Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2019
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KINGERLEE HOLDINGS LIMITED
COMPANY INFORMATION
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KINGERLEE HOLDINGS LIMITED
CONTENTS
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KINGERLEE HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The objectives of this report are to provide shareholders and other users of these statements:
• with the appropriate level of background context for these financial statements; • with an analysis of the Group’s past performance; and • insight into the Group’s main objectives and strategies, the principal risks it faces and how they might affect future prospects.
Kingerlee Holdings Limited is a holding company coordinating the activities of subsidiaries primarily engaged in the business of construction and speculative property developments. Additionally, the Group maintains portfolios of properties and listed investments.
Operating within a 75 mile radius of Oxford, the Group undertakes projects with values ranging up to £35m, with a particular focus on the following sectors: • Universities • Local authority and public/private schools • High quality private houses • Healthcare and research • Leisure • Public buildings, including churches and museums • Bespoke commercial and residential developments The Group also has a Joinery Division which specialises in the design, manufacture, supply and fitting of bespoke high quality joinery. During the year, with comparatives shown for the year ended 31 December 2018, the Group generated: • Turnover of £49.7m (2018: £38.5m) • Profit for the financial year of £890k (2018: £1,473k) Objectives and strategies The Group's main business objective is to deliver sustainable, responsible and profitable business growth. It seeks to do this whilst delivering: • A client focussed professional service • Motivated and trained employees, with staff retention and personal development seen as a high priority • A portfolio of projects and developments with a balance of risk and reward The Group's strategy is to: • Seek repeat business through its reputation and performance. The Group remains mindful of the fact that we are, and will be, judged on the manner in which we manage and deliver each project. • Adopt a true Partnering and Best Value approach through a thorough understanding of our client's needs • Continue with our policy of treating our Supply Chain in a fair and reasonable manner
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KINGERLEE HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
The Group has a risk management process in place to identify and effectively manage risk across the business. The following principal risks have been identified that may have an impact on the Group and its operations:
• Key personnel - Attracting, developing and retaining experienced, competent, motivated and talented employees. The Group is constantly reviewing policies in this area, to improve our effectiveness in managing this risk. • Availability of reliable and skilled subcontractors - these are all vetted to ensure they meet our requirements for their ability to deliver on time, financial stability, quality, health and safety, and environmental impact. • Our reputation as a safe construction business - we recognise our need to ensure safe working conditions for our employees, subcontractors and the public. The Group has a comprehensive framework in place to manage health and safety and has an in-house health, safety and environmental specialist who regularly reviews our policies and provides training and site inspections. • Project related risks - the commercial risk we take on each project will depend on the nature and complexity of the works, the duration of the project, the credit risks and the contractual terms under which the work is carried out. In order to manage these risks we have a rigorous approach to project selection to ensure that the works we undertake match our capabilities and resources, that the contractual terms are acceptable and that the projects are approved by the appropriate level of management. The Group has a proactive and non-adversarial approach that aims to avert conflict before disputes have an opportunity to crystallise. • COVID-19 - the global pandemic arising since the year-end has resulted in additional risks to the operations of the Group. We have adopted a range of measures across the Group including providing safe operating working environments on our construction projects to ensure that the Group continues to achieve the desired outcomes of its clients whilst ensuring the health and safety of our employees and third party contractors. The Group is also continuing to monitor the financial risks and is taking proactive measures including reviewing its cost base and tender submissions for future projects to ensure the Group continues to trade profitably. Financial risk management Exposure to credit and interest rate risks arise in the normal course of the Group's business. The Group's credit risk is attributable to its trade receivables. The amounts presented in the consolidated Statement of Financial Position are net of any allowance for doubtful debtors, based on prior experience and assessment of specific circumstances by the directors. In order to manage credit risk the directors make an assessment of each potential client, with third party credit checks being carried out where appropriate. The Group seeks to manage cash flow risk by preparing rolling forecasts of income and expenditure over the short and long term. Given the size of the Group's operations, the relative costs of managing exposure to interest rate risk are considered to exceed any potential benefits.
The Group operates in a low margin/high risk sector. Consequently its most important financial performance indicators are turnover, gross margin and net margin. These are monitored on a regular basis, as is the underlying performance of each project and development.
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KINGERLEE HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
Turnover increased by 29% for the Group compared to the previous financial year and the Group continued to trade profitably. The Group has also experienced an increase in its gross profit for the year although gross profit margins have fallen.
