Company Registration No. SC452100 (Scotland)
KHL HOLDING LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
KHL HOLDING LIMITED
COMPANY INFORMATION
Directors
I Dunbar
C Crombie
A Rae
J Florence
S Martin
A Macaskill
Secretary
LC Secretaries Limited
Company number
SC452100
Registered office
Johnstone House
52 - 54 Rose Street
Aberdeen
AB10 1HA
Auditor
Johnston Carmichael LLP
Bishop's Court
29 Albyn Place
Aberdeen
AB10 1YL
Business address
Kirkwood Business Park
Sauchen
Inverurie
AB51 7LE
KHL HOLDING LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 10
Group statement of comprehensive income
11
Group balance sheet
12
Company balance sheet
13
Group statement of changes in equity
14
Company statement of changes in equity
15
Group statement of cash flows
16
Notes to the financial statements
17 - 34
KHL HOLDING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -

The directors present the strategic report for the year ended 30 June 2023.

Fair review of the business

The principal activity of the group is residential property development. The main business activities are the construction of private housing for sale. In prior years, the group also manufactured timber frames for its housebuilding operations and external customers but ceased this activity on 1 July 2022, when the group transferred its Timber Frame business to Kirkwood Timber Frame Limited, a party with common ownership and control.

 

During the year the group had housing developments in Dundee and Aberdeenshire building quality homes for private individuals. They were also involved in construction of affordable homes for Housing association and local authority customers which contributed towards the Scottish Governments affordable housing targets.

 

Despite the challenging market conditions experienced by the group as a result of underlying economic factors including increased bank interest rates, the group delivered a strong result with turnover of £60m for the year ended 30 June 2023 and also profit before tax of £1.6m.

 

Revenue was also delivered from ongoing sales from sites in Tayside and Aberdeenshire. In Tayside ths group continued to sell units at its successful Balgillo Heights development in Broughty Ferry which is now into its final phase and also sold and handed over homes at the group’s new development at Drumoig, near St Andrews. In Aberdeenshire the group sold the final units from developments at Stonehaven, Countesswells and Dunecht and launched a further phase at Sauchen and new sites in Banchory, Alford and at Blackdog. In addition to the construction and sale of homes for private individuals, the group also successfully handed over affordable housing at Inchmarlo and Alford and commenced construction of an 80 unit affordable housing development at Blackdog.

 

The result for the year reports turnover of £60.0m (2022: £60.6m) with the decrease compared with the prior year partly as a result of the transfer of the manufacturing business to Kirkwood Timber Frame Limited. Profit before taxation was £1.6m and EBITDA for the year was £3.3m (2021: £2.2m) as a result of improved margins and overhead cost control.

 

The group's net assets increased from £21.2m to £22.6m, in line with profit generated in the period.

Principal risks and uncertainties

The board regularly review the risks and uncertainties affecting the business and have procedures in place to monitor and mitigate these risks.

 

The principal risks affecting the group are set out below.

 

Demand for homes

As a housebuilder, the group has exposure to the overall macroeconomic conditions that impact the demand for new homes including interest rates, availability of finance and overall consumer confidence in addition to local economic conditions. The group manages this risk at the site acquisition stage by performing detailed appraisals on all developments including analysing market demand. At ongoing developments, the group manages this risk by close monitoring of performance against plan and the wider economic environment allowing the group to take appropriate action to mitigate this risk should circumstances change.

 

Land availability

The group’s ability to grow and continue to deliver its quality product at the best locations is dependent on its ability to secure appropriately serviced land with planning consent for future housebuilding. The group manages this risk by employing an experienced land team who proactively identify future development sites and maintain a strong pipeline of future sites.

 

Funding and interest rate risk

The group is funded by a combination of equity and revolving credit and working capital facilities with Bank of Scotland. The directors recognise that one of the principal risks is the availability of finance and the cost of borrowing and monitor cash flows closely on a regular basis including the preparation of cash flow forecasts. The directors continue are working closely with the bank in terms of ongoing funding requirements and facilities.

