Kingstown Associates (Holdings) Limited - Limited company accounts 20.1

KINGSTOWN ASSOCIATES (HOLDINGS) LIMITED - Company Information

IRIS Accounts Production v22.2.0.402 09796628 Board of Directors Board of Directors 31.12.21 1.1.21 31.12.21 31.12.21 true true false true true false false false true true true true false Ordinary A 0 Ordinary B 0 iso4217:GBPiso4217:USDiso4217:EURxbrli:sharesxbrli:pure097966282020-12-31097966282021-12-31097966282021-01-012021-12-31097966282019-12-31097966282020-01-012020-12-31097966282020-12-3109796628ns16:EnglandWales2021-01-012021-12-3109796628ns15:PoundSterling2021-01-012021-12-3109796628ns11:Director12021-01-012021-12-3109796628ns11:Director22021-01-012021-12-3109796628ns11:Consolidated2021-12-3109796628ns11:ConsolidatedGroupCompanyAccounts2021-01-012021-12-3109796628ns11:PrivateLimitedCompanyLtd2021-01-012021-12-3109796628ns11:FRS102ns11:Consolidated2021-01-012021-12-3109796628ns11:Auditedns11:Consolidated2021-01-012021-12-3109796628ns11:LargeMedium-sizedCompaniesRegimeForDirectorsReport2021-01-012021-12-3109796628ns11:LargeMedium-sizedCompaniesRegimeForAccounts2021-01-012021-12-3109796628ns11:Consolidatedns11:LargeMedium-sizedCompaniesRegimeForDirectorsReport2021-01-012021-12-3109796628ns11:LargeMedium-sizedCompaniesRegimeForAccountsns11:Consolidated2021-01-012021-12-3109796628ns11:FullAccounts2021-01-012021-12-310979662812021-01-012021-12-3109796628ns11:OrdinaryShareClass12021-01-012021-12-3109796628ns11:OrdinaryShareClass22021-01-012021-12-3109796628ns11:Consolidated2021-01-012021-12-3109796628ns11:Director32021-01-012021-12-3109796628ns11:Director42021-01-012021-12-3109796628ns11:Director52021-01-012021-12-3109796628ns11:RegisteredOffice2021-01-012021-12-3109796628ns11:Consolidated2020-01-012020-12-3109796628ns6:CurrentFinancialInstruments2021-12-3109796628ns6:CurrentFinancialInstruments2020-12-3109796628ns6:Non-currentFinancialInstruments2021-12-3109796628ns6:Non-currentFinancialInstruments2020-12-3109796628ns6:ShareCapital2021-12-3109796628ns6:ShareCapital2020-12-3109796628ns6:SharePremium2021-12-3109796628ns6:SharePremium2020-12-3109796628ns6:FurtherSpecificReserve1ComponentTotalEquity2021-12-3109796628ns6:FurtherSpecificReserve1ComponentTotalEquity2020-12-3109796628ns6:RetainedEarningsAccumulatedLosses2021-12-3109796628ns6:RetainedEarningsAccumulatedLosses2020-12-3109796628ns6:ShareCapital2019-12-3109796628ns6:RetainedEarningsAccumulatedLosses2019-12-3109796628ns6:SharePremium2019-12-3109796628ns6:FurtherSpecificReserve1ComponentTotalEquity2019-12-3109796628ns6:RetainedEarningsAccumulatedLosses2020-01-012020-12-3109796628ns6:FurtherSpecificReserve1ComponentTotalEquity2020-01-012020-12-3109796628ns6:RetainedEarningsAccumulatedLosses2021-01-012021-12-3109796628ns6:FurtherSpecificReserve1ComponentTotalEquity2021-01-012021-12-310979662812021-01-012021-12-3109796628ns6:NetGoodwill2021-01-012021-12-3109796628ns6:IntangibleAssetsOtherThanGoodwill2021-01-012021-12-3109796628ns6:CostValuationns6:UnlistedNon-exchangeTraded2020-12-3109796628ns6:AdditionsToInvestmentsns6:UnlistedNon-exchangeTraded2021-12-3109796628ns6:CostValuationns6:UnlistedNon-exchangeTraded2021-12-3109796628ns6:UnlistedNon-exchangeTraded2021-12-3109796628ns6:UnlistedNon-exchangeTraded2020-12-3109796628ns6:WithinOneYearns6:CurrentFinancialInstruments2021-12-3109796628ns6:WithinOneYearns6:CurrentFinancialInstruments2020-12-3109796628ns6:BetweenOneTwoYearsns6:Non-currentFinancialInstruments2020-12-3109796628ns11:OrdinaryShareClass12021-12-3109796628ns11:OrdinaryShareClass22021-12-3109796628ns6:RetainedEarningsAccumulatedLosses2020-12-3109796628ns6:SharePremium2020-12-3109796628ns6:FurtherSpecificReserve1ComponentTotalEquity2020-12-3109796628ns6:SharePremium2021-01-012021-12-31

