The directors present the strategic report for the year ended 31 December 2024.
The Group operates a restaurant, known as Trenchers. The local competition is largely comprised of smaller companies and privately owned restaurants.
The Group continues to monitor changing trends and tastes and tailors its offerings and marketing activity to compete effectively with other operators in the market, and with the many other activities that compete for the disposable income of our target age customers. Recent general consumer confidence in the UK has been growing, largely due to the recent pandemic now being behind us and whilst our target customers appear less sensitive to economic downturn, the effects of recent increases in the general cost of living are yet to be fully realised. The restaurant sector however has continued to attract more of consumers disposable income over recent years and especially local to the restaurant, with the recent popularity of staycations. To capitalise on this the Group has extended the courtyard of the restaurant, which was completed post year end, to enable us to seat more customers and increase trade.
The Group has continued to trade well in the restaurant sector, with a successful Summer period in particular, despite the poor weather. Cash flow from operating activities has been positive during the period and post year end, enabling the Group to continue to service creditors as they became due. As a consequence, cash resources remain strong at the balance sheet date.
The principal risks and uncertainties that could affect the Group's business are summarised below:
Internal risks
High proportion of fixed overheads and variable revenues
A significant proportion of the Group's cost base remains constant notwithstanding changes to the level of revenues; therefore, any significant changes in the level of the Group's revenues could significantly affect the level of earnings and cash flows. While the Group considers it currently operates with a lean fixed cost base, this remains an area of continuing focus going forward.
Failure to ensure brands evolve in relation to changes in consumer taste
The market in which the Group operates is subject to changes in fashions and trends, and the Group is exposed to the risk that its innovations in venue format and content do not keep up with changes in consumer tastes. The Group continues to closely monitor changes in the marketplace and adapts its offering to protect and secure its future revenue opportunities.
Health and safety
Health and safety is taken very seriously by the Group. The risk of non-compliance with health and safety legislation is minimised through comprehensive training and an active in-house team who regularly review and develop policies and procedures to maintain standards. Furthermore, the Group carries substantial public and employer's liability insurance cover, in order to minimise the financial impact of any claim that might arise as a consequence of a failure in health and safety regulatory compliance.
External risks
Interest rate movements
Interest rates are currently not seen as a significant risk despite the incremental increases in the base rate recently. The level of interest rates is constantly monitored and it is the Group's intention to look to fix rates when it is believed they are at the lowest point in the cycle with the outlook being for increases.
Loss of licences
The Group has a dedicated and experienced central team to monitor all licensing related matters, working closely with the operations management team and local licensing authorities. This is backed up with centralised incident reporting and follow-up, including liaison with licensing authorities for early warning of potential issues. Every effort is made to ensure that managers and supervisors are fully conversant with current licensing legislation and their responsibilities under it.
Uncertainties
Economic uncertainty
The Group is competing for a share of the disposable income of its target customers so revenue is vulnerable to the impact of the unprecedented events such as the recent pandemic and economic uncertainty caused by unexpected pressures on household incomes.
Seasonality and weather
The number of admissions in the Group's venues is considerably increased during holiday periods, especially Christmas and New Year, and over bank holiday periods. Similarly the admissions and revenue levels are generally lower in the early months of the calendar year, compared to other periods. The Group's revenues can also be adversely impacted by extended periods of extreme weather conditions, which could deter customers from travelling to the area where the business is located.
With the lifting of covid restrictions and the continuing popularity of "staycations" throughout the current year and beyond, the Group has been able to make a rapid recovery in turnover and profitability. The directors are now optimistic that without further unexpected events the Group will continue to grow the level of trade during 2025.
The results for the Company for the year are shown in more detail on page 8, with the significant financial key performance indicators outlined below.
The Group undertakes comprehensive business planning to define long-term strategic objectives and goals. Operational plans are considered utilising financial and non-financial KPIs. Business performance, measured by KPIs which include monitoring of actual against previous comparative periods, is reported to the Board on a monthly basis.
The Group aims to achieve a healthy gross profit margin on all wet and dry sales. This is monitored monthly using independent stocktakers and throughout the majority of the financial period this has been achieved.
The key financial KPIs for the Group include:
| Year ended | Year ended |
| 31-Dec | 31-Dec |
| 2024 | 2023 |
|
|
|
Turnover (£) | 4,319,765 | 3,666,980 |
Gross profit margin (%) | 30.4 | 26.1 |
Profit before taxation (£) | 558,967 | 350,578 |
Net Assets (£) | 3,360,260 | 3,005,076 |
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £57,746. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Kymel Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and 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
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £57,746 (2023 - £0 profit).
