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Registered number: 00297731










KILFROST LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2022

 
KILFROST LIMITED
 
 
COMPANY INFORMATION


Director
Mr G Lydiate 




Registered number
00297731



Registered office
Albion Works

Haltwhistle

Northumberland

NE49 0HJ




Independent auditors
Ryecroft Glenton
Chartered Accountants & Statutory Auditor

32 Portland Terrace

Newcastle upon Tyne

NE2 1QP




Bankers
Allied Irish Bank (GB)

One Trinity Gardens

Broadchare

Newcastle upon Tyne

NE1 2HF




Solicitors
Womble Bond Dickinson (UK) LLP
St. Ann's Wharf

112 Quayside

Newcastle upon Tyne

NE1 3DX





 
KILFROST LIMITED
 

CONTENTS



Page
Strategic Report
 
1 - 2
Director's Report
 
3 - 4
Independent Auditors' Report
 
5 - 8
Statement of Comprehensive Income
 
9
Balance Sheet
 
10 - 11
Statement of Changes in Equity
 
12
Notes to the Financial Statements
 
13 - 32


 
KILFROST LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2022

Introduction
 
Kilfrost has entered its 91st year as a chemical company. Its legacy in Aircraft De-icing Fluids (ADF) is the foundation which all new products are based on. As such it continues to lead the way in product development. Its Speciality Fluids (SFD) continues to make inroads into the Market. 

Business review
 
For the aviation industry the past 12 months have been the beginning of the recovery phase post COVID. Whilst passenger numbers have been depressed from previous years there was still very positive signs of recovery moving at a pace. The past 12 months were also noted for a mild winter. Coupled together this meant a lower, than average, use of ADF. At the same time the cost of our major raw material (MPG) remained at a historic high. However, due our contractual pricing mechanisms we remained profitable.
In SFD we continued to make further inroads into Scandinavia which is becoming a core market. For the USA we continue to move ahead but further work needs to be done on Sales and Marketing.
In summary Kilfrost had a good trading year and is in a strong position for the next phase of growth. 

Principal risks and uncertainties
 
The principal risks and uncertainties facing the Company are broadly grouped as market, competitive, legislative and financial risk.
-  Market risks
The market for our ADF products is highly seasonal and significantly variable, depending on weather conditions. We aim to mitigate this risk going forward through further continuing development and growth in our Speciality Fluids Division.
-  Competitive risks
The Company operates in a global market and services customers either directly or by way of licence agreements in more than 50 countries. These customers select suppliers and products based on a combination of factors including price, delivery, quality and reputation. The Company has a wide range of customers with no individual customer accounting for a significant proportion of the entire business with many customers having dealt with the Company for a number of decades. The Kilfrost brand is well respected in the global marketplace and viewed as a leader in its field. However, our main market is the UK where we account for a large percentage of that space.
-  Legislative risks
The Company is governed by a wide range of legislation, particularly in the supply of fluids to the aircraft industry. The Company takes great care to keep up to date with all new initiatives to ensure that it can maintain its position at the forefront of the industry. 
 
Page 1

 
KILFROST LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022


-  Financial risks
The Company's main areas of financial risks are credit, foreign currency and liquidity risks.
The Company's policy is to minimise credit risk by ensuring that credit terms are only granted to customers who demonstrate an appropriate history and credit position. Credit insurance is held with Atradius.
The Company manages foreign currency risk through transacting business in only three currencies, namely Sterling, Euro and US Dollars. Each currency is managed by matching income and expenditure whenever possible.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company aims to mitigate liquidity risk by managing cash generation from its activities on a regular basis, utilising appropriate credit facilities for working capital and longer-term investments.
Our new Speciality Fluids products are going into a steady mature market dominated by a few key players. Our aim is to show a new innovative way of servicing this market by showing better performance and safety without compromise on either.
Financially the business has sufficient liquidity to cover at least the next 12 months trading after the accounts are finalised. 

Financial key performance indicators
 
The Company's key financial performance indicators for the year were:



2022
2021
£'000
£'000
Turnover

14,837

8,956
 
Operating profit

2,593

820
 
Profit / (loss) for the year after taxation

1,557

(1,085)
 
Shareholders' funds

3,196

4,014
 


This report was approved by the board on 11 August 2022 and signed on its behalf.