REGISTERED NUMBER: 09796628 (England and Wales)

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements for the Year Ended 31 December 2021

for

Kingstown Associates (Holdings) Limited

Page

Company Information

Group Strategic Report

Report of the Directors

Report of the Independent Auditors

Consolidated Income Statement

Consolidated Other Comprehensive Income

Consolidated Statement of Financial Position

Company Statement of Financial Position

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

DIRECTORS:

P Chambers

W Barry

J L Stephenson

E A Curd

Ms L Thompson

REGISTERED OFFICE:

1 Wadsworth Road

Kelleythorpe Industrial Estate

Driffield

East Yorkshire

YO25 9DJ

REGISTERED NUMBER:

09796628 (England and Wales)

AUDITORS:

Harris Lacey and Swain

Chartered Accountants and Statutory Auditors

Suite 1

The Riverside Building

Hessle

East Yorkshire

HU13 0DZ

The directors present their strategic report of the company and the group for the year ended 31 December 2021.

REVIEW OF BUSINESS

We aim to present a balanced and comprehensive review of the development and performance of the business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of the business and is written in the context of the risks and uncertainties we face.

The turnover in the year is £16,825,406 (2020: £16,673,473) which is an increase of 0.9% on 2020. The gross profit margin has increased to 22.37% compared with 14.61% in the prior year. The gross margin has increased due to scaling back on the company's marketing spend. Product margins remain strong as the company continues to actively seek competitive prices. The company experienced a small increase in turnover, but it was the significant reduction in cost of sales that has strengthened the gross profit result. This was due to actively reducing marketing spend recruiting new customers and by concentrating on the average order value which enabled savings in distribution. The company looked to strengthen its financial position by maintaining favourable credit terms with its primary suppliers.

Key Performance Indicators

We consider that our key financial performance indicators are those that communicate the financial performance and strength of the company, these being turnover, gross profit and operating profit. Efficiency KPI's such as cost per order processed/picked and parcels per order are used to monitor our fulfilment process. We also closely monitor delivery costs as a percentage of sales and our marketing spend as a percentage of sales which has a direct correlation to sales and indicates its effectiveness.

2021

2020

£m

Turnover

16.8

16.7

Gross Profit

3.8

2.4

Operating Profit

1.3

0.6

PRINCIPAL RISKS AND UNCERTAINTIES

Financial Risk Management and Policies

The main financial risks of the company relate to foreign exchange and credit (in relation to trade receivables).

Foreign exchange risk

Currency risk management relating to transactional business, if significant, is dealt with through the use of foreign currency forward contracts.

Credit risk (trade receivables)

The company's credit risk is primarily attributable to trade receivables. It is company policy that all customers are granted credit subject to credit verification procedures. A rigorous system of credit control is applied, and receivables are continually monitored. The amounts presented in the balance sheet are net of allowances for doubtful debts.

FUTURE DEVELOPMENTS

The Company has made significant changes in how it reaches out to its customers throughout the year, reducing marketing spend significantly again without having a significant impact on turnover. The Company has continued to find niches in the market with the focus on the 5 main brands which it provides to its customers. The company has always had the ethos of providing value for money and bringing products to the market which are not readily available to its target audience. The company will continue with this approach.

The company plans to build on the success of the previous two years, continuing to maximise marketing spend and increasing ROI. There will also be focus on customer retention and understanding customer purchase patterns, spending habits, and optimising the mailing plan accordingly. The focus for 2022 will be on customer reactivation and retention.

Freight and duty have also seen significant rises in the last 12 months. This has had a relatively modest impact on our margin as the company has been able to shift its stock reliance back from the Far East to the UK with little impact on cost.

The company will place emphasis on improving the current stock forecasting system. High demand in recent times has seen an increase in stock. Key emphasis will be placed on slow movers and seasonal items to reduce current stock levels in line with demand.

The company has benefited from increasing its average order value; raising this gives a significant increase in contribution per order. With fuel costs at a record high, this has been key in the reduction of distribution costs for the company.

The Companies plans for the current financial year are to focus on continual improvement in all areas and the maximisation of return on investment on marketing spend, reduction in costs and the improvement of the 'customer journey'. The early indications show that the company is well on its way to successfully achieving this.

MATTERS OF STRATEGIC IMPORTANCE

As for many companies of our size, the business environment in which we operate continues to be challenging given the current global slowdown. With these risks and uncertainties in mind, we are aware that any plans for future development of the business may be subject to unforeseen future events outside of our control. However, we will continue to show flexibility and respond to market conditions and opportunities as they arise.

ON BEHALF OF THE BOARD:

W Barry - Director

14 July 2022

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2021.

PRINCIPAL ACTIVITY

The principal activity of the group in the year under review was that of engagement in the UK mail order catalogue market.

