Various Eateries PLC
Annual Report 2022

Plain-text annual report

V a r i o u s E a t e r i e s P L C A n n u a l R e p o r t & F i n a n c i a l S t a t e m e n t s 2 0 2 2 VaRiouS EaTERiES PLC ANNUAL REPORT & FINANCIAL STATEMENTS 2022 Welcome to Various Eateries STRaTEGIC REPORT GOVERnanCE FInanCIaL STaTEmEnTS We are a hospita lit y group passionate a bout creat ing unique and immersive exper iences for moder n consumers With both Coppa Club and Noci, we are focused on creating destinations that reflect the way people want to socialise, work and relax. Strategic Report Financial Statements 42 Consolidated Statement of Comprehensive Income 43 Consolidated Statement of Financial Position 44 45 46 47 Company Statement of Financial Position Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Consolidated Statement of Cash Flows 48 Notes to the Financial Statements 4 At a Glance 6 our Brands 8 Chairman’s & Chief Executive’s Statement 14 Business Model & the opportunity 16 Financial Review 19 Principal Risks & uncertainties 20 Directors’ Duties – S.172 Statement Governance 24 Board of Directors 26 Executive Chairman’s Statement on Corporate Governance 30 Directors’ Report 34 Independent Auditor’s Report VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 1 We are welcoming: Inclusive and positive; Open minded; Nothing is too much trouble 2 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 R E P o R T S T R a T E G i C VARiouS eAteRieS plC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 3 4 At a Glance6 Our Brands8 Chairman’s & Chief Executive’s Statement14 Business Model & the Opportunity 16 Financial Review19 Principal Risks & Uncertainties20 Directors’ Duties – S.172 Statement at a Glance The success of our business is dependent on t he cult ure we foster and t he way we t hink, behave and act. our Directors are responsible for developing some of the uK’s most successful hospitality groups, and we believe that the current market conditions present the perfect opportunity to expand both Coppa Club and Noci across the UK.  44 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS Our history Various eateries was founded by Hugh Our culture the success of our business is dependent osmond – owner of the Strada business – on the culture we foster and the way we in 2014. The first Coppa Club opened in think, behave and act towards our key Sonning-on-Thames in 2015, and five more stakeholders. We want to work with people Coppa Clubs had been launched by 2019. who share the same passion that we have Andy Bassadone invested in the Group in for our customers and our brands, and 2019 with a vision to redefine the Italian with people looking to work hard, develop dining sector with our second key brand, with us and become part of the Various Noci which opened its first location in Eateries team. islington Green in 2022. Our brands the Various eateries Group comprises the Coppa Club, Noci brands and various standalone brands which currently operate across 15 UK locations. Our purpose Great people delivering unique experiences through continuous innovation. Our values & behaviours We are welcoming inclusive and positive; open minded; Nothing is too much trouble We take pride Don’t compromise; Challenge yourself We are a community Be part of something; We look out for each other; We care about our community VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 5 our Brands For years, only members’ clubs offered a space for people to enjoy at any time of the day – so we created Coppa Club. With clubhouses in beautiful locations, Coppa provides relaxed spaces to eat, drink, meet, work and stay. Coppa is rooted in its local community where every local is made to feel like a member. it offers an escape from the stresses of everyday life, enabling guests to relax, have fun and connect with natural surroundings in an informal setting. There are currently 11 Coppa Clubhouses across the South of england, including three Clubhouses with rooms – Coppa at The Swan and Coppa at The Great House, both located in Berkshire and the Georgian in Haslemere, Surrey. Current Coppa Clubhouses include: Clubhouses with Rooms Coppa at the Swan, Coppa at the Great House and Coppa at the Georgian Clubhouses located in tower Bridge, putney, Clifton, Cobham, Henley, maidenhead, Brighton and Bath Our other assets Strada Strada is an established business and remains a well-known brand. The Group owns and controls the last two remaining sites, which are located in central London. 6 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS Noci is a specialist fresh pasta restaurant with cocktails on tap and a neighbourhood vibe. opened in islington, london in march 2022, the venue quickly found its feet and continues to grow in popularity. With an accessible price point, laid-back atmosphere and a focus on quality, Noci will develop several new sites in the london area in the coming year. Tavolino A quality focused Italian restaurant on the banks of the River Thames, overlooking Tower Bridge, attracts both a corporate and tourist market. 31 Below 31 Below is a neighbourhood café/bar with an all-day menu, full service bar, lounge area and workspace located on Marylebone High Street. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 7 Chairman’s & Chief Executive’s Statement The 52 weeks ending 2 October 2022 was anot her per iod of good strategic progress and commercial resilience aga inst a backdrop character ised by industr y-w ide cha llenges. As previously announced, sales were slightly ahead of market expectations, demonstrating the lasting appeal of our proposition despite the well-publicised headwinds. While profitability was impacted by our decision to resist passing price increases onto customers in full until there was more certainty around the trajectory of inflation, post-period end, we have taken action to enhance margins. We were delighted to open four new venues in the year – our busiest in terms of site acquisition yet – including our first Noci restaurant in islington, which has been a success. ANDY BASSADoNe executive Chairman YiSHAY mAlKoV Chief Executive Officer 8 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS Looking ahead, while macroeconomic uncertainty is set to persist in the short term, we believe Various Eateries continues to be in a favourable position, relative to many. It is our view that we have three strong brands aligned with modern consumer trends that are set to endure for many years to come, a proven rollout strategy with enough flexibility to ensure we keep moving forward, and a motivated leadership team with complementary skills and experience to deliver it. There will no doubt be challenges to overcome in FY23, but we are well-prepared and confident of another year of steady, continued progress. amBITIOn TO CREaTE a SIGnIFICanT PLaYER In uK LEISuRE Various Eateries is a modern, high-quality hospitality group that is focused on creating concepts with a solid value-proposition. The Group has several different but complementary brands that are aligned to the needs of the modern consumer, from single-product venues like Noci, that speak to the consumers’ desire for high- quality, artisan products delivered at an excellent price, to the Coppa Club concept, with its all-day ethos; that meets consumers’ needs for a flexible out-of-home space to work and socialise from. This variety of offer was consciously designed to ensure resilience during difficult economic conditions. Various Eateries has a highly experienced management team, that over several decades have together and independently played leading roles in building some of the most successful brands in UK hospitality. We have seen market conditions at both ends of the spectrum and everything in between and, as a result, are well versed in not only navigating adversity but recognising opportunities within it. Various Eateries was conceived as one such opportunity. Although recent years have been characterised by continued uncertainty, and the timings and severity of challenges have at times been difficult to predict, the overall direction of travel of the industry remains the same, and our confidence in and enthusiasm for our strategy is as high as it has ever been. In Coppa Club, we have a multi-use, all-day concept that combines restaurant, terrace, café, lounge, bar and remote-working spaces under one roof. We operate several formats but are extremely selective in the sites we take. As a result, we have developed a highly desirable estate of prime locations designed to capture the growing demand for this kind of offering and, as an operator with long-term growth ambitions, will continue in a similar vein. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 9 Chairman’s & Chief Executive’s Statement CoNTiNuED New sites opened in the year have, overall, performed encouragingly under the circumstances. The performance of our Townhouse Coppa Club in central Bath since opening in august 2022 has been particularly noteworthy, attracting city centre workers and residents through the day and night. In 2023, the Cardiff, Farnham and Guildford sites will take similar formats, and enjoy similarly healthy footfall, giving us a high degree of confidence in their prospects. Our hotels delivered a steady performance with high occupancy and room rates. against an exceptional prior year that benefited from high levels of pent-up demand post Covid and the rise in popularity of the ‘staycation’, we are pleased with their contribution. The performance of Tavolino has also been in line with expectation, with central London footfall increasing as workers returned to the office. Opening in July 2020, meaningful performance comparisons are particularly difficult given there have been no reporting periods of uninterrupted trading. Nonetheless, we have been satisfied with the steady improvement we have seen over time and remain optimistic about the brand’s prospects. Since opening in March, Noci has surpassed expectations both in terms of performance and profile across the capital. Given challenges such as the impact of the Covid escalation on our ability to trade and consumer sentiment in the winter, the cost-of-living crisis in the months since and ongoing train strikes, the Board believes the trading performance in the year to be a positive result. Tavolino addresses the gap in the market for high- quality italian food at mid-market prices. Located on the river by London Bridge, with year-on-year sales growth, the restaurant has shown real promise and we continue to harbour plans to open new sites when conditions are right. The first restaurant of our newest brand, Noci, opened in Islington, London, in March 2022. Noci, a modern, neighbourhood pasta restaurant, has been received positively in the local community and beyond and we are excited by the brand’s potential. although early in its existence, we are confident it will go on to form an important part of the Group. While the pace of the rollout of our brands has been impacted by Covid and the elevated industry-wide cost pressures that have materialised subsequently, the rate at which we open new sites will continue to be dictated by the number of opportunities we see that meet our strict criteria rather than the need to grow at a particular rate. SOLID TRaDInG PERFORmanCE Prior year performance comparisons remain difficult given the extended periods of Covid-related restrictions between March 2020 and January 2022. However, for the last six months of the financial year (4 April to 2 October 2022), a period of relatively normal trading, the Coppa estate achieved an LFL growth of 1% compared with 2019 (2019 being the most recent year with uninterrupted comparable trading). “2022 has been marked by yet more volatility and once again, our teams have risen to the challenge, showing great resilience and dedication in delivering great experiences for our guests.” andy Bassadone executive Chairman 10 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS OnGOInG mITIGaTIOn OF INDUSTRY-WIDE CHALLENGES We had considerable success in mitigating many of the well-publicised challenges affecting the industry during the year. While we are not completely immune to energy price rises, we have taken steps to hedge ourselves materially from a volume perspective, which we expect to protect us for at least the next 18 months. At the end of the period, and moving into the new financial year, we carried out a comprehensive menu re-engineering exercise across the Group. The exercise comprised both food and beverage, enhancing margins with only modest price increases and without sacrificing quality. COnTInuED DELIVERY OF OuR EXPANSION STRATEGY During the period, we opened four new venues: Coppa Clubs in Putney, Haslemere and Bath as well as the Group’s first Noci in Islington, taking the total number of sites in the group to 15. In November 2021, Coppa Club Putney opened on the River Thames, benefitting from a wraparound terrace looking onto the water. This generous all-day space has been cleverly designed with different corners for work, socialising and private dining. In May 2022, Coppa Club Haslemere opened and brought fresh energy and design to an old hotel property. A destination venue, this site benefits from overnight stays, private dining, work and socialising spaces and indoor and outdoor eating and drinking. august 2022 saw the opening of Coppa Club Bath, the first of the Townhouse venues. The Townhouse concept allows Coppa Club to capitalise on former retail sites and create multi-floor venues that are buzzy from day-to-night; these generous spaces offer both informal and destination-led eating and drinking under one roof. The Bath Townhouse, located on old Bond Street in the centre of the city’s shopping district, was an innovative redesign of a former Gap site. Busy from early to late, locals and tourists visit the venue for morning coffees through to late night dinner and drinks. In March 2022, we opened the first Noci site overlooking islington Green, a perennially popular neighbourhood. a fresh pasta and relaxed cocktail concept, the Noci site quickly settled into its first location and became known for its quality and atmosphere, the site has performed strongly since opening. We remain on track to open Coppa Club sites in Cardiff, Guildford and Farnham in 2023. A second site for Noci will also open during the year at the iconic Battersea Power Station. Coppa Club Guildford will be the second of the Townhouse variety of Coppa Clubs. A three-storey, all-day venue on the busy High Street, it will boast cafe-work space on the ground floor and a bold mural leading the guests’ eye up the stairwell to the first-floor dining space and destinational bar on the top floor. Coppa Club Farnham opens in Brightwells Yard, a buzzy new neighbourhood in central Farnham. Benefitting from a generous outdoor terrace, this will be a unique, all-day offering for locals in a Grade ii Listed building. Coppa Club Cardiff opens in the Welsh capital’s prime shopping district. With a prominent cafe-bar space on the ground floor and a cosy outdoor terrace, guests will then journey up the first floor to the centrepiece bar, private dining room and flexible spaces for eating, drinking and socialising. Building on the popularity of the original islington Green site, the newest Noci will have the same laid- back, friendly vibe of the original, set in the iconic Battersea Power Station. Benefitting from both a strong corporate and tourist market on its doorstep, the latest Noci site will maintain a focus on artisan pasta and cocktails on tap to ensure we can deliver a high-quality product, at high-volume. While there is an increasing number of good sites available on increasingly advantageous terms, build costs have increased significantly and the economic picture remains uncertain. We will therefore continue to exercise caution in our expansion plans as we move through the new financial year, only proceeding with prospective sites that meet our strict criteria for long- term, sustainable success. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 11 Chairman’s & Chief Executive’s Statement CoNTiNuED Dur ing t he per iod, we opened four new venues: Coppa Club P ut ney, Coppa Club Haslemere, Coppa Club Bat h, and t he Group’s f irst Noci in Isling ton. THE BACKBONE OF OUR BUSINESS: OUR PEOPLE Our venue and head office teams once again demonstrated an exceptional commitment to providing outstanding customer service and memorable experiences for customers. it was another year of testing circumstances caused by challenging market conditions, but our colleagues rose to the challenge. on behalf of the Board, we would like to thank all of our colleagues across the Group. During the period, we continued to recruit and train large numbers of often young and inexperienced staff. While one of the biggest cost increases in the year, we continue to believe it to be the right strategy to ensure we maintain our opening hours, that our service remains to the high standards we expect, and to equip people with skills that will benefit them and society for life. Alongside significant investment in our venue teams, our senior team has gone from strength to strength. in august 2022 we appointed Lyndsay anderson as Marketing Director. In the months Lyndsay has been at the business, she has been instrumental in taking our brand and marketing strategies to the next level and asserted herself as a pivotal member of the senior leadership team. Post period end, on 9 February 2023, we announced the appointment of Sharon Badelek as Chief Financial Officer and board member with effect from 1 April 2023. Sharon has an established track record of driving growth in businesses in our sector, with an impressive CV that includes senior financial positions at RedCat Pub Company, Vue Entertainment and Novus Leisure Limited. To have attracted someone of Sharon’s calibre demonstrates the strength of our proposition and ambition and we look forward to benefitting from her counsel. Sharon replaces Oliver Williams, who left the Company on 11 November 2022. Oliver joined Various Eateries in 2018 and in the years since played an integral role in the Company’s successful listing on AIM and was instrumental in navigating the pandemic while strengthening the finance function of the business. We are thankful for his contribution and wish him well. James Darwent is currently interim CFO and will remain with the Group and on the Board until Sharon’s appointment in April 2023. maRKET COnDITIOnS PRESEnT OPPORTunITY In January 2023, in its coverage of the restructuring of a well-known restaurant group, the BBC provided the results of its analysis of corporate insolvency notices, finding that 320 businesses in the food service industry in the uK – restaurants, pubs, cafés and catering firms – were forced to initiate insolvency procedures in December 2022. This, according to the BBC, was an increase of 41% compared to the same month in 2019, before the pandemic. In total, the BBC said, 6,613 hospitality firms in the UK have started insolvency proceedings since 2020. Issue 37 of the AlixPartners/CGA HospitalityMarketMonitor included some stark statistics regarding closures in the uK in the fourth quarter of calendar year 2022, with a net decline of 1,611 licensed premises. The report states: This represents a 1.6% contraction between September and December and is equivalent to nearly 18 closures every day. It means the sector saw a net decline of more than 4,800 premises, or 4.5% of its total, across the whole of 2022. More than three quarters of these closures – 3,841 premises – occurred in the second half of the year as business pressures intensified. This is an even worse performance than in 2021, when the COVID-19 pandemic was wrecking trade. As we have maintained since IPO in September 2020, while it is sad to see our industry peers fall by the wayside, the increasing number of high-quality sites becoming available at extremely attractive rates presents us with a growing opportunity. Our three new publicly confirmed Coppa Club venues are a good illustration of this. It is very unlikely they would have become available had it not been for the pandemic, and certainly not with the lease terms and at the rates we have been able to secure them on. Similarly, we are seeing an influx of fully fitted restaurants coming to the market that fit the criteria for Noci at no premium, giving us excellent strategic flexibility over the rollout. 