Company registration number 13065806 (England and Wales)
GKTC LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
GKTC LIMITED
COMPANY INFORMATION
Directors
Mr J Stork
Mr I Crawford
Mr A Stokes
Company number
13065806
Registered office
Unit 2
Railsfield Mount
Bramley
Leeds
LS13 3AX
Auditor
BHP LLP
New Chartford House
Centurion Way
Cleckheaton
Bradford
West Yorkshire
BD19 3QB
GKTC LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Group statement of comprehensive income
7
Group balance sheet
8
Company balance sheet
9
Group statement of changes in equity
10
Company statement of changes in equity
11
Group statement of cash flows
12
Notes to the financial statements
13 - 34
GKTC LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 1 -

The directors present the strategic report for the year ended 31 July 2023.

Fair review of the business

The Directors view the results for the year to 31st July 23 as satisfactory. A building block year whilst the Group strengthens the foundations for growth and development for future years. Group turnover remains strong with a 4% increase on prior year from £17.7m to £18.4m as the Group continues to focus on providing customers with the highest quality of service whilst managing increased costs. We are grateful to our customers for placing their trust in us and are committed to building long-term relationships with them, whilst developing our security services offering.

The trading profit for the financial year before tax and dividends was £478,386. This is stated before investment amortisation. Overhead costs have seen a significant increase during the year setting solid foundations to achieve the Directors’ growth ambitions for the coming years.

Although operating costs and overheads have risen year-on-year as expected, gross profit margins remain strong at 24%, an increase of 2% on prior year. At the time of finalising these July 2023 accounts we were anticipating turnover growth in the financial year to July 2024 to just over £21m, with this and the product mix shifting we anticipate a group gross margin in excess of 26%, a 2% increase as the group desires to offer more flexible hybrid solutions which enhance our customers security, whilst minimising their outlay, offering in some circumstances a more secure solution for less money.

The Group have again produced a set of financial forecasts for the coming years upto July 26. We have applied a 10% estimated growth in turnover to be achieved through a combination of organic growth of the core business and acquisitions. We continue to expand the GK brand into new geographical regions of the country as well as adding services to offer a complete security package.

The Consolidated Group balance sheet at July 23 as reported remains strong with a net asset position of £987,776, including cash of £694,323. A 5% growth in net assets this year and with the budgeted growth next year we expect this to be well in excess of £2m by July 25

This combined with the increase in turnover and favourable shift in the product mix stands the Group in a strong place to deliver the Directors’ growth plan as estimated in the 5 year forecasting and allowing for the innovative changes in the industry.

 

IN SUMMARY

Turnover continues to grow as per forecast whilst we focus on improving gross profit margins and effective cost management throughout the Group. We have invested heavily in people during the year which sets us up nicely as we work towards achieving our goal of £30m turnover by 2026 and returning a net margin close to 10%. Achieving this will allow us to fulfil our re-investment into the future customer focused plans to deliver cutting edge security solutions to our ever-widening customer range.

I am confident that with our exceptional staff and sound balance sheet we are in a strong position to achieve our goals.

On behalf of the board

Mr J Stork
Director
11 August 2024
GKTC LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 2 -

The directors present their annual report and financial statements for the year ended 31 July 2023.

Principal activities

The principal activity of the group is the provision of security services.

Results and dividends

The results for the year are set out on page 7.

Ordinary dividends were paid amounting to £100,000. The directors do not recommend payment of a further dividend.

Directors

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

Mr J Stork
Mr I Crawford
Mr A Stokes
Auditor

In accordance with the company's articles, a resolution proposing that BHP LLP be reappointed as auditor of the group will be put at a General Meeting.

Statement of directors' responsibilities

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 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 company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

GKTC LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 3 -
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 company 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 company is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
Mr J Stork
Director
11 August 2024
GKTC LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF GKTC LIMITED
- 4 -
Opinion

We have audited the financial statements of GKTC Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 July 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's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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 and 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.

