Knead Group Limited - Limited company accounts 18.2

REGISTERED NUMBER: 03980576 (England and Wales)

KNEAD GROUP LIMITED

STRATEGIC REPORT,

REPORT OF THE DIRECTOR AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018

Page

Company Information

1

Strategic Report

2

to

3

Report of the Director

4

Report of the Independent Auditors

5

to

6

Profit and Loss Account

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

13

to

22

DIRECTOR:

M J Thurlby

REGISTERED OFFICE:

14 All Saints Street

Stamford

Lincolnshire

PE9 2PA

REGISTERED NUMBER:

03980576 (England and Wales)

AUDITORS:

Duncan & Toplis Limited, Statutory Auditor

14 All Saints Street

Stamford

Lincolnshire

PE9 2PA

BANKERS:

Barclays Bank Plc

46 Broad Street

Stamford

Lincolnshire

PE9 1PX

The director presents his strategic report for the year ended 31 December 2018.

The group had a strong performance in 2018 with turnover increasing by over seven percent. This was helped by a

very good summer and the high quality of the food and beverage offering across the estate.

The business has incurred a higher level of employment costs with an increase in the minimum wage during the year

along with increased employee pension costs. It also continues to maintain and improve the properties in the estate

which it views as being an important factor in maintaining customer loyalty and growth.

The results for the year and financial position of the company are as shown in the annexed financial statements.

The director aims 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. The review is consistent with the size and the non-complex

nature of the business and is written in the context of the risks and uncertainties faced.

The director considers the key performance and business performance indicators as being those that represent the

financial performance and strength of the company as a whole. These are viewed as being turnover, gross profit and

net profit.

REVIEW OF BUSINESS

2018

2017

increase

£

£

%

Turnover

5,056,485

4,713,284

7.28

Gross profit

3,295,588

3,094,532

6.50

Gross profit percentage

65.18%

65.66%

Net profit before taxation

310,908

636,209

Net profit/sales percentage

6.15%

13.50%

The above results have seen net assets increase by £206,112 to £2,594,384. The company has a strong asset base

which will enable further investment in the pubs and allow future growth as opportunities arise.

PRINCIPAL RISKS AND UNCERTAINTIES

The main risks arising from the company's activities are liquidity risk and interest rate risk.

The board reviews and agrees policies for managing each of these risks and they are summarised below.

Liquidity risk

The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and

to invest cash assets safely and profitably. Short term flexibility is achieved by overdraft facilities.

Interest rate risk

The company finances its operations through bank borrowings. The company's exposure to interest rate fluctuations

on its borrowings is managed by the use of both fixed ans variable rate facilities.

ON BEHALF OF THE BOARD:

M J Thurlby - Director

23 September 2019

The director presents his report with the financial statements of the company for the year ended 31 December 2018.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of running public houses.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2018.

DIRECTOR

M J Thurlby held office during the whole of the period from 1 January 2018 to the date of this report.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The director is responsible for preparing the Strategic Report, the Report of the Director and the financial statements

in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the

director has 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 director

must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of

affairs of the company and of the profit or loss of the company for that period. In preparing these financial

statements, the director is 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 director is responsible for keeping adequate accounting records that are sufficient to show and explain the

company's transactions and disclose with reasonable accuracy at any time the financial position of the company and

enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for

safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of

fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a

director in order to make himself aware of any relevant audit information and to establish that the company's

auditors are aware of that information.

AUDITORS

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

Annual General Meeting.

ON BEHALF OF THE BOARD:

M J Thurlby - Director

23 September 2019

Opinion

We have audited the financial statements of Knead Group Limited (the 'company') for the year ended

31 December 2018 which comprise the Profit and Loss Account, Other Comprehensive Income, Balance Sheet,

Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial

Statements, including a summary of significant accounting policies. The financial reporting framework that has been

applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting

Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom

Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2018 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the company in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard,

and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the

audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

you where:

-	the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The director is responsible for the other information. The other information comprises the information in the Strategic

Report and the Report of the Director, 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 there is a material

misstatement in the financial statements or a material misstatement of the other information. If, based on the work

we have performed, we conclude that there is a material misstatement of this other information, we are required to

report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

-	the Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the

audit, we have not identified material misstatements in the Strategic Report or the Report of the Director.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to

you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

The previous year's financial statements were not audited as the company was entitled to exemption from audit

under section 477 of the Companies Act 2006. Accordingly, the comparatives to the current year's financial

statements are unaudited.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page four, the director is 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 director determines 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 director is responsible for assessing the company's ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the director either intends to liquidate the company or to cease operations, or has 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.

