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REGISTERED NUMBER: 08385193 (England and Wales)













Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 31 December 2023

for

Kelston Sparkes (Group) Limited

Kelston Sparkes (Group) Limited (Registered number: 08385193)






Contents of the Financial Statements
for the Year Ended 31 December 2023




Page

Company Information 1

Strategic Report 2

Report of the Directors 3

Statement of Directors' Responsibilities 4

Report of the Independent Auditors 5

Statement of Comprehensive Income 8

Balance Sheet 9

Statement of Changes in Equity 10

Cash Flow Statement 11

Notes to the Cash Flow Statement 12

Notes to the Financial Statements 13


Kelston Sparkes (Group) Limited

Company Information
for the Year Ended 31 December 2023







DIRECTORS: A K Sparkes
R Stark
P G Oddy
K D Stark
D Swann



SECRETARY: R Stark



REGISTERED OFFICE: Bromley
Stanton Drew
Bristol
Somerset
BS39 4DE



REGISTERED NUMBER: 08385193 (England and Wales)



SENIOR STATUTORY AUDITOR: Michael Cook BSc FCA



AUDITORS: A C Mole LLP
Chartered Accountants
& Statutory Auditor
Stafford House
Blackbrook Park Avenue
Taunton
Somerset
TA1 2PX

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Strategic Report
for the Year Ended 31 December 2023

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

REVIEW OF BUSINESS
The results for the year and financial position of the company are shown in the annexed financial statements.

The company undertakes comprehensive business planning to define long term strategic objectives and goals. Annual budgets and operational plans are prepared utilising financial Key Performance Indicators ("KPI's"). Business performance, measured by KPI's (including monitoring of actual results against budget targets) and bank balances is reported to the directors on a monthly basis.

The turnover for the company for the year was £17,714,620 (2022 - £17,355,869) and the gross profit margin achieved was 18.2% (2022 - 13.5%).

The re-balancing of the fleet which started last year and continued into this year has been reflected by the performance of the company. Utilisation has increased and as a result both turnover and gross profit margin has increased to reflect this. The fleet held within the company is now much more suited to the needs moving forwards and it is hoped that the increase in turnover and gross profit margin will continue to increase in the future.

The Directors anticipate that the company will continue to trade profitably for the forthcoming year.

PRINCIPAL RISKS AND UNCERTAINTIES
As with any business, Kelston Sparkes (Group) Limited faces a number of risks and uncertainties in the course of its day to day operations. By effectively identifying and managing these risks their effects can be mitigated.

The principal risk to the company is a deterioration in demand from the UK Construction Industry. Any deterioration in economic conditions may significantly decrease demand which could have a material effect on revenues, margins, profits and debt levels.

The Directors also constantly monitor the state of receivables, as this remains a key factor in protecting the company's cash flow in the short and medium term.

FUTURE DEVELOPMENTS
The directors will continue to monitor costs closely in order to maintain profitability, whilst not compromising on quality and service. The directors will also continue to diversify into new products and markets when appropriate.

ON BEHALF OF THE BOARD:





R Stark - Director


2 September 2024

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Report of the Directors
for the Year Ended 31 December 2023

The directors present their report with the financial statements of the company for the year ended 31 December 2023.

PRINCIPAL ACTIVITY
The principal activity of the company in the year under review was that of renting and leasing of construction and civil engineering machinery and equipment.

DIVIDENDS
Interim dividends per share class were paid during the year as follows:
'A' Ordinary Shares - £160,000
'B' Ordinary Shares - £63,500
'C' Ordinary Shares - £40,000
'D' Ordinary Shares - £80,000

The total distribution of dividends for the year ended 31 December 2023 will be £343,500 (2022 - £280,000).

DIRECTORS
The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report.