Mr G Lydiate
Director

Page 2

 
KILFROST LIMITED
 
 
 
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 MARCH 2022

The director presents his report and the financial statements for the year ended 31 March 2022.

Principal activity

The Company's principal activity during the period was that of the manufacture of anti-icing and de-icing fluids, predominantly for the aircraft market.

Results and dividends

The profit for the year, after taxation, amounted to £1,557,000 thousand (2021 - loss £1,085,000).

Director

The director who served during the year was:

Mr G Lydiate 

Director's responsibilities statement

The director is responsible for preparing the Strategic Report, the Director's Report 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 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 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 for the Company's financial statements and then apply them consistently;

make judgments 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 to enable him to ensure that the financial statements comply with the Companies Act 2006He 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.

Environmental matters

The Company will seek to minimise adverse impacts on the environment from its activities, whilst continuing to address health, safety and economic issues. The Company has complied with all applicable legislation and regulations.

Future developments

The business will continue to look at how to further diversify over the coming years. 

Page 3

 
KILFROST LIMITED
 
 
 
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022

Research and development activities

The R&D team continue to invest in research and development activities in respect of both SFD and ADF with patents currently being applied for. Costs charged during the year amounted to £524,000 (2021 : £487,000).


Going concern

The director has performed an assessment of the Company’s ability to continue trading as a going concern by reference to trading forecasts and financing requirements for a period, in excess of 15 months from the date of approval of these financial statements. The director is satisfied that the going concern basis of preparation for these financial statements is appropriate.
In assessing the Company’s ability to continue trading as a going concern for the next 15 months the director has examined all of the potential uncertainties which surround the business and the only significant uncertainty is the weather. This uncertainty is mitigated by the present structure of the business.
The director is aware of the ongoing impact that Covid-19 is having on the aviation industry and consequently on the Company. However the impact is not considered to be catastrophic given that Kilfrost has now traded for over 2 years under the various Covid-19 related restrictions. The director is confident the aviation industry will be back to normal levels by the time the Company enters their busiest period of output.
 
The director has considered these uncertainties and believes that there is sufficient financial headroom available for the forthcoming 15 months to mitigate the associated risks.
The direction of the business is set with a combination of continued R&D activity, ADF activity in the British Isles and invigorated activities in the Speciality Fluids Division. 

Disclosure of information to auditors

The director at the time when this Director's Report is approved has confirmed that:
 
so far as he is aware, there is no relevant audit information of which the Company's auditors are unaware, and

he has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Auditors

The auditorsRyecroft Glentonwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 11 August 2022 and signed on its behalf.
 





Mr G Lydiate
Director

Page 4

 
KILFROST LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KILFROST LIMITED
 

Opinion


We have audited the financial statements of Kilfrost Limited (the 'Company') for the year ended 31 March 2022, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 March 2022 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 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.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.


Page 5

 
KILFROST LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KILFROST LIMITED (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and  our Auditors' Report thereon.  The director is responsible for the other information contained within the Annual Report.  Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.  If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.  If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


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 Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Director's 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 Director's Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 directors
 

As explained more fully in the Director's Responsibilities Statement set out on page 3, 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 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 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 have no realistic alternative but to do so.


Page 6

 
KILFROST LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KILFROST LIMITED (CONTINUED)


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 an Auditors' 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.


The extent to which the audit was considered capable of detecting irregularities including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

• the engagement partner ensured that the engagement team collectively had the appropriate                                competence, capabilities and skills to identify or recognise non-compliance with applicable laws and    regulations;
• we identified the laws and regulations applicable to the Company through discussions with directors and   other management, and from our commercial knowledge and experience of the sector in which the    company operates;
• we focused on specific laws and regulations which we considered may have a direct material effect on    the financial statements or the operations of the Company, including the Companies Act 2006 and    taxation legislation;
• we assessed the extent of compliance with the laws and regulations identified above through making    enquiries of management and inspecting legal correspondence; and
• we ensured that the identified laws and regulations were communicated within the audit team regularly    and the team remained alert to instances of non-compliance throughout the audit. 
We assessed the susceptibility of the Company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:  
• making enquiries of management as to where they considered there was susceptibility to fraud and      their knowledge of actual, suspected and alleged fraud; and
• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and    regulations.
To address the risk of fraud through management bias and override of controls, we:  
• performed analytical procedures to identify any unusual or unexpected relationships;
• tested journal entries to identify unusual transactions; and
• assessed whether judgements and assumptions made in determining the accounting estimates were    indicative of potential bias. 
 
