Company registration number 03989743 (England and Wales)
KREMPEL UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
KREMPEL UK LIMITED
COMPANY INFORMATION
Director
Mr P J Taberner
Company number
03989743
Registered office
Queens Mill
Queen Street
Longridge
Preston
PR3 3BS
Auditor
MHA
Richard House
9 Winckley Square
Preston
PR1 3HP
KREMPEL UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
4
Director's responsibilities statement
3
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 25
KREMPEL UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The director presents the strategic report for the year ended 31 December 2023.
REVIEW OF BUSINESS
The company recorded a sales turnover of £23,448,738 for the year to 31st December 2023, representing a reduction in turnover of 8.47% when compared to the previous year. Despite this reduction in turnover, the business achieved a Profit Before Taxation (PBT) of £710,664 for the same period.
The company had started 2023 in a strong position, exceeding targets set for turnover and PBT. However, in the second half of the year, a downturn in sales combined with the strengthening of the pound against the euro had a negative effect which impacted our ability to achieve budget.
Whilst material prices began to stabilise with some prices decreasing during 2023, the company still experienced supply chain issues due to the continuing war in Ukraine, restrictions of specific raw materials and high energy costs.
The company continued to experience difficulties in recruiting the staff needed to fill numerous positions and this occasionally impacted on productivity. We have taken steps to attract new team members, and despite some good successes, there remains a lack of available resources in the market. This will clearly continue into 2024 and may continue to be a challenge going forward.
There were no significant bad debts in 2023 and no post balance sheet events affecting the company.
PRINCIPAL RISKS AND UNCERTAINTIES
The management feels the company is not unduly at risk from currency exchange rates. However, any major movement of Sterling against the Euro will affect revenues whether this be negative or positive.
Credit risk is minimised by insuring our trading debtors. There is a small excess to be paid against the policy and a very small number of current customers are not covered by the policy.
The company expects that there will be some supply chain disruption continuing in 2024 as the war and unrest in the Middle East already impacting on global shipping costs and routes. We have already started to implement a higher stock holding of certain raw materials to mitigate such risks.
GOING CONCERN
The company has planned for a slight increase in turnover in 2024 against 2023, to reflect the current market conditions. However, we remain focused on cost reduction activities to improve our PBT in 2024, against 2023.
We started 2024 with a strong order book and numerous annual supply contracts have already been secured with the global OEMs we supply.
By monitoring and controlling costs we envisage the ability for the company to meet the necessary running costs in 2024.
The introduction of SAP has now significantly improved our ability to understand our costs and make the necessary adjustments to streamline our processes and drive efficiency and profitability.
The company's liquidity will continue to be funded by ongoing operations.
The Director is satisfied that the company is an ongoing concern.
FINANCIAL INSTRUMENTS
The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities, which are conducted predominantly in Sterling and Euros.
FINANCIAL COMMITMENTS
The company is committed to pay out a bonus in 2024 to employees, this is based on the performance of the company in 2023. The company intends to settle the outstanding PAYE in line with government policy.
KREMPEL UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
FUTURE DEVELOPMENTS
The company has continued with our capital investment strategy and now having the benefit of a new state of the art Regenerative Thermal Oxidiser (RTO), we will now only operate one RTO for the majority of 2024 to provide significant cost savings in energy and a superior environmental solution.
In 2023,we approved investment of a large Solar PV system that will provide further energy reductions for the future. This system was fully operational in mid 2024 and will provide around 20% of our annual electrical consumption going forward.
We have started to focus our product development activities across specific strategic business fields and intend to develop and introduce further new products during 2024.
KEY PERFORMANCE INDICATORS
Target Actual
PBT 3.0% 3.0%
Material 54.7% 44.6%
Direct Labour 11.5% 13.8%
Cost of Sales + Personnel 85.7% 83.7%
Personnel Ratio 22.6% 26.7%
Mr P J Taberner
Director
4 September 2024
KREMPEL UK LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
KREMPEL UK LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The director presents his annual report and financial statements for the year ended 31 December 2023.
Principal activities
The company’s principal activities during the year were the manufacture of Electrical Insulation, Thermal Insulation, Composite Materials and Technical Textile Materials for a range of high technology markets including high voltage power generation, low voltage rotating machines, wind power generation, medical, automotive and aerospace.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr P J Taberner
Research and development
During, the course of the year the company continued to invest in the research and development of new and existing products for both the UK and export markets.
