Company Registration No. 12906241 (England and Wales)
VS SALONS UK LIMITED
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
PAGES FOR FILING WITH REGISTRAR
Sobell Rhodes Audit Limited
The Kinetic Centre
Theobald Street
Elstree
Borehamwood
Hertfordshire
WD6 4PJ
VS SALONS UK LIMITED
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 11
VS SALONS UK LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2022
31 December 2022
- 1 -
2022
2021
as restated
Notes
£
£
£
£
Fixed assets
Intangible assets
4
15,002
20,002
Tangible assets
5
6,785
51,494
21,787
71,496
Current assets
Stocks
115,803
149,688
Debtors
6
198,978
310,985
Cash at bank and in hand
30,800
203,465
345,581
664,138
Creditors: amounts falling due within one year
7
(2,765,974)
(1,653,653)
Net current liabilities
(2,420,393)
(989,515)
Total assets less current liabilities
(2,398,606)
(918,019)
Creditors: amounts falling due after more than one year
8
(398,966)
Net liabilities
(2,797,572)
(918,019)
Capital and reserves
Called up share capital
1
1
Profit and loss reserves
(2,797,573)
(918,020)
Total equity
(2,797,572)
(918,019)
The director of the company has elected not to include a copy of the profit and loss account within the financial statements.true
The director acknowledges her responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved and signed by the director and authorised for issue on 9 August 2024
Diane Marsh
Director
Company Registration No. 12906241
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 2 -
1
Accounting policies
Company information
VS Salons UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is One Eleven Edmund Street, Birmingham, B3 2HJ.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Prior period error
The comparatives have been restated due to prior period adjustments have been detailed in note 12.
1.3
Going concern
The truefinancial statements have been prepared on a going concern basis. The director has a reasonable expectation the company will continue to have adequate resources to fund its working capital for the foreseeable future.
The company has net current liabilities of £2,420,393 (2021: £989,515 and an overall net liabilities position of £2,797,572 (2021: £918,019). Despite the company experiencing substantial losses and net liabilities post Covid, the ongoing financial support from the parent company mitigates any material uncertainty regarding the subsidiary's ability to continue as a going concern. This support was crucial during periods of financial difficulty, particularly during the Covid-19 pandemic. The parent company continues to support and invest in the subsidiary's and the groups future, including plans for a potential new academy in the US. These actions demonstrate the parent company's commitment to the subsidiary's ongoing operations and financial stability.
Included within creditors amounts falling due within one year is £1,353,117 (2021: £278,414) due to related companies within the group. These companies have provided comfort that they will offer continuous support to VS Salons UK Limited for the period of at least 12 months from the date of when these financial statements were approved, and there are support letters in place.
The company has returned to profitability in 2024, following the opening of the new academy on Greek Street. This was achieved through strategic investments in the academy team, the retention of their services, and the closure of underperforming salons. Significant new hires will further contribute to increased profitability as forecast for 2024 and 2025.
The director has provided detailed disclosures on the forecasts and budgets prepared to support the going concern assessment. The company's cash flow have been closely monitored and are deemed sufficient to support ongoing operations.
On the basis of the above, the director is of the opinion that there is no material uncertainty relating to going concern and therefore it is appropriate to prepare these financial statements on a going concern basis.
The financial statements do not include the adjustments that would result if the company were unable to continue as a going concern. Accordingly, the directors adopt the going concern basis in preparing the financial statements.
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 3 -
1.4
Reporting period
The current period was amended and is a 15 month period to align the year end to 31 December as compared to the prior period which was a 13 month period ended 30 September 2021. The comparative amounts presented in the financial statements (including the related notes) are therefore not entirely comparable. The prior period figures were also not audited.
1.5
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for the sale of salon products and services as well as tuition income provided in the normal course of business, and is shown net of VAT and discounts.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Turnover from product and services sales is recognised when payment is rendered at the time of sale.
Turnover from tuition sales is recognised once a course commences and is pro-rated for any income deferred into the future for longer courses.
1.6
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.7
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business 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 where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Patents & licences
nil
Intangibles
nil
1.8
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 4 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
nil
Fixtures and fittings
20% straight line
IT equipments
nil
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.9
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.10
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in, first out (FIFO) method. Provision is made for damaged, obsolete and slow-moving stock where appropriate.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.11
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 5 -
1.12
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
1.13
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16
Leases
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 6 -
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.17
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.18
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
1.19
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Going concern
As indicated in note 1.3 it it the director's assessment that the company continues to be a going concern. Accordingly, the assets and liabilities have been valued on the basis that the company will continue in the business.
If this presumption is proven to be mistaken the carrying value of assets and liabilities would need to be reappraised to reflect the impact of cessation.
Assessing indicators of impairment
The directors have determined whether there are indicators of impairment of the company's tangible and intangible fixed assets.
