Company Registration No. 03989743 (England and Wales)
KREMPEL UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
KREMPEL UK LIMITED
COMPANY INFORMATION
Directors
Mr J Clasen
Mr C W Reh
Secretary
Mr P J Taberner
Company number
03989743
Registered office
Queens Mill
Queen Street
Longridge
Preston
PR3 3BS
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
KREMPEL UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 25
KREMPEL UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The directors present the strategic report for the year ended 31 December 2021.
REVIEW OF BUSINESS
The company recorded a sales turnover of £22,537,695 for the year to 31 December 2021, this represents an increase in turnover of just over 1% compared to the previous year. On this turnover the business achieved a profit before taxation of £302,547 for the same period, representing an increase in profit before taxation of nearly 73% as compared to 2020.
The company started 2021 in a strong position, exceeding targets set for turnover and PBT despite a negative effect from the strengthening of Sterling against the Euro. In the second half of the year the company then saw significant impact from increasing energy costs, increased prices from raw material suppliers and, also supply chain issues which has led to many materials required being put on strict allocation from the suppliers. The company has also had difficulty in finding the staff needed to fill certain positions within the company.
There were no significant bad debts in 2021 and no post balance sheet events affecting the company.
PRINCIPAL RISKS AND UNCERTAINTIES
The management feels the company is not unduly at risk from currency exchange rates. However, any major movement of Sterling against the Euro will affect revenues whether this be negative or positive.
Credit risk is minimised by insuring our trading debtors. There is a small excess to be paid against the policy and a very small number of current customers are not covered by the policy.
The company experienced supply chain issues and increased prices for goods supplied during 2021. The significant price increases of raw materials were initially driven by freight costs, then in the second half of the year the global energy crisis had a severe effect on pushing prices even higher. The company expects these issues to continue to have an impact in 2022.
Now that the UK has left the EU, the company is still experiencing many issues when importing materials from within the EU, this is expected to have a continued impact in 2022.
GOING CONCERN
The company has planned for increased turnover in 2022 against 2021, by increasing selling prices. By monitoring and controlling costs we envisage the ability for the company to meet necessary running costs in 2022.
The company’s liquidity will continue to be funded by on-going operations.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
FINANCIAL INSTRUMENTS
The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities, which are conducted predominantly in Sterling and Euros.
FINANCIAL COMMITMENTS
The company is committed to pay out a bonus in 2022 to employees, this is based on the performance of the company in 2021. The company intends to settle the outstanding PAYE in line with government policy.
KREMPEL UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
FUTURE DEVELOPMENTS
The company has continued with its capital investment strategy and at the end of 2021, we completed the installation of a new state of the art Regenerative Thermal Oxidiser. Our new RTO not only doubles our existing capacity it also replaces our existing 25-year-old oxidiser to provide a more energy efficient and a superior environmental solution.
The company now looks to complete some specific investment during 2022, to expand manufacturing capacity and capability in both our mica and textile business units.
KEY PERFORMANCE INDICATORS
Target Actual
PBT 3.2% 1.3%
Material 50.45% 52.08%
Direct Labour 12.87% 12.55%
Cost of Sales + Personnel 84.66% 86.56%
Personnel Ratio 26.58% 25.69%
Mr C W Reh
Director
11 March 2022
KREMPEL UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2021.
On 27th September 2021, a Special Resolution was passed, thereby changing the name of the company from Jones Stroud Insulations Limited to Krempel UK Limited.
Principal activities
The company’s principal activities during the year were the manufacture of Electrical Insulation, Thermal Insulation and Composite Materials for a range of high technology markets including high voltage power generation, low voltage rotating machines, wind power generation, automotive and aerospace.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr J Clasen
Mr C W Reh
Research and development
During, the course of the year the company continued to invest in the research and development of new and existing products for both the UK and export markets.
Future developments
Information regarding future developments of the company can be found in the strategic report.
Auditor
MHA Moore and Smalley were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
On behalf of the board
Mr C W Reh
Director
11 March 2022
KREMPEL UK LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
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.
KREMPEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KREMPEL UK LIMITED
- 5 -
Opinion
We have audited the financial statements of Krempel UK Limited (the 'company') for the year ended 31 December 2021 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 FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
KREMPEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KREMPEL UK LIMITED
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors'
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
directors are
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors
either
intend
to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud
,
are
detailed below:
-
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations;
-
Enquires with management about any known or suspected instances of fraud;
-
Examination of journal entries and other adjustments to test for appropriateness and identify any instances of management override of controls, including with regard to performance related remuneration;
-
Challenging assumptions and judgements made by management in their accounting estimates; and
-
Review of legal and professional expenditure to identify any evidence of ongoing litigation or enquiries.
