Kingswood Mobility Group has over 27 years experience within the mobility sector. We have grown to become a market leader and strive to keep those with mobility issues independent and mobile in their own homes. We have developed our products to ensure home independence is sustained. Our customer service is at the forefront of our business with an emphasis on our core values; Integrity, Trust and Ethics.
As leaders within the mobility sector, we have six different brands, each providing innovative mobility solutions that really make a difference to people’s lives. The quality of our products and the high level of customer service provided, make our brands a market leader. These are as follows; Willowbrook, The Recliner Factory, Adjustable Bed Factory, Assistive Bathing, Easy2Bathe and AquaLift.
During the financial year a new 50,000 sq ft production facility was secured enabling us to relocate our previous furniture manufacturing sites to a new single state of the art factory within Grazebrook Industrial Park. The facility was developed and fitted out to our bespoke requirements and the move took place successfully across July and August 2023.
During the financial year a simplification of our company structure was undertaken to streamline processes and improve business efficiency. This involved the transfer of trade and assets of Erinstar Limited, Willowbrook Limited and Kingswood Corporation Limited to Ashley Anderson Limited allowing Ashley Anderson to focus on the manufacture and delivery of mobility furniture. A Transfer of Undertakings (Protection of Employment) or TUPE transfer took place to transfer the employment of all Erinstar Limited employees to Ashley Anderson Limited.
The simplification of the structure also involved the transfer of ownership of Ashley Anderson Limited and Assistive Bathing Limited to Kingswood Mobility Group Limited from Kingswood Corporation Limited. All transactions were effective as at 1 March 2023 the beginning of the financial year.
Results and performance
The Directors of Kingswood Mobility Group Limited are pleased to report that the Group has enjoyed another very successful year. The results of the Group, as set out on page 12, show a operating profit of £1.63m (2023: £2.65m). The business measures the KPI of EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation), which is reported as £7.16m (2023: £4.92m) for the year.
Business review
The mobility market is highly competitive, particularly in the retail and direct to consumer sector. The Group continues to differentiate itself by focusing on bespoke solutions, additional product features and benefits and outstanding customer service as demonstrated by continued high Trustpilot scores across all divisions.
The Group continues to invest in new product development, marketing and supply chain optimisation to ensure it remains competitive in the market.
The Group has benefited greatly from its investors LDC (Lloyds Development Capital) and with their support, the Group have made significant improvements in increasing factory capacity and strengthening the resilience of IT systems and infrastructure.
Strategy
The Group has implemented a strategic plan with customer service at the core. Key initiatives include Sales growth, Marketing, Operational Improvements, Strategic Procurement and Employee engagement.
The Group's success is dependent on the proper selection of pricing policies and ongoing management and sales team. In this market, the Group has continuously strived to consolidate its position by specialising in different categories of products of bespoke specifications so as to engage with the customers at various levels of affordability. The Group continues to consolidate its position and concentrate its efforts on achieving maximum growth in its existing market segments. Customer service remains a top priority.
The process of risk acceptance and risk management is addressed through a framework of policies, procedures and internal controls. All policies are subject to Board approval and ongoing review by management. Compliance with regulations, legal and product standards is a high priority.
The Group has developed a framework for identifying risks by regular management meetings.
Financial Risks
The key financial risks faced by the business are as follows:
Interest rate risk
The Group is partially funded by loans on which interest is charged at a variable rate based on Bank of England (BoE) base rate. The Directors consider the exposure to fluctuations in the market interest rates as currently not significant given the Group’s financial arrangements.
Funding and liquidity
At 28 February 2024, the Group had cash balances of £12.09m (2023: £7.91m). Cash balances are held across all Group companies in current accounts to fund working capital with surplus funds held within a short term notice deposit account. The Directors consider the Group’s risk to be minimal given the funding facilities.
Supply chain risk
The Group’s supply chain is predominantly UK-based with minimal reliance on single suppliers. Covid-19 and challenges with the Suez Canal caused some supply chain challenges and freight cost volatility with shipments inbound from our single Far East supplier with steps put in place to minimise the risk. The Group maintains strong relationships with all key suppliers which is fundamental to ensure this risk is somewhat mitigated.