DIVIDENDS

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

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report.

P Chambers

W Barry

J L Stephenson

E A Curd

Other changes in directors holding office are as follows:

Ms L Thompson - appointed 1 January 2021

Qualifying third party indemnity provision is in place for the benefit of the directors of the Company.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group 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 group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Harris Lacey and Swain, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

W Barry - Director

14 July 2022

Opinion

We have audited the financial statements of Kingstown Associates (Holdings) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, 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 group's and of the parent company affairs as at 31 December 2021 and of the group's 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 group's and the parent 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 Group 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 Group 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 Group 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

-	the parent company 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 group's and the parent 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 group or the parent 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 identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

Audit response to risks identified

- the nature of the industry and sector, control environment and business performance including key drivers for directors' remuneration, bonus levels and performance targets

- results of our enquiries of management and their own identification and assessment of the risks of irregularities;

- any matters we identified having obtained and reviewed the companies' documentation of their policies and procedures relating to:

- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of noncompliance;

- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

- the matters discussed among the audit engagement team including regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in relation to revenue deferrals. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, UK Corporate Governance Code and local tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty.

Audit response to risks identified

Our procedures to respond to risks identified included the following:

- reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

- enquiring of management concerning actual and potential litigation and claims;

- performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

- reading minutes of meetings of those charged with governance

- obtained an understanding of provisions and held discussions with management to understand the basis of recognition or non-recognition of tax provisions; and

- in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or noncompliance with laws and regulations throughout the audit.

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.

Mr Richard D. Lacey (Senior Statutory Auditor)

for and on behalf of Harris Lacey and Swain

Chartered Accountants and Statutory Auditors

Suite 1

The Riverside Building

Hessle

East Yorkshire

HU13 0DZ

22 July 2022

TURNOVER

16,825,406

16,673,473

Cost of sales

13,061,350

14,238,209

GROSS PROFIT

3,764,056

2,435,264

Administrative expenses

2,385,627

1,937,939

OPERATING PROFIT

1,378,429

497,325

Interest payable and similar expenses

(25,055

)

85,157

PROFIT BEFORE TAXATION

1,403,484

412,168

Tax on profit

272,223

111,657

PROFIT FOR THE FINANCIAL YEAR

1,131,261

300,511

Profit attributable to:

Owners of the parent

1,131,261

300,511

PROFIT FOR THE YEAR

1,131,261

300,511

OTHER COMPREHENSIVE INCOME

Share based payment

33,885

Income tax relating to other comprehensive
income

OTHER COMPREHENSIVE INCOME
FOR THE YEAR, NET OF INCOME TAX

33,885

TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

1,165,146

334,396

Total comprehensive income attributable to:

Owners of the parent

1,165,146

334,396

FIXED ASSETS

Intangible assets

784,243

967,292

Tangible assets

55,070

40,521

Investments

839,313

1,007,813

CURRENT ASSETS

Stocks

2,357,161

1,294,369

Debtors

464,797

631,991

Cash at bank and in hand

570,285

740,201

3,392,243

2,666,561

CREDITORS

Amounts falling due within one year

2,135,210

2,308,184

NET CURRENT ASSETS

1,257,033

358,377

TOTAL ASSETS LESS CURRENT
LIABILITIES

2,096,346

1,366,190

CREDITORS

Amounts falling due after more than one
year

(1,031,574

)

(1,446,219

)

PROVISIONS FOR LIABILITIES

(35,595

)

(55,940

)

NET ASSETS/(LIABILITIES)

1,029,177

(135,969

)

CAPITAL AND RESERVES

Called up share capital

1,000

Share premium

5,000

Share based payment reserve

142,393

108,508

Retained earnings

880,784

(250,477

)

SHAREHOLDERS' FUNDS

1,029,177

(135,969

)

The financial statements were approved by the Board of Directors and authorised for issue on 14 July 2022 and were signed on its behalf by:

W Barry - Director

E A Curd - Director

FIXED ASSETS

Intangible assets

Tangible assets

Investments

4,928,390

4,871,275

4,928,390

4,871,275

CREDITORS

Amounts falling due within one year

4,166,348

3,753,529

NET CURRENT LIABILITIES

(4,166,348

)

(3,753,529

)

TOTAL ASSETS LESS CURRENT
LIABILITIES

762,042

1,117,746

CREDITORS

Amounts falling due after more than one
year

1,031,574

1,446,219

NET LIABILITIES

(269,532

)

(328,473

)

CAPITAL AND RESERVES

Called up share capital

1,000

Share premium

5,000

Share based payment reserve

142,393

108,508

Retained earnings

(417,925

)

(442,981

)

SHAREHOLDERS' FUNDS

(269,532

)

(328,473

)

Company's profit/(loss) for the financial year

25,056

(84,961

)

