The directors present the strategic report for the year ended 31 December 2025.
The results for the year and the financial position of KHS UK Limited are shown in the annexed financial statements. KHS UK Limited (“KHS UK”) is a wholly owned subsidiary of KHS GmbH and is responsible for the sale, servicing and upgrading of KHS machinery in the UK and Ireland. KHS UK was incorporated in 1973 and the group is regarded as one of the leading suppliers of machinery to the food and beverage industry in the UK and Ireland. There were no major changes to the Company and Group structure during the year. There have been no significant post balance sheet events. In 2025 the company continued to experience more stable trading conditions following the volatility experienced in prior years resulting from COVID-19 and Brexit. UK economic inflationary pressures resulting from higher energy prices, higher labour costs and new Extended Producer Responsibility (EPR) continued to be prevalent in 2025. The company continued to face exchange rate volatility and rising operational costs. Despite this, KHS UK remained profitable and turned a profit before taxation of £2.15m (2024: £2.43m) and a Dividend of £2.99m was paid (2024: £3m). The profit and loss reserves of the Company at the year-end were £5.48m (2024: £6.85m). |
The main risks arising from KHS UK’s activities are exchange rate risk and credit risk. The Board of directors reviews these risks and agreed the following policies for managing each of these risks.
Exchange rate risk
KHS UK purchases a substantial amount of parts from KHS GmbH in EUR currency, and contracts with customers in Ireland in Euros, albeit on a much smaller scale. KHS UK also undertakes installation and commissioning projects for KHS GmbH in Euros. A significant movement in the EUR: GBP rate can therefore lead to exchange gains or losses accumulating in the financial results. The company manages this risk by carefully monitoring exchange rate movements and considers hedging and forward contracts when appropriate.
Credit risk
A significant proportion of KHS UK’s current assets are derived from Trade Receivables, which are inherently subject to credit risk. The risk is concentrated to a limited number of customers at any point in time and includes receivables from the company’s parent company KHS GmbH. The company’s key account customers are also customers of the group and have excellent credit ratings. Despite this, KHS UK conducts ongoing monitoring of trade receivables, and the use of external credit agency data is used to manage this risk.
We believe that the KPI’s defined below provide a rounded view as to how the company is performing against our primary objectives and strategies. These KPI’s encompass the important areas of customer service, as well as financial indicators taking into consideration the interests of all our stakeholders.
Turnover for the year was £19.59m (2024: £19.74m) and has increased in line with expectations. This stability can be attributed to an increase in Installation and commissioning sales of £1.5m, whilst after-sales faced a decrease of £1.66M. The withdrawal of tax incentives has seen a slowdown in UK companies investing in new beverage production lines, which in turn impacted our after sales market. Increased pressures from customers due to local purchasing and engineering being sourced also contributed to the decline in after sales.
Gross Margin was 25.45% (2024: 24.92%). During 2025 the company faced operational challenges with significant training costs for employees taken on in the prior year alongside structural changes causing a rise in employee numbers. This resulted in increased costs to the company which were non-recoverable.
Profit before tax was £2.15m (2024: £2.43m).
Key non-financial indicators including the monitoring of our employee’s health and safety and welfare, of which there were no accidents in the year or reportable health and safety incidents. Welfare of our employee’s has continued to improve with the maintained flexibility of home working providing an improved work life balance. Dedicated support for any employee experiencing mental health issues has also been implemented.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2025.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £2,986,060. 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:
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
In accordance with the company's articles, a resolution proposing that Thomas & Young Limited be reappointed as auditor of the company will be put at a General Meeting.
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
United Kingdom 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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; 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.
We have audited the financial statements of KHS UK Limited (the 'company') for the year ended 31 December 2025 which comprise the income statement, the statement of financial position, 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 101 Reduced Disclosure Framework (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
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included the following.
- Enquiry of management and those charged with governance around actual and potential litigation and claims.
- Assessing the extent of compliance with the laws and regulations considered to have a material effect on the financial statements or the operations of the company through enquiry and inspection.
- 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, and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
The income statement has been prepared on the basis that all operations are continuing operations.
KHS UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is 6 Monkspath Business Park, Highlands Road, Shirley, Solihull, West Midlands, B90 4NY. The company's principal activities and nature of its operations are disclosed in the directors' report.