KHL HOLDING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
Principal risks and uncertainties (continued)

 

Quality, safety and environmental

The group has a proud reputation for building high quality homes which provides a level of differentiation from competitors. The group has appropriate quality controls in place throughout the build process from design to completion to ensure that these high standards are maintained. Compliance with Health and Safety and Environmental rules and regulations is also a key area of focus for the business and controls are in place throughout the organisation to ensure compliance.

 

Availability of raw materials

The availability and cost of raw materials and labour remain a risk for the business with the global shortage of certain construction materials being a risk to the business. The directors mitigate this risk by employing an experienced buyer, careful forward planning and the holding of appropriate levels of stocks of materials.

Key performance indicators

Financial key performance indicators include revenue and EBITDA as noted above. Non-financial key performance indicators include customer satisfaction, health and safety and environmental compliance.

Future developments

Whilst the increase in mortgage interest rates has had an impact on market demand and may result in more challenging selling conditions, the group has continued to experience strong demand in the market generally and for the specific locations of the group’s developments evidenced by the number of secured reservations for sales in the current year. The directors continue with a cautious approach of land acquisition where there is known demand for our product and the group has secured additional development opportunities within these areas with land acquisition planned for the coming months and years, which will allow growth in these targeted areas.

S172 statement

In accordance with s172 of the Companies Act 2006, the directors must act in a way that they consider, in good faith would be most likely to promote the success of the group for the benefit of its members as a whole. All decisions taken by the board are taken with the long-term strategy of the group in mind; whether this is restructuring of the workforce, land acquisition, group expansion, funding decisions or dividend policy.

 

The quality of our homes is a key factor of the success of our business, and this is made possible by a skilled workforce. The importance of maintaining a skilled and experienced workforce in delivering this level of quality is such that the interests of the workforce are considered when the board make decisions particularly in regard to health and safety and employee retention.

 

The directors recognise the importance of business relationships with suppliers and subcontractors and have established long-term working relationships with our subcontractor and supplier base. The importance of maintaining high standards of business conduct is an integral part of the group’s strategy with directors being involved in ensuring integrity and a straightforward approach to dealings with others.

The group has a reputation for building quality homes and as such we take pride in the quality of the product and customer satisfaction. The group complies with all relevant planning and environmental laws and as part of the planning process considers the impact of the group’s operations on the community and environment and we engage with our communities as part of the planning process. The directors recognise the importance of maintaining a reputation for high standards of business conduct and these principles are communicated across the business including honesty, integrity, and fairness. The directors meet regularly and in considering decisions are mindful of the duty to promote the success of the business and the need to act fairly between members of the group.

On behalf of the board

C Crombie
Director
27 March 2024
KHL HOLDING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -

The directors present their annual report and financial statements for the year ended 30 June 2023.

Principal activities

The principal activity of the group continued to be that of residential property development. During the year, the group transferred its Timber Frame trade to a newly incorporated company, Kirkwood Timber Frame Limited, a company controlled by I Dunbar, director.

 

The principal activity of the parent company was to act as a holding company for the trading subsidiary.

Results and dividends

The results for the year are set out on page 11.

No ordinary dividends were paid (2022 - £nil). The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

I Dunbar
C Crombie
A Rae
J Florence
S Martin
A Macaskill
Directors' insurance

The directors have the benefit of the indemnity provisions contained in the Articles and the group maintains directors’ and officers’ liability insurance for the benefit of the directors' and the group’s officers. The parent company and its subsidiary undertaking, Kirkwood Homes Limited, have also entered into qualifying third party indemnity arrangements with each of their directors in a form and scope which comply with the Companies Act 2006. Each of these arrangements remain in force as at the date of this Annual Report.

Auditor

The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Energy and carbon report

Reporting Parameters

The group’s energy usage and carbon emissions are set out in the tables below for the year ended 30 June 2023.

The methodology follows the Environmental Guidelines issued by HM Government dated March 2019 including the use of reports from suppliers and invoices. The reporting uses the 2023 Government emission conversion factors for greenhouse gas (and 2022 comparatives).

We have measured all supplies of electricity, gas, transport fuel and gas oil across all of our sites and offices in the year to June 2023.

Transport includes the purchase of fuel for operation of group vehicles and fuel used in the reimbursement of business mileage for employees own vehicles.