The financial statements were approved by the Board of Directors and authorised for issue on 14 July 2022 and were signed on its behalf by:

E A Curd - Director

W Barry - Director

Called up

based

Retained

payment

Total

capital

earnings

premium

reserve

equity

Balance at 1 January 2020

1,000

(550,988

)

5,000

74,623

(470,365

)

Changes in equity

Total comprehensive income

300,511

33,885

334,396

Balance at 31 December 2020

1,000

(250,477

)

5,000

108,508

(135,969

)

Changes in equity

Total comprehensive income

1,131,261

33,885

1,165,146

Balance at 31 December 2021

1,000

880,784

5,000

142,393

1,029,177

Called up

based

Retained

payment

Total

capital

earnings

premium

reserve

equity

Balance at 1 January 2020

1,000

(358,020

)

5,000

74,623

(277,397

)

Changes in equity

Total comprehensive income

(84,961

)

33,885

(51,076

)

Balance at 31 December 2020

1,000

(442,981

)

5,000

108,508

(328,473

)

Changes in equity

Total comprehensive income

25,056

33,885

58,941

Balance at 31 December 2021

1,000

(417,925

)

5,000

142,393

(269,532

)

Cash flows from operating activities

Cash generated from operations

381,280

1,331,140

Interest paid

25,055

(85,157

)

Tax paid

(136,539

)

(10,163

)

Net cash from operating activities

269,796

1,235,820

Cash flows from investing activities

Purchase of intangible fixed assets

(23,230

)

(36,999

)

Purchase of tangible fixed assets

(30,982

)

(27,739

)

Sale of tangible fixed assets

2,000

6,648

Net cash from investing activities

(52,212

)

(58,090

)

Cash flows from financing activities

Loan repayments in year

(387,500

)

(387,500

)

Net cash from financing activities

(387,500

)

(387,500

)

(Decrease)/increase in cash and cash equivalents

(169,916

)

790,230

Cash and cash equivalents at beginning of
year

740,201

(50,029

)

Cash and cash equivalents at end of year

570,285

740,201

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2021

2020

Profit before taxation

1,403,484

412,168

Depreciation charges

222,712

252,882

(Profit)/loss on disposal of fixed assets

(2,000

)

580

Share-based payment expense

33,885

Financing cost on loan notes

(50,375

)

50,375

Finance costs

(25,055

)

85,157

1,582,651

835,047

(Increase)/decrease in stocks

(1,062,792

)

484,648

Decrease in trade and other debtors

167,194

68,860

Decrease in trade and other creditors

(305,773

)

(57,415

)

Cash generated from operations

381,280

1,331,140

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 December 2021

31.12.21

1.1.21

Cash and cash equivalents

570,285

740,201

Year ended 31 December 2020

31.12.20

1.1.20

Cash and cash equivalents

740,201

4,919

Bank overdrafts

(54,948

)

740,201

(50,029

)

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.21

Cash flow

At 31.12.21

Net cash

Cash at bank and in hand

740,201

(169,916

)

570,285

740,201

(169,916

)

570,285

Debt

Debts falling due within 1 year

(387,500

)

(387,500

)

Debts falling due after 1 year

(625,376

)

437,875

(187,501

)

(1,012,876

)

437,875

(575,001

)

Total

(272,675

)

267,959

(4,716

)

1.	STATUTORY INFORMATION

Kingstown Associates (Holdings) 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 General Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Basis of consolidation

The consolidated financial statements incorporate those of the company and its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits) other than those disclosed in note 11.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The cost of a business combination is the fair value at the acquisition date, of the assets given, equity instruments issued and liabilities incurred or assumed, plus directly attributable costs. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

Contingent consideration

The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably and is adjusted for changes in contingent consideration after the acquisition date.

Critical accounting judgements and key sources of estimation uncertainty

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.

Critical accounting estimates and assumptions

The group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that have significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Useful economic lives of tangible assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 10 for the carrying amount of the property plant and equipment, and the accounting policy above for the useful economic lives for each class of assets.

Stock provisioning

The group retails in perishable goods and as a result it is necessary to consider the recoverability of the cost of the stock and the associated provisioning required. When calculating the stock provision management considers the ageing of the goods and anticipated sale price. See note 12 for the net carrying amount of the stock and associated provision.

Useful economic lives of intangible assets

The annual amortisation charge and the economic useful life of intangibles is considered to be a key accounting estimate and judgement. Management have based the estimated life on the period over which repeat customer sales are expected to be generated from the capitalised customer database.

Fair value of share options

The fair value of share options at the date of grant is based upon market conditions at that specific date. This requires estimates of the current share price, together with requiring valuation assumptions to incorporate expected volatility and return on the shares over which an option exists.

Critical areas of judgement

In categorising leases as finance leases or operating leases, management makes judgements as to whether significant risks and rewards of ownership have transferred to the group.

