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Registered number: 13768693










FRANK KEY HOLDINGS LIMITED










Annual report and financial statements

For the period ended 31 December 2022

 
FRANK KEY HOLDINGS LIMITED
 

Company Information


Directors
J V Norton (appointed 26 November 2021)
V K Meeks (appointed 26 November 2021)
B J Sansom (appointed 26 November 2021)
R M Sansom (appointed 31 October 2022)
S E Sansom (appointed 31 October 2022)




Registered number
13768693



Registered office
Sansom House
Portland Street

Nottingham

NG5 6BL




Independent auditors
PKF Smith Cooper Audit Limited
Statutory Auditors

2 Lace Market Square

Nottingham

NG1 1PB





 
FRANK KEY HOLDINGS LIMITED
 

Contents



Page
Group strategic report
1 - 2
Directors' report
3 - 4
Independent auditors' report
5 - 8
Consolidated statement of comprehensive income
9
Consolidated balance sheet
10
Company balance sheet
11
Consolidated statement of changes in equity
12
Company statement of changes in equity
13
Consolidated Statement of cash flows
14
Consolidated analysis of net debt
15
Notes to the financial statements
16 - 37


 
FRANK KEY HOLDINGS LIMITED
 

Group strategic report
For the period ended 31 December 2022

Introduction
 
The directors present their strategic report for the period ended 31 December 2022.

Business review
 
Within this report the directors aim to present a balanced and comprehensive review of the development and performance of the business during the year and its position at the year end. 2022 represented a good year for the Frank Key Group. The Group continues to have a strong balance sheet and is operating efficiently. 
Post Covid-19, the economic outlook in the areas in which we operate began to deteriorate during the year. Significant materials price inflation continued from the previous year and our ability to pass these on diminished during the year. Increasing cost of living began to reduce demand for building materials in our markets linked to the end user. Activities linked to housebuilding continued to be stable during the year, but increases in interest rates to combat wider inflation led to this sector beginning to slow later in 2022. Volumes in the sector fell over the course of the year, masked by the inflation in the price of the materials we sell.
General inflation led to increases across the majority of our overheads during the year, with the impact of reducing overall profitability. That said, the previous period was a record year following a boom in DIY spend whilst other sectors were significantly affected by lock downs and other Covid restrictions.
During the year, a restructure of the Group took place as part of our succession strategy. This led to shareholding and director changes and was facilitated by the addition of a new parent company, Frank Key Holdings Limited. 

Principal risks and uncertainties
 
The Group has a strong balance sheet and a settled management team. As with other businesses in our sector, any uncertainty will come from external influences, but all indications are that the construction sector activity (specifically the RMI sector and private housing developments) will see output levels struggle in the next trading period. 
Indications remain that the effects to the Group from the Brexit decision should continue to be minimal given our turnover is domestic and close to the branches, with recent progress on arrangements with the EU, this risks to our supply chain are now reduced, given our products are principally manufactured or raw materials. More aligned to the effects of Covid-19 than Brexit has been the impact on product shortages which continued into 2022, but eased as the year progressed meaning 2023 should not see these challenges. Demand no longer is exceeding domestic supply and worldwide issues around international shipping rates have reduced with rates expected to return to normal during 2023.
The main risk we foresee is around customer demand and their purchasing power, our customers currently have healthy order books but the impact of the rising cost of living will potentially reduce demand within the private RMI sector. This is coupled with significant inflation in the products we offer, up to now these been affordable to customers, but if they continue we are likely to see further falls in output demand and potential pressure on our trading margins.
Uncertainty does present its own risks, mainly with predicting capacity and credit control, but the Group continues to remain cautious and controlled in exploiting opportunities. Group borrowings remain well within our affordability and strong cash flow ensure they are easily serviceable, even if activity were to fall.

Page 1

 
FRANK KEY HOLDINGS LIMITED
 

Group strategic report (continued)
For the period ended 31 December 2022

Financial key performance indicators
 
We consider that our key financial performance indicators are those that communicate the financial performance and position of the company, these being net profit, current ratio and gearing.
ole1939.png
This is the first trading period of the new holding company and the consolidated figures above cover this initial period. The balance sheet is strong, with excellent liquidity. The reorganisation, which led to the creation of the Company, introduced some financing from the retiring shareholders, but gearing remains low and will be repaid over the next few years.