12 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS We shouldn’t let the current economic climate and prospect of further train strikes overshadow the progress we continue to make, and the potential of the Group. Our focus for FY23 will be on continued delivery of our strategy. Regardless of what happens to inflation and demand in the short-term, we are building the Group for the long-term, and will continue to make decisions, and take actions we believe will ensure sustainable, profitable growth and value creation for shareholders long into the future. ANDY BASSADoNe Executive Chairman YiSHAY mAlKoV Chief Executive Officer as hospitality businesses struggle to contend with food and utility costs, we are observing that consumers are reducing spending in response to the cost-of-living crisis, and with the knowledge government support won’t last forever, it is hard to imagine a future where things don’t get worse before they get better. it is an unfortunate outlook for many, but an inevitable one, and we believe we are ideally positioned to take on the best of those empty sites and bring them back into the community as thriving all-day hubs and restaurants. Regarding reduced consumer spending, while obviously not immune to economic downturn, we expect the Group to be a beneficiary of the emerging premiumisation trend. as disposable income reduces, we are seeing more and more people choosing quality over quantity and memorable experiences over the everyday. Our brands and venues, engineered around first-class food and destination venues at affordable prices, should continue to prove a popular choice. CuRREnT TRaDInG anD OuTLOOK Sales in the first quarter of FY23 were in line with management expectations. As we move through the second quarter, it remains difficult to predict with any certainty how this financial year will pan out. a mixed picture in october and November followed by a strong festive period didn’t offer a great deal in terms of themes and patterns, and it is still too early to draw any meaningful conclusions. Beyond Various Eateries, there doesn’t yet seem to be any real consensus in the industry about what to expect, with opinion divided as to whether inflation and interest rates will continue to rise, or whether the solid Christmas many retail businesses enjoyed represented something of a turning point. One thing that is certain is the negative impact of the ongoing train strikes on trading, particularly at our London sites. We saw evidence of this during the year under review and post-period end, and expect them to be detrimental as long as they continue. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 13 Business Model & the Opportunity We leverage our key st reng t hs and sources of compet it ive advantage to deliver our dist inct customer proposit ion. THE OPPORTUNITY OUR KEY STRENGTHS The shake up of the uK restaurant sector, kick-started by Covid-19 in early 2020, continues to accelerate at pace, driven by the many well-documented industry-wide challenges. However, this in turn has created some significant opportunities in the sector for a well-placed operator: Site availability With so many existing restaurants and pubs having already closed, the change in the licensing to allow hospitality to take over existing retail units and the cliff edge of rising costs on the horizon, leases in quality locations are becoming available on attractive terms. Changes in consumer behaviour Coppa Club was designed specifically to take advantage of changes in consumer behaviour, many of which have been accelerated by Covid-19. Coppa Club offers a place where you can spend all day. A level of hybrid working is clearly here to stay which will benefit our local sites in the community. Acquisition opportunities Strong liquidity and a wealth of experience means we are well placed to make selective and targeted acquisitions of either high-quality individual sites or, if appropriate, restaurant brands. Reduced competition A significant number of branded chains, and numerous independents, have either folded or been through an administration process, significantly reducing their estate. Reduced competition, especially of italian mid-market chains for example, provides a major opportunity for our new and fresh concepts to grow market share rapidly. Entrepreneurial leadership with expert experience We are led by entrepreneurs andy Bassadone and Hugh Osmond who bring extensive experience in creating and growing some of the uK’s most successful hospitality groups. Well-invested central infrastructure to support growth Head office structure capable of supporting our growth plans as well as established in-house support functions such as finance, HR, marketing and procurement. As well as the ability to operate the current business, we also have vast experience of executing builds, new openings and acquisitions. Financial strength The successful raise of £25m on the AIM Market of the London Stock Exchange in 2020 provides a strong financial base to fund growth organically, and the potential for further investment. As at the balance sheet date, the Group has low levels of net debt. An exceptional executive team Led by CEO Yishay Malkov, the team has considerable sector expertise and a proven track record of delivering growth strategies for hospitality groups over many years. Their understanding of the market and strategic guidance will ensure the successful roll- out of our key brands. Established scalable brands The Group now has three brands already trading with proven success across a variety of locations, ready to scale up. 14 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS For years, only members’ clubs have offered space for guests to stay all day and transition from work to play, but we aim to change all that. We’re relaxed, welcoming and informal, our bars serve great wines and cocktails, our lounge areas are comfy with sofas to relax in and plenty of Wi-Fi and plug sockets, perfect for meetings or just for settling in with your laptop. A quality-focused Italian restaurant and bar on the river at London Bridge. Serving simple dishes using the best produce from Italy and the UK, buzzing with local workers and tourists alike. Fresh artisan pasta and cocktails on tap. Noci, Islington Green has quickly settled in to the London dining scene and has become known for its quality and value. In 2023, Noci Battersea Power Station opens in this new, iconic neighbourhood. NeW BRANDS AND ACQuiSitioNS Our entrepreneurial spirit means we are always looking to develop brands in-house that could join Coppa, Noci and Tavolino in being rolled out in the future. But with a strong executive team, we are constantly on the lookout for new acquisition opportunities which match our values and ambition, and to which we believe our expertise could add considerable value. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 15 Financial Review OVERVIEW The financial results for FY22 benefitted from all sites being open to trade throughout the year compared to periods of closure in the preceding two years due to the impact of Covid-19 restrictions, albeit trade was impacted in December 2021 through to early 2022 from the Government’s advice to stay at home. The KPIs of the Group’s performance are summarised in the table below: Revenue Adjusted EBITDA (before impact of IFRS 16)* Adjusted EBITDA* operating loss total loss for the year after tax Basic and diluted earnings per share (pence) Cashflow from operating activities Net debt / (cash) excluding lease liabilities Number of sites * Not audited 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 40,667 22,348 437 3,531 (5,209) (7,215) (8.8) 1,861 3,317 15 (1,178) 1,204 (2,098) (3,740) (4.6) 3,292 (7,278) 12 Change % 82% 137% 193% 148% 93% 93% (43)% 146% 25% 16 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS Summary of financial performance for the 52 weeks ended 2 October 2022 Reconciliation of loss before tax to adjusted EBITDa Revenue Loss before tax impairment Net financing costs Depreciation and amortisation insurance claim loss on disposal of property, plant and equipment Authorised Guarantee Agreements provision EBITDa pre-opening costs Share-based payments Non-trading site costs adjusted EBITDa* Adjustment for rent expense adjusted EBITDa (before impact of IFRS 16)* * Not audited FInanCIaL PERFORmanCE 52 weeks ended 2 October 2022 £ 000 40,667 (7,215) 2,543 2,006 4,702 – 54 – 2,090 755 830 (144) 3,531 (3,094) 437 53 weeks ended 3 October 2021 £ 000 22,348 (3,740) 610 1,642 3,971 (2,500) 335 (104) 214 295 844 (149) 1,204 (2,382) (1,178) Overall Group revenue increased by 82% (FY22: £40.7m, FY21: £22.3m), resulting in an increase in adjusted EBITDA of £2.3m, from £1.2m in FY21 to £3.5m in FY22. The Group benefited from all sites being able to trade throughout the period compared to FY21 in which there were significant restrictions to trade at various times during the year. The loss before tax has increased from £3.7m in FY21 to £7.2m in FY22. In FY21 the Group benefitted from insurance claim proceeds in the amount of £2.5m that related to the original Covid-19 restrictions in FY20. In FY22 the Group incurred impairments to goodwill and right- of-use assets of £2.5m (FY21: £0.6m). Furthermore, the Group’s depreciation charge has increased by £0.7m (from £4.0m in FY21 to £4.7m in FY22) and pre-opening costs have increased by £0.5m (from £0.3m in FY21 to £0.8m in FY22), as we have continued to invest in new sites. Like-for-like sales performance (v calendar year 2019) London (3 sites)* Regional (5 sites)* Total (8 sites)* * Not audited Oct 21 to Nov 21 Dec 21 to Jan 22 Feb 22 to mar 22 apr 22 to Sep 22 8% 18% 12% -19% -7% -14% -3% 2% -1% 0% 7% 3% Prior year comparisons remain difficult due to the impact of Covid-19 related restrictions during FY21. In addition the period from December 2021 to January 2022 was impacted by the Government’s advice to stay at home. The Government’s advice to stay at home in December 2021 had a significant impact on all sites, particularly our three sites in London which would traditionally benefit from significant Christmas trade. From April 2022 onwards, a period of relatively normal trading, our five regional sites benefitted from a 7% uplift in like-for-like sales and this contributed to an overall growth of 3% for the eight sites in that period. Trading in London saw a slower recovery as tourism and office-based working had not yet recovered to their pre-pandemic levels. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 17 Financial Review CoNTiNuED FInanCInG COSTS Financing costs of £2.0m (2021: £1.6m) have increased by £0.4m in the year. This arises from increases in lease liability interest as we have invested in new sites, together with slight increases in costs on the renewal of the deep discounted bonds. Financing costs on bank overdraft and borrowings lease liability interest Financing costs ImPaIRmEnTS 52 weeks ended 2 October 2022 £ 000 662 1,344 2,006 53 weeks ended 3 October 2021 £ 000 537 1,108 1,645 A detailed review of each individual site has resulted in an impairment charge of £1.6m against goodwill (2021: nil), and of £1.0m (2021: £0.6m) against right-of-use assets. Detail of the methodology is included in notes 13 and 14. DIVIDEnDS The Directors do not recommend the payment of a dividend, believing it more beneficial to use cash resources to invest in the Group in line with our strategy. CASHFLOW AND BALANCE SHEET Net cashflow from operations declined from £3.3m in FY21 to £1.9m in FY22. In FY21 the Group benefited from £2.5m relating to its Covid-19 Business Interruption claim and therefore the underlying improvement in net cashflow from operations was £1.1m. During the period the Group invested £8.9m (2021: £5.1m) in capital expenditure in support of future growth. New Coppa Club sites were opened in Putney, Haslemere and Bath, and our first Noci was opened in Islington. Furthermore some light refurbishment was undertaken across other locations. As a result of the investment undertaken during the year the Group ended the period with cash at bank of £9.4m (2021: £19.7m). KEY PERFORMANCE INDICATORS (‘KPIS’) The Group’s indicators of performance, as shown on page 16, are reviewed on a monthly and annual basis. However with the prior period severely impacted by the conditions faced by the Group arising from the Covid-19 pandemic, the total loss and EPS figures are hard to assess in comparison to the prior year. 18 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS Principal Risks & uncertainties The Directors formally assess the risks of the Group and look to take appropriate action to ensure these are mitigated wherever possible where they could impact its objectives. The Directors consider the following to be the principal risks faced by the Group: KEY RISKS DESCRIPTIOn mITIGaTIOnS CONSUMER BEHAVIOUR & CONFIDENCE COST InFLaTIOn THE WAR IN UKRAINE RECRuITmEnT & RETEnTIOn CYBER SECuRITY COnSISTEnCY COmPETITIOn HEALTH & SAFETY As the Group operates in the competitive UK marketplace, it is exposed to the wider pressures faced by the uK economy. Lower disposable income, low consumer confidence and the expected recession all impact the way our customers behave. Focusing on both quality and value has never been more important to the Group. Being product focused from the very top, having a diverse portfolio of brands spread geographically, and driving the business through continuous innovation ensures we are always relevant to our customers. The Group is not immune to the impact of inflation, especially as far as food products are concerned, increased energy costs, build costs and labour costs, all of which are outside of our scope of control and which put pressure on margins. As the Group has several concepts, and through careful menu engineering, we are able to control the F&B pressures while avoiding large price increases. Our experienced finance and procurement department continue to effectively control and utilise opportunities for savings across all cost lines. As the Group grows so does it’s buying power and ability to capitalise on these opportunities. as the war in ukraine continues there are continuing risks and uncertainties affecting both the global economy and the uK economy specifically. These include supply chain issues, cost inflation and political instability amongst others. The Group continually monitors the situation maintaining constant dialogue with suppliers, ensuring we have suitable alternatives where needed. The Group is also actively looking, where appropriate, for medium to long term deals with its different suppliers to ensure continuity and stability. The Group’s performance is largely dependent on the management team and employees across its sites. it is therefore important that the Group can continue to employ the right people, with the right skills and experience. The Group works hard (as detailed in the statement on corporate governance) to be an employer of choice, to aid both retention and recruitment. The Group has also invested in its Human Resources department to ensure training, as well as rewards and incentives, are continually reviewed and improved. as the Group grows, and its reliance on iT increases, there is a greater risk from cyber security threats of impact on trading, reputational damage or GDPR errors. With an accelerated expansion plan across various brands, there is a risk of lack of focus on food and service standards. Ensuring continuous innovation of our product is paramount to remain ahead of the competition. The Group employs a Head of IT to ensure all upgrades / changes to any systems are completed accurately and that data protection measures are followed and recorded. We are also continually monitoring and investing in appropriate firewalls and security, utilising a third-party provider. The Group holds quality of product and service at the core of everything it does and continues to invest in numerous systems to constantly monitor these in detail. These include the consolidating of all social feedback, continuous staff training, regular in-house auditing and a robust menu development and delivery process. although the hospitality industry in the uK has been under enormous pressure, it is also the most diverse and competitive it’s ever been. Staying relevant and ahead of the game requires constant vigilance. as mentioned before, the Group is constantly led by quality, consistency and innovation. There is a constant focus on offering a diverse range of products, across different day parts for different people. This keeps the Group relevant and popular for different reasons and helps maintains its competitive edge. The Health & Safety of our staff, guests and suppliers is of paramount importance to the Group. Equally important is the need to ensure compliance with numerous regulations for the sector including food hygiene, allergens and fire safety. The Group has a third-party specialist to ensure that it adheres to the most up-to-date legislation. The Group also undertakes extensive training with its staff, which is then also monitored by various site visits and audits, both from internal and external parties, to ensure documented procedures and policies are being met. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 19 Directors’ Duties – S172 Statement it is the Board’s responsibility to ensure that Various Eateries is managed in the long-term interests of all shareholders and stakeholders in the business. The Board considers the needs and concerns of all stakeholders in its running of the Group. By seeking to understand the differing stakeholder interests and impacts through a proactive programme of engagement, the Directors ensure its decision-making is informed and that the development and delivery of our strategy leads to long-term sustainable success for Various Eateries. as required by section 172 of the uK Companies Act 2006, the Directors have acted to promote the success of the Group for the benefit of its stakeholders. in meeting this responsibility during the period, the Directors have had regard, amongst other matters, to: a. the likely consequences of any decisions in the – – long term; throughout the period the Board has ensured investment decisions, including new leases, are right for the long-term prospects of the business, not just in this uncertain economic environment. Specifically this included signing leases this past year that protect the Group for the next decade or so with favourable terms not seen for a long time in the hospitality property market. the Board also invested in a new concept that is suitable for expansion with the long term view of capitalising on both the current depressed economic climate, and the inevitable period of recovery that will follow. b. the interests of the Group’s employees; – the Board recognised the need for strong communications with the employees. in order to keep the positive momentum from the previous year investments took place including a relaunch of a monthly Group wide newsletter and a weekly communication tool with senior managers on site. – An annual engagement survey and a follow up on last year’s employee feedback took place and engagement numbers have gone up across the estate. – Work has been undertaken on a new employee engagement and training platform that will be launched in 2023. – c. the need to foster the Group’s business relationships with suppliers, customers and others; the Group maintains close dialogue with its suppliers, looking to consolidate wherever possible without compromising on quality and security of supply. – We have actively reduced the number of different food and beverage suppliers in order to both achieve efficiency and to create closer, more mutually beneficial relationships. Throughout the last year, especially because of the well publicised supply chain issues, the Board has encouraged the Culinary Director and Head of procurement to engage with our suppliers on a daily basis, renegotiate credit terms and to meet with them face to face regularly. – the Board discusses the customer feedback in every board meeting and has continued investing in the channels of communication and acting upon the feedback given. this includes investing further in a customer feedback platform and in house training for the daily maintenance of it. Further investment has been made in the company website and central reservations (both as far as team numbers and IT infrastructure) in order to more efficiently communicate with our guests and to increase our efficiency in answering their needs. This has reflected in improved guest scores and general feedback across the estate. d. the impact of the Group’s operations on the community and environment; – We are members of the Sustainable Restaurants Association and are committed to actively reducing our environmental impact through our sourcing, energy use and waste disposal, and our place in society. the Group has invested, and continues to invest, in different initiatives in order to lower our environmental footprint and better integrate with our surrounding communities. Specifically these include review of our energy consumption including installation of digital meters which allow the property team to analyse and reduce the energy consumption on site. the Group has also signed up to various sustainable groups such as the marine Conservation Society. – to engage with the community the Group engages in a number of activities, including partnering with Hm prisons in order to integrate day release inmates as team members in our sites, investing in an array of local community activities such as “mums Clubs”, different wellbeing classes and talks and sponsoring local charity events. e. the Group’s reputation for high standards of – business conduct; internal audit, both desktop and site visits, to ensure standards are being maintained. this includes operational audits, customer service audits and financial audits. – ongoing staff training, including the introduction of staff trainers in sites, buddy system for new starters and revamped standard operating procedures for both front and back of house teams. – Formal mystery diner programme, aligned to guest feedback. This is brand specific and is updated every year to ensure standards are aligned with guest needs. f. the need to act fairly between members of the Company. – Regular shareholder engagement. – one class of share capital to ensure all shareholders are treated equally. 20 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 STRaTEGIC REPORT GoVeRNANCe FiNANCiAl StAtemeNtS STAKEHOLDER ENGAGEMENT Further to the section 172 statement, the Group continues to develop an ESG taskforce to develop a clear strategy, through stakeholder engagement, which will be communicated once clear timeframes and targets are developed. However, as detailed in the table below, the Group already does a considerable amount to engage with its stakeholders. Why we engage Shareholders How we engage Stakeholder interests The Board regards effective communication with shareholders as crucial to understanding and meeting their needs and expectations. • Investor meetings and roadshows • one-to-one meetings • interim, ad hoc and annual announcements • Annual report and AGM • Corporate website • Financial and operational performance • Business model and strategy • Governance • Trust in leadership team Community and environment We care about the communities we operate in. We engage with local people and groups in order to learn how best we can support the local economy, support local charities and provide a distinct and differentiated experience. • Creating all-day multi-use venues, designed to • Investment and reinvigoration of local meet the needs of local communities in a post-Covid-19 world • Refurbishing and restoring historic buildings • Hosting wellness and lifestyle events allowing local communities to engage with each other • Providing support to local charities • Carbon and Emissions reporting • We are a member of the Sustainable Restaurants association economies including jobs for local people • Locations for hosting community and charity events Customers our success is dependent on maintaining a distinct proposition and relationship with our guests. We must understand evolving consumer requirements in order to best meet their needs and ensure continued loyalty. • Providing a comfortable and relaxed home- from-home experience and great hospitality • Formal feedback and guest surveys • Digital marketing and social media • Publicity activity through key lifestyle publications • Pop-up activity • a distinct and unique proposition • an all-day offering allowing guests to eat, meet, work or relax • a broad, high-quality menu that incorporates vegetarian, vegan and gluten-free options • Exciting and convenient locations • accessible pricing • Consistency in service • Responsiveness to feedback Employees We are a people business. The skills, experience and passion of our employees enables us to deliver the highest levels of quality, standards and service. In order to attract and retain the best people, we offer competitive pay rates and believe in fostering a culture of collaboration, support, two-way listening and inclusivity. • Town hall meetings • Central and brand-specific Intranets, providing learning resources, community hubs and a communication channel • annual appraisals • Staff newsletters • Targeted electronic campaign “Check ins” • Annual engagement surveys • Training and development opportunities • Career progression and recognition • Compensation and incentives • Group culture and reputation • Health, safety and wellbeing Suppliers/partners our proposition is dependent on access to the best ingredients from our suppliers. • Honest and open dialogue and negotiation • Clear lines of communication/decision- making • Annual/six-monthly pricing review • Ongoing product/service review • Direct feedback from operational level • Disciplined ordering/approval process • Menu development involvement • Long-term and trusted partnerships • Fair pricing with mutually beneficial growth • Ethical and sustainable trading and procurement • Clear communication and processes • Aligned Group culture and values Approved by the Board on 27 February 2023 and signed on its behalf by: YiSHAY mAlKoV Ceo VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 21 We take pride: Don’t compromise; Challenge yourself 22 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 R E P o R T G o V E R N a N C E VARiouS eAteRieS plC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 23 24 Board of Directors26 Executive Chairman’s Statement on Corporate Governance30 Directors' Report34 Independent Auditor’s ReportBoard of Directors andy Bassadone Executive Chairman Yishay malkov Chief Executive Officer James Darwent Interim Chief Financial Officer Hugh Osmond non-Executive Director Appointed: 28 August 2020 Appointed: 28 August 2020 Appointed: 11 November 2022 Appointed: 28 August 2020 James has over 15 years’ experience working in private equity-backed businesses and has previously held roles at Big table Group and Casual Dining Group as Finance Director. prior to this, he held the role of Global Head of Finance at AllSaints. James qualified as a Certified Accountant at pannell Kerr Forster, now BDo, in 1992. Yishay was an officer in the Israeli navy until 1999 when he progressed to work as a chef in a significant number of restaurants in New York, tel Aviv and the uK. Between 2003 and 2010 Yishay worked as Restaurant Director at Gordon Ramsay Holdings, uK, running the Claridge’s site. He went on to found and operate the award-winning Bertie restaurant in israel, before returning to the uK to take a position as General manager at Roka restaurant followed by executive operations Director at the ivy Collection overseeing the roll-out of the group to 30 sites in four years. Between 2019 and 2020, Yishay was managing Director of the international high-end restaurant group, park Chinois, leading a successful turnaround programme and opening a new london site. He was appointed Ceo of Various eateries in 2020. Andrew Bassadone has significant experience in the restaurant and hospitality sector. He was Managing Director (Europe) of My Kinda town, which floated on the London Stock Exchange in 1994 and which was ultimately sold to Capital Radio in 1996. He worked as Senior Vice president for europe for planet Hollywood before moving to a role as Chief executive at Signature Restaurants. Between 1998 and 2005, Andy led the acquisitions of restaurants including Belgo, the ivy, J. Sheekey, le Caprice and Daphnes and co-founded a new restaurant business – Strada. Signature Restaurants was sold in 2005 but Andy continued as Chief executive in the new acquisition entity, ultimately leading to the sale of Strada in 2007 for £140m and co-founding Côte at the same time. Côte was sold in 2013 for £100m, whilst Andy focused on developing Bill’s restaurant and the initial expansion of the ivy Café brand. He joined and invested in Various eateries in 2019. Hugh founded Sun Capital Partners Limited in 2001 and Osmond Capital Ltd in 2017. He continues to operate both companies. In 1993, Hugh co-led the £18m acquisition and market listing of pizzaexpress. During the eight years he remained on the board, pizzaexpress became one of the uK’s largest sit down casual dining groups and the value of the company increased more than 20-fold. over this period, annual losses were turned into profits of £38m. In 1997, Hugh co-founded punch Group and, as executive Chairman, he orchestrated the acquisition and integration of the Allied Domecq Retail estate, the Bass leased estate and inn business, to create the uK’s largest pub group. punch Group reached an enterprise value of £3.5bn in 2005. Hugh co-founded Pearl Group in 2005. Pearl was acquired for £1.1bn from Henderson Plc and embedded value was subsequently grown to £2.3bn. pearl Group acquired Resolution Plc in 2008 and the enlarged group (renamed Phoenix Group) floated in 2009. Phoenix is now the largest uK insurance consolidator and is listed in the FTSE 100 index. Most recently, Hugh led the investment into Capital Physio in 2019. He founded Various Eateries in 2014. a Re 24 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GOVERnanCE FiNANCiAl StAtemeNtS Tiffany Sword non-Executive Director Glyn Barker non-Executive Director Gareth Edwards non-Executive Director Committee membership a Audit and AIM Compliance n Nomination Re Remuneration Committee Chair Appointed: 28 August 2020 Appointed: 28 August 2020 Appointed: 28 August 2020 tiffany studied architecture at the university of Cambridge and, after time at De & J levy and l’oreal uK she moved to work alongside Hugh osmond at Sun Capital partners limited. tiffany worked with Hugh on the creation of Coppa Club from its inception in 2015, and led the launch of the first site in Sonning-on-thames as managing Director. more recently tiffany led the investment into Capital physio and the development of its high street physiotherapy brand, Bodyset. tiffany is also a director of osmond Capital. a n Re Glyn is a Chartered Accountant and worked at pwC until he stepped down in 2011. During his time at pwC Glyn held positions including uK Head of Assurance, Managing Partner (UK), Vice Chairman (UK) and Chief Executive, Markets (Europe). Glyn is the Chairman of irwin mitchell. He has significant public market experience as a Director of transocean limited and a senior advisory partner of Novalpina Capital. He previously acted as senior independent director of Aviva plc until 2019 and as Chairman of the Berkeley Group until 2022. a n Re Gareth is a qualified solicitor and was previously a partner at law firm pinsent masons llp, where he held both the positions of Global Head of Corporate and international Development partner. He is currently a strategic consultant and an executive Director of london Bridge Capital limited, an FCA authorised corporate finance boutique. He has significant public markets experience and is Chairman of Nightcap plc, and a non-executive director on the Board of Cornerstone FS plc, all of which are admitted to trading on the Aim market of the london Stock exchange. a n Re VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 25 Executive Chairman’s Statement on Corporate Governance 3) TAKE INTO ACCOUNT WIDER STAKEHOLDER AND SOCIAL RESPONSIBILITIES AND THEIR IMPLICATIONS FOR LONG-TERM SUCCESS The Board recognises that strong, trusted relationships with all stakeholders (both internal and external) is vital for the long-term success of the Group. See more in our section 172 statement on page 20. As part of the annual planning process, the Board identifies the following areas as key: • Quality – food and drink offer and consistent operational excellence • • Suppliers – sustainable and deep supply chain built on strong, long-term relationships Teamwork – motivating, empowering and retaining our best people • Community – nurturing long-term relationships with guests across all sites; offering quality, good value product in attractive surroundings to grow sales underpinned by our Purpose, Values and Behaviours • Purpose: Great people delivering unique experiences through continuous innovation Values: Behaviours: We are welcoming We take pride We are a community inclusive and positive; open minded; Nothing is too much trouble own it; Don’t compromise; Challenge yourself Be part of something; We look out for each other; We care about our community We have a well-developed and detailed intranet which allows staff to communicate their thoughts with us and where we share an abundance of learning and coaching materials for staff at all levels. We are also In the process of developing a new learning and development, communication and engagement platform that will be launched In 2023. Our ears are open – we listen hard and regularly review our menus, settings and our future location strategy to align with what our customers and staff are telling us. We are committed to a culture of respect and a positive, productive working environment, which is free from any form of discrimination. We are an equal opportunities employer and are committed to treating all current and potential new recruits equally. Various Eateries PLC encourages collaborative two-way communication with guests through engagement on social media, in person on site, via our central reservations team and through our integrated feedback platform. as Chairman of the Board of Directors of Various Eateries PLC, my responsibilities include leading the Board effectively, overseeing the Company’s corporate governance model, communicating with shareholders, and ensuring that good information flows freely between the Executive Directors and the Non-Executive Directors in a timely and efficient manner. it is the Board’s responsibility to ensure that Various Eateries PLC is managed in the long-term interests of all shareholders and stakeholders in the business. The Board believes a strong and effective corporate governance culture is critical in this respect as we endeavour to grow a resilient and sustainable business for the benefit of our shareholders, customers, people and suppliers. The building blocks are firmly in place, through the recruitment of strong executives and NEDs, as well as the creation of committees and structures as detailed. THE QCA CORPORATE GOVERNANCE CODE Various Eateries PLC has adopted the 2018 QCa Corporate Governance Code (the ‘Code’) on a comply or explain basis. The Code is constructed around ten broad principles and the report below sets out how we comply with the Code at this time. Compliance with the Code will be reviewed and updated annually, and further information can be found within the compliance statement published on our website. 1) ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTES LONG-TERM VALUE FOR SHAREHOLDERS The Group’s strategy is to drive the long-term growth of the business. The Group’s business model is described on page 14 of the Strategic Report, whilst also referenced in the Chairman’s and Chief Executive’s statement. The Board generally meets once a month to review: • • the Group’s operational business performance; review of the product and customer feedback; • business model; • sales, marketing and IT development; • property matters including potential new sites; • • strategic considerations; and the progress of previously agreed actions. 2) SEEK TO UNDERSTAND AND MEET SHAREHOLDER NEEDS anD EXPECTaTIOnS Various Eateries PLC has a policy of maintaining open two-way lines of communication with all investors to ensure a clear understanding of the strategy, business plan and current trading. This is achieved through a combination of regular investor meetings (both formal and informal) and quick replies to all queries received. The Directors see the Annual General Meeting (‘AGM’) as an important opportunity to meet its shareholders either in person or virtually, and encourages all investors to participate and discuss their views. Where feedback is provided, including voting decisions against Company expectations, the Board will engage with those shareholders to hear and address any issues. all corporate information (including any Company announcements) is available to shareholders, investors and the public at any time on the corporate website. The key point of contact for all shareholders is the Group CEO, Yishay Malkov. See more in our section 172 statement on page 20 of the Strategic Report. 26 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GOVERnanCE FiNANCiAl StAtemeNtS 4) EMBED EFFECTIVE RISK MANAGEMENT, CONSIDERING BOTH OPPORTUNITIES AND THREATS, THROUGHOUT THE ORGANISATION The Board is supported by the Audit and AIM Compliance Committee, the Nomination Committee and the Remuneration Committee as detailed below against principle 9. The Group operates a robust risk assessment process, which is embedded in the normal management and governance of the business. as part of the annual planning and budgeting process, management document the significant risks identified, the severity and their potential impact, and the plans for managing and mitigating each of those risks. The Company maintains liability insurance for its Directors and Officers. The Company has also entered into indemnity agreements with the Directors, in terms of which the Company has indemnified its Directors, subject to the Companies act 2006 limitations, against any liability arising out of the exercise of the Directors’ powers, duties and responsibilities as a Director or Officer. The Board discusses potential risks at each Board meeting which includes an assessment of the Group’s internal control system, comprising financial, operational and compliance controls, to ensure that the Group’s risk management framework identifies and addresses all relevant risks in order that the Group’s strategy can be successfully executed and delivered. This review considers any significant issues included in reports received during the year and how the risks may have changed during the year and reviews any reports on internal controls prepared by management as well as any issues identified by external auditors. The Group operates a series of controls to ensure the Executive team implements the policies for risk management and control. These include: the annual strategic planning and budgeting process; a clearly defined organisational structure; authorisation limits; monthly reviews by the Executive team of financial and other operational KPis. The Audit and AIM Compliance Committee (‘AACC’) meets periodically to review the effectiveness of internal controls. The AACC receives reports from management and observations from the external auditors concerning internal control systems and any material control weaknesses. Any significant issues flagged would be included in the risk section of the next Board meeting. Principal risks faced by the Group are included on page 19 in the Strategic Report. Both the Board and the Executive team are responsible for reviewing and evaluating risk. The Executive team generally meets at least weekly to review ongoing trading performance, discuss budgets and forecasts and new risks associated with ongoing trading, whilst these figures are also made available to the wider Board and discussed in Board meetings. 