Duncan Adams Limited - Limited company accounts 18.2

REGISTERED NUMBER: SC138033 (Scotland)

Strategic Report, Report of the Director and

Audited Financial Statements for the Period 1 November 2016 to 30 April 2018

for

Duncan Adams Limited

Page

Strategic Report

1

Report of the Director

2

Report of the Independent Auditors

4

Statement of Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Cash Flow Statement

10

Notes to the Cash Flow Statement

11

Notes to the Financial Statements

12

The director presents his strategic report for the period 1 November 2016 to 30 April 2018.

REVIEW OF BUSINESS

The directors report a loss for the 18 month period to 30 April 2018 of £1,048,290 (2016 restated: £229,777) made on a

turnover of £24,961,894 (2016 restated: £17,022,576). Gross profit margin has dropped by 1.62% to 4.14% (2016 restated:

5.76%) which reflects rises in wages and fuel costs without an increase in rates charged to customers. Administrative

expenses have also risen significantly, with large rises in rent, rates, wages, pension and finance costs.

Accounting errors were identified in the prior years which totalled £510,472 (£299,773 relates to year end 31 October 2016

and £210,699 relates to previous periods). These accounting errors were discovered as a result of a complete forensic

analysis of all accounting records and reports following the introduction of a new Financial Controller in June 2017.

At the year end the company had net assets of £79,905 (2016 restated net assets: £797,652) and net current liabilities of

£1,780,522 (2016 restated: £1,250,757).

Although the business implemented new financial systems in 2016, the lack of accurate management information continued

until the systems were fully developed in late 2017.

The introduction in late 2017/early 2018 of a divisional reporting structure including improved vehicle financial

performance reporting has re-energised management, increased accountability and focused management on improving

efficiency, streamlining costs, reviewing the cost base, removing loss-making contracts (entered into in previous years) and

improving profitability.

Post April 2018, the turnaround is continuing with further cost savings, personnel changes and contract and vehicle

performance improvement.

We continue to closely monitor the ongoing performance and cash position of the business using the improved financial

information available within the company.

The company is currently making cash profits which is allowing the company to meet its liabilities as they fall due and this is

forecast to be the case for the following twelve months.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have assessed the main risks facing the company, one of which is an increase in fuel prices. However, this risk

has been transferred to a certain extent to customers via surcharges lowering the impact on the company. The directors

believe that mitigating this risk together with the quality of our services and customer service will help the business deliver

satisfactory trading results in a difficult market in the coming year.

ON BEHALF OF THE BOARD:

E M Adams - Director

25 January 2019

The director presents his report with the financial statements of the company for the period 1 November 2016 to 30 April 2018.

PRINCIPAL ACTIVITY

The principal activity of the company in the period under review was that of road hauliers.

DIVIDENDS

No dividends will be distributed for the period ended 30 April 2018.

DIRECTORS

E M Adams has held office during the whole of the period from 1 November 2016 to the date of this report.

Other changes in directors holding office are as follows:

D M Adams - deceased 3 February 2017

C W Adams ceased to be a director after 30 April 2018 but prior to the date of this report.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Strategic Report, the Report of the Director and the financial statements in

accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has

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 director must not approve the

financial statements unless he is 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 director is 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 director is 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 him to

ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is 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 he 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

Drummond Laurie CA are deemed to be reappointed under section 487(2) of the Companies Act 2006.

ON BEHALF OF THE BOARD:

E M Adams - Director

25 January 2019

Opinion

We have audited the financial statements of Duncan Adams Limited (the 'company') for the period ended 30 April 2018

which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow

Statement and Notes to the Cash Flow Statement, 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 April 2018 and of its loss for the period 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 director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the director has 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.

Emphasis of matter - Going Concern

We draw attention to note 1 in the financial statements which indicates that the company has a payment arrangement in place

with unsecured creditors until May 2019 to pay back arrears. Although all payments are being made in a timely manner with

over 64% of arrears currently paid, the failure to generate sufficient cash profits to pay the arrears and ongoing debts as they

fall due could possibly result in demand for payment in full. As stated in note 1, these events or conditions, along with other

matters as set forth in note 1, indicate that a possible material uncertainty exists that may cast doubt on the company's ability

to continue as a going concern. Our opinion is not modified in respect of this matter.

Other information

The director is responsible for the other information. The other information comprises the information in the Strategic

Report and the Report of the Director, 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.

Opinion 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 Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Director 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 Report of the Director.