 

KHL HOLDING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -
2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
2,508,009
2,794,870
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
61.00
60.00
- Fuel consumed for owned transport
417.00
480.00
478.00
540.00
Scope 2 - indirect emissions
- Electricity purchased
76.00
96.00
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the company
14.00
18.00
Total gross emissions
568.00
654.00
Intensity ratio
Tonnes CO2e per turnover (£m)
9.5
10.8
Quantification and reporting methodology

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.

Intensity measurement

The directors' consider TCo2E as a proportion of per m turnover as an appropriate intensity ratio.

Measures taken to improve energy efficiency

Our homes are constructed using timber frames which are a low carbon material. Using wood instead of other materials saves C02 emissions both through carbon captured in the timber product and the avoidance of alternative more C02 intensive products. Timber frame is key component of all our homes.

We comply with all planning requirements around energy efficiency. The energy efficiency of our new homes is a key consideration in the design of new homes ensuring we comply with industry standards including the installation of solar panels and air source heat pumps at certain developments. Energy efficiency is also considered in the design of street lighting for our developments which include the use of LEDs and the carbon reduction from planting trees is considered as part of any landscape plan.

We will consider the use of electric and hybrid vehicles when our existing fleet of vans require to be replaced and offer the option and encourage employees to select a fully electric or hybrid vehicle as company car choice.

Heating for our head office, yard and factory complex is provided by a biomass boiler which is fueled by timber waste which would be otherwise be treated as waste. Biomass is considered a renewable form of energy production as biomass growth removes carbon dioxide from the atmosphere and stores it in the soil, plants, or trees.

KHL HOLDING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 5 -
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the group is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the group is aware of that information.

Information contained within the Strategic Report

The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments, financial risks, and in respect of how the company fosters its relationships with suppliers, customers and others.

On behalf of the board
C Crombie
Director
27 March 2024
KHL HOLDING LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 6 -

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and parent company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and parent company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

KHL HOLDING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KHL HOLDING LIMITED
- 7 -
Opinion

We have audited the financial statements of KHL Holding Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

 

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 Auditor 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 UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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 or 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.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's 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.

KHL HOLDING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KHL HOLDING LIMITED
- 8 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

 

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and 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:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 7, 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 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.

 

Auditor's 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 auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

 

Extent to which the audit is 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.

 

We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.

 

All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

KHL HOLDING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KHL HOLDING LIMITED
- 9 -
Auditor's responsibilities for the audit of the financial statements

Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)

We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and the parent compnay and the sector in which they operate, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks identified include:

• UK GAAP

• Companies Act 2006

• Corporation Tax legislation

• VAT legislation

• Health and Safety Legislation

We gained an understanding of how the group and the parent company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquires through our review of relevant correspondence with regulatory bodies and and legal fees.

We assessed the susceptibility of the group and the parent company's financial statements to material misstatement, including how fraud might occur by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance where remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened risk of fraud in relation to:

 

 

In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:

 

 

Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

KHL HOLDING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KHL HOLDING LIMITED
- 10 -

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Allison Dalton (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
28 March 2024
Statutory Auditor
Bishop's Court
29 Albyn Place
Aberdeen
AB10 1YL
KHL HOLDING LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
2023
2022
Notes
£'000
£'000
Turnover
3
60,020
60,621
Cost of sales
(51,142)
(51,942)
Gross profit
8,878
8,679
Administrative expenses
(6,438)
(7,190)
Other operating income
426
155
Operating profit
4
2,866
1,644
Interest receivable and similar income
8
50
-
0
Interest payable and similar expenses
9
(1,268)
(520)
Profit before taxation
1,648
1,124
Tax on profit
10
(195)
(68)
Profit and comprehensive income for the financial year
26
1,453
1,056
The profit and total comprehensive income for the year is all attributable to the owners of the parent company.