Recruitment and employee relations Recruitment policies are designed to ensure equal opportunity of employment regardless of age, race or gender. Appropriate consideration is given to disabled applicants in offering employment. The Directors seek to establish an environment in which the ambitions and expectations of all employees are actively encouraged and properly rewarded. These ideals are reflected in the Kingerlee Management Principles of Leadership, Communication, Technical Competence, Planning and Co-ordination and Training and Development. Environmental policies The Group is committed to being a leader in advancing environmental and sustainability standards and processes in the construction sector. We aim to improve management processes by the implementation of a Waste Management Plan on each project and, where possible, source materials from sustainable supplies, reduce transport cost and generally apply high standards of management to ensure the effective use of all resources. The systems of the construction subsidiary, Kingerlee Limited, are certified as being ISO 14001 compliant. Safety The health and safety management system of Kingerlee Limited has achieved certification to both the standards required of BS OHSAS 18001:2007 and Safety Schemes in Procurement. Quality management system During 2019, Kingerlee Limited started working towards obtaining ISO 9001:2015 accreditation, to demonstrate the robustness of its systems as well as seeking to build in continuous improvement reviews. Certification of this standard was received in January 2020. Future developments Although the construction market remains highly competitive in 2020, the Directors acknowledge that COVID-19 will result in changing demands of customers that the Group must adapt to. The Group continues to identify new projects to ensure continued profitability and is anticipating growth in revenue through its development subsidiaries.
This report was approved by the board
and signed on its behalf.
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KINGERLEE HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The Directors present their report and the financial statements for the year ended 31 December 2019.
The Directors who served during the year were:
The Directors are responsible for preparing the Group Strategic Report, the Directors' Report and the
consolidated
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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
∙
select suitable accounting policies for the Group's financial statements 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 Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £
890,000
(2018:
£
1,473,000
)
.
The Directors have recommended a dividend of £244,000 (2018: £244,000).
Information in respect of future developments are disclosed in the Group Strategic Report.
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KINGERLEE HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
Each of the persons who are
Directors at the time when this Directors' Report is approved has confirmed that:
The Directors have also considered the impact of COVID-19 on the accounting estimates prepared and significant assumptions used in the preparation of the financial statements for the year ended 31 December 2019 and do not consider it to have any direct material financial impact on the assets held at 31 December 2019. The Directors have, therefore, not made any subsequent provisions in the financial statements because of COVID-19.
The auditor, James Cowper Kreston, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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KINGERLEE HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF KINGERLEE HOLDINGS LIMITED
We have audited the financial statements of Kingerlee Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2019, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity
and the related notes, 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:
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 United Kingdom, including the Financial Reporting Council'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.
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 Group's or the parent 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.
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditor's Report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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KINGERLEE HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF KINGERLEE HOLDINGS LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Group 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 Group 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 identified material misstatements in the Group Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the Directors' Responsibilities Statement on page 4, 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.
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 Auditor's Report.
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KINGERLEE HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF KINGERLEE HOLDINGS LIMITED (CONTINUED)
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.
for and on behalf of
Chartered Accountants and Statutory Auditor
2 Chawley Park
Cumnor Hill
OX2 9GG
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KINGERLEE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
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KINGERLEE HOLDINGS LIMITED
REGISTERED NUMBER:
00984588
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2019
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KINGERLEE HOLDINGS LIMITED
REGISTERED NUMBER:
00984588
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(CONTINUED)
AS AT
31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 18 to 40 form part of these financial statements.
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KINGERLEE HOLDINGS LIMITED
REGISTERED NUMBER:
00984588
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2019
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KINGERLEE HOLDINGS LIMITED
REGISTERED NUMBER:
00984588
COMPANY STATEMENT OF FINANCIAL POSITION
(CONTINUED)
AS AT
31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 18 to 40 form part of these financial statements.
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KINGERLEE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2018
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KINGERLEE HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2019
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2018
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KINGERLEE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
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KINGERLEE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Kingerlee Holdings Limited is a private company limited by shares incorporated and domiciled in England and Wales. The address of the registered office is Thomas House, Langford Locks, Kidlington, Oxfordshire, OX5 1HR. The registered number of the Company is 00984588.
The principal activity of the Company is that of a holding company. The principal activities of the Group are the trade of construction and speculative property development.
2.
Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The financial statements are presented in pounds Sterling and are rounded to the nearest thousand pound.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
Between the year-end and the date of approval of the financial statements, the world has entered into a pandemic due to COVID-19. In the year to 31 December 2019, the Group made a profit of £890,000 (2018: £1,473,000), had net assets at 31 December 2019 of £22,634,000 (2018: £23,569,000) and cash and cash equivalents at 31 December 2019 of £2,115,000 (2018: £3,167,000). The Company does not trade and its principal activity is the support of its subsidiaries as a holding company. The Company had net assets at 31 December 2019 of £3,845,000 (2018: £3,963,000) and cash and cash equivalents at 31 December 2019 of £33,000 (2018: £1,000).
The Directors have considered the ability of the Group and Company to continue as a going concern. The Directors acknowledge that COVID-19 will have a significant impact on the outlook for 2020 and 2021 for the Group and that turnover levels will be below the anticipated levels forecast before COVID-19. The Directors have prepared cash flow forecasts for the Group and Company for a period covering more than 12 months from the date of their approval of these financial statements. The Directors have reviewed the assumptions made in respect of the timing of completion of ongoing projects and of new projects to be secured. The Directors acknowledge that the impacts of COVID-19 remain uncertain in the long-term but have introduced measures to mitigate these risks and ensure the continued development and performance of the Group. The Group has developed safe working and visiting practices in line with UK Government and industry guidelines and have forecast revised schedules for completion of projects.
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
The Group's business activities, performance and position are set out in the Group Strategic Report and the Report of the Directors. In addition, the Group Strategic Report includes details of the Group's financial risk management and objectives as well as an analysis of the Group's key risks and uncertainties. Based on these forecasts, the Directors consider that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Therefore, the Directors continue to adopt the going concern basis in preparing these financial statements.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
Investments in subsidiaries are measured at cost less accumulated impairment.
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated Statement of Comprehensive Income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated Statement of Financial Position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition.
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Revenue from construction work is recognised based on the certified valuation of work in progress on contracts between the beginning and end of the year. Revenue from the sale or exchange of properties during the year but not completed until after the year-end is recognised if contractual completion takes place within three months of the year end. No turnover is recognised on non-contractual reservations and any reservation deposits are included in creditors.
The investment property is leased to other group companies and so in the Consolidated Statement of Financial Position is classified as Freehold Property and has, therefore, been recognised at historic cost less accumulated depreciation. Investment property is depreciated over its useful economic life of 50 years.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Development land and property and developments in progress are stated at the lower of cost and net realisable value. Cost consists of land, direct materials, direct labour and subcontractors and attributable overheads.
In the case of raw materials and consumable stores, cost means purchase price including transport and handling costs, less trade discounts, calculated on a first in first out basis. In the case of short-term work in progress, cost consists of direct materials, direct labour and attributable overheads. The amount of work in progress has been reduced by progress payments. Net realisable value means estimated selling price (less trade discounts) less all further costs to complete and all costs to be incurred in marketing and selling. Profit on long-term contract work in progress is accounted for once the outcome of a contract can be assessed with reasonable certainty and is based on stage of completion of the contract. Costs incurred to carry out work on long-term contracts are matched with long-term contract work included in turnover. Where costs cannot be matched with contract work accounted for as turnover, such amounts are included in stock. Provision is made for foreseeable losses on all contracts based on the loss which is currently estimated to arise over the duration of any contract, irrespective of the amount of work carried out at the reporting date. Ground rents arise where the Company retains long term freehold interest in a development. The capital value is calculated to be the equivalent of five times the annual ground rent receivable.
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the Group. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.
Page 21
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that:
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown as a liability in the Consolidated Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
Page 22
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an 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.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Page 23
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Interest income is recognised in profit or loss using the effective interest method.