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



J V Norton
Director

Date: 29 September 2023

Page 2

 
FRANK KEY HOLDINGS LIMITED
 

 
Directors' report
For the period ended 31 December 2022

The directors present their report and the financial statements for the period ended 31 December 2022.

Directors' responsibilities statement

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 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 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 2006They 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.

Principal activity

The principal activity of the Company is that of a holding company.
The principal activity of the Group is the supply of building materials and associated goods and services.

Results and dividends

The profit for the period, after taxation, amounted to £1,680,692.

Dividends of £nil were paid during the period.

Directors

The directors who served during the period were:

J V Norton (appointed 26 November 2021)
V K Meeks (appointed 26 November 2021)
B J Sansom (appointed 26 November 2021)
R M Sansom (appointed 31 October 2022)
S E Sansom (appointed 31 October 2022)

Future developments

The Group will continue to look to grow organically through its existing branch base, building further on the success of recent years. We will look to invest in driving improved efficiencies, but with the current uncertainty in the economy, we will exercise caution in these strategic decisions.

Page 3

 
FRANK KEY HOLDINGS LIMITED
 

 
Directors' report (continued)
For the period ended 31 December 2022

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and

the director 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 and the Group's auditors are aware of that information.

Auditors

The auditorsPKF Smith Cooper Audit Limitedwill 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.
 





J V Norton
Director

Date: 29 September 2023

Page 4

 
FRANK KEY HOLDINGS LIMITED
 

 
Independent auditors' report to the members of Frank Key Holdings Limited
 

Opinion


We have audited the financial statements of Frank Key Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 31 December 2022, which comprise the Group Statement of comprehensive income, the Group and Company Balance sheets, 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 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 Group's and of the parent Company's affairs as at 31 December 2022 and of the Group's profit for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the 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.


Conclusions relating to going concern


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


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


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


Page 5

 
FRANK KEY HOLDINGS LIMITED
 

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


We have nothing to report in this regard.


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 Group strategic report and the Directors' report for the financial period 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.


Matters on which we are required to report by exception
 

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:


adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 3, 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.


Page 6

 
FRANK KEY HOLDINGS LIMITED
 

 
Independent auditors' report to the members of Frank Key Holdings 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 Group financial statements.


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

We identified that the principal risk of fraud or non-compliance with laws and regulations related to:
 
management bias in respect of accounting estimates and judgements made;
management override of control;
posting of unusual journals or transactions.

We focussed on those areas that could give rise to a material misstatement in the Group financial statements. Our procedures included, but were not limited to:
 
enquiry of management and those charged with governance around actual and potential litigation and claims, including instances of non-compliance with laws and regulations and fraud;
reviewing minutes of meetings of those charged with governance where available;
reviewing legal expenditure in the year to identify instances of non-compliance with laws and regulations and fraud;
reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.

It is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.


Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.


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.


Page 7

 
FRANK KEY HOLDINGS LIMITED
 

 
Independent auditors' report to the members of Frank Key Holdings Limited (continued)


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.





James Bagley (Senior statutory auditor)
for and on behalf of
PKF Smith Cooper Audit Limited
Statutory Auditors
2 Lace Market Square
Nottingham
NG1 1PB

29 September 2023
Page 8

 
FRANK KEY HOLDINGS LIMITED
 

Consolidated statement of comprehensive income
For the period ended 31 December 2022

Period ended
31 December
2022
Note
£

  

Turnover
 4 
25,651,056

Cost of sales
  
(16,158,072)

Gross profit
  
9,492,984

Distribution costs
  
(1,767,791)

Administrative expenses
  
(5,647,629)

Other operating income
 5 
39,441

Operating profit
 6 
2,117,005

Interest receivable and similar income
 10 
2,571

Interest payable and similar expenses
 11 
(90,927)

Profit before taxation
  
2,028,649

Tax on profit
 12 
(347,957)

Profit for the financial period
  
1,680,692

Profit for the period attributable to:
  

Owners of the parent Company
  
1,680,692

There were no recognised gains and losses for 2022 other than those included in the consolidated statement of comprehensive income.