Opinions on other matters prescribed by the Companies Act 2006

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

GKTC LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF GKTC LIMITED
- 5 -
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 their environment obtained in the course of the audit, we have not identified material misstatements in the 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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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 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 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

There are inherent limitations in the audit procedures as described above 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 would become aware of it.

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, 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 deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

We focussed on laws and regulations, relevant to the company, which could give rise to a material misstatement in the financial statements. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management and a review of the operation of controls within the year. There are inherent limitations in the audit procedures as described above 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 would become aware of it.

As part of our audit, we also addressed the risk of management override of internal controls, including a review of the nominal ledger. From this we evaluated whether there was evidence of bias by the directors that could represent a risk of material misstatement due to fraud.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

GKTC LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF GKTC LIMITED
- 6 -

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.

Lesley Kendrew (Senior Statutory Auditor)
For and on behalf of BHP LLP
11 August 2024
Chartered Accountants
Statutory Auditor
New Chartford House
Centurion Way
Cleckheaton
Bradford
West Yorkshire
BD19 3QB
GKTC LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
18,474,229
17,729,353
Cost of sales
(14,095,571)
(13,931,774)
Gross profit
4,378,658
3,797,579
Administrative expenses
(3,958,811)
(2,653,602)
Operating profit
4
419,847
1,143,977
Interest receivable and similar income
8
-
0
114
Interest payable and similar expenses
9
(128,035)
(38,024)
Profit before taxation
291,812
1,106,067
Tax on profit
10
(143,554)
(257,958)
Profit for the financial year
148,258
848,109
Profit for the financial year is all attributable to the owners of the parent company.
GKTC LIMITED
GROUP BALANCE SHEET
AS AT 31 JULY 2023
31 July 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
12
2,142,499
2,097,606
Tangible assets
13
1,761,653
1,540,125
Investments
14
18,900
-
0
3,923,052
3,637,731
Current assets
Stocks
17
568,006
369,565
Debtors
18
4,436,937
3,185,882
Cash at bank and in hand
694,323
221,107
5,699,266
3,776,554
Creditors: amounts falling due within one year
19
(6,928,464)
(4,937,899)
Net current liabilities
(1,229,198)
(1,161,345)
Total assets less current liabilities
2,693,854
2,476,386
Creditors: amounts falling due after more than one year
20
(1,528,767)
(1,463,422)
Provisions for liabilities
Deferred tax liability
23
177,311
73,446
(177,311)
(73,446)
Net assets
987,776
939,518
Capital and reserves
Called up share capital
26
100
100
Share premium account
175,000
175,000
Profit and loss reserves
812,676
764,418
Total equity
987,776
939,518

These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.

The financial statements were approved by the board of directors and authorised for issue on 11 August 2024 and are signed on its behalf by:
11 August 2024
Mr J Stork
Director
Company registration number 13065806 (England and Wales)
GKTC LIMITED
COMPANY BALANCE SHEET
AS AT 31 JULY 2023
31 July 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
14
4,256,500
4,256,500
Current assets
Debtors
18
684,635
264,560
Cash at bank and in hand
60,406
4,520
745,041
269,080
Creditors: amounts falling due within one year
19
(4,121,366)
(3,717,970)
Net current liabilities
(3,376,325)
(3,448,890)
Total assets less current liabilities
880,175
807,610
Creditors: amounts falling due after more than one year
20
(682,500)
(618,600)
Net assets
197,675
189,010
Capital and reserves
Called up share capital
26
100
100
Share premium account
175,000
175,000
Profit and loss reserves
22,575
13,910
Total equity
197,675
189,010

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 £108,665 (2022 - £307,922 profit).