5) MAINTAIN THE BOARD AS A WELL-FUNCTIONING, BALANCED TEAM LED BY THE CHAIR The Group is controlled and governed by the Board of Directors. as the Chairman, andy Bassadone has the responsibility of running the Board. Yishay Malkov, the CEO, has executive responsibility for running the business day to day and implementing the strategy of the Group. The Board comprises three Executive Directors and four Non- Executive Directors. Two of these Directors, Gareth Edwards and Glyn Barker, whilst holding a small immaterial shareholding, are considered as independent by the Board. The Board generally meets every month, which all Directors are expected to attend. They receive all trading and operational results every month (as per the agreed timetable and in advance of any meetings). There is a documented schedule of matters reserved for the Board. 6) ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY UP-TO-DATE EXPERIENCE, SKILLS AND CAPABILITIES The Company has seven Directors being Hugh Osmond, Andy Bassadone, Gareth Edwards, Glyn Barker, Yishay Malkov, Tiffany Sword and James Darwent. Details of the Board’s extensive industry experience, skills and personal qualities are highlighted in the biographies on pages 24 and 25. The Board keeps a close eye on all industry changes and receives regulatory and corporate updates from a number of external advisors who advise where necessary on the legal aspects of any ongoing regulatory enquiries. This ensures that the necessary mix of experience, skills, personal qualities and capabilities delivers the strategy of the Group for the benefit of the shareholders over the medium to long term. For example, Glyn Barker, as the audit Committee Chair, is a member of the ICAEW, and James Darwent as interim CFO, is a Certified Accountant, and both undertake regular development to ensure they remain up to date with changes in standards. 7) EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVanT OBJECTIVES, SEEKInG COnTInuOuS ImPROVEmEnT Executive Directors are assessed annually on performance by the Chairman before re-election, based on: • • • their performance (measured against KPIs); their independence (where applicable); continued commitment to the role. In addition, the overall effectiveness of the Board is measured on the achievements of the Group’s annual budget and strategic plan. Whilst the Group has no formal succession plan, the Board continues to think long-term and will appoint senior roles where required. The Board is confident that the Group’s middle management have the strength to ensure the Group’s business is not adversely impacted in the period between an Executive Director leaving and a replacement being recruited. The Nomination Committee is required to recommend and review nominees as new directors to the Board where there are vacancies or where it is felt that additional directors should be appointed. For new appointments, the search for candidates will be conducted and appointments made on merit against objective criteria and with due regard for the benefits of diversity on the Board. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 27 Executive Chairman’s Statement on Corporate Governance CoNTiNuED 8) PROMOTE A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND BEHAVIOURS The Board aims to lead by example, and to do what is in the best interests of the Group. The Group takes a serious approach towards corporate social responsibility, its values relating to Group culture and its people; the decisions of the management team and the Group strategy are also guided by the values wherever appropriate. With a growing business that encompasses numerous levels of team diversity and multi-site operations, the Group recognises the vital importance of maintaining a strong culture and clear values to its success. The management team also understands the extent to which the skills, experience and passion of our employees enables us to deliver the highest levels of quality, standards and service – so that ultimately, our guests enjoy the best experience possible with us. Our teams are chosen carefully; we want people who share the same passion that we have for our guests, that have a strong work ethic and that want to enjoy their time in the industry. We are passionate about developing our team members whatever stage of their careers they are at. We have clear purpose statements for each brand, underpinned by the same three consistent values and supporting behaviours across the Group. This is clearly communicated throughout the employee journey with us. The Board continuously seeks to ensure that all of its employees are aware of the Group’s core ethical values, and the management structure at restaurant, hotel, and regional level ensures that the ethical values are recognised and respected throughout the Group. The values are covered repeatedly throughout the employee journey through the business: from job descriptions through interview, the mandatory induction process for new employees, regular Group-wide “town hall” meetings and training sessions and staff newsletters. They are used as points of assessment in annual appraisals which influence promotion and reward, ensuring that all team members are working to the highest operational and ethical standards. Board members undertake regular informal enquiries of employees to ensure these values are being upheld and promoted to ensure a healthy corporate culture. Feedback from all stakeholders allows the Board to maintain an awareness of the state of its corporate culture, as well as performance against internal targets. 9) MAINTAIN GOVERNANCE STRUCTURES AND PROCESSES THAT ARE FIT FOR PURPOSE AND SUPPORT GOOD DECISION- MAKING BY THE BOARD During the year the Board has met formally 11 times, the audit Committee twice, the Remuneration Committee 4 times, and the Nomination Committee met once. Board and Committee meetings are also convened on an ad hoc basis from time to time in order to consider specific corporate activity. Directors are expected to attend all meetings of the Board and the Committees on which they sit, and the Non-Executive Directors are expected to devote sufficient time to the Group to enable them to fulfil their duties as Directors. The Board is satisfied that the Chairman and each of the Non-Executive Directors are able to devote sufficient time to the business, and they each maintain open communication with the Executive Directors and senior management between the formal scheduled meetings. Director Chairman Andy Bassadone Executive Directors Yishay malkov oliver Williams non- Executive Directors Hugh osmond Gareth edwards Glyn Barker tiffany Sword* Board meetings Audit Committee meetings Remuneration Committee meetings Nomination Committee meetings 11/11 N/A N/A N/A 11/11 N/A N/A N/A 11/11 N/A N/A N/A 11/11 10/11 10/11 8/11 2/2 2/2 2/2 2/2 4/4 4/4 4/4 4/4 N/A 1/1 1/1 1/1 * Tiffany Sword missed three meetings due to being on maternity leave. 10) COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING BY MAINTAINING A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS Audit and AIM Compliance Committee (‘the AACC’) The AACC comprises the four Non-Executive Directors, with Glyn Barker as Chair. The aaCC meets at least twice a year and at such other times as the Chair of the aaCC shall deem necessary. The AACC reviews the scope and results of the external audit, its cost effectiveness, and the objectivity of the auditors. It also reviews, prior to publication, the interim financial statements, preliminary results announcement, the annual financial statements and the other information included in the annual Report. in addition, the aaCC considers the regulatory, technical and operational risks of the Company and ensures these risks are properly assessed, monitored and reported on and the appropriate policies and procedures are in place. During the period, the aaCC met twice, in these meetings they approved the signing of the prior period Annual Report and approved the interim financial statements. Whilst conducting all other duties, as described, there were no particular issues or risk not previously disclosed that needed to be communicated or resolved. Remuneration Committee The Remuneration Committee comprises the four Non-Executive Directors, with Gareth Edwards as Chair. as Chair, Gareth Edwards has the casting vote. The Remuneration Committee meets at least once per financial year. The Remuneration Committee reviews and recommends nominees as new directors to the Board, reviews the performance of the Executive Directors and sets the remuneration of the Executive Directors. In addition, the Committee determines the payment of bonuses to Executive Directors and approves the Group’s bonus and incentive arrangements for employees. 28 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GOVERnanCE FiNANCiAl StAtemeNtS The remuneration of the Non-Executive Directors is decided upon by the Board of Directors. The Committee is also responsible for ensuring the Company’s share option schemes are operated properly and approves the share option grants to Executive Directors and employees. During the period, the Remuneration Committee met four times, in these meetings, they approved some additional share option grants to directors and employees of the Group as disclosed in the Directors’ Report. Nomination Committee The Nomination Committee comprises Tiffany Sword, Glyn Barker and Gareth Edwards, with Tiffany Sword as Chair of the Committee. The Nomination Committee met once during the year. The Committee is appointed by the Board to assist the Group and the Board in fulfilling their respective corporate governance responsibilities under applicable laws, to promote a culture of integrity throughout the Group and to assist the Group in identifying and recommending new nominees for election to the Board. The Group has a schedule of matters reserved for the Board. The Board is responsible for formulating, reviewing and approving the Group’s strategy, budgets and corporate actions. The Board also ensures that the principal goal of the Group is to create shareholder value, while having regard to other stakeholder interests, and takes responsibility for setting the Group’s values and standards. At this stage the Board believes that the governance framework is appropriate for a group of its size, but it continues to keep this under review. The terms of references for the various committees are set out on the groups website. The Group communicates with shareholders through the annual Report, interim and annual announcements, the AGM, investor roadshows, and meetings with individual existing or potential new investors. The results of the resolutions from the previous AGM were communicated through the regulatory information service. See more in our section 172 statement on page 20. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 29 Directors’ Report The Directors present the Directors’ Report on the affairs of Various Eateries PLC (‘the Company’) and its subsidiaries (‘the Group’), together with their audited consolidated financial statements for the 52–week period ended 2 october 2022 (prior period comparatives are for the 53–week period ended 3 October 2021). The Corporate Governance Statement on pages 26 to 29 also forms part of the Directors’ Report. PRInCIPaL aCTIVITY The principal activity of the Group is the operation of restaurants and hotels. REVIEW OF THE BUSINESS AND FUTURE DEVELOPmEnTS information about the progress of the business and the Group’s corporate activities is given in the Chairman’s & Chief Executive’s Statement on pages 8 to 13 and the Financial Review on pages 16 to 18 of the Strategic Report. maTTERS OF STRaTEGIC ImPORTanCE The business review and future outlook, key performance indicators, and the principal risks and uncertainties and engagement with suppliers, customers and others, required by Schedule 7 of the Large and Medium–sized Companies and Groups (Accounts and Reports) Regulations 2008 have been included in the Strategic Report in accordance with section 414C (11) of the Companies act 2006.. RESuLTS anD DIVIDEnDS The consolidated statement of comprehensive income is set out on page 42 of the financial statements and shows the comprehensive loss for the period. The Directors do not recommend the payment of a dividend. CaPITaL STRuCTuRE Details of the issued share capital are in note 23 on page 64 of the financial statements. Each ordinary share carries the right to one vote at general meetings of the Company. DIRECTORS OF THE COMPANY The Directors who served throughout the period and up until the date of signing, except as noted, were as follows: Ga Barker aK Bassadone J Darwent (appointed 11 November 2022) GM Edwards Y Malkov HEM Osmond TC Sword O Williams (resigned 11 November 2022) Biographical details of each of the current Directors in office at the year end are included in the Board of Directors section (pages 24 and 25). CHARITABLE AND POLITICAL DONATIONS The Group makes occasional contributions to community–related initiatives. The Group made no political donations in the period. STaTEmEnT aS TO DISCLOSuRE OF InFORmaTIOn TO auDITORS The Directors who were in office on the date of approval of these financial statements have confirmed that as far as they are aware, there is no relevant audit information of which the auditors are unaware. The Directors have confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor. 30 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GOVERnanCE FiNANCiAl StAtemeNtS STREAMLINED ENERGY AND CARBON REPORTING (SECR) / ENERGY CONSUMPTION The Group presents its greenhouse gas (‘GHG’) emissions and energy use data under Streamlined Energy and Carbon Reporting (‘SECR’) for the period ended 2 october 2022. Energy Consumption Scope 1: Combustion of fuel and operation of facilities Scope 2: electricity purchased Scope 3: Indirect Transport 2021/22 2020/21 Variance Natural Gas (kWh) 4,308,688 1,933,701 122% Total Scope 1 Energy (kWh) excl Refrigerants 4,308,688 1,933,701 122% Total Electricity (kWh) 4,587,958 2,727,716 Total Owned Vehicles (kWh) 243,353 158,103 68% 54% Total Scope 1, 2 and 3 Energy Consumption (kWh) 9,139,999 4,819,520 90% Emissions assessment Scope 1: Combustion of fuel and operation of facilities Scope 2: electricity purchased and heat and steam generated Scope 3: Indirect Transport location Based Intensity metric assessment intensity Ratio Natural Gas (tCo2e) Total Scope 1 – tCO2e Location Based (LB) (tCO2e) employee owned Vehicles (tCo2e) Total Scope 1, 2 and 3 Emissions (tCO2e) 2021/22 2020/21 Variance 787 787 887 60 1,734 354 354 579 39 972 122% 122% 53% 54% 78% 2021/22 2020/21 Variance Total scope 1–3 (LB) (tCO2e/turnover £m) 42.6 43.5 –2% The Group’s total energy consumption for the period ended 2 October 2022 was 9,139,999 kWh (2021: 4,819,520 kWh). The increase in total energy consumption was due to the increased trading periods in the year (not impacted by Covid lockdowns) whilst there were also additional sites opened in the period. We continue to look to install new more energy-efficient equipment across our estate, on both new builds and like–for–like replacements. We are also trialling a new monitoring system at our two busiest sites – the system saves energy by controlling the speed of the extract and air supply fans in–line with activity levels in the kitchen. At lower fan speeds the energy consumption is only 6% of that with the fans running at full capacity. DIRECTORS’ REMUNERATION The remuneration of the Directors of the parent Company who held office during the period was: o Williams tC Sword Hem osmond Y malkov Gm edwards AK Bassadone GA Barker Period ended 2 October 2022 Period ended 3 October 2021 Salary and fees £ 000 Employer pension £ 000 131 25 25 202 50 – 50 483 4 – – 5 – – – 9 Total £ 000 135 25 25 207 50 – 50 492 Salary and fees £ 000 113 25 25 181 50 – 50 444 employer pension £ 000 total £ 000 3 – – 5 – – – 8 116 25 25 186 50 – 50 452 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 31 Directors’ Report CoNTiNuED DIRECTORS’ INTERESTS IN SHARES Options under the CSOP scheme were granted in January 2022 to Yishay Malkov, Oliver Williams, and Tiffany Sword, with an exercise price of £0.69. No options were exercised by any directors in the period. The remaining share options in the schemes, as detailed in note 26 to the financial statements, relate to awards to employees who are not directors. Directors’ interests in the shares of the Company, including family interests, were as follows: Andy Bassadone1 Yishay malkov2 oliver Williams2 Hugh osmond tiffany Sword Glyn Barker Gareth edwards at 2 October 2022 At 3 October 2021 Shares owned no. Outstanding Directors’ share awards no. Shares owned No. outstanding Directors share awards No. 3,473,817 – 3,473,817 2,190,476 208,333 2,190,476 1,095,238 104,167 1,095,238 41,616,859 – 41,616,859 60,372 300,000 158,730 119,047 – – 4,187 158,730 119,047 – – – – – – – 1. 2,045,246 of the shares owned are held by Anella Limited and 1,428,571 of the shares owned are held jointly with Compound Management (UK) Limited under the Joint Share Ownership Plan. 2. All of the shares owned are held jointly with Compound Management (UK) Limited under the Joint Share Ownership Plan. Options under the CSOP scheme were granted in January 2022 to Yishay Malkov, Oliver Williams, and Tiffany Sword, with an exercise price of £0.69. No options were exercised by any directors in the period. The remaining share options in the schemes, as detailed in note 26 to the financial statements, relate to awards to employees who are not directors. DIRECTORS’ LIABILITY INSURANCE AND INDEMNITY The Group has arranged insurance cover in respect of legal action against its Directors. To the extent permitted by uK law, the Group also indemnifies the Directors. These provisions were in force throughout the year and in force at the date of this report. EmPLOYmEnT POLICY Our people truly are our greatest asset and we believe in treating them as such: with respect, looking after their welfare and allowing them the opportunity to develop their job and life skills and progress through the organisation. We encourage a work environment that is fair, open and communicative. Our employees have a performance review at least once a year, which includes consideration of skills development and career prospects. We aim to retain, develop and promote our best staff, offering a variety of training courses and development opportunities. Informal, frank and open dialogue is encouraged at all levels of the Group. We aim to keep our employees informed of any changes and progress with the business on a regular basis in an engaging way. Communication flows both ways, as we take the views of our employees seriously. Our aim has been to make it as easy as possible for our employees to air their opinions, express their ideas and voice any problems they may have. Examples include a cascade process of meetings to communicate key messages throughout the organisation, a weekly feedback process for operational issues and daily meetings of restaurant team members. We have a diverse workforce and an equal opportunities policy in place. We aim to employ people who reflect the diverse nature of society and value people and their contribution irrespective of age, gender, disability, sexual orientation, race, religion, marital status or ethnic origin. We do not tolerate harassment or bullying in any shape or form. Procedures are in place to respond to accusations of workplace discrimination, harassment and victimisation. An effective employee grievance procedure is in operation, and the policy is properly communicated to our people. applications from people with disabilities are given full consideration providing the disability does not seriously affect the performance of their duties. Such persons, once employed, are given appropriate training and equal opportunities. In the event of members of staff becoming disabled every effort is made to ensure that their employment within the Group continues and that the appropriate training is arranged. it is the policy of the Group that the training, career development and promotion of disabled employees should, as far as possible, be identical to that of other employees. ENGAGEMENT WITH STAKEHOLDERS The Board understands the importance of engagement with key stakeholders, including our customers, the communities in which we operate, our suppliers and our shareholders. information on how we engage, and the actions we have taken, are detailed in the S.172 statement on page 20. 