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

KHL HOLDING LIMITED
GROUP BALANCE SHEET
AS AT
30 JUNE 2023
30 June 2023
- 12 -
2023
2022
Notes
£'000
£'000
£'000
£'000
Fixed assets
Tangible assets
11
3,485
5,225
Investment properties
12
230
230
3,715
5,455
Current assets
Stocks
15
41,537
42,418
Debtors
16
5,001
2,897
Cash at bank and in hand
6,667
9,285
53,205
54,600
Creditors: amounts falling due within one year
17
(34,277)
(35,554)
Net current assets
18,928
19,046
Total assets less current liabilities
22,643
24,501
Creditors: amounts falling due after more than one year
18
-
(3,311)
Net assets
22,643
21,190
Capital and reserves
Called up share capital
22
218
218
Share premium account
23
101
101
Revaluation reserve
24
1,178
1,201
Capital redemption reserve
25
133
133
Profit and loss reserves
26
21,013
19,537
Total equity
22,643
21,190
The financial statements were approved by the board of directors and authorised for issue on 27 March 2024 and are signed on its behalf by:
27 March 2024
S Martin
Director
KHL HOLDING LIMITED
COMPANY BALANCE SHEET
AS AT 30 JUNE 2023
30 June 2023
- 13 -
2023
2022
Notes
£'000
£'000
£'000
£'000
Fixed assets
Investments
13
210
210
Current assets
Debtors
16
109
109
Net current assets
109
109
Net assets
319
319
Capital and reserves
Called up share capital
22
218
218
Share premium account
23
101
101
Total equity
319
319

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £0 (2022 - £0 profit).

The financial statements were approved by the board of directors and authorised for issue on 27 March 2024 and are signed on its behalf by:
27 March 2024
S Martin
Director
Company Registration No. SC452100
KHL HOLDING LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 14 -
Share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 1 July 2021
218
101
1,224
133
18,458
20,134
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
-
-
-
1,056
1,056
Release of revaluation reserve
-
-
(23)
-
23
-
Balance at 30 June 2022
218
101
1,201
133
19,537
21,190
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
-
-
-
1,453
1,453
Release of revaluation reserve
-
-
(23)
-
23
-
Balance at 30 June 2023
218
101
1,178
133
21,013
22,643
KHL HOLDING LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 15 -
Share capital
Share premium account
Total
£'000
£'000
£'000
Balance at 1 July 2021
218
101
319
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
-
-
0
Balance at 30 June 2022
218
101
319
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
-
-
0
Balance at 30 June 2023
218
101
319
KHL HOLDING LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 16 -
2023
2022
Notes
£'000
£'000
£'000
£'000
Cash flows from operating activities
Cash absorbed by operations
30
(704)
(4,362)
Interest paid
(1,268)
(520)
Income taxes paid
(394)
-
Net cash outflow from operating activities
(2,366)
(4,882)
Investing activities
Purchase of tangible fixed assets
(329)
(1,947)
Proceeds on disposal of tangible fixed assets
27
73
Interest received
50
-
0
Net cash used in investing activities
(252)
(1,874)
Financing activities
Proceeds of bank loans
-
11,000
Net cash (used in)/generated from financing activities
-
11,000
Net (decrease)/increase in cash and cash equivalents
(2,618)
4,244
Cash and cash equivalents at beginning of year
9,285
5,041
Cash and cash equivalents at end of year
6,667
9,285
KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 17 -
1
Accounting policies
Company information

KHL Holding Limited (“the Company”) is a limited company domiciled and incorporated in Scotland. The registered office is Johnstone House, 52-54 Rose Street, Aberdeen, AB10 1HA. The business address is Kirkwood Business Park, Sauchen, Inverurie, AB51 7LE

 

The Group consists of KHL Holding Limited and its subsidiary undertaking, Kirkwood Homes Limited.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

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 financial statements have been prepared on the historical cost convention, modified to include investment properties at fair value. The principal accounting policies adopted are set out below.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including the parent company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The parent company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

 

 

The parent company has also taken advantage of the exemption available in FRS 102 from the requirement to disclose related party transactions with wholly owned group companies.

1.2
Basis of consolidation

The consolidated financial statements incorporate those of KHL Holding Limited and its subsidiary undertaking, Kirkwood Homes Limited, made up to 30 June 2023. All intra-group transactions and balances are eliminated on consolidation.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 18 -
1.3
Going concern

The group meets its working capital requirements through revolving credit and overdraft facilities. Subsequent to the year-end and following discussions with the group’s lender, the bank has formally approved extension of facilities to September 2024.