The financial statements were approved by the board of directors and authorised for issue on 11 August 2024 and are signed on its behalf by:
11 August 2024
Mr J Stork
Director
Company registration number 13065806 (England and Wales)
GKTC LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 August 2021
90
175,000
216,319
391,409
Year ended 31 July 2022:
Profit and total comprehensive income
-
-
848,109
848,109
Bonus issue of shares
26
10
-
0
(10)
-
0
Dividends
11
-
-
(300,000)
(300,000)
Balance at 31 July 2022
100
175,000
764,418
939,518
Year ended 31 July 2023:
Profit and total comprehensive income
-
-
148,258
148,258
Dividends
11
-
-
(100,000)
(100,000)
Balance at 31 July 2023
100
175,000
812,676
987,776
GKTC LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 11 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 August 2021
90
175,000
5,998
181,088
Year ended 31 July 2022:
Profit and total comprehensive income for the year
-
-
307,922
307,922
Bonus issue of shares
26
10
-
0
(10)
-
0
Dividends
11
-
-
(300,000)
(300,000)
Balance at 31 July 2022
100
175,000
13,910
189,010
Year ended 31 July 2023:
Profit and total comprehensive income
-
-
108,665
108,665
Dividends
11
-
-
(100,000)
(100,000)
Balance at 31 July 2023
100
175,000
22,575
197,675
GKTC LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
32
381,805
264,085
Interest paid
(128,035)
(38,024)
Income taxes refunded
7,659
1,019
Net cash inflow from operating activities
261,429
227,080
Investing activities
Purchase of business
(258,855)
-
Purchase of intangible assets
(25,000)
(30,435)
Purchase of tangible fixed assets
(200,417)
(235,694)
Proceeds from disposal of tangible fixed assets
-
63,985
Purchase of associates
(18,900)
-
Interest received
-
0
114
Net cash used in investing activities
(503,172)
(202,030)
Financing activities
Proceeds from borrowings
152,500
180,000
Repayment of borrowings
(88,600)
-
Net amount due on other borrowings
1,134,144
279,978
Repayment of bank loans
(229,092)
(86,109)
Payment of finance leases obligations
(153,993)
(138,815)
Dividends paid to equity shareholders
(100,000)
(300,000)
Net cash generated from/(used in) financing activities
714,959
(64,946)
Net increase/(decrease) in cash and cash equivalents
473,216
(39,896)
Cash and cash equivalents at beginning of year
221,107
261,003
Cash and cash equivalents at end of year
694,323
221,107
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
- 13 -
1
Accounting policies
Company information

GKTC Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 2, Railsfield Mount, Bramley, Leeds, LS13 3AX.

 

The group consists of GKTC Limited and all of its subsidiaries.

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 £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments 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 this 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 company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 14 -
1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company GKTC Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 July 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

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

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

 

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

1.4
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 15 -

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.7
Tangible fixed assets

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

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

Freehold land and buildings
Not depreciated
Plant and equipment
15% and 25% reducing balance, 33% straight line
Fixtures and fittings
15% and 33% reducing balance, 33% straight line
Motor vehicles
25% reducing balance

Freehold property is included in the balance sheet at its fair value.

 

Although this accounting policy is in accordance with the applicable accounting standard, FRS 102 "The Financial Reporting Standard," it is a departure from the general requirement of the Companies Act 2006 for all tangible fixed assets to be depreciated.

 

The accounting policy adopted is necessary for the financial statements to give a true and fair view. Depreciation or amortisation is only one of many factors reflected in the annual valuation and the amount of this which might otherwise have been charged cannot be separately identified or quantified

 

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 recognised in the profit and loss account.

1.8
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

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

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 16 -

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.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.9
Impairment of fixed assets

At each reporting period 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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 17 -
1.10
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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 profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.11
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

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.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 18 -
Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, 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. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

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.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

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

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 19 -
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.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 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.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.16
Retirement benefits

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

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 20 -
1.17
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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.

2
Judgements and key sources of estimation uncertainty

In the application of the group’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.

Stock provision

The group supply security equipment. As a result it is necessary to consider the recoverability of the cost of stock and associated provision required. When calculating the provision, management consider the nature and condition of stock.

