Company registration number NI020251 (Northern Ireland)
S. D. KELLS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 19 JANUARY 2024
S. D. KELLS LIMITED
COMPANY INFORMATION
Directors
Mr A D Kells
Mr A J Kells
Mr I A Kells
Mrs S Kells
Mr S McElwaine
Secretary
Mr H F McMorris
Company number
NI020251
Registered office
164 Main Street
Lisnaskea
Co Fermanagh
BT92 0JE
Auditor
GMcG PORTADOWN
17 Mandeville Street
Portadown
Craigavon
Co Armagh
BT62 3PB
Business address
8 Lackaghboy Road
Lackaghboy
Enniskillen
Co Fermanagh
BT74 4RL
Bankers
Ulster Bank Limited
4th Floor
11-16 Donegall Square East
Belfast
BT1 5UB
S. D. KELLS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 7
Statement of income and retained earnings
8
Balance sheet
9
Statement of cash flows
10
Notes to the financial statements
11 - 24
S. D. KELLS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 19 JANUARY 2024
- 1 -
The directors present the strategic report for the year ended 19 January 2024.
Principal activities
The principal activity of the company continued to be that of ladies and gents outfitters, together with the sale of household goods.
Review of the business
The directors are pleased with the performance of the company during the year. The previous year enjoyed strong sales with the country coming out of lockdown and this has been maintained in the current year with turnover of £13.9m being achieved (2023: £13.9m). As expected, gross profit margin was slightly depressed in the 2024 year due to continuous pressure on costs, reflective of the economy as a whole. The directors continue to proactively manage the company's cost base and focus on sustaining their customer base throughout their existing stores.
Principal risks and uncertainties
The principal risks and uncertainties relate to:
Economic factors - the short to medium-term effect of inflationary pressures on consumer spending.
Economic uncertainties - the directors regularly monitor the trading results from all shops and are committed to acting quickly in the event of an adverse trend becoming apparent.
Market competition - the directors monitor and discuss market developments continuously and will continue to do so.
The directors are satisfied that systems are in place to mitigate exposure to major risks.
Key performance indicators
Key performance indicators of the company are as set out below:
The key performance indicators reflect the continued strong level of sales achieved by the company and also the cost pressures referred to above.
The directors continue to monitor the performance of the company closely and although they expect the 2024 year to continue to be affected by inflationary pressures on costs, they are hopeful that the extent of pressure will be less than that in the 2024 year.
Mr I A Kells
Director
4 July 2024
S. D. KELLS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 19 JANUARY 2024
- 2 -
The directors present their annual report and financial statements for the year ended 19 January 2024.
Results and dividends
The results for the year are set out on page 8.
Dividends of £363,650 were declared and paid during the year. The directors do not propose a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr A D Kells
Mr A J Kells
Mr I A Kells
Mrs S Kells
Mr S McElwaine
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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.
S. D. KELLS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
- 3 -
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr I A Kells
Director
4 July 2024
S. D. KELLS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF S. D. KELLS LIMITED
- 4 -
Opinion
We have audited the financial statements of S. D. Kells Limited (the 'company') for the year ended 19 January 2024 which comprise the statement of income and retained earnings, the balance sheet, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 19 January 2024 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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
S. D. KELLS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF S. D. KELLS LIMITED (CONTINUED)
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the 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, 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 directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
S. D. KELLS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF S. D. KELLS LIMITED (CONTINUED)
- 6 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
In identifying and assessing potential risks of material misstatement in respect of irregularities, including fraud and non-compliances with laws and regulations, we considered the following:
The nature of the industry and sector, control environment and business performance, including the company’s remuneration policies for directors, bonus levels and performance targets, if any;
Results of our enquiries of management about their own identification and assessment of the risks of irregularities;
Any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to:
Identifying, evaluating and complying with laws and regulations and whether they were aware of any instance of non-compliance;
Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
The internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
The matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud and identified the greatest potential for fraud in revenue recognition. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the Companies Act 2006, and local tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty.