There was no other comprehensive income for 2022.

The notes on pages 16 to 37 form part of these financial statements.

Page 9

 
FRANK KEY HOLDINGS LIMITED
Registered number: 13768693

Consolidated balance sheet
As at 31 December 2022

2022
Note
£

Fixed assets
  

Tangible assets
 14 
8,016,566

Investments
 15 
1,750

Investment property
 16 
212,989

  
8,231,305

Current assets
  

Stocks
 17 
3,648,095

Debtors: amounts falling due within one year
 18 
4,181,799

Cash at bank and in hand
 19 
2,218,394

  
10,048,288

Creditors: amounts falling due within one year
 20 
(5,087,023)

Net current assets
  
 
 
4,961,265

Total assets less current liabilities
  
13,192,570

Creditors: amounts falling due after more than one year
 21 
(4,425,465)

Provisions for liabilities
  

Deferred taxation
 23 
(326,413)

Net assets
  
8,440,692


Capital and reserves
  

Called up share capital 
 24 
1,000,000

Merger relief reserve
 25 
5,760,000

Profit and loss account
 25 
1,680,692

  
8,440,692


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




J V Norton
Director

Date: 29 September 2023

The notes on pages 16 to 37 form part of these financial statements.

Page 10

 
FRANK KEY HOLDINGS LIMITED
Registered number: 13768693

Company balance sheet
As at 31 December 2022

2022
Note
£

Fixed assets
  

Investments
 15 
4,840,000

  
4,840,000

Current assets
  

Debtors: amounts falling due within one year
 18 
4

  
4

Creditors: amounts falling due within one year
 20 
(1,248,004)

Net current (liabilities)/assets
  
 
 
(1,248,000)

Total assets less current liabilities
  
3,592,000

  

Creditors: amounts falling due after more than one year
 21 
(2,592,000)

  

Net assets
  
1,000,000


Capital and reserves
  

Called up share capital 
 24 
1,000,000

  
1,000,000


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




J V Norton
Director

Date: 29 September 2023

The notes on pages 16 to 37 form part of these financial statements.

Page 11

 
FRANK KEY HOLDINGS LIMITED
 

Consolidated statement of changes in equity
For the period ended 31 December 2022


Called up share capital
Merger relief reserve
Profit and loss account
Total equity

£
£
£
£



Profit for the period
-
-
1,680,692
1,680,692

Interest created on business combination
-
5,760,000
-
5,760,000

Shares issued during the period
1,000,000
-
-
1,000,000


At 31 December 2022
1,000,000
5,760,000
1,680,692
8,440,692

The notes on pages 16 to 37 form part of these financial statements.

Page 12

 
FRANK KEY HOLDINGS LIMITED
 

Company statement of changes in equity
For the period ended 31 December 2022


Called up share capital
Total equity

£
£

Shares issued during the period
1,000,000
1,000,000


At 31 December 2022
1,000,000
1,000,000

The notes on pages 16 to 37 form part of these financial statements.

Page 13

 
FRANK KEY HOLDINGS LIMITED
 

Consolidated statement of cash flows
For the period ended 31 December 2022

2022
£

Cash flows from operating activities

Profit for the financial period
1,680,692

Adjustments for:

Write off of negative goodwill
(590,991)

Depreciation of tangible assets
560,207

Loss on disposal of tangible assets
4,580

Interest paid
90,927

Interest received
(2,571)

Taxation charge
347,957

Decrease in stocks
93,473

Decrease in debtors
920,062

Increase in creditors
2,336,385

Corporation tax (paid)/received
(35,855)

Net cash generated from operating activities

5,404,866


Cash flows from investing activities

Purchase of tangible fixed assets
(1,050,709)

Sale of tangible fixed assets
115,032

Purchase of subsidiaries
(4,840,000)

Cash on acquisition of subsidiaries
1,976,357

Interest received
2,571

HP interest paid
(14,735)

Net cash from investing activities

(3,811,484)

Cash flows from financing activities

Issue of ordinary shares
1,000,000

Repayment of loans
(323,005)