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 £.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:
inclusion of an explicit and unreserved statement of compliance with IFRS;
presentation of a statement of cash flows and related notes;
disclosure of the objectives, policies and processes for managing capital;
disclosure of key management personnel compensation;
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
the effect of financial instruments on the statement of comprehensive income;
comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment, intangible assets, investment property and biological assets;
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
a reconciliation of the number and weighted average exercise prices of share options, how the fair value of share-based payments was determined and their effect on profit or loss and the financial position;
comparative narrative information;
for financial instruments, investment property and biological assets measured at fair value and within the scope of IFRS 13, the valuation techniques and inputs used to measure fair value, the effect of fair value measurements with significant unobservable inputs on the result for the period and the impact of credit risk on the fair value; and
related party disclosures for transactions with the parent or wholly owned members of the group.
Where required, equivalent disclosures are given in the group accounts of Salzgitter Ag. The group accounts of Salzgitter Ag are available to the public and can be obtained as set out in note 22.
To determine whether to recognise revenue, the company follows a 5-step process:
Identifying the contract with a customer
Identifying the performance obligations
Determining the transaction price
Allocating the transaction price to the performance obligations
Recognising revenue when/as performance obligation(s) are satisfied
Revenue is recognised either at a point in time or over time, when (or as) the company satisfies performance obligations by transferring the promised goods or services to its customers.
Revenue from the sale of machines and spares for a fixed fee is recognised when or as the company transfers control (usually upon delivery of the goods) of the assets to the customer. Invoices for goods or services transferred are due upon receipt by the customer. Often the company requires a deposit to be placed upon order of large machines. This is received in advance of any performance obligations being satisfied and therefore is shown as a contract liability until obligations have been satisfied.
The company provides services relating to the modification or repair of new or existing customer machines. Revenue from these services is recognised on a time basis as the services are provided. The company measures its progress towards complete satisfaction of the performance obligation by comparing actual hours spent to date with the total estimated hours required to install each part. The hours-to-hours basis provides the most faithful depiction of the transfer of services to each customer due to the company's ability to make reliable estimates of the total number of hours required to perform, arising from its significant historical experience in providing these services.
Revenue from the installation of entire lines and single machines is recognised in line with the performance obligations of the contract. Due to new and unpredictable nature of these contracts, revenue is recognised at cost value.
Revenue from commissions is recognised when the amount of revenue can be measure reliably, it is probable that the company will receive the consideration due under the contract and both parties have completed their performance obligations in respect of the contract.
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:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
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.
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.
Value is based on the cost of purchase on a first in, first out basis.
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
The tax expense represents the sum of the tax currently payable and deferred tax.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset 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.
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently adjusted for remeasurements of the lease liability and applies the relevant cost model, fair value model or revaluation model as set out within the accounting policies for the applicable asset class. Where the cost model is applied, the asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term, and is periodically reduced by impairment losses, if any.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is reassessed at each financial period end to reflect lease modifications and any changes to the factors considered at initial measurement, as set out above. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
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.
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, if the revision affects only that period, or in the period of the revision and future periods if 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 outlined below.
Trade receivables are reviewed to ensure amounts are in line with agreed terms. A further assessment is made regarding the financial status of companies. If there is an indication of non-recoverability of debtors or accrued income that is to be billed to customers, then a provision will be made against the balances.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2024 - 1).
The charge for the year can be reconciled to the profit per the income statement as follows:
Property, plant and equipment includes right-of-use assets, as follows:
Contract liabilities are included within "Trade and other receivables" on the face of the balance sheet. They arise from the satisfaction of performance obligations within the period in advance of the contract invoices being raised.
Contract liabilities are included within "Current liabilities" on the face of the balance sheet. They arise from deposits paid by customers required to place orders for parts and service contract monies received in advance.
The company's contracts are for the delivery of goods and services within the next 12 months, for which the practical expedient in paragraph 121(a) of IFRS 15 applies.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The fair value of the company's lease obligations is approximately equal to their carrying amount.
Lease liabilities represent amounts owed by the company for its property and its cars. The property lease is for a long term of ten years with an option to break after five years. The car lease terms are negotiated for an average of 3-4 years. The property rentals are fixed for five years and the car rentals are fixed for three years. The liabilities above are secured over the assets to which they relate.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
The deferred tax liability set out above is expected to reverse within 1-2 years and relates to accelerated capital allowances that are expected to mature within the same period.