Future developments
Information regarding future developments of the company can be found in the strategic report.
Auditor
Following the merger of MHA Moore & Smalley with MHA, the company's independent auditor has now become MHA. A resolution to reappoint MHA as independent auditor will be proposed at the next Annual General Meeting.
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 company’s auditor 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 company’s auditor is aware of that information.
On behalf of the board
Mr P J Taberner
Director
4 September 2024
KREMPEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KREMPEL UK LIMITED
- 5 -
Opinion
We have audited the financial statements of Krempel UK Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 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 director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
KREMPEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KREMPEL UK LIMITED (CONTINUED)
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations;
Enquires with management about any known or suspected instances of fraud;
Examination of journal entries and other adjustments to test for appropriateness and identify any instances of management override of controls, including with regard to performance related remuneration;
Auditing the risk of fraud in revenue, including through the testing of income cut off at the year end and through sales transaction testing to provide comfort that revenue stated in the financial statements has occurred;
Challenging assumptions and judgements made by management in their accounting estimates; and
Review of legal and professional expenditure to identify any evidence of ongoing litigation or enquiries.
KREMPEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KREMPEL UK LIMITED (CONTINUED)
- 7 -
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities 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.
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.
Joe Sullivan FCA
Senior Statutory Auditor
For and on behalf of MHA, Statutory Auditor
Preston, United Kingdom
5 September 2024
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)
KREMPEL UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
23,448,738
25,617,918
Cost of sales
(17,336,885)
(19,853,617)
Gross profit
6,111,853
5,764,301
Administrative expenses
(5,435,257)
(4,712,756)
Other operating income
29,721
36,693
Intercompany loan waived
4
528,602
Operating profit
5
706,317
1,616,840
Interest receivable and similar income
9
4,347
109
Interest payable and similar expenses
10
(131)
Amounts written off investments
11
-
(20,000)
Profit before taxation
710,664
1,596,818
Tax on profit
12
(175,596)
(241,723)
Profit for the financial year
535,068
1,355,095
The Statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
KREMPEL UK LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
14
917,538
390,299
Tangible assets
15
7,334,129
7,231,511
8,251,667
7,621,810
Current assets
Stocks
16
4,253,847
4,350,974
Debtors
17
5,710,595
5,682,959
Cash at bank and in hand
942,410
872,881
10,906,852
10,906,814
Creditors: amounts falling due within one year
18
(1,439,258)
(1,524,064)
Net current assets
9,467,594
9,382,750
Total assets less current liabilities
17,719,261
17,004,560
Provisions for liabilities
Deferred tax liability
19
1,196,689
1,017,056
(1,196,689)
(1,017,056)
Net assets
16,522,572
15,987,504
Capital and reserves
Called up share capital
21
4,667,001
4,667,001
Profit and loss reserves
11,855,571
11,320,503
Total equity
16,522,572
15,987,504
The financial statements were approved and signed by the director and authorised for issue on 4 September 2024
Mr P J Taberner
Director
Company registration number 03989743 (England and Wales)
KREMPEL UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
4,667,001
9,965,408
14,632,409
Year ended 31 December 2022:
Profit and total comprehensive income
-
1,355,095
1,355,095
Balance at 31 December 2022
4,667,001
11,320,503
15,987,504
Year ended 31 December 2023:
Profit and total comprehensive income
-
535,068
535,068
Balance at 31 December 2023
4,667,001
11,855,571
16,522,572
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Krempel UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Queens Mill, Queen Street, Longridge, Preston, PR3 3BS.
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. The principal accounting policies adopted are set out below.
This 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:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
Section 26 ‘Share based Payment’: Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of August Krempel Söhne GmbH & Co. KG. These consolidated financial statements are filed at Companies House, together with the entity financial statements of the immediate parent company, Krempel (UK) Holdings Limited.
1.2
Going concern
The financial statements demonstrate that the company has maintained the demand for its products and profitability amidst the impact of various supply chain issues and an inflationary environment affecting both the sector and wider economy. true
The company has a strong pipeline of work at the date of signing the financial statements, with actual profits before taxation ahead of budget at 31 July 2024. The company generated significant operating cash flows of £1,660,000 during the year under report and has increased cash at bank balances in consecutive years, owing to strong working capital management. The company is part of a strong, global group, from which it could seek financial and operational support, should it ever be required.