 

The directors have prepared forecasts and projections taking into account the current economic conditions across the industry and reasonably possible changes in trading performance that the group should be able to operate within its agreed bank facilities. The directors are confident that bank facilities will be renewed beyond September 2024 and will commence discussions in respect of this in due course.

 

The directors have a reasonable expectation that the parent company and group has adequate resources to continue in operational existence for the foreseeable futures. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

1.4
Turnover

Turnover is measured at the fair value of the consideration received or receivable from residential property development and the sale of timber frames, net of discounts, VAT and other sales related taxes.

 

Turnover on private property sales is recognised at the point of handover and, on timber frame sales, at the point of despatch.

 

The sales proceeds of part-exchange properties are recognised within turnover at the point of handover.

 

The sales proceeds of land are recognised within turnover when missives are concluded and all suspensive

conditions have been settled.

 

Profit is recognised on construction contracts, if the final outcome can be assessed with reasonable certainty, by including profit or loss, turnover and related costs as contract activity progresses. Turnover is calculated as that proportion of total contract value which costs to date bear to total expected costs for that contract.

Dividend income from investments is recognised when the shareholder's right to receive payment has been established.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings
- 2-10% Straight line
Tools and equipment
- 20% Reducing balance
Plant and vehicles
- 25% Reducing balance
Office equipement
- 20% Straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is charged to profit or loss.

Freehold property is included at a deemed cost based on market value at the date of transition to FRS 102 being 1 April 2012.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 19 -
1.6
Investment properties

Investment properties, which are properties held to earn rentals and/or for capital appreciation, are measured using the fair value model and stated at their fair value as the reporting end date. The annual surplus or deficit in fair value is recognised in profit or loss.

1.7
Fixed asset investments

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.8
Impairment of fixed assets

At each reporting end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

1.9
Stocks

Stocks are stated at the lower of cost and net realisable value.

Stocks include raw materials for the construction of homes and work in progress which consists of the cost of development land, part exchange properties, direct materials, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition. Net realisable value is based on estimated selling price less anticipated costs to completion and disposal. Provision is made for all foreseeable losses.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in the profit and loss account. Reversals of impairment losses are also recognised in profit or loss.

 

Development land and land options are included within work in progress at cost. If, or when, it becomes apparent that an option on land relating to a potential development site will not receive the necessary approvals, the option will be charged in full to profit or loss, or written down to its estimated recoverable value.

 

Part exchange properties are held within work in progress and are initially recognised at cost, and subsequently held at the lower of cost and net realisable value. Net realisable value is based on estimated selling price less costs of disposal.

1.10
Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

 

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.

 

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 20 -

The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.

1.11
Cash and cash equivalents

Cash and cash equivalents include deposits held at call with banks and bank credit facilities. Bank credit facilities are shown within borrowings.

1.12
Financial instruments

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. The impairment loss is recognised in the profit and loss account.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. All of the group's financial liabilities are classified as basic.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 21 -
Basic financial liabilities

Basic financial liabilities, including trade and other payables and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

1.14
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.15
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

1.16
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 22 -
1.17
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

1.18
Government grants

Grants are recognise when it is reasonable to expect that the grants will be received and that all related conditions will be met, usually on submission of a valid claim for payments. Revenue grants are credited to the profit and loss account as and when the relevant expenditure is incurred and are presented within other operating income.

2
Judgements and key sources of estimation uncertainty

In the application of the group and parent company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Costs to completion

In order to allocate an appropriate level of costs to plots sold, management must estimate the total expected costs for each given development site. This involves a significant degree of estimation. These estimates are calculated by individuals with the relevant qualifications and experience to enable them to estimate such values accurately and are reviewed against actual costs incurred on a regular basis.

Profit recognition

In order to recognise the appropriate level of revenue and costs on construction contracts, the group must estimate the costs to complete and total expected revenue. Only then can the stage of completion be assessed accurately in order to calculate the amount of revenue and costs to be recognised. This also involves a significant degree of estimation and as above these estimates are made by individuals with the relevant qualifications and experience to enable them to do so accurately. The estimates are also reviewed against actual revenue and costs on a regular basis.

