Kiowa Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02667552 (England and Wales)

KIOWA LIMITED

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE PERIOD

1 FEBRUARY 2021 TO 31 DECEMBER 2021

Page

Company Information

1

Strategic Report

2

to

3

Report of the Directors

4

to

5

Report of the Independent Auditors

6

to

9

Statement of Comprehensive Income

10

Statement of Financial Position

11

Statement of Changes in Equity

12

Notes to the Financial Statements

13

to

24

DIRECTORS:

A Towers

S Galbussera

E Gennasio

REGISTERED OFFICE:

18 Northgate

Sleaford

Lincolnshire

NG34 7BJ

BUSINESS ADDRESS:

The Reservation

East Road

Sleaford

Lincolnshire

NG34 7BY

REGISTERED NUMBER:

02667552 (England and Wales)

SENIOR STATUTORY AUDITOR:

Simon Syddall BFP FCA

AUDITORS:

Duncan & Toplis Limited, Statutory Auditor

18 Northgate

Sleaford

Lincolnshire

NG34 7BJ

The directors present their strategic report for the period 1 February 2021 to 31 December 2021.

REVIEW OF BUSINESS

The trading period has been changed to align with the new parent company. This resulted in an 11 month trading period, the new trading period ending 31st December 2021.

In the period, the Company's operating profit has increased to £1,191,492 compared to £435,567 in the previous year. The results were affected by an impairment of goodwill of £351,194 (Administration expenses), and a dividend received of £948,819 which is shown within other operating income. Both the impairment of investments and the dividend received relate to the subsidiaries previously held.

The Company's main key performance indicator is gross profit achieved. In the period to 31 December 2021 this fell to 36.2% (January 2021: 37.4%). The main reason for the change being an increase in vendor freight and raw material costs.

The trading period presented challenges in terms of the supply chain recovering from the COVID-19 pandemic. However, revenue, operating profit and gross profit has remained relatively in line with the prior periods despite the shortened reporting period of 11 months. The sale of Kiowa Limited during the period has presented new opportunities in terms of business.

PRINCIPAL RISKS AND UNCERTAINTIES

The Company reviews its risks regularly and considers the principal risk that it faces is the ability to provide a company wide, consistent, first class service for all products and services to maintain its excellent reputation and to seek repeat custom. The Company will manage this risk through consistent monitoring and investment in the IT platform, ISO systems and staff.

The Company is also exposed to the risk of changes in the market prices for some commodities. Aside from any general market inflation part of this exposure relates to Euro and Dollar exchange rate fluctuations.

The Company aims to reduce the risk of foreign currency exposure by equalising the purchases and sales of goods in these currencies to create a natural hedge as well as the use of forward contracts where required.

The financial risks that the Company is exposed to, as well as the policies for managing these risks are detailed below:

Interest rate risk

The Company looks to finance some of its operations to get an appropriate mix of capital and debt. It does this by limiting the amount of floating debt that it has and looks to pool its funds with other group companies to minimise the interest payments.

Credit risk

The Company has put appropriate procedures in place to check the credit risk of each credit customer and manage the collection of each of the debts. These trade debtors are regularly reviewed to ensure they are collected within their credit terms.

Liquidity risk

The Company has appropriate facilities to manage any changes in working capital.

ON BEHALF OF THE BOARD:

A Towers - Director

12 May 2022

The directors present their report with the financial statements of the company for the period 1 February 2021 to 31 December 2021.

PRINCIPAL ACTIVITY

The principal activity of the company in the period under review was that of wholesale of rubber and plastic materials.

DIVIDENDS

No dividends will be distributed for the period ended 31 December 2021.

DIRECTORS

A Towers has held office during the whole of the period from 1 February 2021 to the date of this report.

Other changes in directors holding office are as follows:

Mrs L J Needham - resigned 26 February 2021

N Colman - resigned 26 February 2021

Miss K J Earth - resigned 26 February 2021

Mrs C L Needham - resigned 26 February 2021

S Galbussera - appointed 26 February 2021

E Gennasio - appointed 26 February 2021

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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;

-	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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Duncan & Toplis Limited, Statutory Auditor will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

A Towers - Director

12 May 2022

Opinion

We have audited the financial statements of Kiowa Limited (the 'company') for the period ended 31 December 2021 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity 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).

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 period 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 Auditors' 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.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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.