A K Sparkes
R Stark
P G Oddy
K D Stark
D Swann

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The directors are responsible for monitoring financial risk. Appropriate policies have been developed and implemented to identify, evaluate and manage the key risks.

a) Price risk - The company is exposed to price risk as a result of its operations. Due to the economic climate the company has to quote competitive prices to win work. The directors are aware of the risks in selling and providing services at low margins and as the trading environment improves the directors will consider improving margins.

b) Credit risk - The company has implemented policies that require appropriate credit checks on customers before contracts are entered into. The credit given to customers is subject to limits which are determined and reassessed by the directors.

c) Liquidity risk - The company is reliant upon the continued support of its bankers. The company has arranged a debt factoring facility for its day to day cash flow requirements. Budgets and cash flow projections are prepared and regularly monitored to ensure that the company operates within these facilities.

d) Interest rate cash flow risk - The debt factoring facility has been arranged at a competitive rate of interest. The company also has a bank loan which is repayable over 15 years. The interest charged on the loan is at a competitive rate of interest and is linked to LIBOR.

e) Economic risk - The company's performance is directly impacted by the economic environment. In order to manage this risk the company strives to deliver competitively priced services. The company is actively concentrating on improving efficiency and reducing costs.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS
The auditors, A C Mole LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:





R Stark - Director


2 September 2024

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Statement of Directors' Responsibilities
for the Year Ended 31 December 2023

The directors are responsible for preparing the Strategic report, the directors' 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, including Financial Reporting Standard 102 Reduced Disclosure Framework (FRS 102).

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-select suitable accounting policies and then apply them consistently;
-make judgements and accounting estimates that are reasonable and prudent;
-state whether applicable United Kingdom Accounting Standards, including FRS 102, have been followed,
subject to any material departures disclosed and explained in the financial statements;
-notify the company's shareholders in writing about the use of disclosure exemptions, if any, of FRS 102 used in
the preparation of financial statements; and
-prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.

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

Report of the Independent Auditors to the Members of
Kelston Sparkes (Group) Limited

Opinion
We have audited the financial statements of Kelston Sparkes (Group) Limited (the 'company') for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:
-give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its loss for the year then ended;
-have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 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 directors are responsible for the other information. The other information comprises the information in the Strategic Report, the Report of the Directors and the Statement of Directors' Responsibilities, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether 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 the audit:
- the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
- the financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.

Report of the Independent Auditors to the Members of
Kelston Sparkes (Group) Limited


Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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 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 company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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:

Identifying and assessing potential risks of material misstatement due to irregularities.

We considered the following when identifying and assessing risks of material misstatement due to irregularities, including fraud and non-compliance with laws and regulations;

- the legal and regulatory framework within which the business operates
- the nature of the industry in which the business operates
- the control environment and internal controls established to mitigate such risks
- the results of our enquiries of management about their own identification and assessment of risks of irregularities
- discussions within the audit engagement team and with the group auditors about where fraud might occur.

Laws and regulations which are considered to be significant to the entity include those relating to the construction industry, the requirements of the financial reporting framework FRS 102, the Companies Act 2006 and UK tax legislation. In addition we considered other laws and regulations which may not directly impact the financial statements but may impact on the operations of the company, such as the changes arising following Brexit.

As a result of these procedures we concluded that the greatest potential for material misstatements due to fraud arose in respect of sales being overstated. In common with all audits under International Auditing Standards we also concluded that a risk in relation to the potential for management override of controls existed.

Audit responses to the risks identified

We undertook audit procedures to respond to the risks identified, and designed our audit testing to respond to these risks. The additional procedures we undertook included the following:

- Gaining an understanding of the company's procedures for ensuring compliance with laws and regulations.
- Controls testing over sales together with additional substantive procedures to agree to third party certificates.
- Testing the appropriateness of journal entries and other adjustments
- Considering whether accounting estimates were indicative of potential bias
- Considering any transactions which arose outside the normal course of business
- Making enquiries of management
- Corroborating our enquiries through the review of Board Minutes and review of correspondence.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members. We remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Report of the Independent Auditors to the Members of
Kelston Sparkes (Group) Limited


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 a Report of the Auditors 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.




Michael Cook BSc FCA (Senior Statutory Auditor)
For and on behalf of A C Mole LLP
Chartered Accountants
& Statutory Auditor
Stafford House
Blackbrook Park Avenue
Taunton
Somerset
TA1 2PX

4 September 2024

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Statement of Comprehensive Income
for the Year Ended 31 December 2023

2023 2022
Notes £    £   

TURNOVER 4 17,714,620 17,355,869

Cost of sales 14,494,945 15,003,863
GROSS PROFIT 3,219,675 2,352,006

Administrative expenses 2,146,071 1,866,117
OPERATING PROFIT 6 1,073,604 485,889

Interest receivable and similar income 355,760 188,267
1,429,364 674,156

Interest payable and similar expenses 7 989,003 625,391
PROFIT BEFORE TAXATION 440,361 48,765

