SIXCO_LIMITED - Accounts
SIXCO_LIMITED - Accounts
The directors present the strategic report together with the consolidated financial statements for the year ended 2 July 2023.
Introduction
The principal activities of the Sixco Group are the operation of restaurants, cafés and wine import and distribution. The core brand operated by the Group is “Six by Nico”, a dining concept that provides fixed price 6 course tasting menus inspired by a creative theme, destination or concept which change every 6 weeks. Fixed price matching wine flights are available to complement the experience.
The group is developing a number of other brands, including restaurant "111 by Modou" a restaurant acquired 4 July 2022, Valaria a café and patisserie operation, and Tan&NS a wine importer and distributor. The Group also operates Beat 6, a not-for-profit restaurant for the benefit of the Beatson Cancer Charity.
This strategic report has been prepared for the Group as a whole and therefore gives emphasis to those matters which are significant to Sixco Limited and its subsidiary undertakings when viewed as a whole.
The year ended 2 July 2023 was a transitional year for the Group with an extension of our core operations and the exit/divestiture of several operations deemed to be non-core, as discussed further below. Having completed this process, the Group is now focused on the growth and development of its core strategic operations.
Revenue from continuing operations increased by 11.1% in the year to 2 July 2023 from £26.6m to £29.6m reflecting continuing growth in the Group’s core activities. Operating profit prior to discontinued operations and exceptional items was £4.0m (2022: £4.6m) with EBITDA from continuing operations and before exceptional items of £4.9m (2022: £5.0m). Further discussion of the result for the year is within the heading “Key Performance Indicators” below.
Capital investment of £3.0m (FY22 £3.9m) was made in FY23. This included the extension of the core Six by Nico network with the opening of a further location in Byres Road, Glasgow, which opened in February 2023 and the development of two further sites in Leeds and Cardiff which have opened subsequent to the year-end. Further site expansion is planned through the coming financial year.
Other notable investment in the year included the development of Valaria – a café and patisserie concept – which opened its first site in Glasgow in February 2023 and the acquisition of 111 by Modou, a well established and successful restaurant in Glasgow. This restaurant had been owned by Mr. Simeone personally and the decision to bring the restaurant into the Group reflected its importance to the origins and heritage of the business. Beat 6, the not-for-profit restaurant, was also relocated from Dennistoun to new premises in Bearsden.
The discontinued operations in the year related to the wind down of the Group’s Home-X business, which had been created in response to the COVID-19 pandemic and ceased in September 2022. In February 2023 the Group sold the trade and assets of TC Fragrances Limited (formerly Timeless Candles Limited) and in October 2023 the Group disposed of the Chateau-X restaurant in Finnieston, Glasgow.
Serving around 11,000 covers a week, the Group has a significant customer database, allowing cross-referral between brands and sites. The main form of marketing deployed by the Group is to generate customer referrals through innovative use of social media and email campaigns to stimulate customers to book against new themes.
The consolidated balance sheet at 2 July 2023 identifies net assets of £1.7m (3 July 2022: £1.3m). Additional drawdowns of £3.4m were made in the year from the Group's debt facilities to fund the strategic growth. At 2 July 2023, net debt is £9.1m (2022: £6.9m).
In summary the directors are satisfied with the overall development and progress in the year and are focused on expanding the core brands and offerings in the coming year.
The nature of the Group’s activities give rise to operating risks and uncertainties from:
General economic conditions and competition risk
The directors believe the Group offers an excellent value for money proposition to customers. This proposition together with the certainty of a fixed price menu provides the Group a degree of protection and resilience in tougher economic conditions where customers have less disposable income. Additionally, the breadth of our UK and Ireland wide operations provides a level of protection against conditions in individual regions.
The “cost of living” crisis in the UK is affecting every business with inflationary pressures in the supply chain and pressures on the disposable income of customers. Management closely monitors restaurant bookings and the average spend per head while actively managing our cost base to mitigate the risk to the business as far as possible.
Staff recruitment and retention
The atmosphere in our restaurants and the quality of customer experience is vital to the success of the Group. To maintain and enhance this experience the Group places significant focus on recruiting and developing colleagues with the personal qualities, skills and experience and brand knowledge to make every visit to one of our restaurants, memorable.