Page 7

 
KILFROST LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KILFROST LIMITED (CONTINUED)



In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:  
• agreeing financial statement disclosures to underlying supporting documentation;
• reading the minutes of meetings of those charged with governance;
• enquiring of management as to actual and potential litigation and claims; and
• reviewing correspondence with HMRC, and the Company’s legal advisers where appropriate.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. 
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. 


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 Auditors' Report.


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 2006Our 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 Auditors' 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.





Grahame Maughan (Senior Statutory Auditor)
  
for and on behalf of
Ryecroft Glenton
 
Chartered Accountants
Statutory Auditor
  
32 Portland Terrace
Newcastle upon Tyne
NE2 1QP

11 August 2022
Page 8

 
KILFROST LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2022

2022
2021
Note
£000
£000

  

Turnover
 4 
14,837
8,956

Cost of sales
  
(10,454)
(5,837)

Gross profit
  
4,383
3,119

Administrative expenses
  
(2,483)
(2,514)

Other operating income
 5 
693
215

Operating profit
 6 
2,593
820

Exceptional items : provision against group intercompany loans
 10 
(952)
(1,852)

Interest payable and similar expenses
 11 
(54)
(53)

Profit/(loss) before tax
  
1,587
(1,085)

Tax on profit/(loss)
 12 
(30)
-

Profit/(loss) for the financial year
  
1,557
(1,085)

Other comprehensive income for the year
  

Actuarial gains / (losses) on defined benefit pension scheme
 23 
125
(133)

Other comprehensive income for the year
  
125
(133)

  

Total comprehensive income for the year
  
1,682
(1,218)

The notes on pages 13 to 32 form part of these financial statements.

Page 9

 
KILFROST LIMITED
REGISTERED NUMBER: 00297731

BALANCE SHEET
AS AT 31 MARCH 2022

2022
2021
Note
£000
£000

Fixed assets
  

Tangible assets
 14 
769
843

  
769
843

Current assets
  

Stocks
 15 
3,475
1,960

Debtors: amounts falling due within one year
 16 
2,540
2,820

Cash at bank and in hand
 17 
1,660
1,377

  
7,675
6,157

Creditors: amounts falling due within one year
 18 
(4,725)
(2,237)

Net current assets
  
 
 
2,950
 
 
3,920

Total assets less current liabilities
  
3,719
4,763

Provisions for liabilities
  

Deferred tax
 20 
(30)
-

  
 
 
(30)
 
 
-

Pension liability
  
(493)
(749)

Net assets
  
3,196
4,014


Capital and reserves
  

Called up share capital 
 21 
19
19

Share premium account
 22 
921
921

Capital redemption reserve
 22 
29
29

Capital contribution
 22 
1,508
1,508

Other reserves
 22 
1
1

Profit and loss account
 22 
718
1,536

  
3,196
4,014


Page 10

 
KILFROST LIMITED
REGISTERED NUMBER: 00297731
    
BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2022

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 11 August 2022.




Mr G Lydiate
Director

The notes on pages 13 to 32 form part of these financial statements.

Page 11

 

 
KILFROST LIMITED


 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022



Called up share capital
Share premium account
Capital redemption reserve
Capital contribution
Other reserves
Profit and loss account
Total equity


£000
£000
£000
£000
£000
£000
£000


At 1 April 2020
19
921
29
1,508
1
2,754
5,232





Loss for the year
-
-
-
-
-
(1,085)
(1,085)


Actuarial losses on pension scheme
-
-
-
-
-
(133)
(133)

Total comprehensive income for the year
-
-
-
-
-
(1,218)
(1,218)




At 1 April 2021
19
921
29
1,508
1
1,536
4,014





Profit for the year
-
-
-
-
-
1,557
1,557


Actuarial gains on pension scheme
-
-
-
-
-
125
125

Total comprehensive income for the year
-
-
-
-
-
1,682
1,682


Dividends: Equity capital
-
-
-
-
-
(2,500)
(2,500)



At 31 March 2022
19
921
29
1,508
1
718
3,196



The notes on pages 13 to 32 form part of these financial statements.