Tax on profit 8 715,477 116,230
LOSS FOR THE FINANCIAL YEAR (275,116 ) (67,465 )

OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE LOSS FOR THE
YEAR

(275,116

)

(67,465

)

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Balance Sheet
31 December 2023

2023 2022
Notes £    £    £    £   
FIXED ASSETS
Intangible assets 10 598,038 655,914
Tangible assets 11 21,846,037 23,490,807
22,444,075 24,146,721

CURRENT ASSETS
Stocks 12 298,336 282,046
Debtors: amounts falling due within one year 13 4,517,292 4,555,023
Debtors: amounts falling due after more than
one year

13

5,171,811

5,051,781
Cash at bank and in hand 2,172,217 6,106
12,159,656 9,894,956
CREDITORS
Amounts falling due within one year 14 7,618,358 8,558,760
NET CURRENT ASSETS 4,541,298 1,336,196
TOTAL ASSETS LESS CURRENT
LIABILITIES

26,985,373

25,482,917

CREDITORS
Amounts falling due after more than one
year

15

(16,792,109

)

(15,386,514

)

PROVISIONS FOR LIABILITIES 20 (3,345,883 ) (2,630,406 )
NET ASSETS 6,847,381 7,465,997

CAPITAL AND RESERVES
Called up share capital 21 3,952,250 3,952,250
Retained earnings 22 2,895,131 3,513,747
SHAREHOLDERS' FUNDS 6,847,381 7,465,997

The financial statements were approved by the Board of Directors and authorised for issue on 2 September 2024 and were signed on its behalf by:




A K Sparkes - Director



R Stark - Director


Kelston Sparkes (Group) Limited (Registered number: 08385193)

Statement of Changes in Equity
for the Year Ended 31 December 2023

Called up
share Retained Total
capital earnings equity
£    £    £   
Balance at 1 January 2022 3,952,250 3,861,212 7,813,462

Changes in equity
Dividends - (280,000 ) (280,000 )
Total comprehensive loss - (67,465 ) (67,465 )
Balance at 31 December 2022 3,952,250 3,513,747 7,465,997

Changes in equity
Dividends - (343,500 ) (343,500 )
Total comprehensive loss - (275,116 ) (275,116 )
Balance at 31 December 2023 3,952,250 2,895,131 6,847,381

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Cash Flow Statement
for the Year Ended 31 December 2023

2023 2022
Notes £    £   
Cash flows from operating activities
Cash generated from operations 1 4,753,339 4,511,681
Interest paid - (4,418 )
Net cash from operating activities 4,753,339 4,507,263

Cash flows from investing activities
Purchase of tangible fixed assets (488,453 ) (107,162 )
Sale of tangible fixed assets 1,898,001 1,881,603
Interest received 355,760 188,267
Net cash from investing activities 1,765,308 1,962,708

Cash flows from financing activities
Loan repayments in year (118,040 ) (132,385 )
(Increase) in intergroup debtors (120,030 ) (70,628 )
Increase in intergroup creditors 4,106,634 946,713
Hire purchase repayments in year (5,986,981 ) (5,290,327 )
Amount introduced by directors (507,366 ) (732,461 )
Movement in debt factoring account (394,250 ) (287,774 )
Interest paid (508,428 ) (196,579 )
Interest on hire purchase payments (480,575 ) (424,394 )
Equity dividends paid (343,500 ) (280,000 )
Net cash from financing activities (4,352,536 ) (6,467,835 )

Increase in cash and cash equivalents 2,166,111 2,136
Cash and cash equivalents at beginning
of year

2

6,106

3,970

Cash and cash equivalents at end of year 2 2,172,217 6,106

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Cash Flow Statement
for the Year Ended 31 December 2023

1. RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS
2023 2022
£    £   
Profit before taxation 440,361 48,765
Depreciation charges 3,844,753 3,977,420
Profit on disposal of fixed assets (237,574 ) (226,314 )
Finance costs 989,003 625,391
Finance income (355,760 ) (188,267 )
4,680,783 4,236,995
Increase in stocks (16,290 ) (28,647 )
Decrease in trade and other debtors 37,731 667,364
Increase/(decrease) in trade and other creditors 51,115 (364,031 )
Cash generated from operations 4,753,339 4,511,681

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2023
31.12.23 1.1.23
£    £   
Cash and cash equivalents 2,172,217 6,106
Year ended 31 December 2022
31.12.22 1.1.22
£    £   
Cash and cash equivalents 6,106 3,970