Therefore, at the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.3
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.
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.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses 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 20 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.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation 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:
Software
Straight line over the estimated remaining life of five years
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
Straight line over the estimated remaining life of between 5-40 years
Plant and equipment
Straight line over the estimated remaining life of between 1-25 years
Fixtures and fittings
Straight line over the estimated remaining life of 20 years
Motor vehicles
Straight line over the estimated remaining life of three years
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 credited or charged to profit or loss.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Assets in course of construction represent the cost incurred on tangible fixed assets under construction which are not ready and available for use at the balance sheet date. These assets are not depreciated. Depreciation only starts once the assets are finished and have been transferred to the appropriate tangible fixed assets category.
1.7
Impairment of fixed assets
At each reporting period end date, the company 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.
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.
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.
1.8
Stocks
Stocks are stated at the lower of standard cost and estimated selling price less costs to complete and sell. Standard 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.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.10
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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
All of the company's financial assets are basic financial instruments.
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 company 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 company after deducting all of its liabilities.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies, 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
All of the company's financial liabilities are basic financial instruments.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company 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 company.
1.12
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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when the company has 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.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
1.17
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Depreciation and useful economic life of fixed assets
Depreciation is provided so as to write down the assets to their residual values over their estimated useful lives. The selection of these residual values and estimated lives requires the exercise of management judgement and is reviewed at each balance sheet date.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
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.
WIP and finished goods valuation
Within the financial statements, an estimate is made for the labour and overhead rates applied to work in progress and finished goods. Management calculate the labour and overhead rates using expected costs and normal working activity of the company. As such, these rates applied, and subsequently the valuation of work in progress and finished goods, is an estimation of uncertainty.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
8,439,605
9,564,642
Europe
11,739,934
11,051,082
Asia
2,471,007
2,608,544
Americas
488,225
347,025
Australasia
309,967
157,082
Eastern Block
-
1,889,543
23,448,738
25,617,918
2023
2022
£
£
Other revenue
Interest income
4,347
109
Grants received
29,721
36,693
The company operates in three principal areas of activity, that of (1) manufacturers of materials for the electrical, consumer product and reinforced plastics and (2) manufacturers of electrical insulation/engineering materials, precision moulding and machined parts industries, (3) manufacturers of electrical and thermal insulants.
4
Exceptional item
2023
2022
£
£
Income
Intercompany loan waived
-
(528,602)
In December 2022 the subsidiary company, Krempel Limited, waived it's right to receive amounts owed to it. Given the quantum of this balance it has been separately disclosed to aid readers' understanding of the financial statements.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
5
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
755
(59,465)
Government grants
(29,721)
(36,693)
Depreciation of owned tangible fixed assets
691,599
675,799
Impairment of owned tangible fixed assets
100,000
Loss on disposal of tangible fixed assets
11,390
-
Amortisation of intangible assets
161,919
-
Operating lease charges
77,236
70,013
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
20,900
20,219
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
148
153
Sales and Marketing
9
7
Administration
13
13
Total
170
173
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
5,650,952
5,315,263
Social security costs
559,948
525,539
Pension costs
217,243
205,123
6,428,143
6,045,925
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
8
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
214,362
83,176
Company pension contributions to defined contribution schemes
13,504
6,495
227,866
89,671
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
214,362
83,176
Company pension contributions to defined contribution schemes
13,504
6,495
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
109
Other interest income
4,347
Total income
4,347
109
10
Interest payable and similar expenses
2023
2022
£
£
Interest payable to group undertakings
115
Other interest
16
131
11
Amounts written off investments
2023
2022
£
£
Other gains and losses
-
(20,000)
This loss is an impairment charged recognised during the prior year in respect of its dormant subsidiary, Krempel Limited, which is currently being struck off.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
12
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
67,523
Adjustments in respect of prior periods
(4,037)
2,460
Total current tax
(4,037)
69,983
Deferred tax
Origination and reversal of timing differences
179,633
171,740
Total tax charge
175,596
241,723
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
710,664
1,596,818
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
167,148
303,395
Tax effect of expenses that are not deductible in determining taxable profit
796
20,280
Tax effect of income not taxable in determining taxable profit
(8,009)
(107,407)
Adjustments in respect of prior years
(4,037)
2,460
Effect of change in corporation tax rate
10,631
41,218
Permanent capital allowances in excess of depreciation
(2,944)
(18,223)
Depreciation on assets not qualifying for tax allowances
12,011
Taxation charge for the year
175,596
241,723
The headline rate of corporation tax increased to 25% on 1 April 2023.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
13
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£
£
In respect of:
Property, plant and equipment
15
100,000
Investments in subsidiaries
-
20,000
Recognised in:
Administrative expenses
100,000
-
Amounts written off investments
-
20,000
The impairment losses in respect of fixed asset investments are recognised in other gains and losses in the profit and loss account.
