The directors present the strategic report for the year ended 31 March 2024.
The UK economy has experienced a period of significant turbulence over the past three to four years, marked by a series of overlapping challenges. These dynamics have directly impacted the construction sector and shaped the broader economic environment in which the Kenai Group operates.
Economic Trends: 2020-2024
Pandemic Disruptions (2020-2021)
The COVID-19 pandemic brought construction activity to a near standstill in 2020, with GDP contracting by 9.3% - the steepest decline on record. Government stimulus measures and pent-up demand led to a strong rebound in 2021, but lingering supply chain disruptions and workforce shortages created persistent pressures.
Inflation and Energy Crisis (2022-2023)
The war in Ukraine and subsequent global energy crisis drove UK inflation to a 40-year high, peaking at 11.1% in October 2022. Rising costs for construction materials such as steel, concrete, and timber squeezed margins across the sector. The Bank of England’s aggressive interest rate hikes, reaching 5.25% by late 2023, further dampened investment in infrastructure and housing.
Evolving Labour Market
Labour shortage, exacerbated by post-Brexit migration policies and an aging workforce, have persisted as a critical challenge. Vacancies in construction remained significantly above pre-pandemic levels, driving up wages and increasing project costs.
Signs of Stabilisation (2024)
While inflation has started to ease, falling to 4.7% in early 2024, the high cost of borrowing continues to constrain investment. GDP growth in 2024 is forecasted at a modest 0.6%, reflecting an economy still grappling with uncertainty but showing signs of gradual recovery.
Recent Construction Sector Outlook
The UK construction sector has displayed resilience in the face of these economic headwinds, but key challenges remain and finds itself at a crossroads in navigating a mix of risks and opportunities. Public sector infrastructure spending, sustainability driven innovation, and adaptive strategies will underpin growth in 2024 and beyond. The Kenai Group is well-positioned to leverage its strengths in operational excellence and market responsiveness to weather the headwinds and capitalise on emerging trends.
Review of the business
Despite these continued challenges the Group has delivered a strong performance again this year, achieving results that significantly exceeded our projected budgets. While Group turnover decreased from £73.16m to £60.15m, our gross profit margin improved to 18.13%, the highest level in the past three years. This reflects the success of our ongoing focus on operational efficiency and controlling prices on our longer-term projects.
The Group’s performance continues to be significantly supported by two of its core businesses, Northern Steel Decking Limited and Studwelders Composite Floor Decks Limited. Together, these businesses contributed £2.3m in profit before tax, showcasing their resilience and ability to perform well in a challenging UK market. Although this represents a reduction compared to the prior year’s £2.8m, the focus remains on their strong operational execution and strategic value within the Group.
However, two of the Group’s businesses, Met Structures Limited and The Bolted Frame Company Limited, faced continued challenges during the year. Operating in the light gauge steel framing market we saw turnover fall from £27.7m to £19.3m this year, operating just below break-even for the financial year. This performance was adversely affected by an increasingly competitive market driving down margins and high inflation in raw material costs, which have caused some projects to be postponed or cancelled due to market uncertainty.
This sector presents ongoing challenges due to high turnover per project at low percentage returns, and the substantial investment required to build the necessary infrastructure, particularly in design, to establish a foothold. Despite these obstacles, the Group takes pride in the market share achieved within a relatively short timeframe. The Directors remain confident in the sector’s long-term growth potential, continue to invest in R&D activities to drive continuous improvement, and view it as a key component to the Group’s strategy to diversify within the UK construction industry.
On the 8th March 2023 we formed a new Joint Venture (JV) with a long-term business partner to help support the ongoing development opportunities at Gwent Europark in Magor; part of the land which we acquired in 2019. This land acquisition was a strategic step in diversifying the Group’s activities and has delivered significant benefits over the last few years. As part of the JV formation, an internal re-structuring of the Group’s assets and liabilities were undertaken, transferring them from Studwelders Holdings (SWH) into Kenai Holdings, leaving only the remaining land investment in SWH as of 31st March 2023. The JV sale resulted in a £7.0m gain on the revaluation of the fair value of the investment at the date of sale. SWH was then renamed Sullivan Smith Limited on 18th March 2024.