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 director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page two, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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 Wheeler (Senior Statutory Auditor)

for and on behalf of Drummond Laurie CA

Statutory Auditor

Unit 5

Gateway Business Park

Beancross Road

Grangemouth

FK3 8WX

28 January 2019

TURNOVER

3

24,961,894

17,022,576

Cost of sales

(23,929,594

)

(16,041,359

)

GROSS PROFIT

1,032,300

981,217

Administrative expenses

(2,082,039

)

(1,168,690

)

OPERATING LOSS

6

(1,049,739

)

(187,473

)

Interest payable and similar expenses

7

(216,357

)

(103,328

)

LOSS BEFORE TAXATION

(1,266,096

)

(290,801

)

Tax on loss

8

217,806

61,024

LOSS FOR THE FINANCIAL PERIOD

(1,048,290

)

(229,777

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD

(1,048,290

)

(229,777

)

Prior year adjustment

9

(510,472

)

(210,699

)

TOTAL COMPREHENSIVE LOSS SINCE LAST ANNUAL REPORT

(1,558,762

)

(440,476

)

FIXED ASSETS

Tangible assets

10

3,376,198

3,582,003

CURRENT ASSETS

Stocks

11

94,810

114,791

Debtors

12

3,672,883

4,093,027

Cash at bank

56,511

6,819

3,824,204

4,214,637

CREDITORS

Amounts falling due within one year

13

(5,604,726

)

(5,465,394

)

NET CURRENT LIABILITIES

(1,780,522

)

(1,250,757

)

TOTAL ASSETS LESS CURRENT LIABILITIES

1,595,676

2,331,246

CREDITORS

Amounts falling due after more than one year

14

(1,515,771

)

(1,470,063

)

PROVISIONS FOR LIABILITIES

18

-

(63,531

)

NET ASSETS

79,905

797,652

CAPITAL AND RESERVES

Called up share capital

19

430,543

100,000

Retained earnings

20

(350,638

)

697,652

SHAREHOLDERS' FUNDS

79,905

797,652

The financial statements were approved by the director on 25 January 2019 and were signed by:

E M Adams - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 November 2015

100,000

1,138,128

1,238,128

Prior year adjustment

-

(210,699

)

(210,699

)

As restated

100,000

927,429

1,027,429

Changes in equity

Total comprehensive income

-

280,695

280,695

Balance at 31 October 2016

100,000

1,208,124

1,308,124

Prior year adjustment

-

(510,472

)

(510,472

)

As restated

100,000

697,652

797,652

Changes in equity

Issue of share capital

330,543

-

330,543

Total comprehensive loss

-

(1,048,290

)

(1,048,290

)

Balance at 30 April 2018

430,543

(350,638

)

79,905

Cash flows from operating activities

Cash generated from operations

1

740,073

596,718

Interest paid

(216,357

)

(103,328

)

Net cash from operating activities

523,716

493,390

Cash flows from investing activities

Purchase of tangible fixed assets

575,918

(7,044

)

Sale of tangible fixed assets

89,278

4,000

Net cash from investing activities

665,196

(3,044

)

Cash flows from financing activities

New loans in period

220,000

-

Loan repayments in period

(100,858

)

(50,000

)

Capital repayments in period

(1,264,487

)

(457,074

)

Share issue

150,543

-

Net cash from financing activities

(994,802

)

(507,074

)

Increase/(decrease) in cash and cash equivalents

194,110

(16,728

)

Cash and cash equivalents at beginning of period

2

(137,599

)

(120,871

)

Cash and cash equivalents at end of period

2

56,511

(137,599

)

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

Period

1.11.16

to

Year Ended

30.4.18

31.10.16

as restated

£

£

Loss before taxation

(1,266,096

)

(290,801

)

Depreciation charges

842,632

524,738

Loss on disposal of fixed assets

93,096

26

Finance costs

216,357

103,328

(114,011

)

337,291

Decrease/(increase) in stocks

19,981

(22,289

)

Decrease/(increase) in trade and other debtors

754,419

(378,893

)

Increase in trade and other creditors

79,684

660,609

Cash generated from operations

740,073

596,718

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these

Balance Sheet amounts:

Period ended 30 April 2018

30.4.18

1.11.16

£

£

Cash and cash equivalents

56,511

6,819

Bank overdrafts

-

(144,418

)

56,511

(137,599

)

Year ended 31 October 2016

31.10.16

1.11.15

as restated

£

£

Cash and cash equivalents

6,819

6,542

Bank overdrafts

(144,418

)

(127,413

)

(137,599

)

(120,871

)

1.	STATUTORY INFORMATION

Duncan Adams Limited is a private company, limited by shares, domiciled in Scotland, registration number

SC138033. The registered office is PO Box 46, Grange Dock, Grangemouth, FK3 8UG.

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.

Going concern

The financial statements of the company have been prepared on the assumption that the company will continue as a

going concern. The application of the going concern basis is based on the assumption that the company will be able

to realise its assets and settle its liabilities in the normal course of business.