In considering the impairment of stock, management make judgements as to the estimated selling price less selling costs for obsolete and slow-moving items and whether impairment losses recognised in previous years have reversed.

In assessing impairment of the customer database acquired in November 2015, the directors make judgements concerning the repeat business of current customers and the expected cash flows which will arise from this customer group.

The valuation of the call and put option over the future purchase of own shares is dependent upon the future expected profitability and financial position of the group. Anticipated cash flows have been discounted at a rate of 3.25% per annum.

Turnover

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

Turnover represents the amount receivable from customers excluding Value Added Tax and discounts. Turnover is recognised at the performance date, provided the amount can be reliably measured and it is probable that the economic benefits will flow to the entity. When merchandise is sold to customers, the performance date is normally defined as the point in time at which the customer becomes beneficial owner of the merchandise. The point at which the customer is considered to become the beneficial owner is at the point of dispatch. This transfer of beneficial ownership does not necessarily correspond to the transfer of legal ownership.

Goodwill

Goodwill is capitalised and written off evenly over 10 years as in the opinion of the directors, this represents the period over which the goodwill is expected to give rise to economic benefits.

Intangible fixed assets (other than goodwill)

Other intangible assets

Intangible assets purchased other than in a business combination are recognised when future economic benefits are probable and the cost or value of the asset can be measured reliably.

Intangible assets arising on a business combination are recognised, except where the asset arises from legal or contractual rights, and there is no history or evidence of exchange transactions for the same or similar assets and estimating the asset's fair value would depend on immeasurable variables.

Intangible assets are initially recognised at cost (which for intangible assets acquired in a business combination is the fair value at acquisition date) and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets are amortised to profit or loss on a straight-line basis over their useful lives, as follows:-

Customer database - over 10 years

Purchased computer software - 10 - 20% reducing balance or straight line determined on an asset by asset basis

The customer database intangible represents the projected revenue achievable from existing customers at the business combination date who are estimated to have sales spanning a 10 year period. As such, the directors' have estimated the economic life of the customer database to be finite at 10 years, given the projection based on historic sales data.

On disposal, the difference between the net disposal proceeds and the carrying amount of the intangible asset is recognised in profit or loss.

Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost net of depreciation and any impairment losses. Cost represents purchase price together with any incidental costs of acquisition.

Depreciation

Depreciation is calculated so as to write off the cost of an asset to its estimated residual value, net of anticipated disposal proceeds, over the useful economic life of that asset as follows:

Plant & Machinery - 10-20% reducing balance or straight line determined on an asset by asset basis

Leasehold Improvements - over the term of the lease

Residual value is calculated on prices prevailing at the reporting date, after estimated costs of disposal, for the asset as if it were at the age and in the condition expected at the end of its useful life.

Impairment of fixed assets

An assessment is made at each reporting date of whether there are indications that a fixed asset may be impaired or that an impairment loss previously recognised has fully or partially reversed. If such indications exist, the group estimates the recoverable amount of the asset.

Shortfalls between the carrying value of fixed assets and their recoverable amounts, being the higher of fair value less costs to sell and value-in-use, are recognised as impairment losses. Impairments of revalued assets are treated as a revaluation loss. All other impairment losses are recognised in profit or loss.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Reversals of impairment losses are recognised in profit or loss or, for revalued assets, as a revaluation gain. On reversal of an impairment loss, the depreciation or amortisation is adjusted to allocate the asset's revised carrying amount (less any residual value) over its remaining useful life.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Net realisable value is based on selling price less anticipated costs to complete and selling costs.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stock over its estimated selling price less selling costs is recognised as an impairment loss in the profit and loss. Reversals of impairment losses are also recognised in the profit and loss.

Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any long service potential, i.e. benefits expected from use or sale of the stock.

Financial instruments

The group has elected to apply the provisions of section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instrument Issues' of FRS 102, in full, to all of its financial instruments.

Financial assets and financial liabilities are recognised when the group becomes a party to the contractual provisions of the instrument and are offset only when the company currently has legally enforceable right to set off the recognised amounts and intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously.

Financial Assets

Trade debtors and other debtors

Trade debtors and other debtors which are receivable within one year and which do not constitute a financing transaction are initially measured at the transaction price. Trade debtors are subsequently measured at amortised cost, being the transaction price less any settled and impairment losses.

A provision for the impairment of trade debtors is established when there is objective evidence that the amounts due will not be collected according to the original terms of the contract. Impairment losses are recognised in profit or loss for the excess of the carrying value of the trade debtor over the present value of the future cash flows discounted using the original effective interest rate. Subsequent reversals of an impairment loss that objectively relate to an event occurring after the impairment loss was recognised, are recognised immediately in the profit or loss.

Financial liabilities and equity

Financial instruments are classified as liabilities and equity instruments 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.