Inflationary risk
Inflation has emerged as a significant economic issue and is set to rise further with higher fuel costs coupled with increases in National Minimum Wage. Management will continue to monitor and assess the impact of these matters and take appropriate steps to ensure compliance with obligations whilst managing the impact on the cost base of the company.
The Directors monitor the progress of the Group by reference to the following KPI's:
2024 2023
Group turnover £41.6m £36.0m
Operating Profit £1.63m £2.65m
EBITDA - Note 1 £7.16m £4.92m
EBITDA margin 18.0% 14.0%
Note 1 - EBITDA reconciliation:
2024 2023
(Loss)/Profit before tax (£1.88m) £0.09m
Depreciation and Amortisation £4.61m £1.61m
Interest £3.65m £3.08m
Exceptional items - Note 2 £0.78m £0.14m
EBITDA £7.16m £4.92m
Note 2 - This includes the amounts disclosed within note 4 of the financial statements as defined by FRS 102 section 5 (extraordinary items) as well as internally defined exceptional costs incurred on behalf of the Group during the period.
The Directors of Kingswood Mobility Group Limited recognise that clear interaction with key stakeholders is critical to the long-term success of the business in accordance with their duties detailed in section 172 of the Companies Act 2006, which are summarised as follows:
The likely consequences of any decision in the long term
The interest of the company’s employees;
The need to foster the company’s relationships with suppliers, customers and others
The impact of the company’s operations on the community and environment;
The desirability of the company maintaining a reputation for high standards of business conduct; and
The need to act fairly between member of the company.
The statements below set out how the Directors have had regard to each of these duties.
Long term decisions
The Board of Directors has a comprehensive understanding of the direct sales mobility market and the product range the Group offers. In line with the Group’s ethos and strategy the Group strives to continue to deliver high quality mobility solutions to enable our customers to remain independent and mobile.
All decisions of significance are discussed at the regular senior management team meetings as well as at the monthly Board meeting to consider any potential impact on the key stakeholders of the Group. This helps to ensure that informed and appropriate decisions are made at all times.
Employees
The Group values its employees highly and retention is a key focus of the business. This is evidenced by the engagement offered to employees via the monthly engagement meetings, support available through HR and third-party wellbeing providers and the long service a number of our employees have held at the company. In particular our senior management team has a combined 77 years of experience working within the Group.
The Group is a recognised employer in the local area and is focused on sustaining a talented workforce within a thriving British furniture industry. We collaborate with The Furniture Makers’ Charity for support on Education, Excellence and Welfare.
Customers
As a direct sales business serving typically the older demographic, the Directors recognise their responsibility to the Group’s customers. All key strategic and operational decisions include consideration of the impact on customer experience, product quality and value for money. To monitor this, management regularly review customer service feedback and scores via platforms such as TrustPilot. We work closely with Trading Standards and the Furniture and Home Improvement Ombudsman (‘FHIO’) to ensure our customers are treated fairly.
Suppliers
The Group works closely with a number of suppliers of manufacturing components, service partners and third-party manufacturers. The Group agrees terms and conditions for its business transactions with suppliers before orders are placed and payments are made in accordance with these obligations. Suppliers used by the Group are regularly reviewed by the senior management team to discuss performance, quality and price.
Environment & Community
The Directors continue to develop clear targets for carbon reduction, including the monthly reporting of emissions output in Board meetings. The initiatives undertaken during the year can be seen within the Streamlined Energy and Carbon Reporting (SECR) disclosures made within the Directors’ Report.
The Directors consider the impact of the Group’s operations on the community. The Group fosters relationships within the local community and supports initiatives, such as donation of furniture to local community re-use enterprises and annual donations to local foodbanks and other local charities.
Reputation for high standards of business conduct
The Group maintains a reputation for high standards of business conduct through its core business ethos; Integrity, Trust and Ethics. The Directors ensure that these values and all stakeholders are considered as part of all key decision-making processes undertaken.
