Company registration number 03557927 (England and Wales)
K G NORMAN LIMITED
T/A KGN PILLINGER
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
K G NORMAN LIMITED
T/A KGN PILLINGER
COMPANY INFORMATION
Directors
Mr O Tite
Mr J Norman
Mr C Norman
Company number
03557927
Registered office
Unit 12
Wells Place
Merstham
Redhill
Surrey
RH1 3AS
Auditor
Xeinadin Audit Ltd
249 Cranbrook Road
Ilford
Essex
IG1 4TG
K G NORMAN LIMITED
T/A KGN PILLINGER
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 26
K G NORMAN LIMITED
T/A KGN PILLINGER
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
The previous year of 2022 was an exceptional year for resale and distribution bought in products due to large investments in stock within our warehouse. This was primarily to protect our OEM part of the business but lead to surplus stock which could be sold to other companies struggling with pump market supply chains. This was not repeated in 2023 due to our supply chain improving their product lead times to the wider market, leading to a drop of over £100k in our turnover in this regard. This drop was well compensated for in a growth in excess of £500k in both KGN manufactured fabrications / assembled packages and service work carried out.
Principal risks and uncertainties
Our spread of product ranges, markets and varied customer types puts us ideally positioned for minimal risk impacts to the business. Our long standing experience, market presence and reputation again mitigates risk. We are quick to react to any challenges through a streamlined Senior Management structure.
The principal risk relates to the markets we serve and what investments are forth coming driven by government policy. We actively monitor our key competitors to ensure our offering and positioning are aligned to our expectations of growth and profit whilst being achievable in any challenging markets we serve.
Key performance indicators
The management team regularly analyses various key performance indicators as part of their overall strategic review process. These indicators are essential in evaluating both operational and financial performance and informed decision making.
Mr O Tite
Director
30 October 2024
K G NORMAN LIMITED
T/A KGN PILLINGER
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company during the year was the construction of water projects.
Results and dividends
The company's key financial indicators during the year were as follows:
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Operating profit before interest receivable and payable | | |
Profit / (loss) before taxation | | |
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2023 saw an increase in turnover but a drop in operating profits. Overall turnover increased by 9.43% in the year to 31st December 2023. The company’s gross profit margin has very marginally decreased to 46.46% £5,351,087 (2022 - £4,954,894 at 47.08%). This has resulted in a net profit in the year.
2023 was a consistent year of around £2.9m turnover per quarter. This was driven by a close monitoring of the quotation funnel and workshop loading leading to in general the company only taking on profitable work within the factories resource availability. This subsequently carefully managed our available labor hours and avoided excessive overtime requirements. The overall number of employees remained at a similar level to prior year. Ultimately this has resulted in maintaining the gross profit margin.
We experienced an unforeseen one off cost of £145k charged to us via dilapidations due to our previous business property roof condition. This obviously came off the bottom line profit calculation.
At year end our order intake was in excess of £500k above invoiced sales creating a healthy back log to feed into 2024 turnover.
Our key served markets of building services, municipal and distribution/resale all grew in excess of £100k driving the 9.4% growth. This shows a healthy spread of different markets as such derisking future potential business in any specific field of operation.
Ordinary dividends were paid amounting to £750,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr O Tite
Mr J Norman
Mr C Norman
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
K G NORMAN LIMITED
T/A KGN PILLINGER
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
On behalf of the board
Mr O Tite
Director
30 October 2024
K G NORMAN LIMITED
T/A KGN PILLINGER
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
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.
K G NORMAN LIMITED
T/A KGN PILLINGER
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF K G NORMAN LIMITED
- 5 -
Opinion
We have audited the financial statements of K G Norman Limited (the 'company') for the year ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, 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, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified 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 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 except for the counting of physical inventories as at 31st December 2023. A stock count did not take place. We were not appointed auditors until 18th July 2024, and in consequence it was not possible for us to obtain sufficient appropriate audit evidence. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held as at 31st December 2023 which are included in the financial statements at £1,326,057. Consequently we were unable to determine whether any adjustment to this amount was necessary.
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.
K G NORMAN LIMITED
T/A KGN PILLINGER
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF K G NORMAN LIMITED (CONTINUED)
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the 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.
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.
- Enquiry of management, those charged with governance and the entity’s solicitors (or in-house legal team) around actual and potential litigation and claims.
- Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations.
- Reviewing minutes of meetings of those charged with governance.
- Reviewing internal audit reports.
- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.
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.
K G NORMAN LIMITED
T/A KGN PILLINGER
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF K G NORMAN LIMITED (CONTINUED)
- 7 -
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.