Page 12

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

1.


General information

The Company is a private limited company, which is incorporated and registered in England (no. 00297731). The address of the registered office is Albion Works, Haltwhistle, Northumberland, NE49 0HJ. The principal activity of the Company during the period was that of the manufacture of anti-icing and de-icing fluids, predominantly for the aircraft market.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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 preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The financial statements are prepared in sterling, which is the functional currency of the Company.
Monetary amounts in these financial statements are rounded to the nearest £'000.
 

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Kilfrost Group Limited as at 31 March 2021 and these financial statements may be obtained from Companies House, Cardiff.

Page 13

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

2.Accounting policies (continued)

 
2.3

Going concern

The Company financial statements are prepared on a going concern basis.
The director has performed an assessment of the Company’s ability to continue trading as a going concern by reference to trading forecasts and financing requirements for a period, in excess of 15 months from the date of approval of these financial statements. The director is satisfied that the going concern basis of preparation for these financial statements is appropriate.
In assessing the Company’s ability to continue trading as a going concern for the next 15 months the director has examined all of the potential uncertainties which surround the business and the only significant uncertainty is the weather. This uncertainty is mitigated by the present structure of the business.
The director is aware of the ongoing impact that Covid-19 is having on the aviation industry and consequently on the Company. However the impact is not considered to be catastrophic given that Kilfrost has now traded for over 2 years under the various Covid-19 related restrictions. The director is confident the aviation industry will be back to normal levels by the time the Company enters their busiest period of output.
 
The director has considered these uncertainties and believes that there is sufficient financial headroom available for the forthcoming 15 months to mitigate the associated risks.
The direction of the business is set with a combination of continued R&D activity, ADF activity in the British Isles and invigorated activities in the Speciality Fluids Division. 

Page 14

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

2.Accounting policies (continued)

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company 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. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

 
2.5

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Page 15

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

2.Accounting policies (continued)


2.5
Tangible fixed assets (continued)

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.

Depreciation is provided on the following basis:

Freehold property
-
2% straight line basis
Plant and machinery
-
5-35% straight line basis
Computer equipment
-
33% straight line basis

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.

 
2.6

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first outbasis. Work in progress and finished goods include labour and attributable overheads.
At each Balance Sheet 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.

 
2.7

Debtors

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.

 
2.8

Cash and cash equivalents

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.

 
2.9

Financial instruments

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

Page 16

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

2.Accounting policies (continued)

 
2.10

Creditors

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.

 
2.11

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.

 
2.12

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

 
2.13

Finance costs

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.

 
2.14

Dividends

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.

Page 17

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

2.Accounting policies (continued)

 
2.15

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

The Company has taken advantage of the optional exemption available on transition to FRS 102 which allows lease incentives on leases entered into before the date of transition to the standard 01 October 2013 to continue to be charged over the period to the first market rent review rather than the term of the lease.

  
2.16

Pensions

Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
Defined benefit pension plan
The Company operates a defined benefit plan for certain employees. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including but not limited to age, length of service and remuneration. A defined benefit plan is a pension plan that is not a defined contribution plan.
The asset/liability recognised in the Balance Sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the Balance Sheet date less the fair value of plan assets at the Balance Sheet date (if any) out of which the obligations are to be settled.
The defined benefit obligation is calculated using the projected unit credit method. Annually the Company engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating to the estimated period of the future payments ('discount rate').
The fair value of plan assets is measured in accordance with the FRS 102 fair value hierarchy and in accordance with the Company's policy for similarly held assets. This includes the use of appropriate valuation techniques.
 
Page 18

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

2.Accounting policies (continued)

Defined benefit pension plan (continued)
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income. These amounts together with the return on plan assets, less amounts included in net interest, are disclosed as 'Remeasurement of net defined benefit liability'.
The cost of the defined benefit plan, recognised in profit or loss as employee costs, except where included in the cost of an asset, comprises:
a) the increase in net pension benefit liability arising from employee service during the period; and
b) the cost of plan introductions, benefit changes, curtailments and settlements.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is recognised in profit or loss as a 'finance expense'.

 
2.17

Onerous leases

Where the unavoidable costs of a lease exceed the economic benefit expected to be received from it, a provision is made for the present value of the obligations under the lease.