32 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GOVERnanCE FiNANCiAl StAtemeNtS The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Various Eateries PLC website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. POST BALANCE SHEET EVENTS included in note 29 to the Financial Statements on page 71. GOInG COnCERn In adopting the going concern basis for preparing the financial statements for the period ended 2 October 2022, the Directors have considered the business model as set out on page 14, the Group’s principal risks and uncertainties as set out on page 19 as well as taking into account the current cash position and potential facilities. Based on the Group’s cash flow forecasts and projections, the Board is satisfied that the Group will be able to operate within the level of its facilities for the foreseeable future. in making this assessment, the Directors have made a specific analysis of the impact of the economic uncertainty arising from the rise in inflation, along with the continuing impact of both Covid–19 and Brexit, together with the events in Ukraine. We have also taken into account the renewal of the deep discounted bond post year–end (as detailed in note 29, post balance sheet events). For this reason, the Board considers it appropriate for the Group to adopt the going concern basis in preparing its financial statements. auDITOR RSM UK Audit LLP has indicated its willingness to continue in office. Approved by the Board on 27 February 2023 and signed on its behalf by: YiSHAY mAlKoV Director 20 St Thomas Street London SE1 9RS S.172 STaTEmEnT The Directors behave and carry out their activities to promote the long–term success of the Group. More detail is shown in the Strategic Report on page 3 as the Directors believe it to be of strategic importance to the Group. DIRECTORS’ RESPONSIBILITIES STATEMENT The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and Company financial statements for each financial year. The Directors have elected under company law and the AIM Rules of the London Stock Exchange to prepare the Group financial statements in accordance with international accounting Standards in conformity with the requirements of the Companies act 2006 and have elected under company law to prepare the Company financial statements in accordance with United Kingdom Generally accepted accounting Practice (united Kingdom accounting Standards and applicable law). The Group financial statements are required by law and international accounting Standards in conformity with the requirements of the Companies act 2006 to present fairly the financial position of the Group and the Company and the financial performance of the Group. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing each of the Group and Company financial statements, the Directors are required to: a. select suitable accounting policies and then apply them consistently; b. make judgements and accounting estimates that are reasonable and prudent; c. for the Group financial statements, state whether they have been prepared in accordance with uK-adopted international Accounting Standards; d. for the company financial statements state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the company financial statements; e. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the requirements of the Companies act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 33 Independent Auditor’s Report to the members of Various Eateries plc OPINION BASIS FOR OPINION We have audited the financial statements of Various Eateries plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the period ended 2 October 2022 which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, company statement of financial position, consolidated statement of changes in equity, company statement of changes in equity, consolidated statement of cashflows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK-adopted International Accounting Standards. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice). In our opinion: • • • • the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 2 October 2022 and of the group’s loss for the period then ended; the group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards; the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 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’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent 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 as applied to listed entities 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. Summary of our audit approach Key audit matters Group • Impairment of goodwill and property, plant and equipment • Existence and occurrence of revenue • Recognition of capital expenditure Parent company • Impairment of investments • Impairment of intercompany receivables Materiality Group • Overall materiality: £406,000 (2021: £455,000) • Performance materiality: £284,000 (2021: £318,000) Parent company • Overall materiality: £402,000 (2021: £275,000) • Performance materiality: £281,000 (2021: £192,000) Our audit procedures (on a sample basis) covered 100% of revenue, 90% of total assets and 100% of loss before tax. Scope 34 VARIOuS EAtERIES Plc AnnuAl REpoRt & FinAnciAl StAtEmEntS 2022 StRAteGiC RepoRt GOVERnanCE FiNANCiAl StAtemeNtS KEY auDIT maTTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the group and parent company financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the group and parent company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Impairment of goodwill and property, plant and equipment Key audit matter description How the matter was addressed in the audit Key observations Existence and occurrence of revenue Key audit matter description How the matter was addressed in the audit The total net carrying value at 2 October 2022 of goodwill was £11.1m (2021: £12.6m) and that of property, plant and equipment (“PPE”) £47.7m (2021: £35.9m). Economic and trading conditions faced by the restaurant and hospitality sector in the UK have been challenging during a proportion of the period ended 2 October 2022 and since that date. As required by IAS 36 impairment of assets, management undertook detailed impairment testing to determine whether such assets were impaired and recognised a total impairment charge of £1.6m for goodwill and £1.0m for PPE (2021: total impairment charge of £0.6m) in respect of sites which were forecast to underperform in the short to medium term. Because of the significant management judgement involved in forecasting cash flows, in considering the timing and quantum of generation of cash flows, a change in assumptions used could have a material impact on the financial statements and this was therefore determined to be a key audit matter. Refer to note 3 – Critical accounting judgements and key sources of estimation uncertainty, note 13 – Intangible assets and note 14 – Property, plant and equipment. Our audit approach included: • • • • • • obtaining management’s site-by-site impairment review and considering the reasonableness of inputs and assumptions, as well as the accuracy of the calculations in the impairment reviews; reviewing sensitivity considerations prepared by management considering the accuracy of management’s previous forecasting by reference to actual results; considering management’s assessment of the forecast periods included in the impairment reviews, in the light of commercial plans; comparing post period-end performance with management’s forecasts; reviewing the disclosures in the financial statements for adequacy. as a result of wider economic uncertainties, including general consumer sentiment, management have included disclosures in notes 13 and 14 to explain the degree of estimation involved in determining appropriate carrying values of goodwill and property, plant and equipment. Group revenue was £40.7m for the period ended 2 October 2022 (2021: £22.3m). Revenue is derived from multiple restaurant sites, as well as hotels (including reservations and events). in the growth phase of the group there is risk in relation to the existence and occurrence of reported revenue. Our audit approach included reconciling revenue per the financial statements to the following: • EPOS reports (for restaurants) and booking systems (for hotels); • Amounts banked during the period including reviewing any reconciling items and considering the completeness and accuracy of such reconciling items. Key observations We have no observations to report in respect of this key audit matter. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 35 independent auditor’s Report CoNTiNuED KEY auDIT maTTERS CoNTiNuED Recognition of capital expenditure Key audit matter description How the matter was addressed in the audit There is a risk, particularly for new sites opened in the period, that revenue expenditure in the period has been capitalised which should have been expensed in the income statement. Total capitalised additions (excluding right-of-use assets) during the period were £8.9m (2021: £5.1m). Our audit approach included: • • • assessing the nature of the expenditure by agreeing to invoice on a sample basis and considering whether the costs have been appropriately treated; obtaining a listing of repairs and maintenance costs and reviewing these for material error on a sample basis; obtaining fit-out budgets for new sites or sites with significant refurbishment and comparing to actual costs capitalised; challenging any significant variances between expected and actual costs capitalised at period end with management. Key observations We have no observations to report in respect of this key audit matter. Impairment in the parent company statement of financial position of: • Investment in hotel companies • Intercompany receivables Key audit matter description How the matter was addressed in the audit The total net carrying value in the parent company statement of financial position at 2 October 2022 of the investment in the two hotel companies was £9.3m (2021: £9.3m). In addition, the parent company had intercompany receivables due from the group’s trading and other entities at 2 October 2022 of £42.6m (2021: £40.9m). Trading conditions (including as a result of the UK economic downturn and the ‘cost of living crisis’) faced by the restaurant and hospitality sector in the UK have been challenging during a proportion of the period ended 2 October 2022 and since that date. As required by IAS 36 impairment of assets and iFRS 9 Financial instruments, management undertook detailed impairment testing to determine whether such assets were impaired. No material impairment has been recognised in the current period. Because of the significant management judgement involved in forecasting cash flows, in considering the timing and quantum of generation of cash flows, a change in assumptions used could have a material impact on the financial statements (including net assets and distributable reserves of the parent company) and this was therefore determined to be a key audit matter. Refer to note 2 – Accounting policies and note 17 – Trade and other receivables. Our audit approach included: • Obtaining management’s impairment review and considering the reasonableness of the inputs and assumptions, as well as the accuracy of the calculations; • reviewing the disclosures in the financial statements for adequacy. Key observations We have no observations to report in respect of this key audit matter. 36 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GOVERnanCE FiNANCiAl StAtemeNtS OuR aPPLICaTIOn OF maTERIaLITY When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements. Based on our professional judgement, we determined materiality as follows: Overall materiality £406,000 (2021: £455,000) £402,000 (2021: £275,000) Group Parent company Basis for determining overall materiality 1% of revenue (2021: 2% of revenue) Rationale for benchmark applied At its current stage of development, revenue growth is a major driver of business performance and a key benchmark for stakeholders 4% of net assets, reduced to not exceed maximum aggregated component materiality (2021: 4% of net assets, reduced to not exceed maximum aggregated component materiality) as this is a non-trading holding company, net assets was selected as the most appropriate benchmark to stakeholders Performance materiality £284,000 (2021: £318,000) £281,000 (2021: £192,000) Basis for determining performance materiality 70% of overall materiality (2021: 70% of overall materiality) 70% of overall materiality (2021: 70% of overall materiality) Reporting of misstatements to the audit Committee Misstatements in excess of £20,300 (2021: £22,700) and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds Misstatements in excess of £20,100 (2021: £13,700) and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds AN OVERVIEW OF THE SCOPE OF OUR AUDIT The group consists of 11 components, all of which are based in the uK. Full scope audit Specific audit procedures Total Number of components Revenue Total assets Profit before tax 3 2 5 90% 10% 100% 60% 30% 90% 100% – 100% 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. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included an analysis of the sufficiency of the group’s and parent company’s current cash resources, taking into account current cash levels and a reasonable worse case trading scenario in the outlook period, taking account of the discretionary nature of forecast capital expenditure, as well as the renewal of the deep discounted bond in February 2023. 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 or the parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. OTHER INFORMATION The 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. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 37 independent auditor’s Report CoNTiNuED OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COmPanIES aCT 2006 AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FInanCIaL STaTEmEnTS in our opinion, based on the work undertaken in the course of the 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. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTIOn in the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or 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. RESPOnSIBILITIES OF DIRECTORS 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 group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. 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. THE EXTENT TO WHICH THE AUDIT WAS CONSIDERED CaPaBLE OF DETECTInG IRREGuLaRITIES, INCLUDING FRAUD irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non- compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit. In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit. However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity’s operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud. in identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit engagement team: • • obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the group and parent company operates in and how the group and parent company are complying with the legal and regulatory frameworks; inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud; • discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud. 38 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GOVERnanCE FiNANCiAl StAtemeNtS The most significant laws and regulations were determined as follows: Legislation / regulation Additional audit procedures performed by the Group audit engagement team included: UK-adopted IAS, FRS 101 and Companies Act 2006 Review of the financial statement disclosures and testing to supporting documentation; Completion of disclosure checklists to identify areas of non-compliance. Tax compliance regulations Consideration of whether any matter identified during the audit required reporting to an appropriate authority outside the entity. Food Safety and licensing iSas limit the required audit procedures to identify non-compliance with these laws and regulations to inquiry of management and where appropriate, those charged with governance (as noted above) and inspection of legal and regulatory correspondence, if any. The areas that we identified as being susceptible to material misstatement due to fraud were: Risk Audit procedures performed by the audit engagement team: Impairment of: goodwill and property, plant and equipment; impairment of intercompany receivable and investment in subsidiaries Existence and occurrence of revenue Management override of controls As set out in key audit matters above. As set out in key audit matters above. • • • Testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 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. WILLIAM FARREN FCA (SENIOR STATUTORY AUDITOR) For and on behalf of RSm uK Audit llp, Statutory Auditor Chartered accountants 25 Farringdon Street London EC4A 4AB 27 February 2023 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 39 We are a community: Be part of something; We look out for each other; We care about our community 40 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 F i N a N C i a L S T A T E M E N T S VARiouS eAteRieS plC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 VARiouS eAteRieS plC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 41 42 Consolidated Statement of Comprehensive Income43 Consolidated Statement of Financial Position44 Company Statement of Financial Position45 Consolidated Statement of Changes In Equity46 Company Statement of Changes In Equity47 Consolidated Statement of Cash Flows 48 Notes to the Financial Statements72 Advisers Consolidated Statement of Comprehensive Income for the 52 weeks ended 2 October 2022 Revenue Cost of sales Gross profit Central staff costs Share-based payments insurance claim proceeds impairment of goodwill impairment of property, plant and equipment loss on disposal of property, plant and equipment other expenses Operating loss Finance income Financing costs Loss before tax tax Loss for the period Earnings per share Basic loss per share (pence) Diluted loss per share (pence) 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 40,667 22,348 (36,992) (20,729) Note 4 3,675 (2,617) (830) – (1,563) (980) (54) (2,840) (5,209) – (2,006) (7,215) – 1,619 (2,076) (844) 2,500 – (610) (335) (2,352) (2,098) 3 (1,645) (3,740) – (7,215) (3,740) (8.8) (8.8) (4.6) (4.6) 26 13 14 11 6 6 10 12 12 The above results were derived from continuing operations. There are no items of comprehensive income other than the loss for the period and therefore, no statement of other comprehensive income is presented. 