S. D. KELLS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF S. D. KELLS LIMITED (CONTINUED)
- 7 -
Audit response to risks identified
Our procedures to respond to the risks identified included the following:
Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
Enquiring of management concerning actual and potential litigation and claims;
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
Reading minutes of meetings of those charged with governance and reviewing correspondence with tax authorities; and
In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
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.
The purpose of our audit work and to whom we owe our responsibilities
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.
Ms Gillian Johnston ACA
Senior Statutory Auditor
For and on behalf of GMcG PORTADOWN
4 July 2024
Chartered Accountants
Statutory Auditor
17 Mandeville Street
Portadown
Craigavon
Co Armagh
BT62 3PB
S. D. KELLS LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 19 JANUARY 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
13,919,466
13,960,628
Cost of sales
(10,980,676)
(10,678,159)
Gross profit
2,938,790
3,282,469
Administrative expenses
(2,396,961)
(2,106,237)
Other operating income
96,921
86,990
Operating profit
4
638,750
1,263,222
Interest receivable and similar income
7
60,583
3,873
Interest payable and similar expenses
8
(74,015)
(59,745)
Profit before taxation
625,318
1,207,350
Tax on profit
9
(160,171)
(228,905)
Profit for the financial year
465,147
978,445
Retained earnings brought forward
11,057,926
10,479,481
Dividends
10
(363,650)
(400,000)
Retained earnings carried forward
11,159,423
11,057,926
The profit and loss account has been prepared on the basis that all operations are continuing operations.
S. D. KELLS LIMITED
BALANCE SHEET
AS AT
19 JANUARY 2024
19 January 2024
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
11
4,621,013
4,659,460
Investment property
12
925,300
925,300
5,546,313
5,584,760
Current assets
Stocks
13
5,074,359
4,787,153
Debtors
14
151,982
100,796
Cash at bank and in hand
3,724,380
4,398,664
8,950,721
9,286,613
Creditors: amounts falling due within one year
15
(2,454,212)
(2,689,205)
Net current assets
6,496,509
6,597,408
Total assets less current liabilities
12,042,822
12,182,168
Creditors: amounts falling due after more than one year
16
(420,000)
(660,000)
Provisions for liabilities
Deferred tax liability
18
63,399
64,242
(63,399)
(64,242)
Net assets
11,559,423
11,457,926
Capital and reserves
Called up share capital
20
400,000
400,000
Profit and loss reserves
11,159,423
11,057,926
Total equity
11,559,423
11,457,926
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 4 July 2024 and are signed on its behalf by:
Mr I A Kells
Mr S McElwaine
Director
Director
Company registration number NI020251 (Northern Ireland)
S. D. KELLS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 19 JANUARY 2024
- 10 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
219,128
900,439
Interest paid
(74,015)
(59,745)
Income taxes paid
(242,670)
(394,264)
Net cash (outflow)/inflow from operating activities
(97,557)
446,430
Investing activities
Purchase of tangible fixed assets
(85,778)
(36,563)
Proceeds from disposal of tangible fixed assets
6,685
2,400
Interest received
60,583
3,873
Net cash used in investing activities
(18,510)
(30,290)
Financing activities
Repayment of borrowings
45,433
(119,501)
Repayment of bank loans
(240,000)
(406,667)
Dividends paid
(363,650)
(400,000)
Net cash used in financing activities
(558,217)
(926,168)
Net decrease in cash and cash equivalents
(674,284)
(510,028)
Cash and cash equivalents at beginning of year
4,398,664
4,908,692
Cash and cash equivalents at end of year
3,724,380
4,398,664
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 19 JANUARY 2024
- 11 -
1
Accounting policies
Company information
S. D. Kells Limited is a private company limited by shares incorporated in Northern Ireland. The registered office is 164 Main Street, Lisnaskea, Co Fermanagh, BT92 0JE.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
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.
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.
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
1
Accounting policies (Continued)
- 12 -
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
1% straight line
Leasehold land and buildings
1% straight line
Fixtures and fittings
10% straight line
Computers
20% straight line
Motor vehicles
20% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
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, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
1
Accounting policies (Continued)
- 13 -
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, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
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
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.