During this financial year, a revaluation of the Magor site was carried out, with one plot of this site still retained 100% within the Group under Red Dot 2 Developments Limited, while other portions of the site are owned under the Joint Ventures of Sullivan Smith Limited and Red Dot 1 Developments Limited. This revaluation has resulted in a reported gain of £3.8m in Kenai Holdings’ accounts alongside further gains of £2.8m gain in Sullivan Smith Limited and £1.7m in Red Dot 1 Developments Limited. Together, these gains have formed a significant portion of the Group’s reported profit before tax for this financial year.
Our 50% joint venture of Construction Metal Forming Limited (CMF) has historically been a major contributor to the Group’s results. However, this year, CMF faced challenges and reported its first (small) loss over the 12 months to March 2024. This was largely attributed to transitional effects following significant investment and increased overheads from the commissioning of our second site. The new management team has indicated that this year represents a period of adjustment and growth as CMF adapts to its expanded capacity. Despite this setback, CMF remains a critical part of the Group’s operations, providing stability and security of supply in a competitive marketplace. As part of our long-term vision, the second site, developed through Red Dot 1 Developments Limited and opened in October 2022, has significantly increased CMF’s production capabilities. While this has had a short-term impact on results, we see substantial opportunities to expand the product range, reduce outsourcing, and maintain the high standards of quality and service that define our core businesses. The Group remains committed to supporting CMF’s development as it continues to align with our strategic goals.
The Group is also proud of the charitable work it supports, with £152,860 donated to charitable causes during this financial year. These contributions reflect our commitment to making a positive impact beyond our core business operations and supporting the communities in which we operate
A summary of results are as follows:
|
| 2024 |
| 2023 |
| 2022 |
| 2021 |
|
| £ |
| £ |
| £ |
| £ |
Turnover |
| 60,146,820 |
| 73,155,070 |
| 79,866,509 |
| 45,612,462 |
Gross Profit |
| 10,901,691 |
| 11,210,228 |
| 9,648,835 |
| 9,021,006 |
GP% |
| 18.13% |
| 15.32% |
| 12.08% |
| 19.78% |
PBT |
| 8,687,735 |
| 11,948,425 |
| 5,204,519 |
| 4,245,605 |
PBT% |
| 14.44% |
| 16.33% |
| 6.52% |
| 9.31% |
Outlook for FY2025
The directors remain mindful of the ongoing challenges facing both the UK’s general economic landscape and the UK construction sector which continues to present notable challenges, requiring us to sharpen our focus on efficiency, innovation and market positioning. We consider the Group well positioned to navigate these challenges through a combination of strategic focus, operational agility, and a commitment to excellence. While market conditions are expected to test the resilience of the construction sector, we take pride in our continued ability to adapt to the challenges ahead of us. Our commitment to quality remains unwavering and we take pride in our mission statement: “Only through first quality and service can we become the customers’ first choice.”
Looking ahead, even as we reflect on the continued challenges within the UK and Ireland across the business sectors we operate in, we remain optimistic about the Group’s performance over the year ahead. Our experiences over recent years, coupled with our ability to adapt and persevere, our strong balance sheet, robust order book, minimal debt, and the unity of our core management teams, give us confidence in our ability to overcome any challenges we may face. Additionally, the Group’s broader diversification of core activities has further strengthened our resilience, enabling us to adapt and thrive in a challenging market.
Principal risks and uncertainties
Core risks and uncertainties
The business' activities expose it to a variety of financial risks. Risk management is governed by the Group’s operational policies, which are subject to periodic review by the board of directors.
The business' principal financial instruments comprise bank balances, trade debtors, trade creditors, loans to the business and finance lease agreements. The main purpose of these instruments is to finance the business' operations.
Price and Innovation Risk:
The Group operates in highly competitive markets. Significant product innovation, technical advances or the intensification of price competition could adversely affect the results of the Group. The Kenai Group invests in significant training of its staff to ensure that the Group is well placed to provide a choice for customers, to ensure they remain aware of their options and are satisfied with the level of service the Group provides. The Group also continually works to streamline its cost base to ensure that it remains competitive.
