

30 August 2019

TURNOVER

3

8,315,587

9,264,918

Cost of sales

5,526,025

5,513,313

GROSS PROFIT

2,789,562

3,751,605

Administrative expenses

2,276,070

3,439,345

OPERATING PROFIT

6

513,492

312,260

Interest receivable and similar income

896

395

Interest payable and similar expenses

7

63,781

(1,290,000

)

PROFIT/(LOSS) BEFORE TAXATION

578,169

(977,345

)

Tax on profit/(loss)

8

(244,306

)

297,784

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

822,475

(1,275,129

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

822,475

(1,275,129

)

FIXED ASSETS

Tangible assets

10

305,635

241,508

CURRENT ASSETS

Stocks

11

2,644,871

2,290,051

Debtors

12

5,226,717

3,974,127

Cash at bank and in hand

284,148

1,378,269

8,155,736

7,642,447

CREDITORS

Amounts falling due within one year

13

6,283,964

5,692,693

NET CURRENT ASSETS

1,871,772

1,949,754

TOTAL ASSETS LESS CURRENT LIABILITIES

2,177,407

2,191,262

PROVISIONS FOR LIABILITIES

15

45,326

31,656

NET ASSETS

2,132,081

2,159,606

CAPITAL AND RESERVES

Called up share capital

16

6,579

6,579

Share premium

17

65,923

65,923

Capital redemption reserve

17

3,750

3,750

Retained earnings

17

2,055,829

2,083,354

SHAREHOLDERS' FUNDS

2,132,081

2,159,606

The financial statements were approved by the Board of Directors on 29 August 2019 and were signed on its behalf by:

I Ferguey - Director

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1 December 2016

6,579

3,358,483

65,923

3,750

3,434,735

Changes in equity

Total comprehensive income

-

(1,275,129

)

-

-

(1,275,129

)

Balance at 30 November 2017

6,579

2,083,354

65,923

3,750

2,159,606

Changes in equity

Dividends

-

(850,000

)

-

-

(850,000

)

Total comprehensive income

-

822,475

-

-

822,475

Balance at 30 November 2018

6,579

2,055,829

65,923

3,750

2,132,081

1.	STATUTORY INFORMATION

Kelvinside Electronics Limited is a private company, limited by shares , registered in Scotland. The company's registered

number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemption in preparing these financial statements, as

permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows.

The Company has taken advantage of the exemption under FRS 102 from disclosing a statement of cash flows on the

grounds that it is a wholly owned subsidiary and a group statement of cash flows is included in the consolidated financial

statements of Kelvinside Electronics (Number 1) Limited.

Copies of the consolidated financial statements are available from the Registrar of Companies Companies House, Edinburgh

Quay 2, 139 Fountainbridge, Edinburgh, EH3 9FF.

Significant judgements and estimates

Preparation of the financial statements requires management to make significant judgements and estimates. In preparing

the financial statements the directors have made the following judgements:

-

Determine the basis of recognising income. The Company recognises revenue when the amount can be measured reliably; it is probable that future economic benefit will flow to the Company and the Company has fulfilled its contractual obligations.

-

Determine whether leases entered into by the Company as a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.

-

Determine whether there are indicators of impairment of the Company's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.

-

Determine whether any bad debt provision is required via review of trade debtors, with debts provided for on a specific basis. Factors considered include customer payment history and agreed credit terms.

-

Determine whether any stock provision is required via comparison of cost and net realisable value of stock on an item by item basis. Factors considered include stock obsolescence, stock turnover and stock condition.

Turnover

The turnover shown in the Statement of Comprehensive Income represents net invoiced sales of goods and services,

excluding value added tax. Revenue is recognised when the significant risks and rewards of ownership have been

transferred to a third party, the amount of revenue can be measured reliably, and it is probable that the economic benefits

associated with the transaction will flow to the Company.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life.

Plant and machinery

-

15% on cost

Fixtures and fittings

-

20% on cost

Tangible fixed assets are stated at cost less depreciation. Cost represents purchase price together with any incidental costs

of acquisition.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving

items. Cost is calculated using the first-in first-out method and includes the normal cost of transporting stock to its present

location and condition.

Work in progress

Work in progress is valued on the basis of direct material and labour costs plus attributable overheads based on a normal

level of activity. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the

valuation of work in progress.

Financial instruments

The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

Financial instruments are classified and accounted for as financial assets, financial liabilities or equity instruments,

according to the substance of the contractual arrangement.

Financial instruments which are assets are stated at cost less any provision for impairment. Financial liabilities are stated at

principal capital amounts outstanding at the period end. Issue costs relating to financial liabilities are deducted from the

outstanding balance and are amortised over the period to the due date for repayment of the financial liability.