14
Intangible fixed assets
Goodwill
Software
Total
£
£
£
Cost
At 1 January 2023
3,620,925
390,299
4,011,224
Additions
689,158
689,158
At 31 December 2023
3,620,925
1,079,457
4,700,382
Amortisation and impairment
At 1 January 2023
3,620,925
3,620,925
Amortisation charged for the year
161,919
161,919
At 31 December 2023
3,620,925
161,919
3,782,844
Carrying amount
At 31 December 2023
917,538
917,538
At 31 December 2022
390,299
390,299
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
15
Tangible fixed assets
Freehold land and buildings
Assets under construction
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2023
2,802,316
15,942,540
1,090,217
22,149
19,857,222
Additions
685,455
197,475
22,677
905,607
Disposals
(572,271)
(203,443)
(775,714)
Transfers
418,421
7,017
(358,718)
(66,720)
At 31 December 2023
3,220,737
692,472
15,209,026
842,731
22,149
19,987,115
Depreciation and impairment
At 1 January 2023
711,505
11,027,333
866,827
20,046
12,625,711
Depreciation charged in the year
58,966
584,274
46,256
2,103
691,599
Impairment losses
100,000
100,000
Eliminated in respect of disposals
(560,881)
(203,443)
(764,324)
Transfers
385,946
(335,314)
(50,632)
At 31 December 2023
1,156,417
10,815,412
659,008
22,149
12,652,986
Carrying amount
At 31 December 2023
2,064,320
692,472
4,393,614
183,723
7,334,129
At 31 December 2022
2,090,811
4,915,207
223,390
2,103
7,231,511
More information on impairment movements in the year is given in note 13 to the financial statements.
Land and Buildings includes £125,000 (2022: £125,000) in respect of land which has not been depreciated
16
Stocks
2023
2022
£
£
Raw materials and consumables
2,900,670
2,956,903
Work in progress
825,045
1,246,488
Finished goods and goods for resale
528,132
147,583
4,253,847
4,350,974
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
17
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,324,222
2,842,552
Corporation tax recoverable
100,000
77,477
Amounts owed by group undertakings
3,171,213
2,678,349
Other debtors
42,029
36,693
Prepayments and accrued income
73,131
47,888
5,710,595
5,682,959
18
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
916,871
843,031
Amounts owed to group undertakings
79,925
137,905
Taxation and social security
155,735
152,108
Accruals and deferred income
286,727
391,020
1,439,258
1,524,064
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
1,255,565
1,017,056
Tax losses
(58,876)
-
1,196,689
1,017,056
2023
Movements in the year:
£
Liability at 1 January 2023
1,017,056
Charge to profit or loss
179,633
Liability at 31 December 2023
1,196,689
It is not possible to accurately predict the movement of deferred taxation provisions in the upcoming twelve months as the company's capital expenditure programme has not been finalised.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
217,243
205,123
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Share Capital of £1 each
4,667,001
4,667,001
4,667,001
4,667,001
22
Financial commitments, guarantees and contingent liabilities
A cross-company guarantee in favour of the group's UK banking partner, Natwest Bank Plc, is in place between the company, Krempel Industries Limited and Krempel (UK) Holdings Limited. At the balance sheet date, relevant group borrowings covered by this guarantee totalled £437,827.
23
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
90,713
75,641
Between two and five years
125,679
95,177
216,392
170,818
24
Capital commitments
Contracted, but not provided for within the financial statements: £472,246 (2022: £73,377).
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
25
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Aggregate salary and social security (including pension and benefits)
715,646
624,696
26
Ultimate controlling party
The immediate parent undertaking is Krempel (UK) Holdings Limited, a company registered in England and Wales.
The ultimate parent company during the year under review was August Krempel Soehne GmbH (Papierfabrikstrasse 4, 71665 Vaihingen, Enz, Germany), a company registered in Germany.
There is no ultimate controlling party.
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