42 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS Consolidated Statement of Financial Position as at 2 october 2022 non-current assets intangible assets Right-of-use assets other property, plant and equipment Current assets inventories trade receivables other receivables Cash and bank balances Total assets Current liabilities trade and other payables Borrowings net current liabilities Total assets less current liabilities non-current liabilities Borrowings provisions Total non-current liabilities Total liabilities net assets Equity Share capital Share premium merger reserve Employee benefit trust shares reserve Retained earnings Total funds attributable to the equity shareholders of the Company 2 October 2022 £ 000 3 October 2021 £ 000 Note 13 14 14 16 17 17 18 19 20 21 22 23 11,214 26,109 21,592 58,915 808 204 2,359 9,390 12,761 12,841 20,724 15,168 48,733 546 137 1,367 19,716 21,766 71,676 70,499 (11,420) (12,707) (11,366) 47,549 (11,243) (12,438) (1,915) 46,818 (29,244) (22,128) (357) (357) (29,601) (22,485) (53,728) (46,166) 17,948 24,333 890 52,284 64,736 (5,012) 890 52,284 64,736 (5,012) (94,950) (88,565) 17,948 24,333 The financial statements of Various Eateries PLC (registration number: 12698869) were approved by the Board and authorised for issue on 27 February 2023 They were signed on its behalf by: Y mAlKoV Director VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 43 Company Statement of Financial Position as at 2 october 2022 Fixed assets investments Current assets Amounts due from subsidiaries Total assets Current liabilities trade and other payables net current assets net assets Capital and reserves Share capital Share premium Employee benefit trust shares reserve Retained earnings Total funds attributable to the equity shareholders of the Company 2 October 2022 £ 000 3 October 2021 £ 000 Note 15 9,325 9,325 17 42,632 51,957 40,872 50,197 19 (1,863) (1,146) 23 40,769 50,094 890 52,284 (5,012) 1,932 50,094 39,726 49,051 890 52,284 (5,012) 889 49,051 As permitted by section 408 of the Companies Act 2006, the holding Company’s statement of comprehensive income has not been included in these financial statements. The profit for the period was £213,000 (2021: £147,000). The financial statements of Various Eateries PLC (registration number: 12698869) were approved by the Board and authorised for issue on 27 February 2023 They were signed on its behalf by: Y mAlKoV Director 44 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS Consolidated Statement of Changes in Equity for the 52 weeks ended 2 October 2022 Attributable to equity shareholders of the Company at 27 September 2020 Share-based payments Total transactions with owners loss for the period Total comprehensive loss at 3 October 2021 Share-based payments Total transactions with owners loss for the period Total comprehensive loss at 2 October 2022 Called-up share capital £ 000 Share premium account £ 000 employee benefit trust shares reserve £ 000 merger reserve £ 000 Retained earnings £ 000 total £ 000 890 52,284 64,736 (5,012) (85,669) 27,229 – – – – – – – – – – – – – – – – 844 844 844 844 (3,740) (3,740) (3,740) (3,740) 890 52,284 64,736 (5,012) (88,565) 24,333 – – – – – – – – – – – – – – – – 830 830 830 830 (7,215) (7,215) (7,215) (7,215) 890 52,284 64,736 (5,012) (94,950) 17,948 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 45 Company Statement of Changes in Equity for the 52 weeks ended 2 October 2022 Attributable to equity shareholders of the Company at 27 September 2020 Share-based payments Total transactions with owners Profit for the period Total comprehensive income at 3 October 2021 Share-based payments Total transactions with owners Profit for the period Total comprehensive income at 2 October 2022 Called-up share capital £ 000 Share premium account £ 000 employee benefit trust shares reserve £ 000 Retained earnings £ 000 total £ 000 890 52,284 (5,012) (102) 48,060 – – – – – – – – – – – – 890 52,284 (5,012) – – – – – – – – – – – – 844 844 147 147 889 830 830 213 213 844 844 147 147 49,051 830 830 213 213 890 52,284 (5,012) 1,932 50,094 46 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS Consolidated Statement of Cash Flows for the 52 weeks ended 2 October 2022 Cash flows from operating activities loss for the period Adjustments to cash flows from non-cash items: Depreciation and amortisation impairment loss on disposal of assets and leases Share-based payments Finance income Financing costs Working capital adjustments: increase in inventories (Increase) / decrease in trade and other receivables Increase / (decrease) in accruals, trade and other payables Decrease in provisions Net cash flow from operating activities Cash flows from investing activities interest received purchases of property, plant and equipment proceeds from disposal of property, plant and equipment Costs on issue of shares Net cash flows from investing activities Cash flows from financing activities interest paid proceeds on issue of shares Repayment of borrowings principal elements of lease payments Net cash flows from financing activities (Decrease) / increase in cash opening cash at bank and in hand Closing cash at bank and in hand 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 (7,215) (3,740) 4,702 2,543 54 830 – 2,006 2,920 (262) (1,059) 262 – 1,861 3,971 610 335 844 (3) 1,645 3,662 (145) 54 (175) (104) 3,292 – 3 (8,852) (5,059) – – 59 (46) (8,852) (5,043) (1,345) – (431) (1,559) (3,335) (10,326) 19,716 9,390 (1,525) 23,373 – (1,274) 20,574 18,823 893 19,716 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 47 Notes to the Financial Statements 1 GEnERaL InFORmaTIOn Various Eateries PLC, ‘the Company’, and its subsidiaries (together ‘the Group’) are engaged in the operation of restaurants and hotels in London and the South East of England. The Company is a public company limited by shares whose shares are publicly traded on the AIM Market of the London Stock Exchange and is incorporated and domiciled in the united Kingdom under the Companies act 2006 and are registered in England and Wales. The address of the registered office is 20 St Thomas Street, London, SE1 9RS. 2 aCCOunTInG POLICIES BaSIS OF PREPaRaTIOn The principal accounting policies adopted in the preparation of the financials statements of the Group which have been applied consistently to all periods presented, are set out below. The directors (the ‘Directors’) of Various Eateries PLC are responsible for the financial statements. Judgements made by the Directors, in the application of these accounting policies that have a significant effect on the financial statements and estimates with a significant risk of material adjustments in the next period are disclosed in note 3 on page 52. The consolidated financial statements of the Group have been prepared in accordance with UK adopted International Accounting Standards. The Company has elected to prepare its parent company financial statements in accordance with FRS 101. The financial statements have been prepared on an historical cost basis. Monetary amounts in these financial statements are rounded to the nearest whole £1,000, except where otherwise indicated. As permitted under s408 of the Companies Act 2006, the Company has taken advantage of the disclosure exemption in relation to the presentation of a company statement of profit or loss. As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to presentation of a cash flow statement, standards not yet effective, impairment of assets, related party transactions and remuneration of key management personnel. BaSIS OF COnSOLIDaTIOn The consolidated financial statements incorporate those of Various Eateries PLC and all of its subsidiaries (i.e. entities that the Group controls through its power to govern the financial and operating policies so as to obtain economic benefits). All financial statements are made up to 2 october 2022. 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. GOInG COnCERn In adopting the going concern basis for preparing the financial statements for the period ended 2 October 2022, the Directors have considered the business model, as set out on page 14, the Group’s principal risks and uncertainties as set out on page 19 as well as taking into account the current cash position and potential facilities. Based on the Group’s cash flow forecasts and projections, the Board is satisfied that the Group will be able to operate within the level of its facilities for the foreseeable future. In making this assessment, the Directors have made a specific analysis of the impact of the economic uncertainty arising from the rise in inflation, along with the continuing impact of both Covid-19 and Brexit, together with the events in Ukraine. We have also taken into account the renewal of the deep discounted bond post year end (as detailed in note 29, post balance sheet events). For this reason, the Board considers it appropriate for the Group to adopt the going concern basis in preparing its financial statements. REVEnuE Restaurant revenue represents net invoiced sales of food and beverages excluding value added tax. Hotel revenue represents net invoiced sales of accommodation and room hire excluding value added tax. Revenue is recognised when the goods or services have been provided. GOODWILL Goodwill relates to acquired sites and is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests) and any previous interest held over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the income statement. after initial recognition, goodwill is measured at cost less any accumulated impairment losses. The goodwill is tested annually for impairment irrespective of whether there is an indication of impairment. 48 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS INTANGIBLE ASSETS (OTHER THAN GOODWILL) intangible assets acquired separately from a business combination are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date if the fair value can be measured reliably. Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives of 4 years on a straight-line basis. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses. Cost comprises purchase cost together with any incidental costs of acquisition. Depreciation is provided to write down the cost less the estimated residual value of all tangible fixed assets by equal instalments over their estimated useful economic lives on a straight-line basis. The following rates are applied: Asset class Right-of-use assets Freehold buildings Freehold land Depreciation method and rate Life of lease 2% per annum Not depreciated Leasehold improvements Life of lease Furniture, fittings and equipment 14.29% – 33.33% per annum assets under construction Not depreciated IT equipment 20% – 33.33% per annum The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Property, plant and equipment are tested for impairment if indications of impairment are present. Assets under construction relates to capital expenditure on sites that have not started trading. InVEnTORIES Raw materials and consumables are valued at the lower of cost and net realisable value. Cost is based on latest contracted purchase cost. FInanCIaL InSTRumEnTS The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on the trade date when the Group becomes a party to the contractual provisions of the instrument. Financial instruments are recognised initially at fair value plus, in the case of a financial instrument not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments are derecognised on the trade date when the Group is no longer a party to the contractual provisions of the instrument. NON-DERIVATIVE FINANCIAL INSTRUMENTS Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. All financial instruments held are classified as subsequently measured at amortised cost. trade and other receivables and trade and other payables Trade and other receivables are recognised initially at transaction price less attributable transaction costs. Trade and other payables are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any expected credit losses in the case of trade receivables. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument. interest-bearing borrowings Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses. Cash and cash equivalents Cash and cash equivalents comprise cash balances held at bank, call deposits, cash on hand and cash in transit. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 49 Notes to the Financial Statements CoNTiNuED 2 aCCOunTInG POLICIES CoNTiNuED ImPaIRmEnTS OF TanGIBLE anD InTanGIBLE FIXED aSSETS At each reporting 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 Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. 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. 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 periods. A reversal of an impairment loss is recognised immediately in profit or loss. TaXaTIOn The tax expense represents the sum of the tax currently payable and deferred tax. Tax payable is based on taxable profit. Taxable profit differs from net profit as reported in the statement of profit or loss 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. Any liability for current tax is calculated using tax rates that have been enacted at the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheet 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 based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the consolidated profit and loss account, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognised in the consolidated profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. EmPLOYEE BEnEFITS Post-retirement benefits The Group operates defined contribution plans for its employees. A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the periods during which services are rendered by employees. Termination benefits Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits. 50 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS LEaSES The Group leases a number of properties in various locations around the UK from which it operates. All leases are accounted for by recognising a right-of-use asset and a lease liability except for: • • Leases of low-value assets; and Leases with a duration of 12 months or less. Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. This is 4.5% (2021: 4.5%). Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. in such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments, such as those linked to revenue, are expensed in the period to which they relate. On initial recognition, the carrying value of the lease liability also includes: • Amounts expected to be payable under any residual value guarantee; • The exercise price of any purchase option granted in favour of the Group if it is reasonably certain to exercise that option; and • any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised. Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: • • • Lease payments made at or before commencement of the lease; Initial direct costs incurred; and The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations). Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. Right-of-use assets are tested for impairment if indications of impairment are present. When the Group revises its estimate of the term of any lease (because, for example, it reassesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to be made over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being depreciated over the remaining (revised) lease term. Lease modifications change the scope of the lease or change the consideration for the lease by comparison with that detailed in the original terms and conditions of the contract. If the modifications, in substance, mean that the original lease has been terminated and a new lease created, then the revised terms are accounted for as a new lease. Where modifications do not need to be accounted for as a separate lease, the amount recognised for the lease liability and the right-of-use asset is revisited to reflect the updated terms and conditions of the contract. FInanCE InCOmE anD FInanCInG COSTS Financing costs comprise interest payable, finance charges on shares classified as liabilities and finance leases recognised in profit or loss using the effective interest method, and net foreign exchange losses that are recognised in the Statement of Comprehensive Income. Finance income includes interest receivable on funds invested. Interest income and interest payable are recognised in the Statement of Comprehensive Income as they accrue, using the effective interest method. InVESTmEnTS in the separate accounts of the Company, interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. interests in subsidiaries are assessed for impairment at each reporting date. any impairment losses or reversals of impairment losses are recognised immediately in profit or loss. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 51 Notes to the Financial Statements CoNTiNuED 2 aCCOunTInG POLICIES CoNTiNuED GOVERnmEnT GRanTS During the period, the Group has received business rates relief. The income from this has been offset against the expense to which it relates. STanDaRDS ISSuED BuT nOT YET EFFECTIVE The following standards relevant to the Group are in issue but are not yet effective and have not been applied in the financial statements. In some cases these standards and guidance have not been endorsed for use in the United Kingdom. IFRS 3 (Amendment) Reference to the conceptual framework iaS 16 (amendment) Property, plant and equipment: proceeds before intended use IAS 37 (Amendment) Cost of fulfilling a contract iaS 1 (amendment) Classification of liabilities as current or non-current iaS 1 (amendment) Disclosure of accounting policies iaS 8 (amendment) Definition of accounting estimates iaS 12 (amendment) Deferred tax related to assets and liabilities arising from a single transaction iFRS 17 (amendment) insurance contracts The Group has not yet assessed the impact of these amended accounting Standards. 3 CRITICaL aCCOunTInG JuDGEmEnTS anD KEY SOuRCES OF ESTImaTIOn unCERTaInTY The preparation of the financial statements requires the Directors to make estimates and judgements that affect the reported amounts of assets, liabilities, costs and revenue. Actual results could differ from these estimates. Information about such judgements and estimates is contained in individual accounting policies. The judgements, estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below: Key estimate – determining the rate used to discount lease payments at the commencement date of property leases the lease liability is calculated by discounting the lease payments. The discount rate used should be the interest rate implicit in the lease. However, if that rate cannot be readily determined, which is generally the case for property leases, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. The discount rate applied to the Group’s leases under the portfolio approach is 4.5%. A 0.5% increase in the discount rate to 5% will result in a decrease in net present value of the total lease liability of £1,012,000 in 2022 (2021: £648,000). A 0.5% decrease in discount rate to 4% results in an increase in the net present value of the total lease liability of £1,067,000 in 2022 (2021: £683,000). Key estimate – determining the AGA provision The Group has historically entered into AGA provisions for 8 sites (2021: 9) which have been disposed of via assignment of lease. Should the assignees default on their payments, the Group would become liable. Judgement is required to determine the probable outflow of resources that arise from these guarantees. A provision of £357,000 (2021: £357,000) has been made for one year of rent at 3 sites (2021: 3), with other sites considered a contingent liability (as detailed in note 30). This reflects an assessment of the trading status of the assignees, and the expected cost to dispose of the lease should those assignees default. Key estimate – assessment of recoverable amounts for assets tested for impairment The Group performs impairment assessments on goodwill, other intangibles, and property plant and equipment as required by IAS 36 Impairment of assets. The Company also performs impairment assessments on investments in subsidiaries under IAS 36 and receivables from subsidiaries under iFRS 9 Financial instruments. Determining whether assets are impaired under IAS 36 requires an estimation of the recoverable amount of the cash-generating units (‘CGUs’) to which those assets have been allocated. The value-in-use calculation requires estimation of future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. Details of cash generating units, carrying values of goodwill, other intangibles and property, plant and equipment as well as further information about the assumptions made are disclosed in notes 13 and 14 to the financial statements. Determining whether assets are impaired under IFRS 9 requires application of the ‘expected credit loss’ approach, which involves estimation of how current and future economic conditions will impact on the amount of any such loss. The carrying value of receivables from subsidiaries is set out in note 17 to the financial statements. 