Repayment of/new finance leases
24,209

Bank interest paid
(76,192)

Net cash used in financing activities
625,012

Net increase in cash and cash equivalents
2,218,394

Cash and cash equivalents at the end of period
2,218,394


Cash and cash equivalents at the end of period comprise:

Cash at bank and in hand
2,218,394


Page 14

 
FRANK KEY HOLDINGS LIMITED
 

Consolidated Analysis of Net Debt
For the period ended 31 December 2022






Cash flows
Acquisition and disposal of subsidiaries
New finance leases
Other non-cash changes
At 31 December 2022
£

£

£

£

£

Cash at bank and in hand

242,037

1,976,357

-

-

2,218,394

Debt due after 1 year

-

(2,412,901)

-

693,747

(1,719,154)

Debt due within 1 year

232,005

(232,005)

-

(693,747)

(693,747)

Finance leases

-

(469,323)

(24,209)

-

(493,532)


474,042
(1,137,872)
(24,209)
-
(688,039)

The notes on pages 16 to 37 form part of these financial statements.

Page 15

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

1.


General information

Frank Key Holdings Limited is a private company limited by shares incorporated in England, United Kingdom. The address of the registered office and the company’s registration number is given in the company information page of these financial statements. The nature of the Group and Company’s operations and principal activities are given in the Directors’ Report.
The Company was incorporated on 26 November 2021. The financial statements present the results of the Company for the period from incorporation to 31 December 2022 and the results of the Group for the period 22 March 2022 to 31 December 2022.

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 financial statements have been prepared in Sterling which is the functional currency of the Group are are rounded to the nearest £1.

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 judgment 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:

 
2.2

Basis of consolidation

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 Balance sheet, 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.
Acquisitions made by share issue, for example by share for share exchange, account for the difference between subsidiary net asset values at acquisition and nominal value of the shares issued by the Company or a subsidiary Company as a separate reserve termed the merger relief reserve. The share for share exchange was accounted for as a group reconstruction using the merger accounting method.

Page 16

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

2.Accounting policies (continued)

 
2.3

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 building and merchant supplies is recognised when significant risks and rewards of ownership of the goods have transferred to the buyer, the amount of turnover can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. This is usually on dispatch of the goods.
Revenue from the hire of plant and equipment is recognised over the hire term. 

 
2.4

Leased assets: the Group as lessee

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 company. 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.

 
2.5

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.6

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.

 
2.7

Pensions

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 in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Group in independently administered funds.

Page 17

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

2.Accounting policies (continued)

 
2.8

Current and deferred taxation

The tax expense for the period 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 and the Group operate and generate 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;
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

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.

 
2.9

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.

Depreciation is provided on all tangible fixed assets, at rates calculated to write off the cost, less estimated residual value, of each asset on a systematic basis over its expected useful life.

Page 18

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

2.Accounting policies (continued)


2.9
Tangible fixed assets (continued)

Depreciation is provided on the following basis:

Freehold property
-
not depreciated / 20% straight line
Leasehold improvements
-
10% straight line
Plant and machinery
-
10% straight line or 25% reducing balance
Motor vehicles
-
25% reducing balance
Fixtures and fittings
-
10-25% straight line or 15% reducing balance
Hire equipment
-
1 - 5 years straight line

The directors consider the residual value of freehold property is at least equal to net book value and therefore depreciation is not charged in respect of these assets.
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.

 
2.10

Investment property

Investment property is carried at fair value determined annually by external valuers and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary for any difference in the nature, location or condition of the specific asset. No depreciation is provided. Changes in fair value are recognised in profit or loss.

 
2.11

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Consolidated statement of comprehensive income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.

 
2.12

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 out basis. Costs include all costs of purchase, costs of conversion and other costs incurred in bringing stock into its present location and condition.
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.

 
2.13

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.

Page 19

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

2.Accounting policies (continued)

 
2.14

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.

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.

 
2.15

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.

 
2.16

Provisions for liabilities

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 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.