Credit Risk:
Managing cash flow and credit risk continues to be an ongoing priority and as such the Group has well established policies and procedures that require appropriate credit checks on potential customers before orders are accepted. The Group maintains a policy of obtaining credit insurance where possible, and the amount of exposure to any individual customer is subject to that insurance limit which is reassessed at least annually.
The amounts presented in the balance sheet for Trade debtors are net of allowances made for doubtful debtors.
Liquidity Risk:
Effective management of cash and working capital are a key ongoing priority, and the Group has strong cash reserves as well as an intercompany facility that should be sufficient to ensure funds are always available to fund its operations as well as to take advantage of any opportunities that may arise.
In respect of bank balances, liquidity is managed by maintaining a balance between continuity of funding, flexibility, and maximising returns. All of the Group’s cash balances are held in such a way that achieves a competitive rate of interest.
Health and Safety:
Management maintains a close review on the latest health and safety regulations and are committed to updating procedures accordingly. The responsibility for safety at work rests upon the senior management teams and the Group ensures all policies and procedures are properly communicated and adhered to at all levels. Regular training is provided to ensure all staff understand their need to take proper care for their own and others’ health and safety.
Employees:
We are an equal opportunities employer and are committed to encouraging diversity and eliminating discrimination in both our role as an employer and as a provider of services. The Group’s reputation is dependent on the quality, effectiveness, and skill base of its employees. We aim to create a culture that respects and values each other’s differences, which promotes dignity, equality, and diversity and that encourages individuals to develop and maximise their true potential. We are committed, wherever practicable, to achieving and maintaining a workforce that broadly reflects the communities in which we operate.
Employment of disabled persons:
It is the policy that disabled persons shall be considered for employment, career development and promotion based on their aptitude and abilities in common with all employees.
Employee involvement:
The Directors recognise the importance of good communication and relations with employees and management is encouraged to adopt employee consultations.
Section 172 Statement:
The Directors of Kenai Holdings Limited acknowledge their duty to promote the success of the company for the benefit of its members as a whole, as required under section 172 of the Companies Act 2006. In doing so, they have regard to the interests of the company’s stakeholders, including employees, customers, suppliers, and the communities in which the company operates, as well as the impact of the company’s activities on the environment.
Stakeholder Engagement
Employees: The Directors recognise that employees are vital to the success of the group. Regular communication is maintained through meetings, internal memos and group discussions, ensuring transparency and fostering a collaborative culture. During the year, initiatives were undertaken to support employee well-being, professional development, and diversity and inclusion.
Customers: The group’s commitment to providing high-quality products and services has been central to maintaining strong relationships with customers. Feedback mechanisms, including surveys and regular reviews, have been implemented to understand and respond to customer needs effectively.
Suppliers: The company works closely with its supply chain partners to build long-term relationships based on mutual trust and sustainability. Ethical sourcing policies and regular audits ensure compliance with the group’s standards and support for shared goals.
Community: The group actively engages with the communities in which it operates, supporting local initiatives and contributing to community development projects. This year, the company partnered with local charities to promote social and economic development.
Decision-Making and Long-Term Impact
The Directors have taken steps to ensure that their decisions consider long-term implications and align with the Group’s strategic objectives. This approach includes evaluating potential risks and opportunities in the context of market trends, economic conditions, and regulatory changes within the construction industry. Key decisions during the year included investments in sustainable technologies, measures to reduce the Group’s carbon footprint, and progress towards attaining ISO 14001 across the Group companies.
Environmental, Social, and Governance (ESG) Considerations
The Board is committed to integrating ESG principles into the company’s operations. This year, the group enhanced its environmental initiatives by improving waste management processes, increasing energy efficiency, prioritising the use of sustainable materials in construction projects, as part of our ISO 14001 initiatives. Social and governance practices were also reviewed to ensure adherence to the highest standards of ethical conduct and corporate governance.