 
2.18

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.19

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company 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 Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet 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 Balance Sheet.

Page 19

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

2.Accounting policies (continued)

 
2.20

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

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 balance sheet date.

 
2.21

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.

 
2.22

Research and development

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.


3.


Judgements in applying accounting policies and key sources of estimation uncertainty

Significant judgements are required in relation to the assumptions for the valuation of the pension scheme surplus or deficit including discount rates, interest rates, mortality rates, and inflation. The director receives independent external advice from actuarial consultants in arriving at the scheme assumptions which are outlined in Note 23 of the financial statements. 

Page 20

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

4.


Turnover

The whole of the turnover is attributable to net invoiced sales of goods excluding value added tax and relates to the continuing principal activity of the Company. An analysis of turnover by geographical market is given below:

Analysis of turnover by country of destination:

2022
2021
£000
£000

United Kingdom
10,811
5,400

Rest of Europe
3,446
3,181

Rest of the world
580
375

14,837
8,956



5.


Other operating income

2022
2021
£000
£000

Royalty receivable
693
215

693
215



6.


Operating profit

The operating profit is stated after charging:

2022
2021
£000
£000

Exchange differences
(38)
(11)

Other operating lease rentals
3
19

Page 21

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

7.


Auditors' remuneration

2022
2021
£000
£000


Fees payable to the Company's auditor and its associates for the audit of the Company's annual accounts
16
14

Fees payable to the Company's auditor and its associates in respect of:


Other services relating to taxation
4
4

All other services
4
-


Fees payable to the Company's auditor and its associates in connection with the Company's pension scheme(s) in respect of:


2022
2021
£000
£000


The auditing of accounts of associates of the company pursuant to legislation
11
12


8.


Employees

Staff costs were as follows:


2022
2021
£000
£000

Wages and salaries
1,127
1,243

Social security costs
123
138

Cost of defined contribution scheme
120
134

1,370
1,515


The average monthly number of employees, including the director, during the year was as follows:


        2022
        2021
            No.
            No.







Production
15
17



Research and development
7
9



Sales and administration
11
12

33
38

Page 22

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

9.


Director's remuneration

The director of the Company who served during the year was also a director of the holding company and fellow subsidiaries. The director received total remuneration for the year of £295,000 (2021 : £248,000), as shown below, all of which was paid by the holding company. The director does not believe that it is practicable to apportion this amount between his services as director of the Company and where applicable, his services as director of the holding and fellow subsidiary companies.




The highest paid director received remuneration of £295,000 (2021 - £248,000).


10.


Exceptional items

2022
2021
£000
£000

Provision against group intercompany loan - Kilfrost Group Limited
952
1,667


Provision against group intercompany loan - Kilfrost Inc
-
185





11.


Interest payable and similar expenses

2022
2021
£000
£000


Bank interest payable
4
2

Other interest payable
50
51

54
53


12.


Taxation


2022
2021
£000
£000



Total current tax
-
-

Deferred tax


Origination and reversal of timing differences
30
-

Total deferred tax
30
-


Taxation on profit on ordinary activities
30
-
Page 23

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
 
12.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2021 - higher than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:

2022
2021
£000
£000


Profit/(loss) on ordinary activities before tax
1,587
(1,085)


Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
302
(206)

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
181
356

Capital allowances for year in excess of depreciation
(1)
-

Increase or decrease in pension fund prepayment leading to an increase (decrease) in tax
24
(33)

Other timing differences leading to an increase (decrease) in taxation
7
-

Non-taxable income
(2)
-

Adjustment in research and development tax credit leading to an increase (decrease) in the tax charge
(129)
(121)

Other differences leading to an increase (decrease) in the tax charge
(173)
163

Group relief
(31)
-

Transfer pricing adjustments
(148)
(159)

Total tax charge for the year
30
-


Factors that may affect future tax charges

There were no factors that may affect future tax charges.


13.


Dividends

2022
2021
£000
£000


Dividends
2,500
-

2,500
-

Page 24

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

14.


