Kettle Interiors UK Limited - Period Ending 2019-10-31

Registration number: 04995867

Kettle Interiors UK Limited

Annual Report and Financial Statements

for the Year Ended 31 October 2019

Sterling Grove Accountants Limited
Statutory Auditors
Thames House
Bourne End Business Park
Cores End Road
Bourne End
Buckinghamshire
SL8 5AS

Kettle Interiors UK Limited

Contents

Company Information	1
Strategic Report	2 to 3
Directors' Report	4
Independent Auditor's Report	5 to 7
Profit and Loss Account	8
Statement of Comprehensive Income	9
Balance Sheet	10
Statement of Changes in Equity	11
Statement of Cash Flows	12
Notes to the Financial Statements	13 to 27

Kettle Interiors UK Limited

Company Information

Directors

Mr J Kettle Mr S Ainge Mr S Caddy Mr J P Kettle Mrs R Kettle Mr I Kettle

Company secretary

Mr J P Kettle

Registered office

Thames House Cores End Road Bourne End Bucks SL8 5AS

Bankers

Barclays Bank Plc

Auditors

Sterling Grove Accountants Limited Statutory Auditors Thames House Bourne End Business Park Cores End Road Bourne End Buckinghamshire SL8 5AS

Page 1

Kettle Interiors UK Limited

Strategic Report for the Year Ended 31 October 2019

The directors present their strategic report for the year ended 31 October 2019.

Principal activity

The company operates within two distinct areas in the furniture business, retail and wholesale.

Fair review of the business

The results therefore show a 12 month period compared with the previous 18 month period (May 17 – Oct 18). The results for the company for the year, as set out on page 8, show a profit on ordinary activities before tax of £687,564 (2018: £881,638). The shareholders' funds in the company have increased to £2,852,214 (2018: £2,627,395)

The performance of the company during 2018/19 has been positive considering the challenging trading period. Turnover decreased pro rate 0.5% year on year to £17,953,072 (2018 18 months: £27,054,644). Gross profit remained the same as the previous year at 26% (2018: 26%).

Looking forward to 2019-20, the company expects a similar increase to turnover and profit with the introduction of further new product and an increase in customer base.

The company monitors a variety of financial key performance indicators including gross margin and sales per key member of staff.

Principal risks and uncertainties

The traditional risks to the business of competition from other local and national retailers continues to exist. However with a growing demand for wholesale business, our continued investment in technology to control shipments, financial management and development of relationships with overseas manufacturers puts this company in great shape to excel in the changing markets.

The directors have reconsidered their strategy in light of Covid-19 and the short-term focus has been on reducing the risks due to the pandemic.

The directors have assessed the risks arising from Covid 19 and implemented procedures to mitigate these risks.

The directors believe that the long-term strategies and financial performance of the company will resume once the current situation is remedied.

Financial instruments

Objectives and policies

The company largely sources its finished goods from overseas suppliers and is thus exposed to the financial risk of changes in foreign currency, exchange rates and interest rates.

The company's principal financial instruments comprise of bank overdrafts, trade debtors, trade creditors and property loan. The main purpose of these instruments is to finance business operations.

Page 2

Kettle Interiors UK Limited

Strategic Report for the Year Ended 31 October 2019

Price risk, credit risk, liquidity risk and cash flow risk

In respect of bank balances, the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through use of overdrafts at floating rates of interest.

Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and regular monitoring of amounts outstanding for both time and credit limits.

Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts as they fall due.

Approved by the Board on 18 September 2020 and signed on its behalf by:

.........................................
Mr I Kettle
Director

Page 3

Kettle Interiors UK Limited

Directors' Report for the Year Ended 31 October 2019

The directors present their report and the financial statements for the year ended 31 October 2019.

The directors acknowledge their responsibilities 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 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.