Because of the field in which the client operates we identified that employment law, health and safety legislation and compliance with the UK Companies Act are the area
s
most likely to have a material impact on the financial statements.
KREMPEL UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KREMPEL UK LIMITED
- 7 -
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognize the non-compliance.
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.
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.
Joe Sullivan (Senior Statutory Auditor)
For and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
KREMPEL UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 8 -
2021
2020
Notes
£
£
Turnover
3
22,537,695
22,306,647
Cost of sales
(17,110,197)
(16,874,940)
Gross profit
5,427,498
5,431,707
Administrative expenses
(5,134,656)
(5,371,592)
Other operating income
9,698
114,847
Operating profit
4
302,540
174,962
Interest receivable and similar income
7
49
Interest payable and similar expenses
8
(42)
(37)
Profit before taxation
302,547
174,925
Tax on profit
9
(267,767)
(39,929)
Profit for the financial year
34,780
134,996
The Statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
KREMPEL UK LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 9 -
2021
2020
Notes
£
£
£
£
Fixed assets
Goodwill
11
5,628
Tangible assets
12
7,394,939
6,911,852
Investments
13
20,000
20,000
7,414,939
6,937,480
Current assets
Stocks
15
4,263,759
3,050,231
Debtors
16
5,734,839
6,764,247
Cash at bank and in hand
658,850
400,895
10,657,448
10,215,373
Creditors: amounts falling due within one year
17
(2,066,060)
(1,483,768)
Net current assets
8,591,388
8,731,605
Total assets less current liabilities
16,006,327
15,669,085
Creditors: amounts falling due after more than one year
18
(528,602)
(528,602)
Provisions for liabilities
Deferred tax liability
20
845,316
542,854
(845,316)
(542,854)
Net assets
14,632,409
14,597,629
Capital and reserves
Called up share capital
22
4,667,001
4,667,001
Profit and loss reserves
9,965,408
9,930,628
Total equity
14,632,409
14,597,629
The financial statements were approved by the board of directors and authorised for issue on 11 March 2022 and are signed on its behalf by:
Mr C W Reh
Director
Company Registration No. 03989743
KREMPEL UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2020
4,667,001
10,595,632
15,262,633
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
134,996
134,996
Dividends
10
-
(800,000)
(800,000)
Balance at 31 December 2020
4,667,001
9,930,628
14,597,629
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
34,780
34,780
Balance at 31 December 2021
4,667,001
9,965,408
14,632,409
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
1
Accounting policies
Company information
Krempel UK Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Queens Mill, Queen Street, Longridge, Preston, PR3 3BS.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
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
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues
:
The
disclosure
requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
-
Section 26 ‘Share based Payment’
:
Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
-
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
August Krempel Söhne GmbH & Co. KG
. These consolidated financial statements are
filed at Companies House, together with the entity financial statements of the immediate parent company, Krempel (UK) Holdings Limited.
1.2
Going concern
The financial statements demonstrate that the company has maintained the demand for its products and profitability amidst the impact of COVID-19 pandemic and various supply chain issues affecting both the sector and wider economy.
true
The company has a strong pipeline of work at the date of signing the financial statements, with actual profits before taxation ahead of budget at 28 February 2022. The company generated significant operating cash flows of £1,520,000 during the year under report and is part of a strong, global group, from which it could seek financial and operational support, should it ever be required.
Therefore, a
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 12 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
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.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
Straight line over the estimated remaining life of between 5-40 years
Plant and equipment
Straight line over the estimated remaining life of between 1-25 years
Fixtures and fittings
Straight line over the estimated remaining life of 20 years
Motor vehicles
Straight line over the estimated remaining life of three years
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
.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
Assets in course of construction represent the cost incurred on tangible fixed assets under construction which are not ready and available for use at the balance sheet date. These assets are not depreciated. Depreciation only starts once the assets are finished and have been transferred to te appropriate tangible fixed assets category.
During the reporting period, the company amended its accounting estimates regarding useful economic life of assets and to adopt a straight line depreciation model. Each is in line with the estimation procedures adopted by fellow group companies.