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
Page 24
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Estimates are based on historical experience and other assumptions that are considered reasonable in the circumstances. The actual amount of values may vary in certain instances from the assumptions and estimates made. Changes will be recorded, with corresponding effect in profit or loss, when, and if, better information is obtained. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included below. Critical judgements that management have made in the process of applying accounting policies disclosed herein and that have a significant effect on the amounts recognised in the financial statements relate to the following: Long-term contract balances In assessing long-term contract work, foreseeable losses are provided for over the whole duration of a project irrespective of the amount of work carried out at the reporting date. The future realisation of these losses may be affected by future outcomes on these projects. Provisions In recognising provisions, the Group evaluates the extent to which it is probable that it has incurred a legal or constructive obligation in respect of past events and the probability that there will be an outflow of benefits as a result. The judgements used to recognise provisions are based on currently known factors which may vary over time, resulting in changes in the measurement of recorded amounts as compared to initial estimates. Deferred tax assets The recognition of deferred tax assets is based on forecasts of future taxable profit. The measurement of future taxable profit for the purposes of determining whether or not to recognise deferred tax assets depends on many factors, including the Group's ability to generate such profits and the implementation of effective tax planning strategies. The occurrence or non-occurrence of such events in the future may lead to significant changes in the measurement of deferred tax assets. Stocks and work in progress Management estimates the net realisable value of stocks and work in progress, taking into account the most reliable evidence at each reporting date. The future realisation of these inventories may be affected by market-driven changes that may reduce future selling prices. Tangible fixed assets Management provide for depreciation on tangible fixed assets over the asset's useful economic lives after taking their residual values into account. The residual value is estimated on the basis of amounts expected to be received on disposal of the asset after deducting the estimated costs of disposal. Management assesses the useful lives of assets based on past experience with similar assets. Associate The Group holds a shareholding of 27.3% in Highcroft Investments Plc and accounts for this associate under the equity method. The determination of Highcroft Investments Plc as an associate of Kingerlee Holdings Limited requires management to make judgements on the ability of the Group to participate in the financial and operating policy decisions of Highcroft Investments Plc.
Page 25
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 26
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 27
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 28
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
12.
Taxation (continued)
The Group has tax losses available for set off against future profits of the same trade of approximately £2,096,000 (2018: £2,323,000).
The Finance Act 2016 enacted a reduction in the main rate of corporation tax from 19% to 17% from 1 April 2020. As this change of rate was enacted at the balance sheet date then deferred tax balances have been stated at a rate of 17%. On 17 March 2020 the Government announced their intention to cancel this reduction in the corporation tax rate. As a result the deferred tax timing differences are expected to reverse at 19%.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was £
126,000
(2018 -
£
133,000
)
.
Page 29
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 30
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
15.
Tangible fixed assets (continued)
Page 31
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 32
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 33
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 34
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 35
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Kingerlee Holdings Limited has a term loan with Handelsbanken of £640,000 (2018: £720,000) secured by a charge over Thomas House and by a fixed and floating charge over the assets of the Company. The interest rate is a margin of 2.5% over LIBOR and the loan is repayable over a term of five years.
At 31 December 2019 T.H. Kingerlee & Sons Limited had a loan with Handelsbanken of £1,730,000 outstanding (2018: £Nil). The interest rate on the loan is 3.1% over LIBOR. The loan is for a two year period ending June 2021 and has a maximum facility of £4,500,000 available for funding construction costs of a specific development project. The bank loan is secured by a legal charge over certain freehold properties included within stocks (note 17) and other assets of the Group. Repayment of the loan will be made from the proceeds of sales of that development, and it is anticipated that the loan will be fully repaid in 2020. At 31 December 2019, Kingerlee Homes Limited had a loan with Handelsbanken of £Nil (2018: £140,000). The interest rate on the loan was Handelsbanken base rate 1.25% plus 2.0%. The loan was for a two year period ending 10 October 2019 and had a maximum facility of £1,900,000 available for funding construction costs of a specific development project. The bank loan was secured by a legal charge over certain freehold properties included within stocks (note 17) and other assets of the Group. Repayment of the loan was made from the proceeds of sales of that development and the loan was fully repaid in January 2019. Kingerlee Limited has a bank overdraft facility with Handelsbanken of £750,000 secured against Thomas House and by a fixed and floating charge over the assets of the Company. The interest rate on overdrawn balances is chargeable at 3.0% per annum over Handelsbanken base rate.
Page 36
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Page 37
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
25.
Deferred taxation (continued)
Page 38
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Share premium account
Revaluation reserve
Other reserves
Profit and loss account
The Group has entered into performance bonds in the ordinary course of business with a total value of £998,000 at 31 December 2019 (2018: £1,947,000). The Group has never had a bond called and the Directors' opinion is that no liability is expected to arise in respect of the current bonds.
During the year ended 31 December 2019, the Group was notified of a potential claim from a former client. The value of the potential claim is not reliably measurable and the Directors refute the basis of the claim. The amount being claimed is expected to be material to the financial statements.
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £655,000 (2018: £559,000). Contributions totalling £60,000 (2018: £49,000) were payable to the fund at the reporting date and are included in creditors.
Page 39
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KINGERLEE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The ultimate controlling party of the Company are the shareholders of Kingerlee Holdings Limited.
Page 40
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