 
2.17

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.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Revaluation of investment properties - the Group carries its investment properties at fair value, with changes in fair value being recognised in the statement of other comprehensive income. The investment properties have not been revalued in the year on the basis that the directors do not consider the carrying value to be materially different to the fair value.
Depreciation of freehold property - the Group does not charge depreciation of certain freehold property assets on the basis that the residual value of these assets is at least equal to cost. No formal valuation of the freehold properties has been undertaken during the year; the directors do not consider there to be a material difference between current residual value and cost.

Page 20

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

4.


Turnover

The whole of the turnover is attributable to the principal activity of the Group, being the supply of building materials and associated goods and services.

All turnover arose within the United Kingdom.


5.


Other operating income

Period ended
31 December
2022
£

Net rents receivable
39,441



6.


Operating profit

The operating profit is stated after charging:

Period ended
31 December
2022
£

Write off of negative goodwill
(590,991)

Depreciation of tangible fixed assets
560,207

Operating lease rentals
301,994


7.


Auditors' remuneration

During the period, the Group obtained the following services from the Company's auditors:


Period ended
31 December
2022
£

Fees payable to the Company's auditors for the audit of the consolidated and parent Company's financial statements
4,250

Page 21

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

8.


Employees

Staff costs, including directors' remuneration, were as follows:


Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£


Wages and salaries
4,486,017
-
-
-

Social security costs
578,621
-
-
-

Cost of defined contribution scheme
158,835
-
-
-

5,223,473
-
-
-


The average monthly number of employees, including the directors, during the period was as follows:


     Period ended
     31 December
        2022
            No.






Production
179



Administration
13



Management
17

209

The Company has no employees other than the directors, who did not receive any remuneration.


9.


Directors' remuneration

Period ended
31 December
2022
£

Directors' emoluments
190,613

Group contributions to defined contribution pension schemes
16,406

207,019


During the period retirement benefits were accruing to 2 directors in respect of defined contribution pension schemes.

The highest paid director received remuneration of £122,840.

The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £10,881.

Page 22

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

10.


Interest receivable

Period ended
31 December
2022
£


Bank interest receivable
2,571


11.


Interest payable and similar expenses

Period ended
31 December
2022
£


Bank interest payable
76,192

Finance leases and hire purchase contracts
14,735

90,927


12.


Taxation


Period ended
31 December
2022
£

Corporation tax


Current tax on profits for the year
220,776

Adjustments in respect of previous periods
26,126


Total current tax
246,902

Deferred tax


Origination and reversal of timing differences
131,047

Adjustments in respect of prior periods
(29,992)

Total deferred tax
101,055


Taxation on profit on ordinary activities
347,957
Page 23

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022
 
12.Taxation (continued)


Factors affecting tax charge for the period

The tax assessed for the period is lower than the standard rate of corporation tax in the UK of 19%. The differences are explained below:

Period ended
31 December
2022
£


Profit on ordinary activities before tax
2,028,649


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19%
385,443

Effects of:


Non-tax deductible write off of goodwill
(112,288)

Expenses not deductible for tax purposes
20,593

Fixed asset timing differences
(42,798)

Adjustments to tax charge in respect of prior periods
26,126

Other chargeable gains
14,053

Non-taxable income
(5,633)

Remeasurement of deferred tax for changes in tax rates
31,451

Adjustments in respect of previous periods - deferred tax
(29,992)

Other differences leading to an increase (decrease) in the tax charge
61,002

Total tax charge for the period
347,957


Factors that may affect future tax charges

From 1 April 2023, the rate of corporation tax in the United Kingdom has increased from 19% to 25%. Companies with profits of £50k or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50k and £250k, the higher 25% rate will apply but with a marginal relief applying as profits increase.
As the 25% rate was enacted in May 2021, this rate has been reflected in the calculation of deferred tax.


13.


Parent company profit for the year

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 period was £Nil.

Page 24

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

14.