Directors of the company

The directors who held office during the year were as follows:

Mr J Kettle

Mr S Ainge

Mr S Caddy

Mr J P Kettle - Company secretary and director

Mrs R Kettle

Mr I Kettle

Disclosure of information to the auditors

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Approved by the Board on 18 September 2020 and signed on its behalf by:

.........................................
Mr I Kettle
Director

Page 4

Kettle Interiors UK Limited

Independent Auditor's Report to the Members of Kettle Interiors UK Limited

Opinion

We have audited the financial statements of Kettle Interiors UK Limited (the 'company') for the year ended 31 October 2019, which comprise the Profit and Loss Account, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of 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).

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.

In our opinion the financial statements:

•	give a true and fair view of the state of the company's affairs as at 31 October 2019 and of its profit for the year then ended;
•	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

•	the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
•	the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.

Page 5

Kettle Interiors UK Limited

Independent Auditor's Report to the Members of Kettle Interiors UK Limited

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•	the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

•	the Strategic Report and 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 our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

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 directors’ 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 Statement of Directors' Responsibilities [set out on page -1], 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.

As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Page 6

Kettle Interiors UK Limited

Independent Auditor's Report to the Members of Kettle Interiors UK Limited

•

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. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

•	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

•

Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.

•	Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

......................................
Mr Gianni Pietro Amasanti FCCA (Senior Statutory Auditor)
For and on behalf of Sterling Grove Accountants Limited, Statutory Auditor

Thames House
Bourne End Business Park
Cores End Road
Bourne End
Buckinghamshire
SL8 5AS

21 September 2020

Page 7

Kettle Interiors UK Limited

Profit and Loss Account for the Year Ended 31 October 2019

	Note	2019 £	2018 £
Turnover	3	17,953,072	27,054,644
Cost of sales		(13,225,752)	(19,975,056)
Gross profit		4,727,320	7,079,588
Administrative expenses		(3,927,512)	(6,055,982)
Other operating income	4	45,707	77,860
Operating profit	5	845,515	1,101,466
Interest payable and similar expenses	6	(157,951)	(219,828)
		(157,951)	(219,828)
Profit before tax		687,564	881,638
Taxation	10	(153,852)	(207,800)
Profit for the financial year		533,712	673,838

The above results were derived from continuing operations.

The notes on pages 13 to 27 form an integral part of these financial statements.

Page 8

Kettle Interiors UK Limited

Statement of Comprehensive Income for the Year Ended 31 October 2019

	2019 £	2018 £
Profit for the year	533,712	673,838
Unrealised gain/(loss) on cash flow hedges	9,107	43,222
Total comprehensive income for the year	542,819	717,060

The notes on pages 13 to 27 form an integral part of these financial statements.

Page 9

Kettle Interiors UK Limited

(Registration number: 04995867)
Balance Sheet as at 31 October 2019

	Note	2019 £	2018 £
Fixed assets
Intangible assets	11	-	30,000
Tangible assets	12	3,843,866	3,984,351
		3,843,866	4,014,351
Current assets
Stocks	13	5,209,996	3,441,385
Debtors	14	4,117,075	3,688,918
Cash at bank and in hand		166,493	398,109
		9,493,564	7,528,412
Creditors: Amounts falling due within one year	16	(8,030,493)	(6,310,668)
Net current assets		1,463,071	1,217,744
Total assets less current liabilities		5,306,937	5,232,095
Creditors: Amounts falling due after more than one year	16	(2,381,256)	(2,530,394)
Provisions for liabilities	17	(67,467)	(74,306)
Net assets		2,858,214	2,627,395
Capital and reserves
Called up share capital	19	2,000	2,000
Other reserves	20	(66,446)	(75,553)
Profit and loss account	20	2,922,660	2,700,948
Total equity		2,858,214	2,627,395

Approved and authorised by the Board on 18 September 2020 and signed on its behalf by:
 

.........................................

Mr S Caddy
Director

.........................................

Mr I Kettle
Director

The notes on pages 13 to 27 form an integral part of these financial statements.