As at 30 April 2018, the current liabilities of the company exceeded its current assets by £1,780,522. In addition, the

company is in a payment arrangement with unsecured creditors until May 2019 where all arrears must be repaid and

all current debts must be met as they fell due. One missed payment could possibly result in the immediate demand

for all debts. These conditions indicate the existence of a possible material uncertainty which may cast doubt about

the company’s ability to continue as a going concern.

The director of the company is of the opinion that the preparation of the financial statements of the company on a

going concern basis remains appropriate given the following measures which have been taken or will be taken by the

company to mitigate the existence of possible material uncertainty on going concern and to meet its obligations

falling due within the next 12 months, which include amongst others:

1. A payment arrangement has been agreed with unsecured creditors which will see all arrears brought up to date by

May 2019 and these payments are being made out of cash profits.

2. Maximising the cash which can be realised from assets owned by the company, whether that be by sale or finance

of fixed assets, or by realisation of debtors.

3. The director and shareholder has introduced personal funds as share capital to meet short term cash flow

requirements.

4 The director is actively engaged in improving the profitability of the company through income generation and

cutting costs.

Turnover

Turnover represents the total invoice value, excluding Value Added Tax, of haulage work undertaken during the

year. Turnover is recognised as and when the service is completed.

Tangible fixed assets and depreciation

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 or, if held under a finance lease, over the lease term, whichever is the shorter.

Leasehold Property

-

Over the lease term

Plant & Machinery

-

3 - 15 years Straight Line

Fixtures & Fittings

-

25% Straight Line

Motor Vehicles

-

5 Year Straight Line, Fleet Vehicles 1-10 Year Straight Line

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

costs of acquisition.

The directors review the residual value of all tangible fixed assets using their knowledge of the industry and

depreciate the assets to these residual values.

Stocks

Stocks are stated at the lower of cost and net realisable value. Cost represents the purchase cost if fuel and sundry

items.

Taxation

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

Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws 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 period 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.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held

under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are

depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of

the future payments is treated as a liability.

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 profit and loss account.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as

either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a

residual interest in the assets of the company after deducting all of its liabilities.

Provisions

Provisions are recognised when the company has a legal or constructive obligation as a result of a past event, it is

probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably

estimated. Provisions are not recognised for future operating losses. Provisions are discounted where the time value

of money is material.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is

determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an

outflow with respect to any one item included in the same class of obligations may be small.

Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand and highly liquid interest-bearing securities with

maturities of three months or less. In the cash-flow statement, cash and cash equivalents are shown net of bank

overdrafts, which are included as current borrowings in liabilities on the balance sheet.

3.

TURNOVER

The turnover and loss before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

Period

1.11.16

to

Year Ended

30.4.18

31.10.16

as restated

£

£

United Kingdom

23,299,988

15,991,628

Europe

1,661,906

1,030,948

24,961,894

17,022,576

4.	EMPLOYEES AND DIRECTORS

Period

1.11.16

to

Year Ended

30.4.18

31.10.16

as restated

£

£

Wages and salaries

6,588,041

4,357,174

Social security costs

642,663

425,651

Other pension costs

97,635

55,795

7,328,339

4,838,620

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

Period

1.11.16

to

Year Ended

30.4.18

31.10.16

as restated

Distribution staff

127

128

Administrative staff

21

20

148

148

5.	DIRECTORS' EMOLUMENTS

Period

1.11.16

to

Year Ended

30.4.18

31.10.16

as restated

£

£

Directors' remuneration

108,900

72,600

Directors' pension contributions to money purchase schemes

9,429

6,286

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

Money purchase schemes

1

1

6.	OPERATING LOSS

The operating loss is stated after charging/(crediting):

Period

1.11.16

to

Year Ended

30.4.18

31.10.16

as restated

£

£

Depreciation - owned assets

151,499

181,315

Depreciation - assets on hire purchase contracts

691,133

343,423

Loss on disposal of fixed assets

93,096

26

Auditors' remuneration

9,000

9,874

Foreign exchange differences

(4,802

)

(9,716

)

Operating lease costs: Plant and machinery

1,189,331

1,052,575

Operating lease costs: Land and buildings

351,623

143,399

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

1.11.16

to

Year Ended

30.4.18

31.10.16

as restated

£

£

Bank interest

17,863

5,310

HP/bank loan interest payable

198,494

98,018

216,357

103,328

8.

TAXATION

Analysis of the tax credit

The tax credit on the loss for the period was as follows:

Period

1.11.16

to

Year Ended

30.4.18

31.10.16

as restated

£

£

Deferred tax

(217,806

)

(61,024

)

Tax on loss

(217,806

)

(61,024

)