Tangible fixed assets

Group






Freehold property
Leasehold improvements
Plant and machinery
Motor vehicles

£
£
£
£



Cost


Additions
250,954
-
132,373
443,915


Acquisition of subsidiary
5,448,217
423,674
831,751
2,507,320


Disposals
-
-
(130,048)
(310,822)



At 31 December 2022

5,699,171
423,674
834,076
2,640,413



Depreciation


Charge for the period on owned assets
18,522
3,239
58,864
74,665


Charge for the period on financed assets
-
-
8,250
166,583


Disposals
-
-
(109,156)
(291,154)


Acquisition of subsidiary
67,948
384,816
632,149
1,783,176



At 31 December 2022

86,470
388,055
590,107
1,733,270



Net book value



At 31 December 2022
5,612,701
35,619
243,969
907,143
Page 25

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

           14.Tangible fixed assets (continued)


Fixtures and fittings
Hire equipment
Total

£
£
£



Cost


Additions
2,596
220,871
1,050,709


Acquisition of subsidiary
564,080
3,403,801
13,178,843


Disposals
(49,219)
(192,128)
(682,217)



At 31 December 2022

517,457
3,432,544
13,547,335



Depreciation


Charge for the period on owned assets
38,562
123,168
317,020


Charge for the period on financed assets
-
68,354
243,187


Disposals
(45,335)
(116,970)
(562,615)


Acquisition of subsidiary
386,599
2,278,489
5,533,177



At 31 December 2022

379,826
2,353,041
5,530,769



Net book value



At 31 December 2022
137,631
1,079,503
8,016,566

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2022
£



Plant and machinery
13,750

Motor vehicles
484,436

Hire equipment
355,015

853,201

Page 26

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022



Freehold property held at valuation at 31 December 2022 is as follows:

2022
£



At cost:
5,045,847

At valuation:


May 2003
816,241

March 2008
(206,228)

March 2009
43,311

September 2009
(125,000)

February 2011
(75,000)

April 2019
200,000

5,699,171




If the freehold property had not been included at valuation they would have been included under the historical cost convention as follows:

2022
£



Cost
5,045,847

Accumulated depreciation
(510,237)

Net book value
4,535,610

The freehold property was revalued on 30 January 2013 by Innes England (Chartered Surveyors). The basis of the valuation was open market value for existing use basis.
The directors are not aware of any material changes in the fair value of the freehold property and therefore the valuation has not been updated.

Page 27

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

15.


Fixed asset investments

Group





Unlisted investments

£



Cost


On acquisition of subsidiaries
1,750



At 31 December 2022
1,750






Net book value



At 31 December 2022
1,750

Company





Investments in subsidiary companies

£



Cost


Additions
4,840,000



At 31 December 2022
4,840,000






Net book value



At 31 December 2022
4,840,000

Page 28

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Class of shares

Holding

Frank Key Group Limited
Ordinary
100%
Frank Key (Nottingham) Limited*
Ordinary
100%
Frank Key Tool Hire Limited*
Ordinary
100%
Frank Key (Bulwell) Limited*
Ordinary
100%
Charles Watson (Ironmongers) Limited*
Ordinary
100%
The Builders Centre (Sheffield) Limited*
Ordinary
100%
Robert M Sansom Plant Limited*
Ordinary
100%
Sinbad Tools Limited*
Ordinary
100%
C. Bancroft Limited*
Ordinary
100%
Clower & Sons (Builders Merchants) Limited*
Ordinary
100%

All subsidiaries have the same registered office as that of the parent company.
* These investments are held indirectly.  

Page 29

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

16.


Investment property

Group


Freehold investment property

£



Valuation


On acquisition of subsidiaries
212,989



At 31 December 2022
212,989

Investment property with a net book value of £212,989 (2021: £212,989) has been pledged as security for liabilities of the Group.
The 2013 valuations were made by Innes England (Chartered Surveyors) on an open market for existing use basis.
The directors are not aware of any material changes in the fair value of the investment property and therefore the valuation has not been updated.





If the Investment properties had been accounted for under the historic cost accounting rules, the properties would have been measured as follows:

2022
£


Historic cost
140,010

The investment property was revalued on 30 January 2013 by Innes England (Chartered Surveyors) on an open market value for existing use basis.
The directors are not aware of any material changes in the fair value of the investment property and therefore the valuation has not been updated.



17.


Stocks

Group
2022
£

Finished goods and goods for resale
3,648,095



18.