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.

Mark Hindmarch (Senior Statutory Auditor)

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

14 All Saints Street

Stamford

Lincolnshire

PE9 2PA

23 September 2019

TURNOVER

5,056,485

4,713,284

Cost of sales

(1,760,897

)

(1,618,752

)

GROSS PROFIT

3,295,588

3,094,532

Administrative expenses

(2,679,522

)

(2,418,047

)

616,066

676,485

Other operating income

30,736

32,938

OPERATING PROFIT

5

646,802

709,423

Impairment of freehold property

6

(246,969

)

-

399,833

709,423

Interest receivable and similar income

7

1,494

399,840

710,917

Interest payable and similar expenses

7

(88,932

)

(74,708

)

PROFIT BEFORE TAXATION

310,908

636,209

Tax on profit

8

(105,796

)

(123,929

)

PROFIT FOR THE FINANCIAL YEAR

205,112

512,280

PROFIT FOR THE YEAR

205,112

512,280

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

205,112

512,280

FIXED ASSETS

Tangible assets

9

5,362,283

5,618,356

Investments

10

1

1

5,362,284

5,618,357

CURRENT ASSETS

Stocks

11

96,541

94,507

Debtors

12

1,007,310

836,982

Cash at bank and in hand

359,495

327,118

1,463,346

1,258,607

CREDITORS

Amounts falling due within one year

13

(2,238,246

)

(2,312,715

)

NET CURRENT LIABILITIES

(774,900

)

(1,054,108

)

TOTAL ASSETS LESS CURRENT LIABILITIES

4,587,384

4,564,249

CREDITORS

Amounts falling due after more than one year

14

(1,961,631

)

(2,146,115

)

PROVISIONS FOR LIABILITIES

19

(31,369

)

(28,862

)

NET ASSETS

2,594,384

2,389,272

CAPITAL AND RESERVES

Called up share capital

20

100

100

Retained earnings

2,594,284

2,389,172

SHAREHOLDERS' FUNDS

2,594,384

2,389,272

The financial statements were approved and authorised for issue by the director on 23 September 2019 and were signed by:

M J Thurlby - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2017

100

1,876,892

1,876,992

Changes in equity

Total comprehensive income

-

512,280

512,280

Balance at 31 December 2017

100

2,389,172

2,389,272

Changes in equity

Total comprehensive income

-

205,112

205,112

Balance at 31 December 2018

100

2,594,284

2,594,384

Cash flows from operating activities

Cash generated from operations

1

616,562

743,017

Interest paid

(309

)

(381

)

Tax paid

(136,059

)

(79,994

)

Net cash from operating activities

480,194

662,642

Cash flows from investing activities

Purchase of tangible fixed assets

(72,535

)

(42,384

)

Interest received

7

1,494

Net cash from investing activities

(72,528

)

(40,890

)

Cash flows from financing activities

New loans in year

-

603,276

Loan repayments in year

(80,077

)

(785,672

)

Bank loan interest paid

(88,623

)

(74,327

)

Amount introduced by directors

40,000

9,249

Amount withdrawn by directors

(268,270

)

(178,671

)

Repayment of other loans

(101,628

)

-

Net cash from financing activities

(498,598

)

(426,145

)

(Decrease)/increase in cash and cash equivalents

(90,932

)

195,607

Cash and cash equivalents at beginning of year

2

278,662

83,055

Cash and cash equivalents at end of year

2

187,730

278,662

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

2018

2017

£

£

Profit before taxation

310,908

636,209

Depreciation charges

81,201

93,657

Loss on disposal of fixed assets

438

-

Impairment of freehold property

246,969

-

Finance costs

88,932

74,708

Finance income

(7

)

(1,494

)

728,441

803,080

Increase in stocks

(2,034

)

(5,279

)

Increase in trade and other debtors

(170,328

)

(45,031

)

Increase/(decrease) in trade and other creditors

60,483

(9,753

)

Cash generated from operations

616,562

743,017

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of

these Balance Sheet amounts:

Year ended 31 December 2018

31.12.18

1.1.18

£

£

Cash and cash equivalents

359,495

327,118

Bank overdrafts

(171,765

)

(48,456

)

187,730

278,662

Year ended 31 December 2017

31.12.17

1.1.17

£

£

Cash and cash equivalents

327,118

166,426

Bank overdrafts

(48,456

)

(83,371

)

278,662

83,055

1.	STATUTORY INFORMATION

Knead Group Limited is a private company, limited by shares , registered in England and Wales. The company's

registered number and registered office address can be found on the Company Information page.