Tangible fixed assets





Freehold property
Plant and machinery
Office equipment
Computer equipment
Total

£000
£000
£000
£000
£000



Cost


At 1 April 2021
1,041
2,388
44
100
3,573


Additions
-
6
3
-
9


Disposals
-
(8)
-
-
(8)



At 31 March 2022

1,041
2,386
47
100
3,574



Depreciation


At 1 April 2021
337
2,257
36
100
2,730


Charge for the year on owned assets
21
57
5
-
83


Disposals
-
(8)
-
-
(8)



At 31 March 2022

358
2,306
41
100
2,805



Net book value



At 31 March 2022
683
80
6
-
769



At 31 March 2021
704
131
8
-
843


15.


Stocks

2022
2021
£000
£000

Raw materials and consumables
2,439
1,624

Finished goods and goods for resale
1,036
336

3,475
1,960


Page 25

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

16.


Debtors

2022
2021
£000
£000


Trade debtors excluding factored debts
(2)
7

Factored debts
2,206
2,582

Other debtors
155
3

Prepayments and accrued income
181
228

2,540
2,820






Proceeds of factored debts and stock financing was secured at the year end by way of a fixed and floating charge over certain of the Company's assets. 


17.


Cash and cash equivalents

2022
2021
£000
£000

Cash at bank and in hand
1,660
1,377

1,660
1,377



18.


Creditors: Amounts falling due within one year

2022
2021
£000
£000

Other loans
500
500

Trade creditors
1,076
1,089

Amounts owed to group undertakings
2,500
-

Other taxation and social security
317
302

Other creditors
87
20

Accruals and deferred income
245
326

4,725
2,237


Included within Other loans is £500,000 (2021 : £500,000) due to The Estate of Ms J Halbert, a shareholder in the company's parent undertaking Kilfrost Group Limited. These amounts are unsecured, interest free and are contractually repayable on demand.
Proceeds of factored debts and stock financing was secured at the year end by way of a fixed and floating charge over certain of the Company's assets. 

Page 26

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

19.


Financial instruments

2022
2021
£000
£000

Financial assets


Financial assets that are debt instruments measured at amortised cost
2,359
2,591


Financial liabilities


Financial liabilities measured at amortised cost
(4,364)
(1,935)


Financial assets measured at amortised cost comprise cash at bank and in hand, trade debtors, amounts owed by group undertakings and other debtors.


Financial liabilities measured at amortised cost comprise shareholder loans, trade creditors, amounts owed to group undertakings, certain other creditors and accruals and deferred income.


20.


Deferred taxation




2022


£000






Charged to profit or loss
(30)



At end of year
(30)

The deferred taxation balance is made up as follows:

2022
2021
£000
£000


Accelerated capital allowances
(156)
-

Tax losses carried forward
3
-

Pension deficit
123
-

(30)
-

Page 27

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

21.


Share capital

2022
2021
£000
£000
Allotted, called up and fully paid



19,106 Ordinary shares of £1.00 each
19
19



22.


Reserves

Share premium account

This reserve records the amount above the nominal value received for shares sold, less transaction costs.

Capital redemption reserve

This reserve records the nominal value of shares repurchased by the Company.

Other reserves

This reserve records the total value of capital reserves.
Capital contribution
This reserve records the total value of capital contributions made by the shareholders of the Company.
 

Profit and loss account

This reserve includes all current and prior period retained profits and losses and net of distributions to shareholders.

Page 28

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

23.


Pension commitments

The Company operates a Defined Benefit Pension Scheme.

The Company operates a defined benefit scheme in the UK which is now closed to future accrual and new entrants. The last full actuarial valuation of this scheme was carried out by a qualified independent actuary on 31 July 2019. The calculations below are based on the actuarial valuation as at 31 July 2019 and allowing for movements to 31 March 2022.
During the year, £146,000 was paid by the employer as agreed deficit funding (2021 : £143,000). Management estimate that contributions to the scheme going forwards will total £146,000 per annum. This is the recommended level of deficit funding provided in the latest actuarial valuation.
The directors acknowledge their responsibilities for ensuring that actuarial assumptions are suitably updated to reflect changing economic conditions and they confirm that the assumptions at 31 March 2022 have been carefully reviewed with the actuary.
The pension scheme has not invested in the Company itself.