52 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS 4 REVEnuE An analysis of the Group’s total revenue (including sublease rental income shown within cost of sales) which all originates in the UK is as follows: Sale of goods Accommodation and room hire Sublease rental income 5 SEGmEnTaL REPORTInG 52 weeks ended 2 October 2022 £ 000 36,523 4,086 58 53 weeks ended 3 October 2021 £ 000 20,212 2,111 25 40,667 22,348 iFRS 8 ‘operating Segments’ requires operating segments to be based on the Group’s internal reporting to its Chief operating Decision Maker (‘CODM’). The CODM is regarded as the Chief Executive Officer together with other Board Members who receive financial information at a site-by-site level. Revenue adjusted EBITDa (before impact of IFRS 16) pre-opening costs Non-trading sites income Impact of IFRS 16 Share-based payments EBITDa Depreciation and amortisation loss on disposal of assets and leases impairments Financing costs Profit / (loss) before tax tax Profit / (loss) for the period 52 weeks ended 2 October 2022 Restaurant Segment £ 000 Hotel Segment £ 000 Other unallocated £ 000 Total £ 000 36,523 4,548 (734) 144 1,819 – 4,086 1,050 – – 1,275 58 40,667 (5,161) (21) – – 437 (755) 144 3,094 – (830) (830) 5,777 2,325 (6,012) 2,090 – – – – – – – – (4,702) (4,702) (54) (54) (2,543) (2,543) (2,006) (2,006) 5,777 2,325 (15,317) (7,215) – – – – 5,777 2,325 (15,317) (7,215) VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 53 Notes to the Financial Statements CoNTiNuED 5 SEGmEnTaL REPORTInG CoNTiNuED Revenue adjusted EBITDa (before impact of IFRS 16) pre-opening costs Non-trading sites income Impact of IFRS 16 Share-based payments EBITDa Depreciation and amortisation loss on disposal of assets and leases impairments Financing costs movement in AGA provision insurance claim proceeds Profit / (loss) before tax tax Profit / (loss) for the period 6 FINANCE INCOME / FINANCING COSTS interest income on bank deposits Total finance income interest on bank overdrafts and borrowings lease liability interest Foreign exchange loss Total financing costs Net financing costs 7 AUDITOR’S REMUNERATION Audit of the financial statements 53 weeks ended 3 October 2021 Restaurant Segment £ 000 Hotel Segment £ 000 other unallocated £ 000 total £ 000 2,111 25 22,348 (18) (3,908) – – 1,200 – 1,182 – – – – – – – – – (844) (4,752) (3,971) (335) (610) (1,178) (295) 149 2,382 (844) 214 (3,971) (335) (610) (1,642) (1,642) 104 – 104 2,500 20,212 2,748 (295) 149 1,182 – 3,784 – – – – – 2,500 6,284 – 1,182 (11,206) (3,740) – – – 6,284 1,182 (11,206) (3,740) 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 – – (661) (1,344) (1) (2,006) (2,006) 3 3 (537) (1,108) – (1,645) (1,642) 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 199 138 Audit fees for the 52 weeks ended 2 October 2022 includes £36,000 in respect of the 2021 audit. Audit fees for the 53 weeks ended 3 October 2021 includes £13,000 in respect of the 2020 audit. 54 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS 8 STaFF numBERS anD COSTS their aggregate remuneration comprised: Wages and salaries Social security costs Other pension costs (see note 24) Share-based payments other employee costs Grant income – CJRS The average monthly number of employees (including Directors) was: Restaurants Hotels management The average monthly number of employees (being Directors) of the Company was seven (2021: seven). 9 DIRECTORS’ REMUNERATION the Directors' remuneration for the period in respect of services to the Group, was as follows: Remuneration employer pension contribution in respect of the highest paid Director: Remuneration employer pension contribution 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 15,339 11,824 1,215 220 830 91 – 17,695 898 179 844 94 (3,091) 10,748 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 759 56 43 858 521 46 32 599 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 483 9 492 444 8 452 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 202 5 207 181 5 186 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 55 Notes to the Financial Statements CoNTiNuED 10 TaX Tax charged in the statement of comprehensive income: tax expense Corporation tax Total current income tax tax expense in the statement of comprehensive income 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 – – – – – – Corporation tax is calculated at 19% (2021: 19%) of the estimated taxable loss for the period. The charge for the period can be reconciled to the loss in the consolidated statement of comprehensive income as follows: loss before tax Corporation tax at standard rate of 19.0% (2021: 19.0%) Fixed asset differences expenses not deductible income not taxable Remeasurement of deferred tax for changes in tax rates movement in deferred tax not recognised other movements total tax charge 52 weeks ended 2 October 2022 £ 000 (7,215) (1,371) 527 1,792 (1,409) 1 529 (69) – 53 weeks ended 3 October 2021 £ 000 (3,740) (711) 236 311 – (3,049) 3,213 - – No account has been taken of the potential deferred tax asset of £13,528,000 (2021: £12,705,000) calculated at 25% (2021: 25%) and representing losses carried forward and short-term timing differences, owing to the uncertainty over the utilisation of the losses available. 11 OTHER EXPENSES Depreciation and amortisation AGA release of provision (note 22) other central costs 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 244 – 2,596 2,840 389 (104) 2,067 2,352 56 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS 12 EARNINGS PER SHARE Basic loss per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of shares outstanding during the year. There were no potentially dilutive ordinary shares outstanding as at the periods ended 2 October 2022 and 3 October 2021. loss for the year after tax Basic and diluted weighted average number of shares Basic loss per share (pence) Diluted loss per share (pence) 13 InTanGIBLE aSSETS GROuP Cost or valuation At 3 October 2021 Additions At 2 october 2022 amortisation At 3 October 2021 Charge for the period impairment At 2 october 2022 Carrying amount 2 October 2022 Cost or valuation At 27 September 2020 Additions At 3 October 2021 amortisation At 27 September 2020 Charge for the period At 3 October 2021 Carrying amount 3 October 2021 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 (7,215) (3,740) 82,143,398 82,143,398 (8.8) (8.8) (4.6) (4.6) Brand £ 000 Goodwill £ 000 Trademarks, patents & licenses £ 000 2,912 26,019 – – 2,912 26,019 2,724 13,391 64 – 2,788 124 – 1,563 14,954 11,065 25 – 25 – – – – 25 Brand £ 000 Goodwill £ 000 trademarks, patents & licenses £ 000 2,912 26,019 – – 2,912 26,019 2,662 62 2,724 188 13,391 – 13,391 12,628 25 – 25 – – – 25 Total £ 000 28,956 – 28,956 16,115 64 1,563 17,742 11,214 total £ 000 28,956 – 28,956 16,053 62 16,115 12,841 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 57 Notes to the Financial Statements CoNTiNuED 13 InTanGIBLE aSSETS CoNTiNuED Brand relates to registered brand names and is amortised over an estimated useful economic life of four years. Goodwill is not amortised, but an impairment test is performed annually by comparing the carrying amount of the goodwill to its recoverable amount. The recoverable amount is represented by the greater of the individual cash generating units (CGU’s) fair value less costs of disposal and its value-in-use. The goodwill balance relates to two sites in the restaurant segment (£2,038,000) and two sites in the hotel segment (£9,027,000). Restaurant segment The key assumptions for the value-in-use calculations are those regarding the discount rate, trading forecasts and growth rates. A pre-tax discount rate of 14.9% was used (2021: 12.0%), based on the Group’s WACC and comparable businesses in the sector. Cash flows in line with forecasts were used. Cash flows beyond the forecast period are extended out to the end of the lease terms at a 2% growth rate. Impairment testing at 2 October 2022 resulted in the impairment of goodwill relating to Restaurant 1 for £1,563,000, leaving a recoverable amount of £1,046,000. This is due to the recoverable amount, being value-in-use, being lower than the goodwill recognised. Given the ongoing global economic uncertainty and its impact on the UK hospitality sector, there is particular sensitivity to the forecasts prepared in connection with the impairment review as at 2 October 2022. The estimate of recoverable amount for the restaurant segment is particularly sensitive to the discount rate and trading forecast assumptions. If the discount rate used is increased by 2%, the forecast future EBiTDa is reduced by 10% and the terminal growth rate reduced by 1%, a further impairment loss of £991,000 for the period ended 2 October 2022 would have to be recognised against goodwill (2021: £220,000). Management is not currently aware of any other reasonably possible changes to key assumptions that would cause a unit’s carrying amount to exceed its recoverable amount. Hotel segment The key assumptions for the value-in-use calculations are those regarding the discount rate, trading forecasts and growth rates. A pre-tax discount rate of 14.9% was used (2021: 12.0%), based on the Group’s WACC and comparable businesses in the sector. Cash flows in line with forecasts were used. Cash flows beyond the forecast period are extended at a terminal growth rate of 2%. Impairment testing at 2 October 2022 resulted in no requirement to reduce the carrying value of goodwill at 2 October 2022, as the recoverable amounts of the CGUs, based on value-in-use estimates, were greater than the carrying values. The estimate of recoverable amount for the hotel segment is sensitive to the discount rate, trading forecast assumptions and terminal growth rate. if the discount rate used is increased by 2%, the forecast future EBiTDa is reduced by 10% and the terminal growth rate reduced by 1%, no impairment would be required (2021: £nil). Management is not currently aware of any other reasonably possible changes to key assumptions that would cause a unit’s carrying amount to exceed its recoverable amount. COmPanY The Company has no intangible assets. 58 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS 14 PROPERTY, PLANT AND EQUIPMENT GROuP Cost or valuation At 3 October 2021 Additions Lease modifications Disposals transfers At 2 october 2022 Depreciation At 3 October 2021 Charge for the period eliminated on disposal impairment loss At 2 october 2022 Carrying amount at 2 October 2022 Right-of-use assets £ 000 Freehold property £ 000 Leasehold improvements £ 000 Furniture, fittings and equipment £ 000 assets under construction £ 000 IT equipment £ 000 Total £ 000 29,215 2,294 6,531 2,127 (285) – – – – – 9,814 5,481 – – 6,003 2,291 – (3) 1,336 585 – (74) 998 244 (1,274) 1,583 50,245 495 15,383 – (2) 32 2,127 (364) – 37,588 2,294 16,293 8,535 573 2,108 67,391 8,491 2,286 (278) 980 11,479 – – – – – 1,756 733 – – 3,091 1,351 (2) – 2,489 4,440 – – – – – 1,015 268 (1) – 14,353 4,638 (281) 980 1,282 19,690 26,109 2,294 13,804 4,095 573 826 47,701 Right-of-use assets £ 000 Freehold property £ 000 leasehold improvements £ 000 Furniture, fittings and equipment £ 000 Assets under construction £ 000 it equipment £ 000 total £ 000 Cost or valuation At 27 September 2020 26,907 1,795 Additions Disposals transfers At 3 October 2021 Depreciation At 27 September 2020 Charge for the period eliminated on disposal impairment loss At 3 October 2021 Carrying amount at 3 October 2021 2,308 – – 29,215 5,858 2,023 – 610 8,491 17 – 482 2,294 – – – – – 7,860 2,088 (701) 567 5,942 1,404 (1,404) 61 1,171 1,336 (60) (1,111) 1,432 45,107 215 (65) 1 7,368 (2,230) – 9,814 6,003 1,336 1,583 50,245 1,436 374 (54) – 3,551 1,267 (1,727) – 1,756 3,091 – – – – – 823 244 (52) – 11,668 3,908 (1,833) 610 1,015 14,353 20,724 2,294 8,058 2,912 1,336 568 35,892 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 59 Notes to the Financial Statements CoNTiNuED 14 PROPERTY, PLANT AND EQUIPMENT CoNTiNuED The Group’s leasehold premises and improvements are stated at cost, being the fair value at the date of acquisition, plus any additions at cost less any subsequent accumulated depreciation. Assets under construction relates to capital expenditure on sites that have not started trading. Depreciation is charged to cost of sales in the Statement of Comprehensive Income for property, plant and equipment in use at the trading leasehold premises. Depreciation on property, plant and equipment used by central functions is charged to other expenses in the Statement of Comprehensive Income. Rental income from subletting right-of-use assets is recognised on a straight-line basis over the term of the relevant lease. It is netted off against rental costs and is recognised within cost of sales (2022: £42,000; 2021: £41,000). The Group has determined that each site in the restaurant operating segment, and each of the companies in the hotel operating segment are separate CGus for impairment testing purposes. Each CGu is tested for impairment at the balance sheet date if there exists at that date any indicators of impairment. Losses incurred by the Group pre Covid-19 as well as the ongoing Covid-19 pandemic are considered indicators of potential impairment, accordingly all CGUs have been tested for impairment by comparing the carrying amount of the assets to the recoverable amount. The recoverable amount is represented by the greater of the individual CGU’s fair value less costs of disposal and its value-in-use. Restaurant segment The key assumptions for the value-in-use calculations are those regarding the discount rate, trading forecasts and growth rates. A discount rate of 14.9% was used (2021: 12.0%), based on the Group’s WACC and comparable businesses in the sector. Cash flows in line with forecasts were used. Cash flows beyond the forecast period are extended out to the end of the lease terms at a 2% growth rate. Impairment testing resulted in the reduction of carrying amount to recoverable amount, being value-in-use, for three CGUs in 2022, with the full charge recognised against the restaurant segment. This charge was for the lease on Restaurant 2 (impairment of £495,000 leaving a recoverable amount in the CGU of £1,970,000), Restaurant 3 (impairment of £278,000 leaving a recoverable amount in the CGU of £471,000) and Restaurant 4 (impairment of £207,000 leaving a recoverable amount in the CGU of £nil). The CGUs with the least headroom are Restaurant 5 with £160,000, Restaurant 6 with £318,000 and Restaurant 7 with £534,000. The charge in 2021 was for £610,000 against right of use assets at Restaurant 4. The estimate of recoverable amount for the restaurant segment is particularly sensitive to the trading forecast assumptions. If the discount rate used is increased by 2%, the forecast EBiTDa is reduced by 10%, and the terminal growth rate reduced by 1%, a further impairment loss of £569,000 for the period ended 2 October 2022 would have to be recognised against right-of-use assets. Management is not currently aware of any other reasonably possible changes to key assumptions that would cause a unit’s carrying amount to exceed its recoverable amount. Hotel segment As a result of the headroom identified during the goodwill impairment testing of the hotel operating segment (see note 13), no impairment charge is required in respect of the hotel segment. COmPanY The Company has no property, plant and equipment. 60 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS 15 InVESTmEnTS GROuP SuBSIDIaRIES Name of subsidiary principal activity Various Eateries Holdings Limited* Holding company Rare Bird Hotels at Sonning Limited*† Rare Bird Hotels at Streatley Limited*† Hotels and similar accommodation Hotels and similar accommodation Vel property Holdings limited property management services SCp Sugar limited Holding company Various eateries trading limited licensed restaurants Noci islington limited Coppa Club (Haslemere) Limited Coppa Club limited Coppa (Bath) Limited Coppa Club Cardiff limited property management services property management services property management services property management services property management services tavolino limited Dormant Coppa limited Dormant proportion of ownership interest and voting rights held by the Group 2022 100% 2021 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% – – – 100% 100% Country of incorporation and registered office united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS united Kingdom 20 St thomas Street, London, SE1 9RS * Indicates direct investment of the Company, other companies are held by direct subsidiaries. † The two subsidiary companies set out above, Rare Bird Hotels at Sonning Limited (Registered Company Number 12764418) and Rare Bird Hotels at Streatley Limited (Registered Company Number 12764529) are exempt from the requirement for an audit for the period ended 2 October 2022 under section 479A of the Companies Act 2006 in respect of that period, as the ultimate parent company, Various Eateries Plc, which has prepared audited consolidated financial statements, is providing a guarantee under section 479C of the Companies Act 2006 in respect of that period, and all members of the companies above agree to the exemption of an audit for the period ended 2 october 2022. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 61 Notes to the Financial Statements CoNTiNuED 15 InVESTmEnTS CoNTiNuED Summary of investments in subsidiaries At start and end of financial period There were no additions by the Company in the period. 16 InVEnTORIES Food and beverage Consumables 2 October 2022 £ 000 3 October 2021 £ 000 9,325 9,325 Group Company 2 October 2022 £ 000 3 October 2021 £ 000 2 October 2022 £ 000 3 October 2021 £ 000 285 523 808 234 312 546 – – – – – – Inventories recognised as an expense in the period totalled £9,828,000 (2021: £5,078,000). 17 TRADE AND OTHER RECEIVABLES trade receivables Receivables from subsidiaries prepayments other receivables Group Company 2 October 2022 £ 000 3 October 2021 £ 000 2 October 2022 £ 000 3 October 2021 £ 000 204 – 907 1,452 2,563 137 – 579 788 – – 42,632 40,872 – – – – 1,504 42,632 40,872 All of the trade receivables were non-interest-bearing, receivable under normal commercial terms, and the Directors do not consider there to be any material expected credit loss. The Directors consider that the carrying value of trade and other receivables approximates to their fair value. 