Equity instruments

Financial instruments classified as equity instruments are recorded at the fair value of the cash or other resources received or receivable, net of direct costs of issuing the equity instruments.

Trade creditors and other creditors

Trade creditors, other creditors, group balances and accruals payable within one year that do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.

Borrowings

Borrowings are initially recognised at the transaction price, including transaction costs, and subsequently measured at amortised cost using the effective interest method. Interest expense is recognised on the basis of the effective interest method and is included in interest payable and other similar expenses.

Where the arrangement with a creditor constitutes a financing transaction, the creditor is initially measured at the present value of future payments discounted at a market rate of interest for a similar instrument and subsequently measured at amortised cost.

Derecognition of financial assets and liabilities

A financial asset is derecognised only when the contractual rights to cash flows expire or are settled, or substantially all the risks and rewards of ownership are transferred to another party, 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. A financial liability (or part thereof) is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred 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.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

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

Foreign currencies

Transactions in currencies other than the functional currency (foreign currencies) are initially recorded at the exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies are translated at the rate ruling at the date of transaction or, if the asset or liability is measured at fair value, the rate when fair value was determined.

All translation differences are taken to profit and loss, except to the extent that they relate to gains and losses recognised on non-monetary items recognised in other comprehensive income, when the related translation gain or loss is also recognised in other comprehensive income.

Pension costs and other post-retirement benefits

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

Share based payments

The group grants share options ("equity-settled share-based payments") to certain employees.

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

Group plans

The expense in relation to options over the company's shares granted to employees of a subsidiary is recognised by the company as a capital contribution and presented as an increase in the company's investment in that subsidiary.

Modifications and cancellations

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions (the "original fair value") and under the modified terms and conditions (the "modified fair value") are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

3.	EMPLOYEES AND DIRECTORS

2021

2020

Wages and salaries

2,664,436

2,157,089

Social security costs

164,743

164,063

Other pension costs

72,969

68,805

2,902,148

2,389,957

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

2021

2020

Distribution

Administrative

Call centre

118

2021

2020

Directors' remuneration

478,410

307,298

Directors' pension contributions to money purchase schemes

6,149

5,141

Information regarding the highest paid director is as follows:

2021

2020

Emoluments etc

115,278

79,013

Pension contributions to money purchase schemes

1,319

1,314

4.	OPERATING PROFIT

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

2021

2020

Depreciation - owned assets

16,433

30,416

(Profit)/loss on disposal of fixed assets

(2,000

)

580

Goodwill amortisation

113,529

111,206

Customer database amortisation

69,974

Computer software amortisation

22,776

41,286

Auditors' remuneration

9,600

Auditors' remuneration for non audit work

900

Operating lease rentals

186,772

Share-based payment expense

33,885

INTEREST PAYABLE AND SIMILAR EXPENSES

2021

2020

Loan note interest

25,320

34,768

Corporation tax interest

Interest payable

(50,375

)

50,375

(25,055

)

85,157

TAXATION

Analysis of the tax charge

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

2021

2020

Current tax:

UK corporation tax

292,569

136,539

Over/(under) provision in

prior year

(182

)

Total current tax

292,569

136,357

Deferred tax

(20,346

)

(24,700

)

Tax on profit

272,223

111,657

Reconciliation of total tax charge included in profit and loss

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

2021

2020

Profit before tax

1,403,484

412,168

Profit multiplied by the standard rate of corporation tax in the UK of 19 %
(2020 - 19 %)

266,662

78,312

Effects of:

Expenses not deductible for tax purposes

25,294

49,088

Capital allowances in excess of depreciation

(19,733

)

(15,561

)

Adjustments to tax charge in respect of previous periods

(182

)

Total tax charge

272,223

111,657

Tax effects relating to effects of other comprehensive income

2021

Gross

Tax

Net

Share based payment

33,885

2020

Gross

Tax

Net

Share based payment

33,885

7.	INDIVIDUAL INCOME STATEMENT

As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements.

8.	INTANGIBLE FIXED ASSETS

Group

Customer

Computer

Goodwill

database

software

Totals

COST

At 1 January 2021

1,112,060

699,731

343,778

2,155,569

Additions

23,230

At 31 December 2021

1,135,290

699,731

343,778

2,178,799

AMORTISATION

At 1 January 2021

533,344

355,700

299,233

1,188,277

Amortisation for year

113,529

69,974

22,776

206,279

At 31 December 2021

646,873

425,674

322,009

1,394,556

NET BOOK VALUE

At 31 December 2021

488,417

274,057

21,769

784,243

At 31 December 2020

578,716

344,031

44,545

967,292

9.	TANGIBLE FIXED ASSETS

Group

Improvements

Plant and

property

machinery

Totals

COST

At 1 January 2021

121,469

187,268

308,737

Additions

8,243

22,739

30,982

At 31 December 2021

129,712

210,007

339,719

DEPRECIATION

At 1 January 2021

88,735

179,481

268,216

Charge for year

11,022

5,411

16,433

At 31 December 2021

99,757

184,892

284,649

NET BOOK VALUE

At 31 December 2021

29,955

25,115

55,070

At 31 December 2020

32,734

7,787

40,521

10.	FIXED ASSET INVESTMENTS

Group

Unlisted

investments

COST

Disposals

(990,711

)