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.
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
1
Accounting policies (Continued)
- 14 -
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.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
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.
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
1
Accounting policies (Continued)
- 15 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset 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.
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.
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements and estimates
The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements.
Investment property
At each balance sheet date investment property is remeasured to fair value. As disclosed at note 12 the assessment of the fair value took account of valuations performed by external property valuers, Polllock Commercial LLP, Chartered Surveyors. The directors reassessed the valuations in the light of changes in the commercial property market in Northern Ireland and considered transactions in any similar properties. Assessing the fair value of investment property therefore involves some judgement and estimation uncertainty the extent of which can depend on the level of transactions in the property market of similar properties.
Fixed assets
The annual depreciation charge on fixed assets depends primarily on the estimated lives of each type of asset and estimates of residual values. The directors regularly review these asset lives and change them as necessary to reflect current thinking on remaining lives in light of prospective economic utilisation and physical condition of the assets concerned. Changes in asset lives can have a significant impact on depreciation and amortisation charges for the period. Detail of the useful lives is included in the accounting policies.
Stock
At each balance sheet date the company's stocks are assessed for impairment. If stock is impaired, the
carrying amount is reduced to its selling price less costs to sell. The assessment of the selling price of such stock involves some estimation uncertainty.
Taxation
Judgements are made in relation to the calculation of certain aspects of the year end tax provisions and the respective tax charge. The directors used external professional advice to support the year end provisions.
Debtors
Short term debtors are measured at transaction price, less any impairment. Impairment of such debtors involves some estimation uncertainty.
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Sale of goods
13,919,466
13,960,628
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
3
Turnover and other revenue (Continued)
- 17 -
2024
2023
£
£
Other revenue
Interest income
60,583
3,873
All turnover is attributable to one geographical market, that being the United Kingdom.
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(4,867)
(2,132)
Fees payable to the company's auditor for the audit of the company's financial statements
11,500
11,500
Depreciation of owned tangible fixed assets
121,925
124,222
Profit on disposal of tangible fixed assets
(4,385)
(2,400)
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Administrative staff
20
20
Directors
5
5
Sales staff
125
129
Total
150
154
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
3,334,407
3,058,181
Pension costs
293,204
232,735
3,627,611
3,290,916
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
- 18 -
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
171,579
131,157
Company pension contributions to defined contribution schemes
235,754
187,383
407,333
318,540
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2023 - 4).
7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
60,549
3,873
Other interest income
34
Total income
60,583
3,873
2024
2023
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
60,549
3,873
8
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
74,015
59,745
9
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
161,014
242,636
Deferred tax
Origination and reversal of timing differences
(843)
(13,731)
Total tax charge
160,171
228,905
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
9
Taxation (Continued)
- 19 -
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:
2024
2023
£
£
Profit before taxation
625,318
1,207,350
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
156,330
229,397
Tax effect of expenses that are not deductible in determining taxable profit
11,735
1,654
Tax effect of income not taxable in determining taxable profit
(9)
Effect of change in corporation tax rate
(7,885)
Effect of capital allowances and depreciation
(2,146)
Taxation charge for the year
160,171
228,905
10
Dividends
2024
2023
£
£
Interim paid
363,650
400,000
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
- 20 -
11
Tangible fixed assets
Freehold land and buildings
Leasehold land and buildings
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 20 January 2023
4,633,554
228,149
361,687
70,885
189,119
5,483,394
Additions
4,920
80,858
85,778
Disposals
(59,971)
(59,971)
At 19 January 2024
4,633,554
228,149
361,687
75,805
210,006
5,509,201
Depreciation
At 20 January 2023
399,245
20,533
227,325
38,347
138,484
823,934
Depreciation charged in the year
46,336
2,281
34,777
11,610
26,921
121,925
Eliminated in respect of disposals
(57,671)
(57,671)
At 19 January 2024
445,581
22,814
262,102
49,957
107,734
888,188
Carrying amount
At 19 January 2024
4,187,973
205,335
99,585
25,848
102,272
4,621,013
At 19 January 2023
4,234,309
207,616
134,362
32,538
50,635
4,659,460
12
Investment property
2024
£
Fair value
At 20 January 2023 and 19 January 2024
925,300
The fair value of the investment property has been arrived at on the basis of a valuation carried out on 2nd May 2022 by Pollock Commercial LLP Chartered Surveyors, who are not connected with the company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
The directors believe that these valuations have not materially changed as at the balance sheet date.