Per note 12 to the financial statements, the depreciation charge for the year following this change was £692,481. Applying the accounting estimates in use during the prior financial period would have resulted in a charge of £774,157. Therefore depreciation charged in the year reduced by £81,676 as a consequence of the change in accounting estimate.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in
profit
or
loss
.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.7
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
.
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.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
All of the company's financial assets are basic financial instruments.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including
creditors 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
paymen
ts 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. A
m
ounts 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
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 lease
s
asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
The company has made use of the HMRC Coronavirus Job Retention Scheme, which was introduced to help with employee costs, due to the Coronavirus pandemic.
1.17
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 17 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Depreciation and useful economic life of tangible fixed assets
Depreciation is provided so as to write down the assets to their residual values over their estimated useful lives. The selection of these residual values and estimated lives requires the exercise of management judgement and is reviewed at each balance sheet date.
Key sources of estimation uncertainty
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.
WIP and finished goods valuation
Within the financial statements, an estimate is made for the labour and overhead rates applied to work in progress and finished goods. Management calculate the labour and overhead rates using expected costs and normal working activity of the company. As such, these rates applied, and subsequently the valuation of work in progress and finished goods, is an estimation of uncertainty.
3
Turnover and other revenue
2021
2020
£
£
Other significant revenue
Interest income
49
-
Grants received
9,698
114,847
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
3
Turnover and other revenue
(Continued)
- 18 -
2021
2020
£
£
Turnover analysed by geographical market
United Kingdom
7,872,371
6,577,125
Europe
10,103,626
11,766,644
Asia
2,348,102
1,854,913
Africa
-
24,518
Americas
302,915
100,929
Australasia
180,401
193,106
Eastern Block
1,730,280
1,789,412
22,537,695
22,306,647
The company operates in three principal areas of activity, that of (1) manufacturers of materials for the electrical, consumer product and reinforced plastics and (2) manufacturers of electrical insulation/engineering materials, precision moulding and machined parts industries, (3) manufacturers of electrical and thermal insulants.
4
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
320,120
(220,272)
Government grants
(9,698)
(114,847)
Fees payable to the company's auditor for the audit of the company's financial statements
22,720
18,000
Depreciation of owned tangible fixed assets
692,481
803,830
Loss/(profit) on disposal of tangible fixed assets
33,637
(1,244)
Amortisation of intangible assets
5,628
184,827
Operating lease charges
70,879
74,276
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Production
151
167
Sales and Marketing
7
8
Administration
13
14
Total
171
189
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
5
Employees
(Continued)
- 19 -
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
5,110,236
5,898,670
Social security costs
481,558
583,164
Pension costs
199,276
272,669
5,791,070
6,754,503
6
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
193,520
Company pension contributions to defined contribution schemes
18,152
211,672
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 0 (2020 - 1).
During the current year, the directors are remunerated by other group companies on the basis that the principal elements of their roles do not relate to Krempel UK Limited.
7
Interest receivable and similar income
2021
2020
£
£
Interest income
Interest on bank deposits
49
8
Interest payable and similar expenses
2021
2020
£
£
Other interest
42
37
9
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
75,320
Adjustments in respect of prior periods
(34,695)
(31,511)
Total current tax
(34,695)
43,809
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
9
Taxation
2021
2020
£
£
(Continued)
- 20 -
Deferred tax
Origination and reversal of timing differences
99,586
(3,880)
Changes in tax rates
202,876
Total deferred tax
302,462
(3,880)
Total tax charge
267,767
39,929
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:
2021
2020
£
£
Profit before taxation
302,547
174,925
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
57,484
33,236
Tax effect of expenses that are not deductible in determining taxable profit
15,009
7,594
Tax effect of income not taxable in determining taxable profit
(954)
Adjustments in respect of prior years
(35,051)
Effect of change in corporation tax rate
195,960
Group relief
(10,647)
Depreciation on assets not qualifying for tax allowances
5,403
Amortisation on assets not qualifying for tax allowances
35,117
Research and development tax credit
(31,511)
Effects of other reliefs
35,319
737
Taxation charge for the year
267,767
39,929
In March 2021 the Chancellor confirmed, in the budget, an increase in the corporation tax rate from 19% to 25%. The Finance Bill 2021 had its third reading on 24 May 2021 and is now considered substantively enacted. The timing differences expected to reverse on or after 1 April 2023 have been accounted for at 25%.