Barry Leibovitch
Senior Statutory Auditor
For and on behalf of Xeinadin Audit Ltd
30 October 2024
Statutory Auditor
249 Cranbrook Road
Ilford
Essex
IG1 4TG
K G NORMAN LIMITED
T/A KGN PILLINGER
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
11,517,981
10,525,145
Cost of sales
(6,166,894)
(5,570,251)
Gross profit
5,351,087
4,954,894
Administrative expenses
(3,648,209)
(3,258,725)
Other operating income
36,848
Operating profit
4
1,702,878
1,733,017
Interest receivable and similar income
8
4,413
Interest payable and similar expenses
9
(37,258)
(69,002)
Profit before taxation
1,665,620
1,668,428
Tax on profit
10
(474,305)
7,131
Profit for the financial year
1,191,315
1,675,559
The profit and loss account has been prepared on the basis that all operations are continuing operations.
K G NORMAN LIMITED
T/A KGN PILLINGER
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
£
£
Profit for the year
1,191,315
1,675,559
Other comprehensive income
-
-
Total comprehensive income for the year
1,191,315
1,675,559
K G NORMAN LIMITED
T/A KGN PILLINGER
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
13
2,137,986
2,202,220
Current assets
Stocks
14
1,326,057
1,803,541
Debtors
15
1,803,135
1,564,249
Cash at bank and in hand
1,063,704
961,891
4,192,896
4,329,681
Creditors: amounts falling due within one year
16
(2,016,519)
(2,180,754)
Net current assets
2,176,377
2,148,927
Total assets less current liabilities
4,314,363
4,351,147
Creditors: amounts falling due after more than one year
17
(29,014)
(561,256)
Provisions for liabilities
Deferred tax liability
20
233,637
179,494
(233,637)
(179,494)
Net assets
4,051,712
3,610,397
Capital and reserves
Called up share capital
22
1,000
1,000
Capital redemption reserve
23
80
80
Profit and loss reserves
24
4,050,632
3,609,317
Total equity
4,051,712
3,610,397
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 30 October 2024 and are signed on its behalf by:
Mr O Tite
Director
Company registration number 03557927 (England and Wales)
K G NORMAN LIMITED
T/A KGN PILLINGER
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2022
1,000
80
2,293,758
2,294,838
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
1,675,559
1,675,559
Dividends
11
-
-
(360,000)
(360,000)
Balance at 31 December 2022
1,000
80
3,609,317
3,610,397
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
1,191,315
1,191,315
Dividends
11
-
-
(750,000)
(750,000)
Balance at 31 December 2023
1,000
80
4,050,632
4,051,712
K G NORMAN LIMITED
T/A KGN PILLINGER
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
2,462,593
2,093,530
Interest paid
(37,258)
(69,002)
Income taxes (paid)/refunded
(311,682)
13,669
Net cash inflow from operating activities
2,113,653
2,038,197
Investing activities
Purchase of tangible fixed assets
(553,058)
(281,340)
Proceeds from disposal of tangible fixed assets
189,184
167,727
Repayment of loans
70,065
(342,501)
Interest received
4,413
Net cash used in investing activities
(293,809)
(451,701)
Financing activities
Redemption of shares
80
Repayment of bank loans
(803,704)
(896,296)
Payment of finance leases obligations
(164,327)
(44,731)
Dividends paid
(750,000)
(360,000)
Net cash used in financing activities
(1,718,031)
(1,300,947)
Net increase in cash and cash equivalents
101,813
285,549
Cash and cash equivalents at beginning of year
961,891
676,342
Cash and cash equivalents at end of year
1,063,704
961,891
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information
K G Norman Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 12, Wells Place, Merstham, Redhill, Surrey, RH1 3AS.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
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.
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
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:
Leasehold improvements
over period of the lease
Plant and machinery
15% straight line
Fixtures and fittings
15% straight line
Computer equipment
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
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.
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
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.
1.9
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.
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
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.
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
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.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
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.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.15
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the 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.