Looking Ahead
The Directors remain focused on driving sustainable growth while upholding their responsibilities under section 172. They will continue to engage with stakeholders, foster innovation, and adapt to the evolving needs of the markets in which we trade, ensuring the group’s success for the benefit of all its stakeholders. This is not simply limited to its shareholders but includes its employees, customers, key supply chain partners as well as responsibility to the environment.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 14.
Ordinary dividends were paid amounting to £250,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, UHY Hacker Young, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The energy and carbon summary covers Scope 1 and Scope 2 emissions for the year ended 31st March 2024 in respect of all group companies, and the equity share of emissions in joint venture entities. The footprint is calculated in accordance with the Greenhouse Gas (GHG) Protocol. All conversions are per the conversion factors issued by the Department for Business, Energy and Industrial Strategy (BEIS).
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2023 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is calculated using the industry standard of CO2e per £1m turnover, and the turnover included in that calculation includes the equity share of joint venture turnover for fair comparison.
We have audited the financial statements of Kenai Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the company and the industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to the acts by the company, which were contrary to applicable laws and regulations including fraud, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to recognition of revenue and profit.
Audit procedures performed included; review of journals, testing of cut off, testing of the validity of long term contract balances, testing the validity of development balances, review of the bad debt provisions, testing the validity of trade debtors, and testing creditors for understatement. The directors' rationale behind the recognition of revenue was reviewed to confirm the accounting treatment was relevant and appropriate.
There are inherent limitations in the audit procedures described above. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £2,234,160 (2023 - £13,157,798 profit).
Kenai Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Millennium House, Severnlink Distribution Centre, Newhouse Farm Industrial Estate, Mathern, Chepstow, Monmouthshire, NP16 6UN.
The group consists of Kenai Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, [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.
The consolidated financial statements incorporate those of Kenai Holdings Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts chargeable, net of value added tax in respect of the manufacture and sale of steel floor decks, buildings and other construction products and the provision of floor decking installation and other construction services for customers. This includes amounts invoiced and applied for by the year end and takes into account any work done and not yet billed to customers at the balance sheet date.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include 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, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the 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 if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The depreciation charges depend on the directors' estimation of the useful economic lives of the company's assets and residual values. The directors have used depreciation rates and methods which they estimate result in depreciation charges which write off the cost less estimated residual value over the useful economic life of the asset.
The directors estimate the degree of completion, expected further costs and foreseeable losses with regards to long term contracts.
In applying the Company's accounting policy for the valuation of fixed assets the directors have used an expert to provide an appropriate annual valuation of the helicopters. This valuation involves an estimate of the market value of the helicopters and is subject to significant inherent uncertainties.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The directors are of the opinion that the market value of the investment property at the balance sheet date is £6,800,000.
The carrying value of land and buildings comprises:
Details of the company's subsidiaries at 31 March 2024 are as follows:
The following subsidiaries are exempt from the requirements of the Companies Act relating to the audit of the individual accounts by virtue of guarantee that has been given by Kenai Holdings Ltd:-
Company |
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Speedy Deck Ltd | 08370013 | |||
Red Dot 2 Development Ltd | 12238645 | |||
Whirlybirds Helicopters Ltd | 05693205 | |||
Brother Bear Farm Ltd | 12238665 |
Details of joint ventures at 31 March 2024 are as follows:
Included within other creditors is a loan of £nil (2023 - £428,681). The loan is interest free and is repayable on demand. M Smith (Director) has provided a guarantee for the loan.
The Company has a loan from Studwelders SSAS for £367,946 (2023 - £487,817). Interest of 1.15% is being charged on the loan which is repayable by May 2026.
The long-term loans are secured by fixed and floating charges over the land and properties of the group.
The hire purchase creditors are secured on the assets to which they relate.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The company has given cross guarantees to Barclays Bank plc in respect of the bank debt of its subsidiary undertakings Northern Steel Decking Limited, Northern Steel Decking Installations Limited, Studwelders Composite Floor Decks Limited.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Amounts contracted for but not provided in the financial statements:
The remuneration of key management personnel is as follows.
Interest free loans have been granted by the group to its directors as follows: