The directors present the strategic report for the year ended 30 June 2024.
Principal Activities
CoolKit was established in 2005 by founder and CEO Rupert Gatty. The principal activities of the Company include:
The manufacture of light commercial vehicle (LCV) conversions and insulated bodywork for temperature-controlled applications.
The sale of those products direct and via a network of distributors in the UK and worldwide.
The retail of a range of converted LCV's, together with brokered funding solutions.
Sole distribution of a range of imported temperature-controlled containers.
The provision of mobile service, maintenance, and repair to transport refrigeration systems.
Now in its twentieth year of trading, CoolKit has long been established as the largest specialist in temperature-controlled light commercial vehicles (LCVs) in the UK – both as a modifier of basic vehicles and as a retailer of converted ones.
Our customer portfolio includes many major companies in asset finance, vehicle rental and fleet leasing as intermediaries on behalf of businesses that are household names in the wholesale, retail and sample delivery of food, pharmaceutical and healthcare products.
Our strategy for the coming years focuses on the following key areas:
Innovation: Continuous investment in R&D to improve the efficiency, performance, and safety features of our products, with a new focus on rigid box bodies.
Customer-Centric Approach: Enhancing customer relationships by offering personalized solutions and after-sales support that is second to none.
Sustainability: Commitment to environmental sustainability through the development of energy-efficient and eco-friendly transportation options.
Expansion and Market Penetration: Growing our presence in both domestic and international markets.
Operational Efficiency: Improving manufacturing processes to reduce costs and increase production efficiency, whilst upholding the highest product quality standards.
Innovation
Whilst broadly recognised for our lightweight panel van conversions, the Company remains committed to innovation, and accordingly, several opportunities for diversification that have arisen this year have been seized upon.
We have responded to interest from major fleet customers in our award-winning lightweight insulated box bodies by investing heavily in the production line for that product - and has seen output grow exponentially when compared with the previous year.
Further, we have acquired sole distribution rights for the UK in respect of a radical new transport refrigeration system with zero greenhouse gas emissions being the principle USP.
Achievements
CoolKit continues to build a strong reputation for quality, reliability, and innovation, and this has been endorsed by a growing and now unrivalled number of accreditations from LCV manufacturers including Ford, Mercedes-Benz, Volkswagen, Renault, MAN, Toyota and Stellantis.
2024 saw CoolKit win the prestigious What Van? Convertor of the Year Award for an unprecedented third time – and win the Medium Sized Business of the Year Award at the Insider Northwest Awards.
These achievements contribute to define CoolKit’s unique value proposition that will see us continue to attract growth in market share in the UK and overseas.
Relocation
In September 2023, we relocated our conversion and body assembly operation from one of our sites in Burnley to premises in Blackburn as the result of a fire in July 2023 that caused considerable disruption.
Whilst unwelcome, the event of fire was an insured risk, and the Directors have noted since that the company’s insurance policy provided adequate cover in relation to increased costs of working including stocks, plant, machinery, premises and business interruption (BI).
With 75,000 square feet of industrial premises on a site extending to four acres, the new Blackburn site is some 50% larger in size than the Burnley premises they succeed, which has facilitated a commensurate increase in capacity alongside opportunities for new product research and development, R&D and product diversification.
Results
Turnover remained inline with previous year at £21.2m, despite significantly reduced operational capacity due to the aforementioned fire. The second half of the financial year saw a turnover annualised runrate of £29.7m.
Operating profit increased to £959k, up from £201k in the previous year, this is net of insurance receipts and associated fire costs, the underlying business continued to grow in profitability and recover from some of the macro factors which impacted 2023.
Recruitment: Shortages of suitably skilled labour continue to threaten the growth prospects for the business. We address this by continuing to improve our employee value proposition with an enhanced range of measures. In addition to that, we collaborate with the local institutions of further and higher education – including arrangements for apprentices and T-level students, the shortage is being addressed.
Economic Conditions: The seemingly omnipresent threat of a significant downturn in the economy threatens to stifle customer demand for new vehicles or lead to delays in the purchasing cycle whilst customers evaluate their own prospects more fully. Work to broaden the customer base to reduce over-reliance on an imbalanced customer mix is constant.
Competition: The growing competitive landscape within the temperature-controlled vehicle market threatens to impact our market share, but by continuing to innovate whilst remaining true to our unique value proposition, we expect to continue to attract adequate business to achieve our growth expectations.
Supply chain: Pricing and currency volatility in conjunction with extended lead times for certain products, most notably vans and chassis-cabs, remains a threat. But by maintaining close relationships with van manufacturers (OEMs) this risk can be mitigated.
Regulation: A number of stage two converters and body builders have rendered themselves insolvent as one of the outcomes of delayed product type approvals. This risk is mitigated by maintaining a strong focus on emerging vehicle types and revisions (extensions) and by maintaining a close dialogue with our industry regulator.
Future Developments
Looking ahead, CoolKit Limited remains focused on building on its successes and addressing the challenges of an ever-evolving market. The key priorities for the financial year 2024/25 include:
Expanding the product portfolio to include new innovations in sustainable temperature-controlled LCV transportation.
Strengthening our position in both domestic and international markets, particularly through strategic partnerships.
Continuing to drive operational efficiencies to improve profitability and maintain competitive advantage.