3. ANALYSIS OF CHANGES IN NET DEBT

Other
non-cash
At 1.1.23 Cash flow changes At 31.12.23
£    £    £    £   
Net cash
Cash at bank
and in hand 6,106 2,166,111 2,172,217
6,106 2,166,111 2,172,217
Debt
Finance leases (15,295,500 ) 5,986,981 (3,314,081 ) (12,622,600 )
Debts falling due
within 1 year (521,412 ) 512,290 (115,552 ) (124,674 )
Debts falling due
after 1 year (1,566,224 ) - 115,552 (1,450,672 )
(17,383,136 ) 6,499,271 (3,314,081 ) (14,197,946 )
Total (17,377,030 ) 8,665,382 (3,314,081 ) (12,025,729 )

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements
for the Year Ended 31 December 2023

1. STATUTORY INFORMATION

Kelston Sparkes (Group) Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).


The company is engaged in renting of construction and civil engineering machinery and equipment.

2. STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with UK accounting standards, including Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS 102") and the Companies Act 2006.

3. ACCOUNTING POLICIES

General information
These financial statements are prepared on a going concern basis, under the historical cost convention, as modified by certain financial assets and liabilities measured at fair value through profit or loss.

Going concern
The company meets its day-to-day working capital requirements through the Kelston Sparkes Holdings Limited group bank facilities and borrowings which are negotiated at group level. The Kelston Sparkes Holdings Limited group forecasts and projections, taking account of possible changes in trading conditions, show that the group should be able to operate within the level of its current bank facilities and borrowings.

The Directors therefore continue to adopt the going concern basis in preparing the financial statements.

Turnover
Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue is recognised when the rental of the machinery and equipment has been provided to the customer.

Goodwill
Goodwill, being purchased goodwill acquired in 2014, is carried at cost less accumulated amortisation and impairment losses, if any. Amortisation is calculated on a straight-line basis over the useful economic life of 20 years.

Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Major Plant (Excluding Crushers)- 11% on straight line for first 5 years and then 12.5% on reducing balance
thereafter
Major Plant (Crushers) - 16.66% on straight line for first 5 years and then 12.5% on reducing
balance thereafter
Dumper Trucks - 11% on straight line for first 5 years and then 12.5% on reducing balance
thereafter
Sundry Plant (Excluding GPS)- 12.5% on reducing balance
Sundry Plant (GPS Equipment)- 33.3% on straight line
Motor Vehicles- 25% on reducing balance


Fixed assets are initially recorded at cost.

Stocks
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Stocks comprise consumables.


Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

3. ACCOUNTING POLICIES - continued
Taxation
The taxation expense for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly into equity respectively.

i) Current tax
Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

ii) Deferred tax
Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax is recognised on all timing differences at the balance sheet date, except for certain exceptions. Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the timing difference.

Hire purchase and leasing commitments
Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period using the sum of digits method. The capital element of the future payments is treated as a liability.

Pension costs and other post-retirement benefits
The company operates a defined contribution pension scheme for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions to a separate entity. Once the contributions have been paid the company has no further payment obligations. The contributions are recognised as an expense when they fall due. Amounts not paid are shown in accruals in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

Cash and cash equivalents
Cash and cash equivalents includes cash in hand, that is readily convertible to cash with insignificant risk of change in value and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial instruments
i) Financial assets
Basic financial assets, including trade and other receivables and cash and bank balances are initially recognised at transaction price and subsequently measured at amortised cost.

At the balance sheet date financial assets are assessed for evidence of impairment. If an asset is impaired the impairment loss is recognised in the income statement.

ii) Financial liabilities
Basic financial liabilities, including trade and other payables and bank loans, are initially recognised at transaction price and subsequently measured at amortised cost.

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

3. ACCOUNTING POLICIES - continued

Critical accounting judgements and estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Having given due consideration to the estimates and assumptions that form part of the carrying amount of assets and liabilities within the financial statements, the directors are of the opinion that the only material judgements or estimates relate to the annual depreciation charge and deferred taxation.

(i) Useful economic lives of tangible assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimates of useful economic lives and residual values of the assets. The useful economic lives and residual values are reviewed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 11 for the carrying amount of the property plant and equipment and note 3 for the useful economic lives for each class of assets. Depreciation for the year was £3,786,877 (2022: £3,919,544).