Need to act fairly between stakeholders of the company
The Directors understand the need to act fairly between stakeholders of the company. Each Director attends the monthly Board meetings, reviews monthly KPI updates and considers the strategic goals of the Group and its stakeholders.
This report was approved and authorised by the Board and signed on its behalf by:
The results for the year are set out on page 12.
No ordinary dividends were paid (2023: £nil). The directors do not recommend payment of a further dividend (2023: £nil).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The Group did not make any political donations in the current or prior year.
The Group, where possible, looks to donate to local charities and has an ongoing commitment to supporting charities in the local community.
The Group operates a treasury function which is responsible for managing the liquidity, interest and credit risks associated with the Group’s activities.
The Group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the Group has sufficient liquid resources to meet the operating needs of the business.
The Group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The Group uses interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
There have been no material adjusting or non-adjusting events since the financial year end.
The Group has continued to invest in people and infrastructure during the year and will continue to in future periods. We are currently in the process of implementing a new Customer Relationship Management (‘CRM’) system.
The auditor, Morgan Berkeley Limited, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
This SECR Disclosure represents our United Kingdom Carbon footprint across Scope 1, 2 and 3 emissions. It also includes an appropriate intensity metric, our total electricity, gas and transport energy usage, and a summary of the energy efficiency actions taken in the relevant financial year.
We have followed the 2019 HM Government Environmental Reporting Guidelines, used the GHG Reporting Protocol and have used the 2022 UK Government’s Conversion Factors for Company Reporting. The financial year ended 2024 is the first period whereby the data has been practical to obtain.
The chosen metric best reflects our business performance based on the nature of our business.
Solar panels were fitted to the exterior of our new factory premises and were made active in July 2024
Electric vehicle charging points have been fitted at the new factory premises
From January 2024 all energy contracts were renewed using fully renewable energy
From October 2023 all mattress wastage is being recycled rather than being sent to landfill
Following the Group structure simplification a more streamlined delivery process was implemented reducing our delivery fleet’s carbon footprint.
Management has considered the business landscape along with wider economic conditions and has determined the business to be a going concern.
The Board has undertaken a review of post year-end performance and forecasts which shows anticipated operating profits and positive cash reserves.
The Group is expected to continue generating positive cash flows for the foreseeable future. The Group had a strong cash balance at the end of the financial year, a healthy balance sheet and has generated healthy operating profits. The Directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.
We have audited the financial statements of Kingswood Mobility Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 28 February 2024 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are 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. We also considered laws and regulations that have a direct impact on the preparation of the financial statements, such as the Companies Act 2006.
We evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance.
Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:
Discussing with the directors and management their policies and procedures regarding compliance with laws and regulations;
Communicating identified laws and regulations throughout our engagement team and remaining alert to any indications of non-compliance throughout our audit; and
Considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud.
Our audit procedures in relation to fraud included but were not limited to:
Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
Gaining an understanding of the internal controls established to mitigate risks related to fraud;
Discussing amongst the engagement team the risks of fraud; and
Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Kingswood Mobility Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Browne Jacobson LLP (Cs), Mowbray House, Castle Meadow Road, Nottingham, NG2 1BJ. The principal place of business is Mercury House, Kingswood Road, Hampton Lovett, Droitwich Spa, WR9 0QH.
The Group consists of Kingswood Mobility Group Limited and all of its subsidiaries.
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.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
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: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated Group financial statements consist of the financial statements of the parent company Kingswood Mobility Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 28 February 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts receivable for rental income and management charges net of VAT and is recognised when entitled to the income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
Equity investments are measured at cost.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include trade and other receivables 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, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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 non-current 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
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.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The directors have made judgements when determining the useful economic life of goodwill. Amortisation is recognised so as to write off the value of the assets over the life that economic benefit is expected to flow. During the period the UEL was re-assessed from 20 years to 10 years. See note 12 in the financial statements for a detailed disclosure of goodwill.
The exceptional items related to costs incurred for the new factory site opened during the year. The move was completed in July 2023.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
In the budget on 3 March 2021, the UK Government announced an increase in the main UK corporation tax rate from 19% to 25% with effect from 1 April 2023. The change in rate was substantively enacted on 24 May 2023. Deferred tax has been calculated 25% which was the tax rate substantively enacted at 31 August 2023.
For accounting periods that straddle 1 April 2023, company profits/losses arising in an accounting period are apportioned between financial years in which the accounting period falls.
Software capitalised in the year relates to the development of a new CRM system.
On 30 September 2021, Kingswood Mobility Group Limited (formerly Kingswood Corporation Group Limited) acquired 100% of voting rights of Kingswood Corporation Ltd and its subsidiaries for a consideration of £39.97m. The net assets of £11.83m acquired comprised of assets of £18.50m and liabilities of £6.67m.
The amortisation charge is recognised within administrative costs in the profit and loss account.
The depreciation charge is recognised within administrative costs in the profit and loss account.
The 100% share capital of Ashley Anderson Limited and Assistive Bathing Limited was transferred from Kingswood Corporation Limited to Kingswood Mobility Group Limited as of 3 March 2023.
Details of the company's subsidiaries at 28 February 2024 are as follows:
Inventories are stated after provisions of £52,470 (2023: £nil).
Trade debtors are stated after provisions for impairment of £70,000 (2023: £nil)
Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
Loans and Borrowings
On 30 September 2021, finance facilities were entered into totalling £31,322,963.
The loans are secured by cross guarantees which include all assets in the Group.
Bank Loans are secured by way of fixed and floating charge over the assets or undertakings of the group.
Bank Loans
The Group’s Flex Business Loan with Clydesdale Bank Plc includes two tranches of £4.4m and £6.6m. The £6.6m accrues interest at the Bank of England base rate plus 4.25% margin. The £4.4m loan accrues interest at the Bank of England base rate plus 3.95% margin. The loans are due for full repayment in October 2027. As at 28 February 2024 the amount outstanding on these loans totalled £9,227,814.
Bank Loans are disclosed net of debt issue costs of £328,620 (2023: £420,324).
Loan Notes
On 30 September 2021, loan notes (unsecured redeemable loan notes) were issued totalling £20,322,963. These are split between various classes as noted below. All loan notes are listed on The International Stock Exchange. Unsecured loan notes carry a 12% interest rate and are repayable in full on 30 September 2028. Interest accrued across all these loan notes as at 28 February 2024 totalled £6,490,795 (2023: £3,498,973).
Investor loan notes A1 and A2 with a principal amount of £17,800,000 with interest accrued of £5,690,713 (2023: £3,065,571) were outstanding at the year end.
Vendor loan notes B1 and B2 with a principal amount of £1,977,776 with interest accrued of £627,192 (2023: £335,518) were outstanding at the year end.
Management loan notes C1 and C2 with a principal amount of £545,187 with interest accrued of £172,890 (2023: £97,884) were outstanding at the year end.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
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. There were £23,279 (2023: £24,549) outstanding contributions at the reporting date.
The above share classes were allotted during the period and all shares have income, capital and voting rights subject to various restrictions.
Cross guarantee and debenture is provided by the group companies for the borrowings of the company and all of its subsidiaries.
The security is a fixed charge over all fixed assets, both tangible and intangible, and a floating charge over all other assets.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Company
During the year a monitoring fee cost of £119,679 (2023: £106,691) was incurred from LDC (Lloyds Development Capital), a major shareholder.
An amount of £23.49m (2023: £20.87m) was owed to LDC as at the year end including interest of £5.69m (2023: £3.07m).
An amount of £209,078 (2023: £185,668) was owed to company director, JM Rolph as at the year end including interest of £50,339 (2023: £26,929). An amount of £508,998 (2023: £452,007) was owed to company director, PJ Williamson as at the year end including interest of £122,550 (2023: £65,559). An amount of £nil (2023: £58,620) was owed to previous company director SA Thomas as at the year end including interest of £nil (2023: £5,396).
These amounts are included within creditors falling due after more than one year.