Reconciliation of present value of plan liabilities:


2022
2021
£000
£000

Reconciliation of present value of plan liabilities


At the beginning of the year
1,544
1,348

Interest cost
34
31

Actuarial (gains) / losses
(152)
123

Losses due to benefit changes
-
42

At the end of the year
1,426
1,544



Reconciliation of present value of plan assets:


2022
2021
£000
£000


At the beginning of the year
795
646

Interest income
19
16

Actuarial losses
(27)
(10)

Contributions
146
143

At the end of the year
933
795

Page 29

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
 
23.Pension commitments (continued)


Composition of plan assets:


2022
2021
£000
£000


Bonds
29
37

Cash
833
687

Diversified growth including global absolute return fund
71
71

Total plan assets
933
795

2022
2021
£000
£000


Fair value of plan assets
933
795

Present value of plan liabilities
(1,426)
(1,544)

Net pension scheme liability
(493)
(749)


The amounts recognised in profit or loss are as follows:

2022
2021
£000
£000


Interest cost
15
15

Losses due to benefit changes
-
42

Total
15
57



The cumulative amount of actuarial gains and losses recognised in the Statement of Comprehensive Income was £2,033,000 (2021 - £2,212,000).



The Company expects to contribute £146,000 to its Defined Benefit Pension Scheme in 2023.




Page 30

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
 
23.Pension commitments (continued)


Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):

2022
2021
%
%
Discount rate


2.8

2.2
 
Future salary increases


3.6

3.3
 
Future pension increases


2.9

2.6
 
Mortality rates



 
- for a male aged 65 now


21.1

21.1
 
- at 65 for a male aged 45 now


22.4

22.4
 
- for a female aged 65 now


22.9

22.8
 
- at 65 for a female member aged 45 now


24.4

24.3
 

In agreement with the directors the actuary has used long cohort mortality assumptions that are consistent with the PCMA00 and PCFA00 mortality tables and reflect a reasonable estimate of likely future experience. The directors will continue to monitor these assumptions as the long term trend is for mortality improvements which add to life expectancies and hence the value of the liabilities.



Amounts for the current and previous four periods are as follows:


Defined benefit pension schemes

2022
2021
2020
2019
2018
£000
£000
£000
£000
£000
Defined benefit obligation

(1,426)

(1,544)

(1,348)
 
(1,323)
 
(1,191)

Scheme assets

933

795

646
 
510
 
376

Surplus
(493)

(749)

(702)
 
(813)
 
(815)


Experience adjustments on scheme liabilities
6
13
(30)
(4)
(7)
Experience adjustments on scheme assets
(27)
(10)
(11)
(10)
(8)
(21)
3
(41)
(14)
(15)


Page 31

 
KILFROST LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022

24.


Commitments under operating leases

At 31 March 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2022
2021
£000
£000


Not later than 1 year
5
10

Later than 1 year and not later than 5 years
2
5

7
15


25.


Related party transactions

The Company is a member of a group headed by Kilfrost Group Limited. Transactions with wholly owned group undertakings are not disclosed as the Company has taken advantage of the exemption available under Financial Reporting Standard 102 on the grounds that the Company is a wholly owned subsidiary of Kilfrost Group Limited.
Included within other loans is £500,000 (2021 : £500,000) due to The Estate of Ms J Halbert, a shareholder in the company's parent undertaking Kilfrost Group Limited. These amounts are unsecured, interest free and are contractually repayable on demand.
Key management personnel
The Company has elected to take advantage of the key management personnel compensation exemption under FRS 102 paragraphs 1.12(e) and 33.7.


26.


Controlling party

The Company's parent undertaking is Kilfrost Group Limited. Kilfrost Group Limited is the parent of the only group to which Kilfrost Limited belongs and for which financial statements are drawn up. In the opinion of the directors, Kilfrost Group Limited has outright control of the Company though no individual shareholder has outright control of Kilfrost Group Limited. Copies of Kilfrost Group Limited financial statements can be obtained from Companies House, Cardiff.
 
Group financial statements are not prepared to consolidate the financial statements of the Company's subsidiary undertakings. The Company has taken advantage of the exemptions in Section 400 of the Companies Act 2006 not to prepare group financial statements on the basis that it is a wholly owned subsidiary of Kilfrost Group Limited, a company incorporated in England, and is included together with its subsidiary undertaking in the group financial statements of that company. These financial statements present information about the Company as an individual undertaking and not about its Group.

 
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