Kymel Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Kymel House, Boker Lane, East Boldon, Tyne and Wear NE36 0RY. The principal place of business is Trenchers, New Quay Road, Whitby, North Yprkshire YO21 1DH.
The group consists of Kymel Group Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain fixed assets. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Kymel Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
The Group's forecasts and projections, taking account of reasonable, possible changes in trading performance, suggest the Group is expected to continue to be profitable, cash generative and to have a sufficient level of financial resources. Therefore the directors believe that the Group is well placed to manage its business risks successfully. In particular, at the year end the Group had cash at bank of £896,000 and net assets of £3.4million.
Accordingly, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents the amounts (excluding value added tax) derived from the provision of goods and services to customers during the period. Turnover is recognised when the goods and services have been provided and paid for at the point of delivery. The turnover of the Group is derived entirely from its principal activities carried out in the United Kingdom.
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The directors carry out an annual appraisal of the carrying value of certain land and buildings. Their assessment is informed by engaging an independent, qualified surveyor from time to time to inform their valuation of these assets. The directors consider any changes between the market conditions at the date of the most recent valuation and the balance sheet date and if any significant change in market conditions is identified, then an adjustment to these assets is considered accordingly.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
£Nil (2023: £284) of the above arose when Kymel Trading Limited acquired the trade and net assets of the Trenchers business from the administrator of Vimac Group Limited and subsidiary companies, with this amount being in excess of the fair value of the non monetary assets acquired. Vimac Group Limited was owned by Mr PA Mackings immediately prior to entering into administration. The Trenchers business is the operation of a restaurant and take-away in Whitby on the Yorkshire coast.
£327,936 (2023: £Nil) relates to the acquisition of the shareholding in Kymel Limited with this amount being in excess of the fair value of the non monetary assets acquired.
Freehold land and buildings with a carrying amount of £4,287,374 (2023 - £4,295,457) have been pledged to secure borrowings of the trading subsidiary.
Land and buildings with a carrying amount of £3,577,278 were revalued by the directors in December 2019 based on a valuation on the basis of market value provided at 20 March 2018 by Lambert Smith Hampton, independent valuers not connected with the company. The valuation conformed to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
In the opinion of the directors following a review of maket conditions, the fair value of land and buildings at the balance sheet date is unchanged.
If land and buildings were measured using the cost model, the carrying amounts would have been £2,466,862 (2023 - £2,467,715), being cost £2,557,293 (2023 - £2,548,045) and depreciation £90,431 (2023 - £80,330).
Details of the company's subsidiaries at 31 December 2024 are as follows:
Included within other debtors are amounts due from directors of £36,765 (2023 - £212,715). The amounts due from directors are unsecured and subject to interest at a rate of 2.25% with no fixed repayment date.
The bank loans are secured by fixed charges and floating charges of the Group's freehold land and buildings.
The bank loan has a nominal interest rate of 1.9% above base rate. The loan is due to mature in December 2028 and attracts equal monthly instalments of £16,133 through to maturity with a lump sum repayment to pay the loan in full on the final repayment date.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
In March 2024, the company redesignated its share capital to A, B, C and D ordinary shares as disclosed above. Each share class has full voting rights and rights to income.
Where property, plant and equipment is revalued, the cumulative increase in the fair value of the property (net of deferred tax) at the date of valuation or reclassification in excess of any previous impairment losses is included in the revaluation reserve.
On 1 May 2019 Kymel Trading Limited signed as a guarantor on behalf of Spanish City (NE) Limited, a related party, in respect of their rental lease of a building. The commencement date of the lease was the 30 September 2018. The lease has a term of 10 years from the commencement date, with a break date of 31 March 2021 which directors did not exercise. The total lease payments due on the remaining lease amount to £262,500.
Other costs for dilapidations that would become the responsibility of Kymel Trading Limited, should Spanish City (NE) Limited default, cannot be estimated.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
As disclosed in note 23, Kymel Trading Limited acts as guarantor on behalf of Spanish City (NE) Limited in respect of their rental lease of a building.
Advances or credits have been granted by the group to its directors as follows:
Dividends totalling £51,971 (2023 - £0) were paid in the year in respect of shares held by the company's directors.