10
Dividends
2021
2020
£
£
Final paid
800,000
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
11
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2021 and 31 December 2021
3,620,925
Amortisation and impairment
At 1 January 2021
3,615,297
Amortisation charged for the year
5,628
At 31 December 2021
3,620,925
Carrying amount
At 31 December 2021
At 31 December 2020
5,628
12
Tangible fixed assets
Freehold land and buildings
Assets under construction
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2021
2,789,531
307,231
15,023,136
913,070
22,149
19,055,117
Additions
1,156,850
52,356
1,209,206
Disposals
(1,968)
(166,357)
(168,325)
Transfers
(307,231)
307,231
At 31 December 2021
2,787,563
16,320,860
965,426
22,149
20,095,998
Depreciation and impairment
At 1 January 2021
597,743
10,713,146
816,536
15,840
12,143,265
Depreciation charged in the year
56,962
609,452
23,964
2,103
692,481
Eliminated in respect of disposals
(654)
(134,033)
(134,687)
At 31 December 2021
654,051
11,188,565
840,500
17,943
12,701,059
Carrying amount
At 31 December 2021
2,133,512
5,132,295
124,926
4,206
7,394,939
At 31 December 2020
2,191,788
307,231
4,309,990
96,534
6,309
6,911,852
Land and Buildings includes £125,000 (2020: £125,000) in respect of land which has not been depreciated
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
13
Fixed asset investments
2021
2020
Notes
£
£
Investments in subsidiaries
14
20,000
20,000
14
Subsidiaries
Details of the company's subsidiaries at 31 December 2021 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Krempel Limited
Queen Street, Longridge, Preston, PR3 3BS
Ordinary Shares
100.00
15
Stocks
2021
2020
£
£
Raw materials and consumables
2,539,942
1,776,551
Work in progress
1,488,692
1,133,634
Finished goods and goods for resale
235,125
140,046
4,263,759
3,050,231
16
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
2,040,387
1,866,939
Corporation tax recoverable
97,460
Amounts owed by group undertakings
3,440,130
4,681,002
Other debtors
46,462
118,111
Prepayments and accrued income
110,400
98,195
5,734,839
6,764,247
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
17
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Bank loans and overdrafts
19
53,712
Trade creditors
854,864
824,454
Corporation tax
25,320
Other taxation and social security
135,201
186,840
Other creditors
173,294
Accruals and deferred income
902,701
393,442
2,066,060
1,483,768
18
Creditors: amounts falling due after more than one year
2021
2020
£
£
Amounts owed to group undertakings
528,602
528,602
19
Loans and overdrafts
2021
2020
£
£
Bank overdrafts
53,712
Payable within one year
53,712
An inter-company guarantee, dated 23 March 2007, is held between the reporting entity, Krempel Industries Limited, Krempel (UK) Holdings Limited and Krempel Limited.
A legal charge over land and buildings at Standard Works, Queen Street, Longridge, Preston, PR3 3BS, dated 5 July 2004, is held by The Royal Bank of Scotland PLC.
20
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2021
2020
Balances:
£
£
Accelerated capital allowances
854,900
542,854
Short term timing difference
(9,584)
-
845,316
542,854
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
20
Deferred taxation
(Continued)
- 24 -
2021
Movements in the year:
£
Liability at 1 January 2021
542,854
Charge to profit or loss
99,586
Effect of change in tax rate - profit or loss
202,876
Liability at 31 December 2021
845,316
It is not possible to accurately predict the movement of deferred taxation provisions in the upcoming twelve months as the company's capital expenditure programme has not been finalised.
21
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
199,276
272,669
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
22
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Share Capital of £1 each
4,667,001
4,667,001
4,667,001
4,667,001
23
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2021
2020
£
£
Within one year
84,162
104,819
Between two and five years
73,246
133,368
In over five years
1,277
158,685
238,187
24
Capital commitments
Contracted, but not provided for within the financial statements: £520,702 (2020: £1,109,765).
KREMPEL UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
25
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2021
2020
£
£
Aggregate salary and social security (including pension and benefits)
467,851
756,183
26
Ultimate controlling party
The immediate parent undertaking is Krempel (UK) Holdings Limited, a company registered in England and Wales.
The ultimate parent company during the year under review was August Krempel Soehne GmbH (Papierfabrikstrasse 4, 71665 Vaihingen, Enz, Germany), a company registered in Germany.
There is no ultimate controlling party.
2021-12-31
2021-01-01
false
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