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 21 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Provision of security services
18,474,229
17,729,353
2023
2022
£
£
Other significant revenue
Interest income
-
114
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
18,474,229
17,729,353
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging:
Depreciation of owned tangible fixed assets
142,560
122,346
Depreciation of tangible fixed assets held under finance leases
59,536
37,995
Loss on disposal of tangible fixed assets
1,263
14,235
Amortisation of intangible assets
311,455
247,632
Operating lease charges
13,454
-
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
4,280
3,900
Audit of the financial statements of the company's subsidiaries
42,480
25,900
46,760
29,800
For other services
Taxation compliance services
6,020
3,500
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 22 -
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
Direct
192
192
-
-
Administrative
43
33
-
-
Directors
3
3
-
-
Total
238
228
-
0
-
0

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
6,944,533
5,745,698
-
0
-
0
Social security costs
528,796
449,831
-
-
Pension costs
158,130
164,262
-
0
-
0
7,631,459
6,359,791
-
0
-
0
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
200,334
237,135
Company pension contributions to defined contribution schemes
27,000
56,500
227,334
293,635
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
108,732
97,951
Company pension contributions to defined contribution schemes
6,000
5,500
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 23 -
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
-
0
114
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
38,538
19,755
Interest on convertible loan notes
39,813
12,829
Interest on finance leases and hire purchase contracts
12,618
5,257
Other interest
37,066
183
Total finance costs
128,035
38,024
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 24 -
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
110,448
290,525
Adjustments in respect of prior periods
(66,697)
(46)
Total current tax
43,751
290,479
Deferred tax
Origination and reversal of timing differences
99,803
(32,521)
Total tax charge
143,554
257,958

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
£
£
Profit before taxation
291,812
1,106,067
Expected tax charge based on the standard rate of corporation tax in the UK of 21.01% (2022: 19.00%)
61,310
210,153
Tax effect of expenses that are not deductible in determining taxable profit
4,760
2,036
Change in unrecognised deferred tax assets
60,262
(16,002)
Other permanent differences
73,092
61,817
Under/(over) provided in prior years
(66,697)
(46)
Change in deferred tax rates
10,827
-
0
Taxation charge
143,554
257,958
11
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
100,000
300,000
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 25 -
12
Intangible fixed assets
Group
Goodwill
£
Cost
At 1 August 2022
2,445,882
Additions - separately acquired
25,000
Additions - business combinations
294,114
Additions - on acquisition
37,234
At 31 July 2023
2,802,230
Amortisation and impairment
At 1 August 2022
348,276
Amortisation charged for the year
311,455
At 31 July 2023
659,731
Carrying amount
At 31 July 2023
2,142,499
At 31 July 2022
2,097,606
The company had no intangible fixed assets at 31 July 2023 or 31 July 2022.
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 26 -
13
Tangible fixed assets
Group
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 August 2022
946,226
33,160
83,308
569,157
1,631,851
Additions
20,396
21,563
81,971
287,499
411,429
Business combinations
-
0
551
9,200
3,707
13,458
Disposals
-
0
(34,122)
(4,405)
-
0
(38,527)
At 31 July 2023
966,622
21,152
170,074
860,363
2,018,211
Depreciation and impairment
At 1 August 2022
-
0
10,023
(23,085)
104,788
91,726
Depreciation charged in the year
-
0
7,263
42,025
152,808
202,096
Eliminated in respect of disposals
-
0
(32,859)
(4,405)
-
0
(37,264)
At 31 July 2023
-
0
(15,573)
14,535
257,596
256,558
Carrying amount
At 31 July 2023
966,622
36,725
155,539
602,767
1,761,653
At 31 July 2022
946,226
23,137
106,393
464,369
1,540,125
The company had no tangible fixed assets at 31 July 2023 or 31 July 2022.