(ii) Deferred Taxation

Management estimation is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. Further details are contained in note 8.

4. TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2023 2022
£    £   
Renting of equipment 17,714,620 17,355,869
17,714,620 17,355,869

5. EMPLOYEES AND DIRECTORS

20232022
££

Wages and salaries4,813,5864,741,567
Social security504,413544,124
Pension costs253,864257,537
5,571,8635,543,228

The average monthly number of employees during the year was as follows:
20232022

Administration88
Site personnel109118
117126

Key management compensation
Key management includes the directors and members of senior management. The compensation paid to key management for their services totalled £225,258 (2022 - £259,470).

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

2023 2022
£    £   
Directors' remuneration 94,555 93,646
Directors' pension contributions to money purchase schemes 151,654 156,321

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 3 3

6. OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2023 2022
£    £   
Depreciation - owned assets 909,030 791,082
Depreciation - assets on hire purchase contracts 2,877,847 3,128,462
Profit on disposal of fixed assets (237,574 ) (226,314 )
Goodwill amortisation 57,876 57,876
Auditors' remuneration of company 5,000 5,000
Auditors' remuneration taxation compliance services 1,500 1,500
Auditors' remuneration non-audit services 5,971 6,585
Hire of plant and machinery 655,530 423,564

7. INTEREST PAYABLE AND SIMILAR EXPENSES
2023 2022
£    £   
Bank loan interest 105,671 55,515
Inter-company loan interest 360,746 90,567
HMRC interest 5 1,066
Directors loan interest 42,006 53,849
Hire purchase 480,575 424,394
989,003 625,391

8. TAXATION

Analysis of the tax charge
The tax charge on the profit for the year was as follows:
2023 2022
£    £   
Deferred tax 715,477 116,230
Tax on profit 715,477 116,230

UK corporation tax has been charged at 23.50% (2022 - 19%).

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

8. TAXATION - continued

Reconciliation of total tax charge included in profit and loss
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2023 2022
£    £   
Profit before tax 440,361 48,765
Profit multiplied by the standard rate of corporation tax in the UK of
23.500% (2022 - 19%)

103,485

9,265

Effects of:
Expenses not deductible for tax purposes 59,540 34,311
Re-measurement of deferred tax 17,840 214,280

Group relief 509,523 32,090
Loss carried forward - Change in rate 25,089 (190,385 )
ACA understated in previous year - 16,669
Total tax charge 715,477 116,230

9. DIVIDENDS
2023 2022
£    £   
'A' Ordinary Shares shares of £1 each
Interim 160,000 160,000
'B' Ordinary Shares shares of £1 each
Interim 63,500 -
'C' Ordinary Shares shares of £1 each
Interim 40,000 40,000
'D' Ordinary Shares shares of £1 each
Interim 80,000 80,000
343,500 280,000

10. INTANGIBLE FIXED ASSETS
Goodwill
£   
COST
At 1 January 2023
and 31 December 2023 1,157,500
AMORTISATION
At 1 January 2023 501,586
Amortisation for year 57,876
At 31 December 2023 559,462
NET BOOK VALUE
At 31 December 2023 598,038
At 31 December 2022 655,914

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

11. TANGIBLE FIXED ASSETS
Major Dumper Sundry Motor
plant trucks plant vehicles Totals
£    £    £    £    £   
COST
At 1 January 2023 23,953,605 14,670,078 1,015,818 165,393 39,804,894
Additions 2,382,456 1,172,480 165,442 82,156 3,802,534
Disposals (2,202,595 ) (1,905,952 ) - (25,783 ) (4,134,330 )
At 31 December 2023 24,133,466 13,936,606 1,181,260 221,766 39,473,098
DEPRECIATION
At 1 January 2023 9,335,637 6,254,575 592,844 131,031 16,314,087
Charge for year 2,358,587 1,284,443 132,595 11,252 3,786,877
Eliminated on disposal (1,319,915 ) (1,130,088 ) - (23,900 ) (2,473,903 )
At 31 December 2023 10,374,309 6,408,930 725,439 118,383 17,627,061
NET BOOK VALUE
At 31 December 2023 13,759,157 7,527,676 455,821 103,383 21,846,037
At 31 December 2022 14,617,968 8,415,503 422,974 34,362 23,490,807