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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

-	the Strategic Report and the Report of the Directors 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 identified material misstatements in the Strategic Report or the Report of the Directors.

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 four, 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 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.

Auditors' 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 a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We have identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial experience, knowledge of the sector, a review of regulatory and legal correspondence and through discussions with Directors and other management obtained as part of the work required by auditing standards. We have also discussed with the Directors and other management the policies and procedures relating to compliance with laws and regulations. We communicated laws and regulations throughout the team and remained alert to any indications of non-compliance throughout the audit.

The potential impact of different laws and regulations varies considerably. Firstly, the company is subject to laws and regulations that directly impact the financial statements (for example financial reporting legislation) and we have assessed the extent of compliance with such laws as part of our financial statements audit.

Secondly, the company is subject to other laws and regulations where the consequence for non-compliance could have a material effect on the amounts or disclosures in the financial statements. We identified the following areas as those most likely to have such an effect: Health and Safety regulations and Employment laws.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other management and inspection. This inspection included an assessment of the company's employment and health and safety controls. Through these procedures, if we became aware of any non-compliance, we considered the impact on the procedures performed on the related financial statement items.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. The further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. As with any audit, there is a greater risk of non-detection of irregularities as these may involve collusion, intentional omissions of the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors 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.

Simon Syddall BFP FCA (Senior Statutory Auditor)

for and on behalf of Duncan & Toplis Limited, Statutory Auditor

18 Northgate

Sleaford

Lincolnshire

NG34 7BJ

16 May 2022

REVENUE

5

11,251,038

11,296,076

Cost of sales

7,177,454

7,069,822

GROSS PROFIT

4,073,584

4,226,254

Administrative expenses

3,847,753

4,028,156

225,831

198,098

Other operating income

6

965,661

237,469

OPERATING PROFIT

8

1,191,492

435,567

Exceptional item

9

-

76,881

1,191,492

358,686

Amounts written off investments

10

788,587

53,448

402,905

305,238

Interest payable and similar expenses

11

-

1,533

PROFIT BEFORE TAXATION

402,905

303,705

Tax on profit

12

119,379

-

PROFIT FOR THE FINANCIAL PERIOD

283,526

303,705

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

283,526

303,705

FIXED ASSETS

Intangible assets

14

-

359,760

Property, plant and equipment

15

171,094

206,126

Investments

16

-

788,588

171,094

1,354,474

CURRENT ASSETS

Inventories

17

1,645,995

1,357,159

Debtors

18

1,839,209

1,714,055

Cash at bank and in hand

19

801,605

757,112

4,286,809

3,828,326

CREDITORS

Amounts falling due within one year

20

1,636,700

2,664,579

NET CURRENT ASSETS

2,650,109

1,163,747

TOTAL ASSETS LESS CURRENT LIABILITIES

2,821,203

2,518,221

PROVISIONS FOR LIABILITIES

23

19,456

-

NET ASSETS

2,801,747

2,518,221

CAPITAL AND RESERVES

Called up share capital

24

1,000

1,000

Retained earnings

25

2,800,747

2,517,221

SHAREHOLDERS' FUNDS

2,801,747

2,518,221

The financial statements were approved by the Board of Directors and authorised for issue on 12 May 2022 and were signed on its behalf by:

A Towers - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 February 2020

1,000

2,213,516

2,214,516

Changes in equity

Total comprehensive income

-

303,705

303,705

Balance at 31 January 2021

1,000

2,517,221

2,518,221

Changes in equity

Total comprehensive income

-

283,526

283,526

Balance at 31 December 2021

1,000

2,800,747

2,801,747

1.	CHANGE IN REPORTING PERIOD

The reporting period has been shortened to bring the reporting date in line with that of the parent company. Due to this change, the comparative amounts in the financial statements are not entirely comparable.

2.	STATUTORY INFORMATION

Kiowa Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

3.	STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

4.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention.

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

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 33.7.

Preparation of consolidated financial statements

The financial statements contain information about Kiowa Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, Alfa Gomma S.p.A., Via Torri Bianche 1, Vimercate (MB) CAP 20871, Italy.

Turnover

Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2015, is being amortised evenly over its estimated useful life of ten years.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Leasehold property

-

25% on reducing balance and Straight line over the term of the lease

Plant and machinery

-

25% on cost

Motor vehicles

-

25% on cost

Office equipment

-

25% on cost

Tangible fixed assets are held at cost less depreciation.

Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the company will comply with conditions attaching to them and the grants will be received using the accrual model.

Investments in subsidiaries

Investments in subsidiary undertakings are valued and recognised at cost. They are then subsequently impaired where necessary to the recoverable amount.

Stocks

Stocks are valued at the lower of costs and fair value less costs to complete and sell after making allowance for obsolete and slow moving items.

Stocks are accounted for on a first-in first-out basis.

Taxation

Taxation for the period comprises current tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the profit and loss account in the period to which they relate.

Critical accounting judgements and estimation uncertainty

In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(i) Intangible fixed assets

In 2015 Kiowa Limited acquired 100% of the share capital of Parkland Engineering Limited. Goodwill is deemed to have a finite life of ten years by the directors. This has previously been twenty years but due to new information this has now been reduced. Ten years is the default amortisation period for goodwill unless there are factors that suggest otherwise.

(ii) Stock provisions

Kiowa Limited trades in wholesale of rubber and plastic materials and is subject to changing customer demands and economic trends. As a result, it is necessary to consider the recoverability of the cost of stock and the associated provisioning required. See note 15 for the net carrying amount of the stock and amortised provision.

Financial instruments

The company has adopted the Sections 11 and 12 of FRS 102 in respect of financial instruments.

Basic financial assets, including trade and other debtors and cash and bank balances are initially recognised at transaction price, 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.

At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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.

Basic financial liabilities, including trade and other 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 receipts discounted at a market rate of interest.

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. Accounts 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.

5.

REVENUE

The turnover and profit before taxation are attributable to the one principal activity of the company.

The company's principal activity was carried on within the United Kingdom. An analysis of turnover by geographical market is given below:

December 2021

January 2021

Sales - United Kingdom

93.00%

90.18%

Sales - Export

7.00%

9.82%

100.00%

100.00%

6.	OTHER OPERATING INCOME

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Rents received

3,333

4,000

Sundry receipts

-

1

Management charge

-

15,000

Government grants

13,509

218,468

Dividends received

948,819

-

965,661

237,469

Coronavirus Job Retention Scheme Grants of £13,509 (Prior year: £218,468) were received in the year.

7.	EMPLOYEES AND DIRECTORS

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Wages and salaries

2,051,632

2,346,933

Social security costs

209,405

240,315

Other pension costs

66,066

77,300

2,327,103

2,664,548

The average number of employees during the period was as follows:

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

Sales and delivery

28

31

Purchasing and stores

42

42

Office and administration

9

11

79

84

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Directors' remuneration

99,853

332,417

Directors' pension contributions to money purchase schemes

3,924

12,388

8.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Depreciation - owned assets

86,026

99,569

Profit on disposal of fixed assets

(11,660

)

(5,167

)

Goodwill amortisation

8,566

102,788

Operating lease land and buildings

259,407

281,613

Operating lease motor vehicles

76,970

96,549

Auditors remuneration

12,900

12,500

9.	EXCEPTIONAL ITEMS

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Exceptional item

-

(76,881

)

The exceptional expense in the previous period related to redundancy payments.

10.

AMOUNTS WRITTEN OFF INVESTMENTS

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Amount written off investment

788,587

53,448

11.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Bank interest

-

1,533

12.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the period was as follows:

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Current tax:

UK corporation tax

99,923

-

Deferred tax

19,456

-

Tax on profit

119,379

-

Reconciliation of total tax charge included in profit and loss

The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The difference is explained below:

Period

1.2.21

to

Year Ended

31.12.21

31.1.21

as restated

£

£

Profit before tax

402,905

303,705

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2021 - 19%)

76,552

57,704

Effects of:

Expenses not deductible for tax purposes

1,091

1,256

Depreciation in excess of capital allowances

68,765

21,885

Utilisation of tax losses

(14,716

)

-

Amounts written off on investments

149,832

10,155

Income from disposal of shares in group undertaking

(180,276

)

-

Movement in deferred taxation

19,456

-

Group relief

(1,325

)

-

EMI share scheme relief

-

(105,716

)

Tax losses carried forward

-

14,716

Total tax charge

119,379

-

13.	PRIOR YEAR ADJUSTMENT

£260,431 has been reclassified from creditors to cash in hand as the directors believe that this enhances the presentation and therefore represents the true economic substance of the balance. See note 19 for further details.