Page 10

Kettle Interiors UK Limited

Statement of Changes in Equity for the Year Ended 31 October 2019

	Share capital £	Other reserves £	Profit and loss account £	Total £
At 1 November 2018	2,000	(75,553)	2,700,948	2,627,395
Profit for the year	-	-	533,712	533,712
Other comprehensive income	-	9,107	-	9,107
Total comprehensive income	-	9,107	533,712	542,819
Dividends	-	-	(312,000)	(312,000)
At 31 October 2019	2,000	(66,446)	2,922,660	2,858,214

	Share capital £	Other reserves £	Profit and loss account £	Total £
At 1 May 2017	2,000	(118,775)	2,490,892	2,374,117
Profit for the year	-	-	673,838	673,838
Other comprehensive income	-	43,222	-	43,222
Total comprehensive income	-	43,222	673,838	717,060
Dividends	-	-	(463,782)	(463,782)
At 31 October 2018	2,000	(75,553)	2,700,948	2,627,395

The notes on pages 13 to 27 form an integral part of these financial statements.

Page 11

Kettle Interiors UK Limited

Statement of Cash Flows for the Year Ended 31 October 2019

	Note	2019 £	2018 £
Cash flows from operating activities
Profit for the year		533,712	673,838
Adjustments to cash flows from non-cash items
Depreciation and amortisation	5	249,044	340,921
Loss on disposal of tangible assets		-	700
Finance costs	6	157,951	219,828
Income tax expense	10	153,852	207,800
		1,094,559	1,443,087
Working capital adjustments
(Increase)/decrease in stocks	13	(1,768,611)	832,579
Increase in trade debtors and other debtors	14	(428,157)	(608,388)
Increase/(decrease) in trade creditors and other creditors	16	1,311,996	(158,881)
Cash generated from operations		209,787	1,508,397
Income taxes received/(paid)	10	4,831	(396,563)
Net cash flow from operating activities		214,618	1,111,834
Cash flows from investing activities
Acquisitions of tangible assets		(78,558)	(799,167)
Proceeds from sale of tangible assets		-	2,350
Net cash flows from investing activities		(78,558)	(796,817)
Cash flows from financing activities
Interest paid	6	(157,951)	(219,828)
Proceeds from bank borrowing draw downs		102,500	1,598,862
Repayment of bank borrowing		(191,213)	(1,440,153)
Proceeds from other borrowing draw downs		190,988	953,603
Dividends paid	23	(312,000)	(463,782)
Net cash flows from financing activities		(367,676)	428,702
Net (decrease)/increase in cash and cash equivalents		(231,616)	743,719
Cash and cash equivalents at 1 November		(201,891)	(945,610)
Cash and cash equivalents at 31 October		(433,507)	(201,891)

The notes on pages 13 to 27 form an integral part of these financial statements.

Page 12

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

1	General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Thames House
Cores End Road
Bourne End
Bucks
SL8 5AS
England

These financial statements were authorised for issue by the Board on 18 September 2020.

2	Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

The financial statements are prepared in sterling which is the functional currency of the company and rounded to the nearest £.

Page 13

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Although these estimates are based on management's best knowledge of the amount, events or actions, actual results ultimately may differ from those estimates. The directors consider the valuation of fixed assets to be a critical estimate and judgement applicable to the financial statements. Tangible Fixed assets - the estimated useful economic lives of tangible fixed assets are based on management's judgement and experience. When management identifies that the actual useful economic lives differ materially from the estimates used to calculate depreciation, that charge is adjusted retrospectively. Due to the significance of tangible fixed asset investment to the company, variations between actual and estimated useful economic lives could impact operating results both positively and negatively, although historically few changes to estimated useful economic lives have been required. The company is required to evaluate the carrying values of tangible fixed assets for impairment whenever circumstances indicate, in management's judgement, that the carrying value of such assets may not be recoverable. An impairment review requires management to make subjective judgements concerning the cash flows, growth rates and discount rates of the cash generating units under review. The carrying amount as at 31st October 2019 and 2018 is shown in note 12 to these accounts.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.

The company recognises revenue when:
Revenue form sale of goods is recognised when all of the following conditions are satisfied:

the company has transferred the significant risks and rewards of ownership to the buyer: the company retains, neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be reliably measured; it is probable that the company will receive the consideration due under the transaction; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the initial transaction dates.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

Page 14

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the financial statements.

Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.

Tangible assets

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class	Depreciation method and rate
Freehold property	2% straight line basis
Plant and machinery etc	15-33% reducing balance basis

Goodwill

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class	Amortisation method and rate
Goodwill	Over 5 years

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business. Trade debtors are recognised at the transaction price, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using an average cost basis.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Page 15

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities. Trade creditors are recognised at the transaction price.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share capital

Ordinary shares are classified as equity.

Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Page 16

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

Financial instruments

Classification
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. The company enters into basic financial instrument transactions that result in the recognition of the financial assets and liabilities like trade and other debtors and creditors, and loans from banks and other third parties.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short term loan not at a market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at the market rate of interest for a similar debt instrument and subsequently at amortised cost.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discounted rate from measuring any impairment loss is the current effective interest rate determined under the contract.
 
 

Hedging
The company uses an interest rate swap financial instrument to hedge its risks associated with the bank loan detailed in note 21 to these accounts.The interest rate swap is initially recognised at fair value on the date on which the loan was entered into and is subsequently remeasured at fair value. At the inception of the loan management prepared documentation which identified the risk management objective and strategy for undertaking this hedging instrument. The hedge was expected to be highly effective in offsetting changes in cash flows and is assessed on an ongoing basis to determine the level of effectiveness. The company is committed to the interest rate swap for the duration of the bank loan, until January 2033. The ineffective portion of the gain or loss on this hedging instrument is recognised in the income statement.
 

Page 17

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

3

Revenue

The analysis of the company's revenue for the year from continuing operations is as follows:

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Wholesale	15,854,820	22,598,245
Retail	2,098,252	4,456,399
	17,953,072	27,054,644

4	Other operating income

The analysis of the company's other operating income for the year is as follows:

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Rental income	45,707	77,860

5	Operating profit

Arrived at after charging/(crediting)

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Depreciation expense	219,044	322,921
Amortisation expense	30,000	18,000
Foreign exchange losses/(gains)	25,568	(298,226)
Loss on disposal of property, plant and equipment	-	700

6	Interest payable and similar expenses

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Interest on bank overdrafts and borrowings	145,801	195,558
Interest on obligations under finance leases and hire purchase contracts	6,319	17,370
Interest on corporation tax	5,831	6,900
	157,951	219,828

Page 18

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

7	Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Wages and salaries	1,879,450	3,114,334
Social security costs	118,473	211,632
Pension costs, defined contribution scheme	54,961	23,353
	2,052,884	3,349,319

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

	2019 No.	2018 No.
Directors	6	6
Employees	50	51
	56	57

8	Directors' remuneration

The directors' remuneration for the year was as follows:

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Remuneration	31,032	37,822

9	Auditors' remuneration

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Audit of the financial statements	11,184	16,405
Other fees to auditors
Audit-related assurance services	4,000	4,395
Taxation compliance services	3,000	3,000
	7,000	7,395

 

Page 19

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

10

Taxation

Tax charged/(credited) in the income statement

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Current taxation
UK corporation tax	164,000	189,000
UK corporation tax adjustment to prior periods	(3,309)	-
	160,691	189,000
Deferred taxation
Arising from origination and reversal of timing differences	(6,839)	18,800
Tax expense in the income statement	153,852	207,800

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2018 - the same as the standard rate of corporation tax in the UK) of 19% (2018 - 19%).