Food safety and hygiene
As a restaurant and food production business, shortcomings in food safety and hygiene standards could impact significantly on our brand and trade. The Group continually monitors operating processes across each location to ensure high standards.
New site identification and development
Sourcing, securing and fitting-out appropriate new restaurant locations is critical to the growth and development of the Group. The Group has an experienced senior team responsible for the identification, negotiation, fit out and marketing of new sites.
The principal financial risks are discussed in the directors’ report.
Financial KPI’s considered by management include revenue, gross and net operating margins and earnings before interest, tax, depreciation and amortisation ("EBITDA").
| Year ended 2 July 2023 (continuing operations) |
| Year ended 3 July 2022 (continuing operations) |
Revenue | £29.6m |
| £26.6m |
Gross margin | £8.7m (29%) |
| £8.3m (31%) |
Net operating margin | £4.0m (13.5%) |
| £4.6m (17%) |
EBITDA | £4.9m |
| £5.0m |
While revenue from continuing operations grew by £3m compared to the prior year it is worth noting that the prior year included revenue of £2.76m from a leased location which was closed for substantially all of FY23 due to issues with the building. This matter is under discussion between our legal advisors and the landlord.
Gross and net margins contracted in the year reflecting changes in sales mix and rising costs, with increases in minimum wage levels and price inflation generally. The Group has implemented initiatives to improve efficiency and restore margins the benefits of which are expected to be realised in FY24.
Despite the headwinds in the sector EBITDA from continuing operations was sustained at £4.9m (FY22: £5.0m)
Non-financial KPI’s include health and hygiene ratings, repeat customer levels, customer feedback, active customer numbers and the growth of our customer database and online community.
Having considered the financial position and outlook the directors are satisfied that the Group has the financial resources to trade in the ordinary course of business for the foreseeable future. Accordingly, the financial statements continue to be prepared under the going concern basis of accounting.
Future developments
The Group is well placed to continue its development and capitalise on market successes to date. Since the year end, further debt growth funding has been made available which will allow the Group to continue its expansion. While cautious of the general economic environment, with inflation and higher interest rates impacting consumer disposable income, the Group feels well placed to pursue appropriate opportunities and develop at an appropriate pace.
On behalf of the board
The directors present their annual report on the affairs of the group, together with the financial statements and auditor’s report, for the period ended 2 July 2023.
The results for the year are set out on pages 11 to 12.
No ordinary dividends were paid. The directors do not recommend payment of a dividend.
The directors, who each served throughout the year and to the date of approval of these financial statements, are as follows:
The Group's activities expose it to a number of financial risks including liquidity, cash flow and credit risks. The group does not use derivative financial instruments for speculative purposes.
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future operations, the group has in place short term and long term debt facilities.
The group’s activities expose it primarily to the financial risks of changes in interest rates and also foreign currency exchange rates, principally the Euro. The term debt in the year was held at a fixed interest. The group seeks to have a level of natural hedge in Euro transactions and will enter forward contacts when considered appropriate.
The group’s principal financial assets are bank balances and cash. The credit risk on liquid funds is considered to be limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The group's policy is to consult and discuss with employees, through staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
The group seeks to ensure regular communication with customers, suppliers and other key stakeholders. The methods of engagement vary as appropriate to the circumstances. Supplier and stakeholder relations are managed through regular meetings, telephone calls and written communications. General customer relations involve email communications, telephone calls and the seeking of direct feedback, both formal and informal.
Subsequent to the balance sheet date the following significant events are noted:-
On 1 October 2023 the entire issued share capital of Chateau-X (Finnieston) Limited was disposed of for a consideration of £1, with the group receiving settlement of intra company debt of £70k.
The Group has chosen in accordance with Companies Act 2006, s.414C(11) to set out the Group's strategic report information required by Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments.
In accordance with the company's articles, a resolution proposing that Johnston Carmichael LLP be reappointed as auditor will be put at a General Meeting.
select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ; prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 2 July 2023 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 Auditor 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 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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:
the information given in the strategic report and the directors' report for the financial period 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.
In the light of our knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters in relation to which 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.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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 company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and group, 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 most relevant frameworks we identified include:
UK GAAP;
Companies Act 2006;
Corporation Tax legislation;
Employment legislation; and
Health and Safety Legislation.