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of

its liabilities. A financial liability is any contractual arrangement for an entity to deliver cash to the holder of the associated

financial instrument.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income,

except to the extent that it relates to items recognised directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax

Current tax is recognised at the amount of tax payable using the tax rates and laws that that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet

date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in

which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been

enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be

recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Non-monetary assets and liabilities and transactions in foreign currencies are translated into sterling at

the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the

operating profit.

Operating lease commitments

Rentals applicable to operating leases, where substantially all of the benefits and risks of ownership remain with the lessor,

are charged against profits on a straight line basis over the period of the lease.

Pension costs

The company operates a defined contribution pension scheme for employees. The assets of the scheme are held separately

from those of the Company. The annual contributions payable are charged to the Statement of Comprehensive Income.

3.

TURNOVER

The turnover and profit (2017 - loss) before taxation are attributable to the one principal activity of the Company.

An analysis of turnover by geographical market is given below:

2018

2017

£

£

United Kingdom

8,147,019

9,021,962

Overseas

168,568

242,956

8,315,587

9,264,918

4.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

1,564,279

1,686,417

Social security costs

22,265

958,754

Other pension costs

70,947

172,788

1,657,491

2,817,959

The average number of employees during the year was as follows:

2018

2017

Production staff

59

60

Administrative staff

9

9

Management staff

2

2

70

71

5.	DIRECTORS' EMOLUMENTS

2018

2017

£

£

Directors' remuneration

329,960

425,042

Directors' pension contributions to money purchase schemes

-

28,100

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

1

1

Information regarding the highest paid director is as follows:

2018

2017

£

£

Emoluments etc

197,305

268,524

The Company considers key management to be the directors of the Company. The key management remuneration for the

year is as disclosed above.

6.	OPERATING PROFIT

The operating profit is stated after charging:

2018

2017

£

£

Other operating leases

4,644

7,077

Depreciation - owned assets

65,192

57,684

Auditors' remuneration

16,000

15,500

Foreign exchange differences

11,587

10,630

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2018

2017

£

£

Interest on overdue tax

(63,781

)

1,290,000

Interest on overdue tax in the current and prior year relates to the settlement, and subsequent adjustment, after the year

end, of historic tax planning strategies.

8.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the profit for the year was as follows:

2018

2017

£

£

Current tax:

UK corporation tax

34,765

222,468

(Overprovision)/underprovision of tax

(292,741

)

52,000

Total current tax

(257,976

)

274,468

Deferred tax

13,670

23,316

Tax on profit/(loss)

(244,306

)

297,784

Reconciliation of total tax (credit)/charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained

below:

2018

2017

£

£

Profit/(loss) before tax

578,169

(977,345

)

Profit/(loss) multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 19%)

109,852

(185,696

)

Effects of:

Expenses not deductible for tax purposes

754

1,391

Adjustments to tax charge in respect of previous periods

(354,153

)

480,450

Tax chargeable at higher rate

-

3,815

Deferred tax provided at lower rate

(759

)

(2,176

)

Total tax (credit)/charge

(244,306

)

297,784

9.

DIVIDENDS

2018

2017

£

£

Ordinary shares of £1 each

Final

850,000

-

10.	TANGIBLE FIXED ASSETS

Fixtures

Plant and

and

machinery

fittings

Totals

£

£

£

COST

At 1 December 2017

1,865,783

256,239

2,122,022

Additions

126,815

2,504

129,319

At 30 November 2018

1,992,598

258,743

2,251,341

DEPRECIATION

At 1 December 2017

1,631,930

248,584

1,880,514

Charge for year

61,546

3,646

65,192

At 30 November 2018

1,693,476

252,230

1,945,706

NET BOOK VALUE

At 30 November 2018

299,122

6,513

305,635

At 30 November 2017

233,853

7,655

241,508

11.

STOCKS

2018

2017

£

£

Raw materials

2,198,067

1,431,746

Work-in-progress

40,500

40,500

Finished goods

406,304

817,805

2,644,871

2,290,051

12.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade debtors

2,911,628

1,779,325

Other debtors

2,275,265

2,160,000

Prepayments and accrued income

39,824

34,802

5,226,717

3,974,127

13.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade creditors

1,632,377

579,348

Amounts owed to group undertakings

550,826

75,826

Tax

34,765

222,468

Social security and other taxes

3,864,762

4,391,014

VAT

139,691

353,490

Other creditors

-

2,293

Accruals and deferred income

61,543

68,254

6,283,964

5,692,693

14.	LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

2018

2017

£

£

Within one year

4,375

4,375

Between one and five years

2,188

6,563

6,563

10,938

15.	PROVISIONS FOR LIABILITIES

2018

2017

£

£

Deferred tax

Accelerated capital allowances

45,326

31,656

Deferred

tax

£

Balance at 1 December 2017

31,656

Charge to Statement of Comprehensive Income during year

13,670

Balance at 30 November 2018

45,326

16.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2018

2017

value:

£

£

6,579

Ordinary

£1

6,579

6,579