The differences are reconciled below:

	Year ended 31 October 2019  £	1 May 2017 to 31 October 2018  £
Profit before tax	687,564	881,638
Corporation tax at standard rate	130,637	167,511
Effect of expense not deductible in determining taxable profit (tax loss)	2,131	22,494
Deferred tax expense (credit) from unrecognised temporary difference from a prior period	(6,839)	18,800
Increase (decrease) in UK and foreign current tax from adjustment for prior periods	(3,186)	-
Tax increase (decrease) from effect of capital allowances and depreciation	31,109	(1,005)
Total tax charge	153,852	207,800

Deferred tax

Deferred tax assets and liabilities

2019	Liability £
Differences between accumulate depreciation and capital allowances	67,467

Page 20

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

2018	Liability £
Differences between accumulate depreciation and capital allowances	74,306

11	Intangible assets

	Goodwill  £	Total £
Cost or valuation
At 1 November 2018	60,000	60,000
At 31 October 2019	60,000	60,000
Amortisation
At 1 November 2018	30,000	30,000
Amortisation charge	30,000	30,000
At 31 October 2019	60,000	60,000
Carrying amount
At 31 October 2019	-	-
At 31 October 2018	30,000	30,000

12	Tangible assets

	Freehold property £	Plant and Equipment £	Total £
Cost or valuation
At 1 November 2018	3,748,746	1,313,573	5,062,319
Additions	47,000	31,558	78,558
At 31 October 2019	3,795,746	1,345,131	5,140,877
Depreciation
At 1 November 2018	476,494	601,474	1,077,968
Charge for the year	75,360	143,683	219,043
At 31 October 2019	551,854	745,157	1,297,011
Carrying amount
At 31 October 2019	3,243,892	599,974	3,843,866
At 31 October 2018	3,272,252	712,099	3,984,351

Included within the net book value of land and buildings above is £3,243,892 (2018 - £3,272,252) in respect of freehold land and buildings.
 

Page 21

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

	2019 £	2018 £
Other tangible assets	110,520	146,032
Motor vehicles	-	77,276
	110,520	223,308

13

Stocks

	31 October 2019  £	31 October 2018  £
Other inventories	5,209,996	3,441,385

The cost of stocks recognised as an expense in the year amounted to £9,733,936 (2018 - £15,546,160).

14

Debtors

	31 October 2019  £	31 October 2018  £
Trade debtors	2,693,008	2,535,074
Other debtors	1,282,002	1,052,878
Prepayments	142,065	100,966
Total current trade and other debtors	4,117,075	3,688,918

15	Cash and cash equivalents

	31 October 2019  £	31 October 2018  £
Cash on hand	2,685	-
Cash at bank	163,808	398,109
	166,493	398,109
Bank overdrafts	(600,000)	(600,000)
Cash and cash equivalents in statement of cash flows	(433,507)	(201,891)

Page 22

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

16

Creditors

	Note	31 October 2019  £	31 October 2018  £
Due within one year
Loans and borrowings	21	1,983,627	1,732,213
Trade creditors		4,439,666	3,519,426
Amounts due to related parties	24	556,482	336,340
Social security and other taxes		66,940	279,606
Other payables		289,471	89,855
Accrued expenses		339,785	164,228
Income tax liability	10	354,522	189,000
		8,030,493	6,310,668
Due after one year
Loans and borrowings	21	2,381,256	2,530,394

17	Deferred tax and other provisions

	Deferred tax £	Total £
At 1 November 2018	74,306	74,306
Additional provisions	(6,839)	(6,839)
At 31 October 2019	67,467	67,467

18	Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £54,961 (2018 - £23,353).

Contributions totalling £6,910 (2018 - £3,895) were payable to the scheme at the end of the year and are included in creditors.

Page 23

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

19	Share capital

Allotted, called up and fully paid shares

	2019		2018
	No.	£	No.	£
Ordinary of £1 each	2,000	2,000	2,000	2,000

Rights, preferences and restrictions

Ordinary shares have the following rights, preferences and restrictions: Ordinary shares of £1 have full voting rights in the company with respect to voting, dividends and capital distributions.

20

Reserves

The changes to each component of equity resulting from items of other comprehensive income for the current year were as follows:

	Other reserves £	Total £
Unrealised gain/(loss) on cash flow hedges	9,107	9,107

The changes to each component of equity resulting from items of other comprehensive income for the prior period were as follows:

	Other reserves £	Total £
Unrealised gain/(loss) on cash flow hedges	43,222	43,222

The cash flow hedge reserve recognises the deferred liability of the fair value interest rate swap financial instrument until the hedged item impacts other comprehensive income. The amount of any excess/(deficit) of the fair value of the hedging instrument over the change in the fair value of the expected cash flow that was recognised in the other comprehensive income as at 31st October 2019 amounted to £9,107 (2018 £43,222).