Debtors

Group
Company
2022
2022
£
£


Trade debtors
3,753,080
-

Other debtors
87,385
4
Page 30

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

18.Debtors (continued)


Prepayments and accrued income
341,334
-

4,181,799
4



19.


Cash and cash equivalents

Group
2022
£

Cash at bank and in hand
2,218,394



20.


Creditors: Amounts falling due within one year

Group
Company
2022
2022
£
£

Bank loans
693,747
-

Trade creditors
2,464,951
-

Amounts owed to group undertakings
-
842,660

Corporation tax
86,284
-

Other taxation and social security
497,637
-

Obligations under finance lease and hire purchase contracts
379,221
-

Other creditors
693,440
405,344

Accruals and deferred income
271,743
-

5,087,023
1,248,004


Obligations under finance lease and hire purchase contracts are secured upon the assets to which they related.
Details of security granted by the Group in respect of bank loans is detailed in Note 21.

Page 31

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

21.


Creditors: Amounts falling due after more than one year

Group
Company
2022
2022
£
£

Bank loans
1,719,154
-

Net obligations under finance leases and hire purchase contracts
114,311
-

Other creditors
2,592,000
2,592,000

4,425,465
2,592,000


Obligations under finance lease and hire purchase contracts are secured upon the assets to which they related.
Details of security granted by the Group in respect of bank loans is detailed in Note 21.


The aggregate amount of liabilities repayable wholly or in part more than five years after the balance sheet date is:
Group
2022
£


Repayable by instalments
140,266

Included in amounts repayable after more than five years is a bank loan repayment in monthly instalments, with the final payment due in August 2032. Interest on this loan is charged at Base Rate + 2%.

Page 32

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

22.


Loans

Analysis of the maturity of loans is given below:


Group
2022
£

Amounts falling due within one year

Bank loans
693,747

Amounts falling due 1-2 years

Bank loans
714,684

Amounts falling due 2-5 years

Bank loans
864,204

Amounts falling due after more than 5 years

Bank loans
140,266

2,412,901


The Group has two bank loans. Security given on these loans is detailed below:
 
A loan within Frank Key (Nottingham) Limited is secured by way of a first legal charge over the commercial freehold property and investment property, a cross guarantee granted by the Company and Robert M Sansom Plant Limited and a debenture by Robert M Sansom Plant Limited.
 
A loan with Frank Key Group Limited is secured by an unlimited debenture incorporating a fixed and floating charge over all assets of the Company.


23.


Deferred taxation


Group



2022


£






Charged to profit or loss
(101,055)


Arising on business combinations
(225,358)



At end of year
(326,413)

Group
2022
£

Accelerated capital allowances
(443,246)

Tax losses carried forward
98,426

Other short-term timing differences
18,407

(326,413)

Page 33

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

24.


Share capital

2022
£
Allotted, called up and fully paid


600,000 Ordinary A shares of £1.00 each
600,000
400,000 Ordinary B shares of £1.00 each
400,000

1,000,000


Upon incorporation the Company issued 3 £1 Ordinary shares at nominal value.
On 13 December 2021 the Company issued 1 £1 Ordinary share at nominal value. 
On 22 March 2022 the Company issued 600,000 £1 Ordinary shares for consideration of £10.60 per share.
On 22 March 2022 the Company issued £399,996 £1 Ordinary shares at nominal value.
The £1 Ordinary shares were subsequently redesignated as 600,000 Ordinary A shares and 400,000 Ordinary B shares.


25.


Reserves

Merger relief reserve

The merger relief reserve was formed as a result of a group reconstruction. It is the difference between the net asset value of subsidiaries and the nominal value of the shares issued on acquisition or group reconstruction. 

Profit and loss account

The profit and loss account represents cumulative profits and losses net of dividends and other adjustments.

Page 34

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

26.
 

Business combinations

On 22 March 2022 Frank Key Holdings Limited acquired 100% of the ordinary share capital of Frank Key Group Limited via a share for share exchange. Frank Key Group Limited itself holds 100% of the shares in a number of subsidiary undertakings as detailed in Note 15. The information below details the assets and liabilities acquired in Frank Key Group Limited and its subsidiaries.