Enhancing digital transformation initiatives, such as improving our supply chain management and customer experience platforms.
We are confident that our strategic direction will lead to continued growth and success in the coming years.
CoolKit Limited is committed to sustainability and corporate responsibility.
Environment
We take a proactive approach to minimize the environmental impact of our operations, focusing on energy-efficient production processes and the development of environmentally friendly products.
For the fifteenth consecutive year, CoolKit continues to uphold its ISO14001:2015 standard - aiming to reduce environmental impact, to promote a culture of sustainability and to ensure compliance with increasingly complex waste management legislation.
A substantial new product initiative is the transport refrigeration product known as pbx - for which CoolKit has won the UK distribution rights. By using organic refrigerant this product eliminates the threat of GHG (greenhouse gas) emissions from LCV transport refrigeration systems for the first time. It is therefore the perfect complement to the growing mix of vehicles that generate zero tailpipe emissions and its potential for early adoption by customers concerned about their fleet emissions cannot be underestimated.
Social
CoolKit has become a significant employer in the East Lancashire towns of Blackburn and Burnley, employing 152 persons at the time of writing of this report.
Accordingly, we take very seriously its obligation to provide the highest standards in terms of environment, health and safety, welfare and opportunities for staff - appointing for the first time this year a Head of people.
CoolKit regularly embarks upon initiatives to raise money for local good causes and to engage at executive level with the local institutions of further and higher education.
Governance
During the year, the Company has continued to enhance its Board of Directors with the new appointments of an operations director and a sales director.
This has been done with a view to consolidating expertise in areas where there were previously gaps in skills and experience, to focus on strategic growth planning, and to ensure that the company is operating both legally and ethically – whilst also upholding the highest standards in terms of transparency and accountability.
Conclusion
The financial year 2023/24 has been a successful one for CoolKit Limited, with strong financial results and significant progress in achieving our strategic objectives.
As we continue to innovate and adapt to market demands, we are well-positioned to maintain our leadership in the temperature-controlled LCV sector.
We are committed to delivering long-term value for all our stakeholders including our customers, staff, society, suppliers and shareholders, and we look forward to another successful year ahead.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2024.
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £250,000. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
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; and
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.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Coolkit Limited (the 'company') for the year ended 30 June 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
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.
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have considered the following:
the nature of the industry and sector, control environment and business performance including the design of the Company's remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management about their own identification and assessment of the risks of irregularities;
the matters discussed among the audit engagement team and relevant specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud;
any matters we identified having obtained and reviewed the Company's documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: timing of recognition of commercial income, posting of unusual journals and complex transactions; and manipulating the Company's performance profit measures and other key performance indicators to meet remuneration targets and externally communicated targets. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included UK Companies Act, employment law, health and safety regulations, pensions legislation and tax legislation.
Audit response to risks identified
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
in addressing the identified risks of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Coolkit Limited is a private company limited by shares incorporated in England and Wales. The registered office is Thornley Avenue, Blackburn, Lancashire, BB1 3HJ.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Fields House Group Limited. These consolidated financial statements are available from its registered office Kenyon House, Thornely Avenue, Blackburn, Lancashire, BB1 3HJ.
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
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.
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 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.
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.
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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
Where applicable, stock include direct labour costs and overheads incurred in bringing the stock to their present location and condition. Labour and overhead absorption rates are calculated in accordance with management's allocation of relevant costs and estimated normal capacity of the production facilities.
All turnover relates to the company's principal activity and arose within the United Kingdom.
During the year the company had a fire in its main manufacturing property which suffered significant damage.
The exceptional income in the year reflects insurance proceeds received in relation to the business interruption claim.
The exceptional costs incurred in the year relate to costs incurred as a result of the fire which will not be repeated in future years. These costs include £1.1m to replace destroyed vehicles and £600k to replace consumable stock and items which would be fitted into vehicles.
The average monthly number of persons (including directors) employed by the 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:
More information on impairment movements in the year is given in note .
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Amounts owed from group undertakings are interest free and repayable on demand.
Long term loans are secured by way of fixed charges over the group's freehold property and a debenture incorporating fixed and floating charges over the assets of the company.
Hire purchase contracts are secured on the assets to which they relate.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The balance outstanding at the year end amounted to £22,927 (2023 - £17,567).
There is an unlimited multilateral guarantee between Coolkit Limited, Coolkit IP Limited, Farrington PLace Properties Limited and Fields House Group Limited.
There is a fixed and floating charge dated 25 February 2020 with Lancashire County Developments (Property) Limited over all the property of the company and undertaking of the company.,
There is a fixed and floating charge dated 15 January 2019 with North West Loans Npif Gp Limited over all the property and undertaking of the company.
There is a fixed and floating charge dated 27 January 2016 with Lloyds Bank PLC over all the property and undertaking of the company.
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:
On 6 July 2023 one of the companies factory's in Burnley suffered significant damage in a fire. During the year the company received £4,741,518 as part of the claim. At the balance sheet date the claim for business interruption had not been settled in full and negotiations were still ongoing with the insurance company for the remaining balance. At the balance sheet date the final payment is expected to be £2,100,000.
Coolkit Limited has taken advantage of the exemption in FRS 102 (section 33) 'related party disclosure' not to disclose transactions with other members of the group,
At the year end there were amounts owed to a director of £73,551 (2023 - £73,476).