We gained an understanding of how the company and group are complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns.
We assessed the susceptibility of the company and group’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk.
We identified a heightened fraud risk in relation to:
Management override of controls; and
Revenue recognition.
The following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the company and group’s procurement of legal and professional services;
Performing audit work procedures over the risk of management 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 judgements made by management in their calculation of accounting estimates for potential management bias;
Completion of appropriate checklists and use of our experience to assess the Company’s compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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 £1,142,203 (2022 - £550,522 loss).
Sixco Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 227 West George Street, Glasgow, G2 2ND.
The group consists of Sixco Limited (Formerly Simeone Group Limited) and 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 £000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements (where applicable):
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Sixco Limited together with all entities controlled by the parent company (its subsidiaries).
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.
Subsidiaries with a functional currency other than sterling are translated into sterling for presentation within the group financial statements. Assets and liabilities are translated at the exchange rate prevailing at the reporting date. Income and expenses are translated at the average rate over the reporting period. All resulting exchange differences are recognised in other comprehensive income.
Having considered the financial position and outlook the directors are satisfied that the group has the financial resources to trade in the ordinary course of business for the foreseeable future. Accordingly the financial statements are prepared under the going concern basis of accounting.
These financial statements cover the period from 4 July 2022 to 2 July 2023. The company's accounting reference date is 30 June and the company closes its books at the end of the trading week adjacent to the accounting reference date, which for this year was 2 July 2023. Accordingly, this year represents a 52 week trading period and the balance sheet represents the position at that date. The comparative reporting period represented a 53 week period and thus the comparative results and related notes are not entirely comparable.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The costs of assets under construction are capitalised as work progresses. Once complete and available for use assets are transferred to the appropriate category of fixed assets and depreciated over their estimated useful lives.
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 statement of comprehensive income.
Investments are recognised at cost, with any impairment being recognised when it is identified.
In the parent company financial statements, investments in subsidiaries 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.
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 the statement of comprehensive income.
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 the statement of comprehensive income.
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 certain 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.
Financial assets 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 the statement of comprehensive income.
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 the statement of comprehensive income.
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 certain creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future 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.
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 period. Taxable profit differs from net profit as reported in the the statement of comprehensive income 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 statement of comprehensive income, 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 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 are expensed as they are incurred.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to the statement of comprehensive income over the term of the relevant lease.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in the statement of comprehensive income.
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.
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
The carrying value of the group's tangible assets is outlined at note 13.
The carrying value of goodwill is assessed at the year end for risk of impairment. This assessment requires judgement and estimations of future trading prospects and of the expected period of benefit from the goodwill.
The carrying value of the group's goodwill is outlined at note 12.
Discontinued operations
In June 2022 a decision was made to cease the meals aspect of the group's online home delivery offering, with the final boxes being dispatched in August 2022. This decision followed a significant and prolonged decline in sales of an offering that had been designed to be a substitute for restaurant experiences through the Covid pandemic. Accordingly, the operations in both the current and comparative period in relation to the 'restaurant meals at home' offering are presented as discontinued within these financial statements.
On 23 February 2023, the trade and assets of TC Fragrances Limited were divested and therefore all results in relation to this company are presented as discontinued in these financial statements.
On 4 October 2023 the group disposed of its shareholding in Chateau-X (Finnieston) Limited. The results for that company are included within discontinued activities for the year as the decision to sell the company was made prior to the year end.
Exceptional costs and other items
Exceptional costs and other items relate predominately to pre-revenue, start up and business interruption expenditure as well as impairment charges associated with certain fixed assets. Business interruption expenditure includes the costs in relation to the temporary closure of a restaurant which, while not exceptional in nature, are classified separately along with the other noted costs above to assist the reader’s understanding of the financial statements.
Grants received in the prior year were substantially in respect of the UK Government Job Retention Scheme (JRS) which ended in September 2021.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
In addition to the remuneration outlined above, aggregate remuneration of £291k has been included within exceptional costs and have been included in 4. These costs related to employee costs on discontinued operations. Group management staff are employed by the parent company. Remuneration costs incurred by the parent company are recharged to subsidiary undertakings. Prior to recharge, aggregate remuneration was £1,307k (2022: £1,106k).
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 1).
The actual (credit)/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:
Further details on the group's business combinations in the current period are outlined at note 25.
Further details on the acquisition of subsidiary undertakings during the current period are outlined at note 25.
Details of the company's subsidiaries at 2 July 2023 are as follows:
(1*) - The trade and assets of TC Fragrances Limited (formerly Timeless Candles Limited) were disposed of in February 2023 and the company ceased to trade.
(2*) - Entities denoted with a (*2) have been dissolved subsequent to the reporting date.
(3*) - The shareholding of Chateau-X (Finnieston) Limited has been disposed of subsequent to the reporting date (Note 27).
The registered office of all subsidiaries is 227 West George Street, Glasgow, G2 2ND except for Six by Nico (Dublin) FD Limited whose registered office is The Black Church, St Mary's Place, Dublin, D7 and Six by Nico (Leeds) Limited whose registered office is Birchin Court, 20 Birchin Lane, London, EC3V 9DU.
All non-dormant subsidiaries have taken the exemption available under section 479A of the Companies Act 2006 not to have their individual financial statements audited, with the exception of Six by Nico (Holdings) Limited, Six by Nico (Glasgow) Limited and Six by Nico (Liverpool) Limited.
Bank loans are secured by floating charges over the assets of the company and costs associated with the issue of bank loans of £344k (2022: £390k) are included within prepayments and amortised over the periods of the loans.
In September 2023, a further loan agreement of up to £4.1m repayable over 3 years was entered into by the company.
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.
On 20 December 2022 the company issued 638 A Ordinary shares of £1 each at a subscription price of £2.98 as well as 1,766 B Ordinary shares of £1 each, 2,158 C Ordinary shares of £1 each and 2,817 D Ordinary shares of £1 each all at par value.
Also on 20 December 2022, the company re-designated the 10,001 Ordinary shares of £1 each to 10,001 Founder shares of £1 each.
The A, B, C and D Ordinary shares carry no voting entitlement. The income and capital, entitlements for each share class are dependent on the outcome of future events and are subject to certain hurdles and restrictions.
The share premium reserve relates to amounts paid for shares issued in excess of nominal value.
The profit and loss reserve represents total comprehensive income for the current and prior periods less dividends paid.
On 4 July 2022 the group acquired 100 % of the issued capital of 111 By Nico Limited.
The consideration for the acquisition was settled by the company's immediate parent undertaking by virtue of an offset of amounts owed to the company by a director who was also the former shareholder of 111 By Nico Limited.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Subsequent to the balance sheet date the following significant events are noted:-
On 1 October 2023 the entire issued share capital of Chateau-X (Finnieston) Limited was disposed of for a consideration of £1, with the group receiving settlement of intra company debt of £70k.
Two new Six by Nico restaurants have opened since the balance sheet date; Leeds on 3 July 2023 and Cardiff on 14 August 2023.
A new 10 year operating lease of £75k per annum was entered into in July 2023 by a fellow group company.
During the year, management services amounting to £480k (2022 - £480k) were received from VVS Investments Limited, the immediate parent company. The balance owed from VVS Investments Limited at the reporting date was £826k (2022 - £1,008k). The group was also recharged management charges amounting to £45k (2022 - £38k) from non-controlling interests.
In addition to management charges received, management fees of £566k (2022 - £480k) were levied on subsidiary undertakings not wholly-owned.
At the reporting date the group was owed £735k (2022 - £631k) from and owed £Nil (2022 - £190k) to entities under common control. Amounts owed from/to entities under common control are included within other debtors or creditors as applicable.
The company has taken advantage of disclosure exemptions available under Section 33 of FRS 102 whereby it has not disclosed transactions entered into with any wholly-owned subsidiary of the group.
The company is controlled by Mr Nico Simeone, Director, via his direct ownership and control of VVS Investments Limited, a company registered in Scotland whose registered office is 227 West George Street, Glasgow, G2 2ND.
VVS Investments Limited is the company's immediate and ultimate parent company and is the largest group for which group accounts are prepared. Copies of the group accounts can be obtained from the company's registered office.