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2023
2022
2023
2022
£
£
£
£
Motor vehicles
152,572
162,441
-
0
-
0
14
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
15
-
0
-
0
4,256,500
4,256,500
Investments in associates
16
18,900
-
0
-
0
-
0
18,900
-
0
4,256,500
4,256,500
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
14
Fixed asset investments
(Continued)
- 27 -
Movements in fixed asset investments
Group
Shares in associates
£
Cost or valuation
At 1 August 2022
-
Additions
18,900
At 31 July 2023
18,900
Carrying amount
At 31 July 2023
18,900
At 31 July 2022
-
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 August 2022 and 31 July 2023
4,256,500
Carrying amount
At 31 July 2023
4,256,500
At 31 July 2022
4,256,500
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 28 -
15
Subsidiaries

Details of the company's subsidiaries at 31 July 2023 are as follows:

Name of undertaking
Nature of business
Class of
% Held
shares held
Direct
Indirect
Gough & Kelly Group Limited
Holding company
Ordinary
100.00
-
Gough and Kelly Limited
Security Services
Ordinary
-
100.00
Gough & Kelly Security Limited
Security Services
Ordinary
-
100.00
Gough & Kelly Services Limited
Security Services
Ordinary
-
100.00
Initiatec Limited
Dormant
Ordinary
-
100.00
M P Alarms (Fire & Security) Limited
Dormant
Ordinary
-
100.00
High Security Group Limited
Security Services
Ordinary
-
100.00

The registered office is Unit 2, Railsfield Mount, Bramley, Leeds, LS13 3AX for all companies listed above with the exception of High Security Group Limited.

 

The registered office for High Security Group Limited is C/O Clough Corporate Solutions Limited Vicarage Chambers, 9 Park Square East, Leeds, LS1 SLH.

 

16
Associates

Details of associates at 31 July 2023 are as follows:

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Indirect
Gas Detection International Limited
Unit 2 Railsfield Mount, Bramley, Leeds, England, LS13 3AX
Installation of industrial machinery and equipment
Ordinary
-
20
17
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Work in progress
409,916
209,792
-
-
Finished goods and goods for resale
158,090
159,773
-
0
-
0
568,006
369,565
-
-
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 29 -
18
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
3,579,989
2,719,329
-
0
-
0
Amounts owed by group undertakings
-
-
653,543
264,560
Other debtors
744,752
316,989
31,092
-
0
Prepayments and accrued income
106,695
148,125
-
0
-
0
4,431,436
3,184,443
684,635
264,560
Deferred tax asset (note 23)
5,501
1,439
-
0
-
0
4,436,937
3,185,882
684,635
264,560
19
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans
21
1,875,630
893,230
-
0
-
0
Obligations under finance leases
22
148,465
87,057
-
0
-
0
Trade creditors
1,062,223
681,397
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
3,980,498
3,121,311
Corporation tax payable
648,740
597,330
-
0
-
0
Other taxation and social security
908,457
578,389
-
-
Deferred income
24
1,287,033
916,030
-
0
-
0
Other creditors
584,562
812,284
135,068
592,259
Accruals and deferred income
413,354
372,182
5,800
4,400
6,928,464
4,937,899
4,121,366
3,717,970

Obligations under finance lease agreements are secured against the assets to which they relate.

20
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
21
679,122
756,470
-
0
-
0
Obligations under finance leases
22
167,145
85,583
-
0
-
0
Other borrowings
21
682,500
618,600
682,500
618,600
Deferred income
24
-
0
2,769
-
0
-
0
1,528,767
1,463,422
682,500
618,600

Obligations under finance lease agreements are secured against the assets to which they relate.

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 30 -
21
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
2,554,752
1,649,700
-
0
-
0
Other loans
682,500
618,600
682,500
618,600
3,237,252
2,268,300
682,500
618,600
Payable within one year
1,875,630
893,230
-
0
-
0
Payable after one year
1,361,622
1,375,070
682,500
618,600

Bank loans are secured by a floating charge over all the undertakings property, assets and rights both future and present including any uncalled capital.