21	Loans and borrowings

	31 October 2019  £	31 October 2018  £
Current loans and borrowings
Bank borrowings	1,344,775	1,049,604
Bank overdrafts	600,000	600,000
Finance lease liabilities	38,852	82,609
	1,983,627	1,732,213

Page 24

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

	31 October 2019  £	31 October 2018  £
Non-current loans and borrowings
Bank borrowings	2,334,085	2,447,592
Finance lease liabilities	47,171	82,802
	2,381,256	2,530,394

Included in the loans and borrowings are the following amounts due after more than five years:

	31 October 2019  £	31 October 2018  £
After more than five years by instalments	1,629,484	2,042,593

	-	-

The bank loan and overdraft are secured by a legal charge over the company's freehold property, a fixed and floating charge over the company assets, and by personal guarantees given by the directors.
Finance leases are secured on the assets concerned.

A bank loan £934,263 (2018 £983,285) is repayable by instalments by January 2033, interest is charged on the loan at 1.45% per annum above the Bank's Sterling Base Rate.

A bank loan of £1,105,221 (2018 £1,560,308) is repayable by instalments by October 2023. Interest is charged on the loan at 3.75% per annum above the Bank's Sterling Base Rate.

A bank loan of £494,784 (2018 £Nil) is repayable is repayable by instalments by October 2024. Interest is charged on the loan at 3.4% per annum.

Additional borrowing of £1,144,592 (2018 £953,603) was taken in the year in the form of debt factoring.

Page 25

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

22	Obligations under leases and hire purchase contracts

Finance leases

The total of future minimum lease payments is as follows:

	2019 £	2018 £
Not later than one year	38,852	82,609
Later than one year and not later than five years	47,171	82,802
	86,023	165,411

Operating leases

The total of future minimum lease payments is as follows:

	2019 £	2018 £
Not later than one year	415,998	422,332
Later than one year and not later than five years	692,141	908,084
	1,108,139	1,330,416

The amount of non-cancellable operating lease payments recognised as an expense during the year was £372,321 (2018 - £532,764).

23

Dividends

Interim dividends paid

		2019 £		2018 £
Interim dividend of £Nil (2018 - £48.936) per each Ordinary A		-		69,000
Interim dividend of £Nil (2018 - £631.17) per each Ordinary B		-		177,990
Interim dividend of £Nil (2018 - £502.66) per each Ordinary C		-		47,250
Interim dividend of £Nil per each Ordinary D		-		-
Interim dividend of £Nil (2018 - £1,850.00) per each Ordinary E		-		111,000
Interim dividend of £Nil (2018 - £975.70) per each Ordinary F		-		58,542
Interim dividend of £156.00 (2018 - £Nil) per each Ordinary		312,000		-
		312,000		463,782

Page 26

Kettle Interiors UK Limited

Notes to the Financial Statements for the Year Ended 31 October 2019

24	Related party transactions

Summary of transactions with other related parties

The company owed £556,482 (2018: £336,340) to the directors.
 

Income and receivables from related parties

2019	Other related parties £
Sale of goods	269,794
Amounts receivable from related party	468,371

2018	Other related parties £
Sale of goods	498,891
Amounts receivable from related party	236,952

Expenditure with and payables to related parties

2019	Other related parties £
Purchase of goods	9,126,750
Amounts payable to related party	4,096,860

2018	Other related parties £
Purchase of goods	12,236,117
Amounts payable to related party	2,747,078

25	Financial instruments

Financial liabilities measured at fair value

Interest rate swap contract


The fair value is £66,446 (2018 - £75,553) and the change in value included in profit or loss is £Nil (2018 - £Nil).

26	Ultimate controlling party

The ultimate controlling parties are the directors Mr J P Kettle and Mrs R Kettle, who hold 70% of the shares.

Page 27