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

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.

At the financial reporting date the company had net current liabilities of £774,900 (2017: £1,054,108) and net

assets of £2,594,384 (2017: £2,389,272). Net current liabilities includes amounts owing to director of

£1,032,481 (2017: £1,260,751).

The director of Knead Group Ltd considers the financial statements should be prepared on a going concern

basis because:

- he has given an undertaking not to withdraw monies lent to the company if it would prejudice the ability of

the company to continue as a going concern.

- in his opinion, the company's bankers will continue to support the company for the foreseeable future.

- in his opinion, the company will continue to achieve profitability in future periods.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts,

rebates, value added tax and other sales taxes.

Tangible fixed assets

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

Freehold property

-

not provided

Plant and machinery

-

25% on reducing balance

Fixtures and fittings

-

25% on reducing balance

Motor vehicles

-

25% on reducing balance

Computer equipment

-

33.3333% on cost

Freehold buildings are not depreciated as the buildings are maintained to such a standard that their residual

value is not less than their cost or valuation.

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost less impairment.

Stocks

Stocks are stated at the lower of cost and fair value less costs to complete and sell after making due allowance

for slow moving and obsolete items.

Cost is calculated using the first-in-first-out basis.

Financial instruments

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

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

transaction price, unless the arrangement constitutes a financing transaction, where the transaction is

measured at the present value of the future receipts discounted at a market rate of interest.

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

evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying

amount and the present value of the estimated cash flows discounted at the asset's original effective interest

rate. The impairment loss is recognised in profit or loss.

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 the income

statement, except that investments in equity instruments that are not publically traded and whose fair values

cannot be measured reliably are measured at cost less impairment.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are

settled, or(b) substantially all the risks and rewards of the ownership of the asset are transferred to another

part or (c) control of the asset has been transferred to another party who has the practical ability to

unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

Basic financial liabilities, including trade and other creditors and bank loans 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 receipts discounted at a market rate of

interest.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Profit and Loss Account,

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 balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the

balance sheet 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.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's

pension scheme are charged to profit or loss in the period to which they relate.

3.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the company's accounting policies, management is required to make judgements,

estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from

other sources. The estimates and underlying assumptions are based on historical experience and other factors

that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised if the revision affects only that period,

or in the period of the revision and future periods if the revision affects both current and future periods.

There are no critical accounting judgements or estimation uncertainty that, in the opinion of the directors, will

have a material effect on the financial statements.

4.	EMPLOYEES AND DIRECTORS

2018

2017

£

£

Wages and salaries

1,567,390

1,478,600

Social security costs

97,614

88,819

Other pension costs

14,910

7,325

1,679,914

1,574,744

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

2018

2017

Management

1

1

Direct

114

109

Administration

8

7

123

117

2018

2017

£

£

Director's remuneration

-

-

5.	OPERATING PROFIT

The operating profit is stated after charging:

2018

2017

£

£

Hire of plant and machinery

2,668

5,544

Other operating leases

5,356

5,356

Depreciation - owned assets

81,201

93,657

Loss on disposal of fixed assets

438

-

Auditors' remuneration

6,500

6,000

6.	EXCEPTIONAL ITEMS

2018

2017

£

£

Impairment of freehold property

(246,969

)

-

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2018

2017

£

£

Bank overdraft interest

309

381

Bank loan interest

62,767

59,540

Other interest

25,856

14,781

Interest on corporation tax

-

6

88,932

74,708

8.

TAXATION

Analysis of the tax charge

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

2018

2017

£

£

Current tax:

UK corporation tax

103,289

134,964

Adjustment re previous years

-

(384

)

Total current tax

103,289

134,580

Deferred tax

2,507

(10,651

)

Tax on profit

105,796

123,929