Impairment of land and options

In assessing the carrying value of land as part of an impairment review, the Group is required to estimate selling price and costs to complete and sell and where carrying value is greater than selling price less costs to complete and sell an impairment is recognised. The assessment of selling price and costs to sell is subjective and involves a degree of estimation of selling prices and costs to complete and sell. Such estimates are calculated by individuals with experience of selling prices and build costs and are benchmarked against latest prices and market information.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 23 -
3
Turnover and other revenue

An analysis of the group's turnover is as follows:

2023
2022
£'000
£'000
Turnover analysed by class of business
Revenue from sale of private properties
51,819
55,534
Revenue from sale of timber frames
-
1,550
Revenue from construction contracts
8,201
3,537
60,020
60,621
2023
2022
£'000
£'000
Turnover analysed by geographical market
United Kingdom
60,020
60,621
2023
2022
£'000
£'000
Other significant revenue
Interest income
50
-
Grants received
119
37

Grants received in the prior year included amounts received under the Coronavirus job retention scheme.

4
Operating profit
2023
2022
£'000
£'000
Operating profit for the year is stated after charging/(crediting):
Government grants
(119)
(37)
Depreciation of owned tangible fixed assets
446
514
Profit on disposal of tangible fixed assets
(19)
(22)
Operating lease charges
-
272
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor:
£'000
£'000
For audit services
Audit of the financial statements of the group and company
-
-
Audit of the financial statements of the company's subsidiaries
40
34
For other services
Taxation compliance services
7
6
KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 24 -
6
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Production staff
68
87
-
-
Administrative staff
18
18
-
-
Total
86
105
-
0
-
0

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Wages and salaries
6,327
7,748
-
0
-
0
Social security costs
836
828
-
-
Pension costs
278
281
-
0
-
0
7,441
8,857
-
0
-
0
7
Directors' remuneration
2023
2022
£'000
£'000
Remuneration for qualifying services
2,723
2,877
Group pension contributions to defined contribution schemes
47
44
2,770
2,921
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£'000
£'000
Remuneration for qualifying services
1,324
1,584

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 25 -
8
Interest receivable and similar income
2023
2022
£'000
£'000
Interest income
Other interest income
50
-
9
Interest payable and similar expenses
2023
2022
£'000
£'000
Interest on bank loans
1,268
520
10
Taxation
2023
2022
£'000
£'000
Deferred tax
Origination and reversal of timing differences
218
68
Adjustment in respect of prior periods
(23)
-
0
Total deferred tax
195
68

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£'000
£'000
Profit before taxation
1,648
1,124
Expected tax charge based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
338
214
Tax effect of expenses that are not deductible in determining taxable profit
17
19
Deferred tax adjustments in respect of prior years
(23)
-
0
Fixed asset timing differences
(6)
(177)
Difference in deferred tax rate
6
18
Deferred tax not recognised
(208)
(6)
Capital allowances transferred to related party
71
-
Taxation charge
195
68

The Finance Act 2021 was substantially enacted in May 2021 and increased the corporation tax rate from 19% to 25% with effect from 1 April 2023. The deferred tax balances have been measured using the rates expected to apply in the reporting periods when the timing differences reverse.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 26 -
11
Tangible fixed assets
Group
Freehold land and buildings
Tools and equipment
Plant and vehicles
Office equipement
Total
£'000
£'000
£'000
£'000
£'000
Cost
At 1 July 2022
3,335
3,475
1,811
307
8,928
Additions
-
0
130
126
73
329
Disposals
-
0
-
0
(30)
-
0
(30)
Disposals - to related parties
(27)
(1,470)
(283)
(53)
(1,833)
At 30 June 2023
3,308
2,135
1,624
327
7,394
Depreciation
At 1 July 2022
1,191
1,412
946
154
3,703
Depreciation charged in the year
81
166
155
44
446
Disposals
-
0
-
0
(22)
-
0
(22)
Disposals - to related parties
-
0
(124)
(91)
(3)
(218)
At 30 June 2023
1,272
1,454
988
195
3,909
Carrying amount
At 30 June 2023
2,036
681
636
132
3,485
At 30 June 2022
2,144
2,063
865
153
5,225
The company had no tangible fixed assets at 30 June 2023 or 30 June 2022.