At 31 December 2021

(990,711

)

PROVISIONS

Reversal of impairments

(990,711

)

At 31 December 2021

(990,711

)

NET BOOK VALUE

At 31 December 2021

Company

Unlisted

investments

COST

At 1 January 2021

4,871,275

Additions

57,115

At 31 December 2021

4,928,390

NET BOOK VALUE

At 31 December 2021

4,928,390

At 31 December 2020

4,871,275

Additions to investments in the year represent changes in the fair value of contingent consideration and the grant of share options in Kingstown Associates (Holdings) Limited to employees of its subsidiary, Kingstown Associates Limited. The value of share options granted for the year to 31 December 2021 is £33,885 (2020: £33,885).

The company holds more than 20% of the share capital of the following companies:

Name

Country of
incorporation

Holding

Proportion of voting
rights

Principal activity

Direct

Indirect

Kingstown
Associates
Limited

England & Wales

Ordinary
shares

100%

Engagement in the
UK mail order
catalogue market

Fashion
Friendly
Limited

England & Wales

Ordinary
shares

100%

Dormant
company*

Healthy Living
Direct Limited

England & Wales

Ordinary
shares

100%

Dormant
company*

Affordable
Choices
Limited

England & Wales

Ordinary
shares

100%

Dormant
company*

Housewares
Direct Limited

England & Wales

Ordinary
shares

100%

Dormant
company*

Sparkling
Touches
Limited

England & Wales

Ordinary
shares

100%

Dormant
company*

* denotes subsidiary is exempt from audit by virtue of s480 of Companies Act 2006 and that shares in the company are held by Kingstown Associates Limited, a 100% subsidiary.

The registered office of each subsidiary company is 1 Wadsworth Road, Kelleythorpe Industrial Estate, Driffield, East Yorkshire, YO25 9DJ.

11.

STOCKS

Group

2021

2020

Finished goods

2,357,161

1,294,369

12.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group

2021

2020

Trade debtors

216,314

368,895

Prepayments and accrued income

248,483

263,096

464,797

631,991

13.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group

Company

2021

2020

2021

2020

Bank loans and overdrafts (see note 15)

387,500

Trade creditors

1,020,388

1,223,053

Amounts owed to group undertakings

3,778,848

3,364,372

Tax

292,569

136,539

Social security and other taxes

294,353

346,302

Other creditors

17,622

34,358

1,657

Accrued expenses

122,778

180,432

2,135,210

2,308,184

4,166,348

3,753,529

Included in other creditors is an amount of £9,101, (2020: £9,168) in relation to outstanding pension contributions.

14.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR

Group

Company

2021

2020

2021

2020

Other loans (see note 15)

187,501

625,376

187,501

625,376

Other creditors

844,073

820,843

844,073

820,843

1,031,574

1,446,219

1,031,574

1,446,219

Contingent consideration represents the present value of anticipated cash flows due under a call and put option entered into on the management buy-out in November 2015. The call and put option is available to holders of the 'A' Ordinary shares of the company, and can be exercised by any of the 'A' Ordinary shareholders or the company after a minimum of two years have lapsed after the repayment in full of the vendor loan.

At the year-end date contingent consideration recognised at fair value is the directors' best estimate of the future cash flows which are anticipated under the option agreement, discounted to present value using a rate which takes into account the likelihood and anticipated timing of the option being exercised.

At 31 December 2021 the fair value of contingent consideration was £844,073 (2020: £820,843). The changes in fair value during the year to 31 December 2021 of £23,230 (2020: £22,591) are considered to be attributable to changes in the present value of consideration payable. The directors do not consider that the fair value of contingent consideration under the put and call option has been affected by market risk or changes in the company's credit risk during the year to 31 December 2021.

15.

LOANS

An analysis of the maturity of loans is given below:

Group

Company

2021

2020

2021

2020

Amounts falling due within one year or on

demand:

Vendor loans

387,500

Amounts falling due between one and two

years:

Vendor loans - 1-2 years

187,501

625,376

187,501

625,376

The group's bankers and loan note holders hold a fixed charge over all freehold and leasehold properties together with a floating charge over all assets of the group. The loan note ranks secondary to the bank loans until the bank loans are repaid in full.