Fixed assets, included in the above, which are held under hire purchase contracts are as follows:
Major Dumper Sundry Motor
plant trucks plant vehicles Totals
£    £    £    £    £   
COST
At 1 January 2023 16,359,735 10,685,899 335,271 - 27,380,905
Additions 2,006,456 1,172,480 52,989 82,156 3,314,081
Disposals (585,500 ) (1,717,952 ) - - (2,303,452 )
Transfer to ownership (3,270,912 ) - (62,000 ) - (3,332,912 )
At 31 December 2023 14,509,779 10,140,427 326,260 82,156 25,058,622
DEPRECIATION
At 1 January 2023 4,585,115 3,773,476 110,976 - 8,469,567
Charge for year 1,785,057 1,004,853 85,175 2,762 2,877,847
Eliminated on disposal (265,756 ) (1,003,457 ) - - (1,269,213 )
Transfer to ownership (1,205,012 ) (460,631 ) (32,378 ) - (1,698,021 )
At 31 December 2023 4,899,404 3,314,241 163,773 2,762 8,380,180
NET BOOK VALUE
At 31 December 2023 9,610,375 6,826,186 162,487 79,394 16,678,442
At 31 December 2022 11,774,620 6,912,423 224,295 - 18,911,338

12. STOCKS
2023 2022
£    £   
Stocks 298,336 282,046

13. DEBTORS
2023 2022
£    £   
Amounts falling due within one year:
Trade debtors 4,353,744 4,412,982
Sundry debtors and prepayments 163,548 142,041
4,517,292 4,555,023

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

13. DEBTORS - continued
2023 2022
£    £   
Amounts falling due after more than one year:
Amounts owed by group undertakings 5,171,811 5,051,781

Aggregate amounts 9,689,103 9,606,804

A formal agreement is in place to charge interest at a commercial market rate of 2.25% above Bank of England base rate on inter-company loan balances. Inter-company loans are not repayable on demand and therefore are treated as falling due in more than one year.

Included within cash is £2,165,158 (2022 - £NIL) subject to invoice discounting arrangements with HSBC bank Commercial Finance Ltd. This is secured by an all asset debenture.

14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2023 2022
£    £   
Bank loans and overdrafts (see note 16) 124,674 521,412
Hire purchase contracts (see note 17) 5,016,204 5,637,481
Trade creditors 1,186,463 1,220,978
Social security and other taxes 129,550 112,830
VAT 222,749 105,370
Sundry creditors and accruals 911,137 915,283
Interest free loan < 1 year 27,581 45,406
7,618,358 8,558,760

15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2023 2022
£    £   
Bank loans (see note 16) 1,450,672 1,566,224
Hire purchase contracts (see note 17) 7,606,396 9,658,019
Amounts owed to group undertakings 7,639,417 3,532,783
Interest free loan - 1-2 years 1,083 27,581
Directors' loan accounts 94,541 601,907
16,792,109 15,386,514

A formal agreement is in place to charge interest at a commercial market rate of 2.25% above Bank of England base rate on inter-company loan balances. Inter-company loans are not repayable on demand and therefore are treated as falling due in more than one year.

16. LOANS

An analysis of the maturity of loans is given below:

2023 2022
£    £   
Amounts falling due within one year or on demand:
Bank loans 124,674 127,162
Debt factoring account - 394,250
124,674 521,412

Amounts falling due between one and two years:
Bank loans - 1-2 years 133,886 134,201

Amounts falling due between two and five years:
Bank loans - 2-5 years 463,995 448,846

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

16. LOANS - continued
2023 2022
£    £   
Amounts falling due in more than five years:
Repayable by instalments
Bank loans greater then 5 years repayable
by instalments

852,791

983,177

The short term overdraft carries interest at the rate of 2.79% above base rate.

The bank loan was drawn down in April 2018. The loan carries interest at the rate of 1.9% above HSBC Bank plc's base rate and is repayable in 180 monthly instalments. The loan is repayable by April 2033.

17. LEASING AGREEMENTS

Minimum lease payments under hire purchase fall due as follows:

2023 2022
£    £   
Gross obligations repayable:
Within one year 5,432,173 5,967,544
Between one and five years 8,059,265 9,985,577
13,491,438 15,953,121

Finance charges repayable:
Within one year 415,969 330,063
Between one and five years 452,869 327,558
868,838 657,621

Net obligations repayable:
Within one year 5,016,204 5,637,481
Between one and five years 7,606,396 9,658,019
12,622,600 15,295,500

18. SECURED DEBTS

The following secured debts are included within creditors:

2023 2022
£    £   
Bank loans 1,575,346 2,087,636
Hire purchase contracts 12,622,600 15,295,500
14,197,946 17,383,136

The above bank borrowings are secured by HSBC Bank plc with a fixed floating charge over all the assets and undertakings.