3
Turnover and other revenue
2023
2022
£
£
Other revenue
Interest income
-
4,413
Grants received
-
36,848
Turnover
11,517,981
10,525,145
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(978)
(678)
Government grants
-
(36,848)
Depreciation of owned tangible fixed assets
336,260
317,838
Depreciation of tangible fixed assets held under finance leases
114,616
113,259
Profit on disposal of tangible fixed assets
(22,768)
(60,159)
Operating lease charges
265,680
255,272
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
12,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
51
49
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,592,685
2,392,302
Social security costs
279,300
277,397
Pension costs
41,912
39,428
2,913,897
2,709,127
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
319,500
286,962
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Directors' remuneration
(Continued)
- 20 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
120,000
120,000
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
4,413
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
21,568
57,525
Interest on finance leases and hire purchase contracts
15,690
11,477
37,258
69,002
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
420,162
357,746
Adjustments in respect of prior periods
(329,176)
Total current tax
420,162
28,570
Deferred tax
Origination and reversal of timing differences
54,143
(35,701)
Total tax charge/(credit)
474,305
(7,131)
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
(Continued)
- 21 -
The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
1,665,620
1,668,428
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
391,754
317,001
Tax effect of expenses that are not deductible in determining taxable profit
4,185
4,215
Effect of change in corporation tax rate
9
Effect of capital allowances and depreciation
24,214
36,530
Origination and reversal of timing differences
54,143
(35,701)
Utilisation of tax losses of prior year
(329,176)
Taxation charge/(credit) for the year
474,305
(7,131)
11
Dividends
2023
2022
£
£
Final paid
750,000
360,000
12
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
288,436
Amortisation and impairment
At 1 January 2023 and 31 December 2023
288,436
Carrying amount
At 31 December 2023
At 31 December 2022
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
13
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures and fittings
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2023
920,950
2,216,274
357,142
292,591
701,325
4,488,282
Additions
9,067
52,073
637
2,745
488,536
553,058
Disposals
(39,900)
(243,094)
(282,994)
At 31 December 2023
930,017
2,228,447
357,779
295,336
946,767
4,758,346
Depreciation and impairment
At 1 January 2023
130,824
1,423,505
219,591
235,385
276,757
2,286,062
Depreciation charged in the year
92,926
178,321
28,477
16,797
134,355
450,876
Eliminated in respect of disposals
(26,440)
(90,138)
(116,578)
At 31 December 2023
223,750
1,575,386
248,068
252,182
320,974
2,620,360
Carrying amount
At 31 December 2023
706,267
653,061
109,711
43,154
625,793
2,137,986
At 31 December 2022
790,126
792,769
137,551
57,206
424,568
2,202,220
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and machinery
38,092
45,839
Motor vehicles
242,865
396,233
280,957
442,072
14
Stocks
2023
2022
£
£
Work in progress
235,591
370,851
Finished goods and goods for resale
1,090,466
1,432,690
1,326,057
1,803,541
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,264,948
974,091
Other debtors
395,929
488,693
Prepayments and accrued income
142,258
101,465
1,803,135
1,564,249
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
18
377,778
Obligations under finance leases
19
121,600
179,611
Trade creditors
1,196,421
1,116,266
Corporation tax
198,542
90,062
Other taxation and social security
248,602
147,122
Other creditors
227,794
257,773
Accruals and deferred income
23,560
12,142
2,016,519
2,180,754
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
18
425,926
Obligations under finance leases
19
29,014
135,330
29,014
561,256
18
Loans and overdrafts
2023
2022
£
£
Bank loans
803,704
Payable within one year
377,778
Payable after one year
425,926
The long-term loans are secured on fixed charges relating to debentures (satisfied on 15/02/2024 and 12/06/2024).
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
19
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
121,600
179,611
In two to five years
29,014
135,330
150,614
314,941
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
20
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
233,637
179,494
2023
Movements in the year:
£
Liability at 1 January 2023
179,494
Effect of change in tax rate - profit or loss
54,143
Liability at 31 December 2023
233,637
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
41,912
39,428
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.
22
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
1,000
1,000
1,000
1,000
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
23
Capital redemption reserve
2023
2022
£
£
At the beginning and end of the year
80
80
24
Profit and loss reserves
2023
2022
£
£
At the beginning of the year
3,609,317
2,293,758
Profit for the year
1,191,315
1,675,559
Dividends declared and paid in the year
(750,000)
(360,000)
At the end of the year
4,050,632
3,609,317
25
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
289,424
289,424
Between two and five years
1,157,696
1,157,696
In over five years
651,204
940,628
2,098,324
2,387,748
26
Directors' transactions
Dividends totalling £750,000 (2022 - £360,000) were paid in the year in respect of shares held by the company's directors.
The advances to the directors are unsecured, interest free and repayable on demand.
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Mr J Norman -
-
271,717
546,719
(546,000)
272,436
Mr C Norman -
-
70,784
74,397
(145,800)
(619)
342,501
621,116
(691,800)
271,817
K G NORMAN LIMITED
T/A KGN PILLINGER
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
27
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,191,315
1,675,559
Adjustments for:
Taxation charged/(credited)
474,305
(7,131)
Finance costs
37,258
69,002
Investment income
(4,413)
Gain on disposal of tangible fixed assets
(22,768)
(60,159)
Depreciation and impairment of tangible fixed assets
450,876
431,097
Other creditor adjustment
-
(81)
Movements in working capital:
Decrease/(increase) in stocks
477,484
(497,092)
(Increase)/decrease in debtors
(308,951)
75,918
Increase in creditors
163,074
410,830
Cash generated from operations
2,462,593
2,093,530
28
Analysis of changes in net funds/(debt)
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
961,891
101,813
1,063,704
Borrowings excluding overdrafts
(803,704)
803,704
-
Obligations under finance leases
(314,941)
164,327
(150,614)
(156,754)
1,069,844
913,090
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