18 CASH AND BANK BALANCES Cash and bank balances Group Company 2 October 2022 £ 000 9,390 3 October 2021 £ 000 19,716 2 October 2022 £ 000 3 October 2021 £ 000 – – 62 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS 19 TRADE AND OTHER PAYABLES trade payables payables to subsidiaries Accrued expenses Social security and other taxes other payables lease liabilities due in less than one year 20 CuRREnT BORROWInGS Borrowings from related parties Group Company 2 October 2022 £ 000 2,232 – 3,805 1,363 1,194 2,826 11,420 3 October 2021 £ 000 1,544 – 5,028 923 906 2,842 11,243 2 October 2022 £ 000 – 1,863 3 October 2021 £ 000 – 1,146 – – – – – – – – 1,863 1,146 Group Company 2 October 2022 £ 000 12,707 3 October 2021 £ 000 12,438 2 October 2022 £ 000 3 October 2021 £ 000 – – Borrowings from related parties classed as payable within 12 months includes two deep discounted bond instruments issued by VEL Property Holdings Limited and by Various Eateries Trading Limited. The deep discounted bond instrument issued by VEL Property Holdings Limited was issued in January 2022, the subscription amount was £2,584,000, the nominal value £2,791,000, the final redemption date being 14 January 2023. The discount is recognised between subscription and redemption date, resulting in £147,000 of accrued financing costs as at the reporting date. The deep discounted bond instrument issued by Various Eateries Trading Limited was in april 2022, with a subscription price of £9,515,000, a nominal value of £10,001,000, and a term of 12 months. The discount is recognised between subscription and redemption date resulting in £226,000 of accrued financing costs at the reporting date. The balance of £608,000 (2021: £1,038,000) under the August 2019 loan agreement matures in April 2023, bears cash-settled interest at 3.75% above SONIA (2021: cash-settled interest at 3.75% above LIBOR. 21 NON-CURRENT BORROWINGS lease liabilities due after more than one year Group Company 2 October 2022 £ 000 29,244 3 October 2021 £ 000 22,128 2 October 2022 £ 000 3 October 2021 £ 000 – – The loans and borrowings classified as financial instruments are disclosed in note 25. The Group’s exposure to market and liquidity risk in respect of loans and borrowings is disclosed in the financial instruments note. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 63 Notes to the Financial Statements CoNTiNuED 22 PROVISIOnS FOR LIaBILITIES GROuP Authorised Guarantee Agreements (‘AGAs’) At start and end of financial period Authorised Guarantee Agreements (‘AGAs’) At start of previous financial period Release of provision in the prior year At end of previous and current financial period 52 weeks ended 2 October 2022 £ 000 357 53 weeks ended 3 October 2021 £ 000 461 (104) 357 The provision relates to the annual rental cost of three (2021: three) previously operated sites that have been disposed of via assignment of lease and include Authorised Guarantee Agreements (‘AGAs’) as part of the assignment arrangement (see also note 30). 23 SHARE CAPITAL AND SHARE PREMIUM AUTHORISED, ALLOTTED, CALLED-UP AND FULLY PAID SHARES Ordinary shares of £0.01 each 2 October 2022 3 October 2021 no. 000 89,008 £ 000 890 No. 000 89,008 £ 000 890 There were no movements in ordinary share capital in the period ended 2 October 2022. ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have a par value of £0.01 and the Company does not have a limited amount of authorised capital. Employee benefit trust shares reserve The Group presents these shares as an adjustment to own equity at the period end date through the employee benefit trust shares reserve, until the point that the shares are awarded, and cease to be conditional awards of shares. The award of shares is conditional upon certain vesting criteria, as outlined in note 26. 24 RETIREMENT BENEFIT SCHEMES GROUP PERSONAL PENSION SCHEME The Group operates group personal pension schemes for all qualifying employees. The assets of the schemes are held separately from those of the Group. The total cost charged to income of £220,000 (2021: £179,000) represents contributions payable to these schemes by the Group at rates specified in the rules of the schemes. As at 2 October 2022, contributions of £30,000 (2021: £26,000) due in respect of the current reporting period had not been paid over to the schemes. 25 FInanCIaL InSTRumEnTS GROuP FInanCIaL aSSETS aT amORTISED COST Cash at bank and in hand trade and other receivables 64 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 2 October 2022 £ 000 9,390 1,656 11,046 3 October 2021 £ 000 19,716 925 20,641 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS RECOnCILIaTIOn OF LIaBILITIES aRISInG FROm FInanCInG aCTIVITIES At start of financial period New borrowings DDB renewal interest charge Repayments during the period At end of financial period lease liabilities £ 000 other borrowings £ 000 total £ 000 24,970 12,438 37,408 7,315 – 1,344 (1,559) – 700 – (431) 7,315 700 1,344 (1,990) 32,070 12,707 44,777 Valuation methods and assumptions Trade receivables are all due for settlement in less than one year. The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value due to their short-term nature. FInanCIaL LIaBILITIES aT amORTISED COST trade and other payables Borrowings from related parties 2 October 2022 £ 000 3 October 2021 £ 000 39,190 12,707 51,897 32,447 12,438 44,885 Valuation methods and assumptions The Directors consider that the carrying amount of trade and other payables is approximately equal to their fair value due to their short- term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities. FAIR VALUE HIERARCHY The tables above detail the Group’s assets and liabilities disclosed at fair value. Using a three-level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, all assets and liabilities shown above are considered to be level 3: ‘Unobservable inputs for the asset or liability’. There were no transfers between levels during the financial period. FInanCIaL RISK manaGEmEnT anD ImPaIRmEnT OF FInanCIaL aSSETS The Group’s activities expose it to a variety of financial instrument risks. The risk management policies employed by the Group to manage these risks are discussed below. The primary objectives of the financial instrument risk management function are to establish risk limits, and then ensure that exposure to risks stay within these limits. CaPITaL RISK manaGEmEnT The Group’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial period. CREDIT RISK manaGEmEnT The Group’s credit risk is attributable to trade and other receivables and cash with the carrying amount best representing the maximum exposure to credit risk. The Group places its cash with banks with high-quality credit standings. Trade and other receivables relate to day- to-day activities which are entered into with creditworthy counterparties. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 65 Notes to the Financial Statements CoNTiNuED 25 FInanCIaL InSTRumEnTS CoNTiNuED maRKET RISK manaGEmEnT The Group’s activities expose it to economic factors; the Directors closely monitor market conditions and consider any impact on the Group’s existing strategy. InTEREST RaTE RISK manaGEmEnT The Group is exposed to interest rate risk as the Group’s borrowings have an interest rate of 3.75% above SONIA. LIQUIDITY RISK MANAGEMENT Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Management review cashflow forecasts on a regular basis to determine whether the Group has sufficient cash reserves to meet future working capital requirements and to take advantage of business opportunities. Remaining contractual maturities The following tables detail the Company’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. 2022 non-derivatives trade payables other payables Borrowings – Deep Discounted Bond Borrowings – loan lease liability 3.75% + SOnIa 4.5% Weighted average interest rate % 1 year or less £ 000 Between 1 and 2 years £ 000 Between 2 and 5 years £ 000 Over 5 years £ 000 Remaining contractual maturities £ 000 2,232 4,999 12,792 608 3,157 23,788 – – – – – – – – – – – – 3,669 3,669 11,178 11,178 26,451 26,451 2,232 4,999 12,792 608 44,455 65,086 Weighted average interest rate % 1 year or less £ 000 Between 1 and 2 years £ 000 Between 2 and 5 years £ 000 Over 5 years £ 000 Remaining contractual maturities £ 000 2021 non-derivatives trade payables other payables Borrowings – Deep Discounted Bond Borrowings – loan lease liability 3.75% + LIBOR 4.5% 1,544 5,934 12,099 1,038 2,970 23,585 – – – – – – – – – – – – 2,999 2,999 8,627 8,627 18,387 18,387 1,544 5,934 12,099 1,038 32,983 53,598 – – – – – – The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. 66 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS 26 SHARE-BASED PAYMENTS As at 2 October 2022, the Group maintained three separate share-based payment schemes for employee remuneration (2021: three): • Various Eateries Joint Share Ownership Scheme (‘JSOP Scheme 1’) • Various Eateries Joint Share Ownership Scheme (‘JSOP Scheme 2’) • Various Eateries Company Share option Plan (‘CSoP’) JSOP SCHEME 1 In accordance with IFRS 2 “Share-based Payment”, the value of the awards is measured at fair value at the date of the grant. The fair value is expensed on a straight-line basis over the vesting period, based on management’s estimate of the number of shares that will eventually vest. A charge of £713,000 (2021: £818,000) has been recognised in profit and loss by the Group in the period ended 2 October 2022. The JSOP is part of the remuneration package of the Group’s senior management. Participants in this scheme have to be employed until the end of the agreed vesting period. Upon vesting, the holder is entitled to purchase ordinary shares at the market price determined at grant date. At 3 October 2021 Granted Vesting at 2 October 2022 At 27 September 2020 Granted at 3 October 2021 JSOP (Scheme 1) Number of shares Granted exercisable total 5,809,523 – – – (5,809,523) 5,809,523 5,809,523 – – – 5,809,523 5,809,523 5,809,523 – 5,809,523 – – – 5,809,523 – 5,809,523 The fair value of these options granted was determined using a Black-Scholes model. The following principal assumptions were used in the valuation: Grant date Vesting period ends Share price at date of grant Volatility option life Dividend yield Risk-free investment rate Fair value per option at grant date exercise price at date of grant exercisable from / to Remaining contractual life JSop 18 September 2020 31 August 2022 £0.73 66.98% 1.95 years 0.00% (0.13)% £0.26 £0.73 31 August 2022/31 August 2030 nil The historical volatility has been calculated based on the share returns of four comparators for a period preceding the valuation date equal to the initial expected term of the options, i.e. a period of 1.92 years. The total estimated fair value of the options granted on 18 September 2020 that was recognised in expenses over the vesting period is £1,513,000. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 67 Notes to the Financial Statements CoNTiNuED 26 SHARE BASED PAYMENTS CoNTiNuED JSOP SCHEME 2 A charge of £35,000 (2021: £20,000) has been recognised in profit and loss by the Group in the period ended 2 October 2022. The JSOP is part of the remuneration package of the Group’s senior management. Participants in this scheme have to be employed until the end of the agreed vesting period. Upon vesting, the holder is entitled to purchase ordinary shares at the market price determined at grant date. At 3 October 2021 Granted Lapsed 29 June 2022 at 2 October 2022 At 27 September 2020 Granted at 3 October 2021 Grant date Vesting period ends Share price at date of grant Volatility option life Dividend yield Risk-free investment rate exercise price at date of grant exercisable from / to Remaining contractual life JSOP (Scheme 2) Number of shares exercise price per share (£) 360,000 – (360,000) – – 360,000 360,000 1.09 – 1.09 – – 1.09 1.09 JSop 11 may 2021 Various £1.03 64.17% 3.89 0.00% 0.24% £1.09 31 March 2025 / 31 March 2026 2.50 years The historical volatility has been calculated based on the share returns of four comparators for a period preceding the valuation date equal to the initial expected term of the options, i.e. a period of 3.89 years. The total estimated fair value of the options granted on 11 May 2021 to be recognised in expenses over the vesting period was £193,000. All options under the scheme as at 2 October 2022 have lapsed. 68 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS CSOP A charge of £82,000 (2021: £6,000) has been recognised in profit and loss by the Group in the period ended 2 October 2022. At 3 October 2021 Granted 17 January 2022 Lapsed 11 May 2022 Granted 25 August 2022 at 2 October 2022 At 27 September 2020 Granted at 3 October 2021 CSop Number of shares exercise price per share (£) 92,402 990,441 (92,402) 250,000 1.09 0.69 1.09 0.42 1,240,441 various – 92,402 92,402 – 1.09 1.09 The fair value of the options is estimated at the date of grant using a Black-Scholes valuation method. The total estimated fair value of the options granted during the year to be recognised over the vesting period is £340,000. Grant date Vesting period ends Share price at date of grant Volatility option life at grant Dividend yield Risk-free investment rate Fair value per option at grant date exercise price at date of grant CSop 11 may 2021 11 May 2024 17 January 2022 25 august 2022 17 January 2025 25 August 2025 £1.08 65.66% 3 years 0.00% 0.87 % £0.49 £1.08 £0.69 65.66% 3 years 0.00% 0.87 % £0.30 £0.69 £0.42 65.66% 3 years 0.00% 0.87 % £0.19 £0.42 exercisable from / to 11 May 2024 / 11 May 2031 17 Jan 2025 / 17 Jan 2032 25 Aug 2025 / 25 Aug 2032 Remaining contractual life 1.6 years 2.3 years 2.9 years VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 69 Notes to the Financial Statements CoNTiNuED 27 RELaTED PaRTY TRanSaCTIOnS Transactions with related parties include management charges for services provided by Osmond Capital Limited, which has common shareholders with controlling influence in the Company, of £198,000 (2021: £200,000). In addition, H E M Osmond is the principal lender of the £12,099,000 borrowings (2021: £10,000,000) and a shareholder with controlling influence of Xercise2 Ltd which is a significant shareholder of the Company. As at 2 October 2022, there was £9,000 (2021: £20,275) of accrued cash interest payable on borrowings from related parties. REmunERaTIOn OF KEY manaGEmEnT PERSOnnEL The remuneration of the Directors of the Company and its subsidiaries and other key management, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 “Related Party Disclosures”. Salaries and other short-term employee benefits employer’s national insurance contributions Post-employment benefits During the period, the Company entered the following trading transactions with related parties: 52 weeks ended 2 October 2022 £ 000 53 weeks ended 3 October 2021 £ 000 641 83 11 735 716 88 15 819 SCp Newbury manor limited osmond Capital limited the Great House at Sonning limited CCo Cygnet limited 52 weeks ended 2 October 2022 53 weeks ended 3 October 2021 Purchase of goods / services Sale of goods / services purchase of goods / services Sale of goods / services 15 198 774 888 1,875 – – – – – 15 200 657 748 1,620 – – – – – The following amounts were outstanding at the statement of financial position date: the Great House at Sonning limited Rare Bird Hotels limited CCo Cygnet limited mudlark Hotels limited 2 October 2022 3 October 2021 amounts owed to related parties £ 000 amounts owed by related parties £ 000 Amounts owed to related parties £ 000 Amounts owed by related parties £ 000 – – 207 – 207 – – – 396 396 1 – – – 1 53 119 – – 172 SCP Newbury Manor Limited, Osmond Capital Limited, The Great House at Sonning Limited, Rare Bird Hotels Limited, CCO Cygnet Limited and Mudlark Hotels Limited are related parties of the Company because they have common shareholders with controlling influence in the Company. 70 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 StRAteGiC RepoRt GoVeRNANCe FInanCIaL STaTEmEnTS Sales and purchases of goods and services between the related parties were made at market prices discounted to reflect the relationships between the parties. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties. 28 COnTROLLInG PaRTY The ultimate controlling party of the Company is H E M Osmond. 29 POST BALANCE SHEET EVENTS VEL PROPERTY HOLDINGS LIMITED FUNDING Within current liabilities (note 20) is a deep discounted bond instrument with a nominal value of £2,791,000 and a final redemption date of 14 January 2023. In January 2023, this was replaced by a new deep discounted bond instrument with a nominal value of £2,902,000 and a final redemption date of 14 July 2023. VaRIOuS EaTERIES TRaDInG LImITED FunDInG Within current liabilities (note 20) is a deep discounted bond instrument with a nominal value of £10,001,000 and a final redemption date of 15 April 2023. In February 2023, this was replaced by a new deep discounted bond instrument with a nominal value of £10,802,000 and a final redemption date of 15 April 2024. 30 COnTInGEnT LIaBILITIES AUTHORISED GUARANTEE AGREEMENTS There are 8 (2021: 9) previously operated sites that have been disposed of via assignment of lease and include Authorised Guarantee agreements (‘aGas’) as part of the assignment arrangement. There is a risk that the sites would be returned if the assigned leaseholders were to default on their contractual obligations with their respective landlords, the risk of which was heightened as a result of the coronavirus (Covid-19) outbreak. The total annual rental cost for these sites is £559,000, of which £357,000 (2021: £357,000) has been provided for (see note 22). The average remaining lease length is 6 years. CJRS CLaIm The Group made material claims under the CJRS schemes in order to support the business through the pandemic. Given multiple changes to the rules governing the schemes, as well as the degree of complexity in the various rules, the Group undertook an external review of past claims to confirm their validity. The Directors are of the opinion that claims made to date are valid and materially correct and so do not consider the likelihood of material outflow as a result of this review to be probable. VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 71 Advisers nOmInaTED aDVISER anD BROKER WH ireland Limited 24 Martin Lane London EC4R 0DR InDEPEnDEnT auDITORS RSM UK Audit LLP 25 Farringdon Street London EC4A 4AB SOLICITORS Irwin Mitchell LLP 40 Holborn Viaduct London EC1N 2PZ PuBLIC RELaTIOnS alma PR 71–73 Carter Lane London EC4V 5EQ 72 VaRIOuS EaTERIES PLC ANNuAl RepoRt & FiNANCiAl StAtemeNtS 2022 Printed by a carbon balanced, FSC®-recognised printer, certified to ISO 14001 environmental management system using 100% renewable energy. This product has been made of material from well-managed, FSC®-certified forests and other controlled sources. Both paper and production are measured and carbon balanced, based on a third party, audited, calculation. 100% of the inks used are HP indigo Electroink which complies with RoHS legislation and meets the chemical requirements of the Nordic Ecolabel (Nordic Swan) for printing companies, 95% of press chemicals are recycled for further use and, on average 99% of any waste associated with this production will be recycled and the remaining 1% used to generate energy. The printer contributes to the World Land Trust’s ‘Conservation Coast’ project in Guatemala. This scheme supports many landowners and local communities to register and obtain their own land and thereby protect thousands of acres of threatened coastal forest. The local organisation FuNDaECo works with over 3000 families to help transform local livelihoods through job creation and ecotourism. V a r i o u s E a t e r i e s P L C A n n u a l R e p o r t & F i n a n c i a l S t a t e m e n t s 2 0 2 2 Various Eateries PLC REGISTERED OFFICE: 20 St. Thomas Street Runway East London SE1 9RS www.variouseateries.co.uk 

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