22
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
148,465
87,057
-
0
-
0
In two to five years
167,145
85,583
-
0
-
0
315,610
172,640
-
-

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

23
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
Accelerated capital allowances
177,982
73,446
(557)
1,439
Short timing differences
(671)
-
6,058
-
177,311
73,446
5,501
1,439
The company has no deferred tax assets or liabilities.
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
23
Deferred taxation
(Continued)
- 31 -
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 August 2022
72,007
-
Charge to profit or loss
99,803
-
Liability at 31 July 2023
171,810
-

The amount of the net reversal of deferred tax expected to occur next year is £40,000, relating to the reversal of existing timing differences on tangible fixed assets.

24
Deferred income
Group
Company
2023
2022
2023
2022
£
£
£
£
Other deferred income
1,287,033
918,799
-
-

Deferred income is included in the financial statements as follows:

Current liabilities
1,287,033
916,030
-
0
-
0
Non-current liabilities
-
0
2,769
-
0
-
0
1,287,033
918,799
-
-
25
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
158,130
164,262

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 an independently administered fund.

26
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 1p each
10,000
10,000
100
100
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 32 -
27
Acquisition of a business

On 25 August 2022 the group acquired 100% of the issued share capital of High Security Group Limited.

Book Value
Adjustments
Fair Value
Net assets acquired
£
£
£
Intangible assets
37,234
-
37,234
Property, plant and equipment
13,457
-
13,457
Other debtors and creditors
(85,950)
-
(85,950)
Total identifiable net assets
(35,259)
-
(35,259)
Goodwill
294,114
Total consideration
258,855
The consideration was satisfied by:
£
Cash
258,855
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£
Turnover
729,004
Profit after tax
8,739
28
Financial commitments, guarantees and contingent liabilities

There is an unlimited guarantee given by Gough & Kelly Group Limited, Gough and Kelly Limited, Gough & Kelly Security Limited and Gough & Kelly Services Limited dated 16 September 2021 over the Group's borrowings.

29
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
£
£
£
£
Within one year
44,348
52,189
-
-
Between two and five years
22,975
65,830
-
-
67,323
118,019
-
-
GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 33 -
30
Related party transactions
Transactions with related parties

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

Accountancy services supplied
2023
2022
£
£
Group
Other related parties
35,163
39,184

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2023
2022
£
£
Group
Other related parties
682,500
618,600

The following amounts were outstanding at the reporting end date:

Amounts due from related parties
2023
2022
£
£
Group
Other related parties
2,420
-
31
Directors' transactions

Dividends totalling £37,000 (2022 - £131,194) were paid in the year in respect of shares held by the company's directors.

Amounts due to the directors by the group at the year end was £15,061 (2022 - £61,737).

 

Amounts due from the directors to the group at the year end was £28,672 (2022 - £nil). No interest has been charged on the balance.

GKTC LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 34 -
32
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
148,258
848,109
Adjustments for:
Taxation charged
143,554
257,958
Finance costs
128,035
38,024
Investment income
-
0
(114)
Loss on disposal of tangible fixed assets
1,263
14,235
Amortisation and impairment of intangible assets
311,455
247,632
Depreciation and impairment of tangible fixed assets
202,096
160,341
Movements in working capital:
Increase in stocks
(198,441)
(34,321)
Increase in debtors
(1,246,993)
(317,439)
Increase/(decrease) in creditors
524,344
(960,239)
Increase in deferred income
368,234
9,899
Cash generated from operations
381,805
264,085
33
Analysis of changes in net debt - group
1 August 2022
Cash flows
New finance leases
31 July 2023
£
£
£
£
Cash at bank and in hand
221,107
473,216
-
694,323
Borrowings excluding overdrafts
(2,268,300)
(968,952)
-
(3,237,252)
Obligations under finance leases
(172,640)
153,993
(296,963)
(315,610)
(2,219,833)
(341,743)
(296,963)
(2,858,539)
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