16.	LEASING AGREEMENTS

Minimum lease payments fall due as follows:

Group

Non-cancellable operating

leases

2021

2020

Within one year

182,848

186,772

Between one and five years

37,400

219,768

220,248

406,540

17.	PROVISIONS FOR LIABILITIES

Group

2021

2020

Deferred tax

35,595

55,940

Group

Deferred

tax

Balance at 1 January 2021

55,940

Provided during year

(20,345

)

Balance at 31 December 2021

35,595

Deferred taxation is measured at 19% (2019: 19%) which is the rate of UK corporation tax substantively enacted at the balance sheet date.

18.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2021

2020

value:

2,506

Ordinary A

£0.10

251

7,494

Ordinary B

£0.10

749

1,000

19.

RESERVES

Group

based

Retained

payment

earnings

premium

reserve

Totals

At 1 January 2021

(250,477

)

5,000

108,508

(136,969

)

Profit for the year

1,131,261

Share based payment expense

33,885

At 31 December 2021

880,784

5,000

142,393

1,028,177

Company

based

Retained

payment

earnings

premium

reserve

Totals

At 1 January 2021

(442,981

)

5,000

108,508

(329,473

)

Profit for the year

25,056

Share based payment expense

33,885

At 31 December 2021

(417,925

)

5,000

142,393

(270,532

)

Reserves of the company represent the following:

Capital redemption reserve

The nominal value of shares repurchased and still held at the end of the reporting period.

Profit and loss account

Cumulative profit and loss net of distributions to owners.

Capital contribution reserve

The accumulated cost of share options, issued to employees of Kingstown Associates Limited, in the parent company Kingstown Associates (Holdings) Limited.

20.	SHARE-BASED PAYMENTS

Group

Equity-settled share option plan

The company, Kingstown Associates (Holdings) Limited, operates share option schemes and certain employees of its subsidiary company, Kingstown Associates Limited, have been granted share options in the company. Each share option scheme has varying vesting conditions, ranging from no vesting conditions to a vesting period of 5 years. The charge incurred under share-based payment transactions for the year to 31 December 2021 is £33,885 (2020: £33,885).

Share option plans

Share incentive plan - 'C' Ordinary shares

Options over 1,875 'C' Ordinary shares in Kingstown Associates (Holdings) Limited have been granted to employees of the subsidiary company, Kingstown Associates Limited, in March 2018. The options have a vesting period which is equivalent to the shorter of 5 years from the date of grant, or sale of the company. Each option is expected to be exercised at the par value of each 'C' Ordinary share

Kingstown Associates (Holdings) Limited accounts for share-based employee compensation under the fair value recognition and measurement provisions under UK GAAP. The Company's share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognised as an expense over the requisite vesting period. UK GAAP requires the cash flows resulting from the tax benefits due to tax deductions in excess of the compensation cost recognised for those options (excess tax benefits) to be classified as financing cash flows.

The fair value of share options is estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

Share incentive plan - 'C' Ordinary shares 2016

2021

2020

Expected volatility

46.29%

Risk-free interest rate

0.64%

Expected lives

6.83 years

Annual cash dividend

Nil

The determination of the grant date fair value of options using an option-pricing model is affected by the estimated fair value of shares in Kingstown Associates (Holdings) Limited as well as assumptions regarding a number of other complex and subjective variables, which are estimated as follows:

Expected volatility - As Kingstown Associates (Holdings) Limited does not have a trading history for shares, the expected share price volatility for the shares was estimated by taking the average of the historical volatilities of industry peers based on daily price observations over a period equivalent to the expected term of the share option grants. Kingstown Associates (Holdings) Limited intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the share price becomes available.

Risk-free interest rate - The risk-free interest rate is based on UK government bonds in effect at the time of the grant. The risk-free interest rate was estimated using a spot yield curve term similar to the expected term of the options.

Expected lives - The expected term represents the period that the share-based awards are expected to be outstanding. The expected term was determined by the Directors based upon the contractual life of the options and the anticipated future developments in the group. The company has used this method to determine expected lives of the options because of the limited history of share option exercise activity.

Annual cash dividend - The Directors of Kingstown Associates (Holdings) Limited do not anticipate nor plan to declare significant dividends on Ordinary shares in issue in the foreseeable future. Consequently, the company has used an expected dividend yield of £Nil.

Share option plan information

Share incentive plan - 'C' ordinary shares 2016

Option
number

Weighted
average
exercise price
(£)

Outstanding at 1 January

1,875

0.10

Granted during the year

Forfeited during the year

Exercised during the year

Expired during the year

Outstanding at 31 December

1,875

Exercisable at 31 December

As the expense relating to share-based payments which is recognised in the Statement of Comprehensive Income is based on awards expected to vest, it has been reduced for estimated forfeitures. Share based payment accounting requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimated.

All employees who have received options over Ordinary shares are employed by Kingstown Associates Limited. The cost of granting the share options have not been recharged to subsidiary undertakings, although in the subsidiary financial statements a capital contribution reserve has been created to represent the cumulative share-based payment expense incurred.