Acquisition of Frank Key Group Limited

Recognised amounts of identifiable assets acquired and liabilities assumed

Book value
Fair value adjustments
Fair value
£
£
£

Fixed Assets

Tangible
7,858,655
-
7,858,655

Investments
1,750
-
1,750

7,860,405
-
7,860,405

Current Assets

Stocks
3,741,568
-
3,741,568

Debtors
8,700,847
-
8,700,847

Cash at bank and in hand
1,976,357
-
1,976,357

Total Assets
22,279,177
-
22,279,177

Creditors

Due within one year
(8,449,927)
-
(8,449,927)

Due after more than one year
(2,412,901)
-
(2,412,901)

Deferred taxation
(225,358)
-
(225,358)

Total Identifiable net assets
11,190,991
-
11,190,991


Merger relief reserve following share for share exchange
(5,760,000)

Negative goodwill
(590,991)

Total purchase consideration
4,840,000

Consideration

£


Equity instruments
600,000

Deferred consideration
4,240,000

Total purchase consideration
4,840,000

Page 35

 
FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

26.Business combinations (continued)

Cash outflow on acquisition

£

Cash and cash equivalents acquired
1,976,357

The negative goodwill arising on acquisition has been written off to the profit and loss account in the current period as it was deemed to have a useful life of nil. 

The results of Frank Key Group Limited and its subsidiaries since acquisition are as follows:

Current period since acquisition
£

Turnover
25,651,056

Profit after tax for the period since acquisition
1,680,692


27.


Pension commitments

The Group operates a defined contribution 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 £158,835. Contributions totalling £42,065 were payable to the fund at the balance sheet date and are included in creditors.


28.


Commitments under operating leases

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


Group
2022
£

Not later than 1 year
369,365

Later than 1 year and not later than 5 years
378,632

747,997
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FRANK KEY HOLDINGS LIMITED
 

 
Notes to the financial statements
For the period ended 31 December 2022

29.


Related party transactions

The Group has taken advantage of the exemption under FRS 102 Section 33.1A Related Party Disclosures from disclosing transactions with other wholly owned members of the group.
Transactions with directors
During the period sales amounting to £2,480 were made to a director. At 31 December 2022 £4,606 was owed to the Group by the director in relation to these transactions. At 31 December 2022 £48,445 was due from this director. During the period the highest outstanding balance overdrawn was £762,469. Amounts advanced to the director during the period totalled £182,773 and amounts repaid by the director during the period totalled £714,461.
During the period sales amounting to £88 were made to a director. At 31 December 2022 £nil was owed to the Group by the director in relation to these transactions. At 31 December 2022 a balance of £29,422 was due to the director by the Group in respect of a loan account.
During the period sales amounting to £16 were made to a director. At 31 December 2022 £nil was owed to the Group by the director in relation to these transactions.
During the period sales amounting to £717 were made to a close faimly member of a director. At 31 December 2022 £nil was owed to the Group by this related party in relation to these transactions. At 31 December 2022 £1,384 was owing to this related party by the Group in respect of a loan account.
No interest is charged on any directors loan accounts.
Other related party transactions
During the period, sales amounting to £28,611 were made to a company where there are directors in common. At the balance sheet date an amount of £1,559 was owed to the Group by the related party.
During the period, an amount of £25,000 was paid over to a retirement benefit pension scheme where the directors are beneficiaries. No amounts were owing at the balance sheet date.
During the period, there were £4,600 of rental expenses recharged to the Group from a trust fund, which is a related party by virtue of a director being one of the beneficiaries of the trust fund. No amounts were owing at the balance sheet date.
During the period, sales of £2,228 were made to and purchases of £5,550 were made from an entity which has a director in common. An amount of £nil was due to the Group from this related party at the balance sheet date.
Key management personnel
All key management personnel who have authority and responsibility for planning, directing and controlling the activities of the Group are considered to be key management personnel. Total remuneration in respect of these individuals during the period was £336,967 for short-term employment benefits and £25,604 for post-employment benefits.


30.


Controlling party

The ultimate controlling parties is Mr R M Sansom and Mrs S E Sansom by virtue of their shareholding.

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