If investment properties were stated on an historical cost basis rather than a fair value basis, the amounts would have been included as follows:
2024
2023
£
£
Cost
925,300
925,300
Accumulated depreciation
(182,365)
(173,112)
Carrying amount
742,935
752,188
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
- 21 -
13
Stocks
2024
2023
£
£
Finished goods and goods for resale
5,074,359
4,787,153
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
109,556
78,932
Other debtors
2,850
2,850
Prepayments and accrued income
39,576
19,014
151,982
100,796
15
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Bank loans
17
240,000
240,000
Other borrowings
17
113,626
68,193
Trade creditors
360,349
561,678
Corporation tax
160,980
242,636
Other taxation and social security
725,648
700,564
Other creditors
686,383
671,399
Accruals and deferred income
167,226
204,735
2,454,212
2,689,205
Bank loans and overdrafts are secured by the following:
- first legal charge over 12 commercial and investment properties; and
- an all monies debenture held giving a fixed and floating charge over the assets of the company.
16
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Bank loans and overdrafts
17
420,000
660,000
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
- 22 -
17
Loans and overdrafts
2024
2023
£
£
Bank loans
660,000
900,000
Other loans
113,626
68,193
773,626
968,193
Payable within one year
353,626
308,193
Payable after one year
420,000
660,000
Bank loans have variable interest rates of 1.88% and 1% per annum over base rate. The loans are repayable in monthly instalments of £11,667 and £8,333 and the final repayments are due in less than five years. Other loans have no fixed terms of repayment.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
18,206
18,076
Investment property
46,166
46,166
Other timing differences
(973)
-
63,399
64,242
2024
Movements in the year:
£
Liability at 20 January 2023
64,242
Credit to profit or loss
(843)
Liability at 19 January 2024
63,399
19
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
293,204
232,735
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.
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
- 23 -
20
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
400,000
400,000
400,000
400,000
21
Operating lease commitments
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:
2024
2023
£
£
Within one year
140,150
150,398
Between two and five years
303,000
455,112
In over five years
33,750
229,715
476,900
835,225
22
Related party transactions
Remuneration of key management personnel
The directors are considered to be the company's key management personnel. Remuneration of directors is disclosed at note 7.
Transactions with related parties
During the year, rent of £22,000 (2023 - £22,000) was paid for the use of properties owned by the directors.
At the balance sheet date, the company owed the directors £513,617 (2023 - £464,616). Interest is charged, on commercial terms, on loan balances included within amounts owing of £113,626 (2023 - £68,193).
23
Ultimate controlling party
Mr Ian Kells is considered to be the ultimate controlling party of the company.
S. D. KELLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 19 JANUARY 2024
- 24 -
24
Cash generated from operations
2024
2023
£
£
Profit for the year after tax
465,147
978,445
Adjustments for:
Taxation charged
160,171
228,905
Finance costs
74,015
59,745
Investment income
(60,583)
(3,873)
Gain on disposal of tangible fixed assets
(4,385)
(2,400)
Depreciation and impairment of tangible fixed assets
121,925
124,222
Movements in working capital:
Increase in stocks
(287,206)
(578,555)
(Increase)/decrease in debtors
(51,186)
3,736
(Decrease)/increase in creditors
(198,770)
90,214
Cash generated from operations
219,128
900,439
25
Analysis of changes in net funds
20 January 2023
Cash flows
19 January 2024
£
£
£
Cash at bank and in hand
4,398,664
(674,284)
3,724,380
Borrowings excluding overdrafts
(968,193)
194,567
(773,626)
3,430,471
(479,717)
2,950,754
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