Freehold Land with a carrying value of £222k (2022 - £222k) is not depreciated.

 

Freehold property at cost includes property with a deemed cost on transition to FRS 102 of £2,255k. The historic cost was £1,132,871.

 

During the year, the group disposed of tangible fixed assets with net book value of £1,621k (2022: £nil) to other related parties.

12
Investment property
Group
Company
2023
2023
£'000
£'000
Fair value
At 1 July 2022 and 30 June 2023
230
-

Investment property comprises an office building which is leased. The fair value of the investment property has been arrived at by the directors, taking into consideration formal valuations and market evidence of transaction prices for similar properties. The directors have deemed that the open market value of the property at 30 June 2023 is not materially different to the amount at which it is carried in the accounts.

 

The historic cost of the investment properties is £230k (2022: £230k).

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 27 -
13
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£'000
£'000
£'000
£'000
Investments in subsidiaries
14
-
0
-
0
210
210
Movements in fixed asset investments
Company
Shares in subsidiaries
£'000
Cost
At 1 July 2022 and 30 June 2023
210
Carrying amount
At 30 June 2023
210
At 30 June 2022
210
14
Subsidiaries

Details of the company's subsidiaries at 30 June 2023 are as follows:

Name of undertaking
Country of incorporation
Nature of business
Class of
% Held
or residency
shareholding
Direct
Indirect
Kirkwood Homes Limited
Scotland
Residential property development
Ordinary
100.00
15
Stocks
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Raw materials and consumables
31
726
-
-
Work in progress
41,506
41,692
-
-
41,537
42,418
-
-
KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 28 -
16
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£'000
£'000
£'000
£'000
Trade debtors
1,816
1,180
1
1
Amounts owed by related parties
2,041
-
-
0
-
0
Amounts owed by group undertakings
-
-
108
108
Other debtors
486
1,005
-
0
-
0
Prepayments and accrued income
271
524
-
0
-
0
4,614
2,709
109
109
Deferred tax asset (note 20)
387
188
-
0
-
0
5,001
2,897
109
109

Amounts owed by related parties include an amount of £1.7m (2022: £nil) that attracts interest at 3% per annum. The remainder of this balance is interest free. The entire balance is repayable on demand.

 

Amounts owed by group undertakings are interest free and repayable on demand.

17
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£'000
£'000
£'000
£'000
Bank loans
19
21,000
21,000
-
0
-
0
Trade creditors
6,075
10,458
-
0
-
0
Other taxation and social security
348
429
-
-
Other creditors
4,106
202
-
0
-
0
Accruals and deferred income
2,748
3,465
-
0
-
0
34,277
35,554
-
0
-
0
18
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Other creditors
-
0
3,311
-
0
-
0
KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 29 -
19
Bank loans
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Payable within one year
21,000
21,000
-
0
-
0

The group meets its day to day working capital and longer-term financing requirements through a revolving credit and overdraft facility which its wholly owned trading subsidiary, Kirkwood Homes Limited has agreed with Bank of Scotland.

The revolving credit facility has a maturity date of February 2024, therefore been disclosed as payable within one year.

The bank facilities are secured by a bond and floating charge over the assets of the company and standard securities over certain property, including certain development sites included in work in progress, and interest is payable based on SONIA with an applicable margin.

 

20
Deferred taxation

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Assets
Assets
2023
2022
Group
£'000
£'000
Accelerated capital allowances
(375)
(760)
Tax losses
762
948
387
188
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the year:
£'000
£'000
Asset at 1 July 2022
(188)
-
Charge to profit or loss
195
-
Transfer to related party
(394)
-
Asset at 30 June 2023
(387)
-
KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 30 -
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£'000
£'000
Charge to profit or loss in respect of defined contribution schemes
278
281

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in independently administered funds.

 

Contributions unpaid at the year end are £23,331 (2022 - £26,363).