An unlimited composite company guarantee to Kelston Sparkes Holdings Limited, Kelston Sparkes Contractors Limited and KSG Training Services Limited is also in place with HSBC Bank plc to secure all liabilities with the Bank that any of these companies may have.

Included within loans is £NIL (2022 - £394,250) subject to invoice discounting arrangements with HSBC Bank Commercial Finance Limited. This is secured by an all asset debenture.

Hire purchase debts are secured over the asset to which they relate.

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

19. FINANCIAL INSTRUMENTS

The company has the following financial instruments:
Notes 2023 2022
£ £
Financial assets that are debt instruments measured at amortised cost
Trade debtors 13 4,353,744 4,412,982
Amounts owed by group undertakings 13 5,171,811 5,051,401
9,525,555 9,464,383

Financial liabilities measured at amortised cost
Bank loans and overdrafts 14, 15 1,575,346 2,087,636
Trade creditors 14 1,186,463 1,220,978
Amounts owed to group undertakings 15 7,639,417 3,532,783
Hire purchase contracts 14, 15 12,622,600 15,295,500
23,023,826 22,136,897

20. PROVISIONS FOR LIABILITIES
2023 2022
£    £   
Deferred tax
Accelerated capital allowances 4,735,058 4,437,728
Tax losses carried forward (1,389,175 ) (1,807,322 )
3,345,883 2,630,406

Deferred
tax
£   
Balance at 1 January 2023 2,630,406
Provided during year 715,477
Balance at 31 December 2023 3,345,883

21. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number: Class: Nominal 2023 2022
value: £    £   
100 'A' Ordinary Shares £1 100 100
50 'B' Ordinary Shares £1 50 50
50 'C' Ordinary Shares £1 50 50
50 'D' Ordinary Shares £1 50 50
250 250

Allotted and issued:
Number: Class: Nominal 2023 2022
value: £    £   
3,952,000 Ordinary shares £1 3,952,000 3,952,000

There are no restrictions on the distribution of dividends and the repayment of capital on all classes of ordinary shares.

Kelston Sparkes (Group) Limited (Registered number: 08385193)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2023

22. RESERVES
Retained
earnings
£   

At 1 January 2023 3,513,747
Deficit for the year (275,116 )
Dividends (343,500 )
At 31 December 2023 2,895,131

23. PARENT COMPANY

Kelston Sparkes Holdings Limited is the company's parent company.

Accounts for this company may be obtained from the Registrar of Companies, Cardiff.

24. CONTINGENT LIABILITIES

The company is party to a cross company guarantee to HSBC Bank plc for Kelston Sparkes Contractors Limited, Kelston Sparkes Holdings Limited, KSG Training Services Limited and KSG Vehicle Solutions Limited which covers all assets held by these companies. These companies are controlled by the directors of Kelston Sparkes (Group) Limited.

At 31 December 2023 there were contingent liabilities in respect of loan and overdraft facilities granted to other companies in the group of £NIL (2022: £NIL).

25. RELATED PARTY DISCLOSURES

During the year, total dividends of £343,500 (2022 - £280,000) were paid to the directors.

Entities with control, joint control or significant influence over the entity
2023 2022
£    £   
Sales 5,173,843 3,636,307
Purchases 360,133 276,043
Loan interest (payable)/receivable (5,491 ) 97,700
Amount due from related party 5,170,469 5,051,780
Amount due to related party (7,646,694 ) (3,539,443 )

Key management personnel of the entity or its parent (in aggregate)
2023 2022
£    £   
Loan interest (payable) (42,006 ) (53,849 )
Amount due to related party 758,851 1,372,709

Other related parties
2023 2022
£    £   
Paid on behalf of related party - (133,465 )
Loan repayment to related party - 7,500
Amount due from related party 117,654 117,654
Amount due to related party (46,966 ) (43,480 )

26. ULTIMATE CONTROLLING PARTY

The ultimate controlling party for the Company is Mr A K Sparkes, by virtue of his 55% holding of the share capital in Kelston Sparkes Holdings Limited.