Factors taken into consideration in reaching such a decision was the economic viability of the fixed assets. Further details of impairment have been disclosed in note 5.
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 7 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Valuation of stocks
The company establishes a provision for stocks in order to provide against obsolete, or damaged items and this is reviewed on an annual basis.
Useful lives of property, plant and equipment
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic loves and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancements, future investments, economic utilisation and the physical condition of assets.
3
Employees
The average monthly number of persons (including directors) employed by the company during the Period was:
2022
2021
Number
Number
Total
128
174
4
Intangible fixed assets
Goodwill
Patents & licences
Intangibles
Total
£
£
£
£
Cost
At 1 October 2021 and 31 December 2022
20,000
1
1
20,002
Amortisation and impairment
At 1 October 2021
Amortisation charged for the Period
5,000
5,000
At 31 December 2022
5,000
5,000
Carrying amount
At 31 December 2022
15,000
1
1
15,002
At 30 September 2021
20,000
1
1
20,002
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 8 -
5
Tangible fixed assets
Leasehold land and buildings
Fixtures and fittings
IT equipments
Total
£
£
£
£
Cost
At 1 October 2021
1
56,000
2
56,003
Additions
3,528
4,705
8,233
At 31 December 2022
1
59,528
4,707
64,236
Depreciation and impairment
At 1 October 2021
4,509
4,509
Depreciation charged in the Period
14,588
863
15,451
Impairment losses
37,491
37,491
At 31 December 2022
56,588
863
57,451
Carrying amount
At 31 December 2022
1
2,940
3,844
6,785
At 30 September 2021
1
51,491
2
51,494
6
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
51,392
194,979
Amounts owed by group undertakings
33,161
53,570
Other debtors
114,425
62,436
198,978
310,985
7
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
341,524
170,852
Amounts owed to group undertakings
1,353,117
278,414
Taxation and social security
271,623
327,435
Other creditors
799,710
876,952
2,765,974
1,653,653
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 9 -
8
Creditors: amounts falling due after more than one year
2022
2021
£
£
Amounts owed to group undertakings
300,000
Other creditors
98,966
398,966
At the year end, loans amounting to £398,966, is payable to two related companies which have been classified as non-current in the current year. The loans carry an interest rate of 2% to 2.5% per annum. The loans are repayable on or prior to 31 December 2025.
9
Audit report information
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was unqualified.
The senior statutory auditor was Adam Shelley BA FCCA and the auditor was Sobell Rhodes Audit Limited.
10
Events after the reporting date
In January 2023, one of the company's within the group provided a loan of £221k. Interest on this loan is charged at 2.50% per annum and is repayable by 2025.
Post year end, one of the company's under common control provided various loans to a sum of £570k. Interest on the loan is charged at 2.50% per annum and is repayable by 2025.
Post year end the company consolidated all remaining London salons into Greek Street and retained Manchester.
In March 2023, the company acquired a new lease and opened a new academy with estimated leasehold additions of approximately £900k.
The director has determined that these events are non-adjusting subsequent events. Accordingly, the financial position and results of operations as of and for the period ended 31 December 2022 have not been adjusted to reflect their impact.
The director's conclusion on the company being a going concern are set out in the accounting policies (note 1.3).
11
Parent company
The company is wholly owned subsidiary of RG International Holdings LLC a company incorporated in the US.
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 10 -
12
Prior period adjustment
The company had acquired assets and liabilities of another entity in the prior period. During the current year, it was noted by the director that the following amounts were incorrectly stated in the prior period accounts.
The financial statements for the prior year have ben restated as a result of the above errors. The recognition of these events has resulted in the re-statement of the Balance Sheet and also the Profit and Loss account. The results are summarised below:
Changes to the balance sheet
As previously reported
Adjustment
As restated at 30 Sep 2021
£
£
£
Current assets
Stocks
336,706
(187,018)
149,688
Debtors due within one year
442,827
(131,842)
310,985
Creditors due within one year
Taxation
(404,990)
77,555
(327,435)
Other creditors
(918,774)
227,485
(691,289)
Deferred income
(502,140)
(132,789)
(634,929)
Net assets
(771,410)
(146,609)
(918,019)
Capital and reserves
Profit and loss reserves
(771,411)
(146,609)
(918,020)
VS SALONS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
12
Prior period adjustment
(Continued)
- 11 -
Reconciliation of changes in equity
25 September
30 September
2020
2021
£
£
Adjustments to prior Period
Other creditors
-
227,484
Stock
-
(187,018)
Trade debtors
-
(264,631)
Taxation and social security
-
77,556
Total adjustments
-
(146,609)
Equity as previously reported
-
(771,410)
Equity as adjusted
-
(918,019)
Analysis of the effect upon equity
Profit and loss reserves
-
(146,609)
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