22
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£'000
£'000
Issued and fully paid
'A' Ordinary shares of £0001 each
49,953
49,953
50
50
'B' Ordinary shares of £0001 each
10,517
10,517
11
11
'C' Ordinary shares of £0001 each
10,908
10,908
11
11
'D' Ordinary shares of £0001 each
145,654
145,654
146
146
217,032
217,032
218
218

There are four classes of ordinary shares which carry full equal voting rights but no right to fixed income or repayment of capital. Distributions are at the discretion of the group.

23
Share premium account
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
At 1 July 2022 and 30 June 2023
101
101
101
101

The share premium account represents amounts received on the issue of shares, over and above the par value of these shares.

24
Revaluation reserve
Group
Company
2023
2022
2023
2022
£000
£000
£000
£000
At 1 July 2022
1,201
1,224
-
0
-
0
Transfer to retained earnings
(23)
(23)
-
-
At 30 June 2023
1,178
1,201
-
0
-

The revaluation reserve account represents the cumulative effect of revaluations of tangible fixed assets where a policy of revaluation has been adopted.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 31 -
25
Capital redemption reserve
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
At 1 July 2021 and 30 June 2022
133
133
-
0
-
0

The capital redemption reserve represents amounts capitalised to maintain fixed capital following repurchase or redemption of shares.

26
Profit and loss reserves
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
At the beginning of the year
19,537
18,458
-
-
Profit for the year
1,453
1,056
-
0
-
0
Transfer from revaluation reserve
23
23
-
-
At the end of the year
21,013
19,537
-
0
-

The profit and loss reserve account represents the accumulated comprehensive income for the period and prior periods, less distributions.

27
Operating lease commitments
Lessee

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Within one year
-
272
-
-
Between two and five years
-
916
-
-
In over five years
-
75
-
-
-
1,263
-
-

During the year, the group's leases were assigned to a related entity.

KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 32 -
28
Capital commitments

Amounts contracted for but not provided in the financial statements:

Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Contracts for the acquisition of land
5,202
10,202
-
-
Acquistion of tangible assets
131
290
-
-
5,333
10,492
-
-
29
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2023
2022
£'000
£'000
Aggregate compensation
2,723
2,921
Transactions with related parties

During the year the group entered into the following transactions with related parties:

Sales
Purchases
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Group
Key management personnel
5
3
-
-
Other related parties
887
544
3,958
222
Disposal of fixed assets
Rent paid (including insurance)
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Group
Other related parties
1,621
-
100
101

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2023
2022
£'000
£'000
Group
Key management personnel
22
12
KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
29
Related party transactions
(Continued)
- 33 -

The following amounts were outstanding at the reporting end date:

Amounts due from related parties
2023
2022
Balance
Balance
£'000
£'000
Group
Other related parties
2,236
195
Other information

No guarantees have been given or received.

 

Other related parties comprise entities in which the company's directors have common control over.

 

Amounts owed by other related parties include an amount of £1.7m (2022: £nil) that attracts interest at 3% per annum. Included within this balance is £50k (2022 - £nil) of accrued interest.

 

All other amounts due from / to related parties are interest free and all amounts are repayable on demand.

30
Cash absorbed by group operations
2023
2022
£'000
£'000
Profit for the year after tax
1,453
1,056
Adjustments for:
Taxation charged
195
68
Finance costs
1,268
520
Investment income
(50)
-
0
Gain on disposal of tangible fixed assets
(19)
(22)
Depreciation of tangible fixed assets
446
514
Movements in working capital:
Decrease/(increase) in stocks
881
(17,077)
Increase in debtors
(290)
(1,306)
(Decrease)/increase in creditors
(4,588)
11,885
Cash absorbed by operations
(704)
(4,362)
31
Analysis of changes in net debt
1 July 2022
Cash flows
30 June 2023
£'000
£'000
£'000
Cash at bank and in hand
9,285
(2,618)
6,667
Borrowings excluding overdrafts
(21,000)
-
(21,000)
(11,715)
(2,618)
(14,333)
KHL HOLDING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 34 -
32
Controlling party

The entity is controlled by I Dunbar, director.

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