SLG Brands Limited 01911296 false 2022-01-01 2022-12-31 2022-12-31 The principal activity of the company is SLG Brands is an international beauty brand company based in the UK, with a global consumer reach, extensive retail portfolio, proven brand building capability and exceptional cross-category supply chain. We are a highly inventive brand incubator business that imagines, develops, distributes and globally scales Millennial/Gen Z targeted beauty brands, both wholly owned and licensed that has in-house, IP generative integration of cosmetic laboratory, brand management, design & marketing studios with solid operational and financial control. SLG Brands is at the forefront of mid-tier fast, beauty incubators and brand builders, enjoying established and solid partnerships with a number of global retail multiples and rapidly growing distribution network across major global regions, including EMEA, North America and APAC . 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Registration number: 01911296

SLG Brands Limited

Annual Report and Financial Statements

for the Year Ended 31 December 2022

 

SLG Brands Limited

Contents

Company Information

1

Strategic Report

2 to 3

Directors' Report

4

Statement of Directors' Responsibilities

5

Independent Auditor's Report

6 to 8

Profit and Loss Account

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12 to 22

 

SLG Brands Limited

Company Information

Directors

M S M Dunkley

R M Buckland

T Cound

S Hutchings

L Topping

L J Beresford

Registered office

Studio 19
The Brewery Quarter
Unit H2
High Street
Cheltenham
GL50 3FF

Bankers

Lloyds Bank plc
Eastgate Street
Gloucester
GL1 1NU

Auditors

Hazlewoods LLP
Staverton Court
Staverton
Cheltenham
GL51 0UX

 

SLG Brands Limited

Strategic Report for the Year Ended 31 December 2022

The directors present their strategic report for the year ended 31 December 2022.

Principal activity

SLG Brands is an international beauty brand company based in the UK, with a global consumer reach, extensive retail portfolio, proven brand building capability and exceptional cross-category supply chain.

We are a highly inventive brand incubator business that imagines, develops, distributes and globally scales Millennial/Gen Z targeted beauty brands, both wholly owned and licensed that has in-house, IP generative integration of cosmetic laboratory, brand management, design & marketing studios with solid operational and financial control.

SLG Brands is at the forefront of mid-tier fast, beauty incubators and brand builders, enjoying established and solid partnerships with a number of global retail multiples and rapidly growing distribution network across major global regions, including EMEA, North America and APAC .

Fair review of the business

In late 2021, the board approved a new three-year strategy aimed at restoring SLG Brands' profitability by 2022.

During 2022, our revenue increased by 11.7%, and we achieved a profit after tax of £239k, effectively accomplishing the initial phase of our plan.

We prioritised cost savings, resulting in a 12.5% year-on-year reduction in administrative expenses. Additionally, our primary markets experienced robust growth, with the UK business expanding by 6.5% and the Rest of World, particularly the US, showing a 25% annual increase.

Our sustainable haircare brand, Rhyme & Reason, continued its strong growth, with sales in the US up an impressive 124% compared to the previous year. Rhyme & Reason is now available in 2,500 stores across the US and UK.

Furthermore, we continued to expand the presence of our flagship brand, COLAB Dry Shampoo, in various retail channels across the US, including mass, food, and drug stores. Sales in the US surged by 48%, while the UK witnessed a 22% increase. Currently, COLAB is stocked in over 25,000 stores globally.

Our male grooming brand, Johnny's Chop Shop, sustained significant demand in the UK with sales increasing by 53% year on year.

We are delighted to report that our revenue growth is supported by strong increases in both rate-of-sale and market share, as well as the expansion of our distribution channels. These three factors provide a strong foundation for our future growth.

The SLG board is pleased with the successful execution of the initial stage of our three-year plan. This accomplishment delivered solid growth in our crucial markets (the UK and US) and restored profitability. As a result, we are exceptionally well-positioned to continue experiencing rapid expansion across our brand portfolio, thereby regaining and exceeding historical levels of profitability.

The company's key financial and other performance indicators during the year were as follows:

Financial KPIs

Unit

2022

2021

Turnover

£'000

28,733

25,718

Gross profit margin

%

44

45

Operating (loss)/profit

£'000

345

(2,840)

Operating profit margin

%

1

(11)

Net current assets

£'000

2,143

1,966

Net assets

£'000

10,072

9,833

 

SLG Brands Limited

Strategic Report for the Year Ended 31 December 2022

Future developments

Our key brands have continued to experience strong demand throughout the first half of 2023 with NPD delivering tangible incrementality.

The results for H1 2023 were impressive and marked the second highest achievement in our company's history, with 27% year-on-year growth.

We anticipate continued expansion in distribution by the end of the year having secured the launch of a new and innovative brand into the US market in Q1 2024, with plans toward key EMEA markets opening by Q2/3.

We have also secured new retail customers and brand licenses to our portfolio. These collective advancements will contribute to the ongoing realisation of our revenue and profit growth objectives outlined in our three-year plan.

Principal risks and uncertainties

The management of the company and the execution of the company's strategy are subject to a number of risks. The key business risks and uncertainties affecting the company are considered to relate to the competition from providers of other cosmetic and beauty products and the challenges arising as a result of the current economic climate.

Financial instruments

The company is exposed to the usual credit risk and cash flow risk associated with selling on credit and manages this through credit control procedures.

Going concern and liquidity risk

In accordance with the Financial Reporting Council's 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009', the directors of all companies are now required to provide disclosure regarding the adoption of the going concern basis of accounting.

Cash is being managed effectively and we have just agreed an extension to the overdraft facility to support the business over the coming year. The directors believe that the company also has the ongoing support of our shareholders.

The directors therefore have a reasonable expectation that the company has adequate resources to continue in operational existence and has continued to adopt the going concern basis in preparing the financial statements.

Approved by the Board on 28 September 2023 and signed on its behalf by:


R M Buckland
Director

 

SLG Brands Limited

Directors' Report for the Year Ended 31 December 2022

The directors present their report and the financial statements for the year ended 31 December 2022.

Directors of the company

The directors who held office during the year were as follows:

M S M Dunkley

R M Buckland

T Cound

S Hutchings

L Topping

L J Beresford

Research and development

The company undertakes an element of research and development in its manufacturing processes and development of new products.

Disclosure of information to the auditors

Each director has taken the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Reappointment of auditors

Hazlewoods LLP have expressed their willingness to continue in office.

Approved by the Board on 28 September 2023 and signed on its behalf by:


R M Buckland
Director

 

SLG Brands Limited

Statement of Directors' Responsibilities

The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the 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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

SLG Brands Limited

Independent Auditor's Report to the Members of SLG Brands Limited

Opinion
We have audited the financial statements of SLG Brands Limited (the 'company') for the year ended 31 December 2022, which comprise the Directors' report, Strategic report Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were 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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinion on other matter prescribed by the Companies Act 2006

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

the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

 

SLG Brands Limited

Independent Auditor's Report to the Members of SLG Brands Limited

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

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

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

certain disclosures of 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 Statement of Directors' Responsibilities set out on page 5, 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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We considered the nature of the company’s industry and its control environment and reviewed the company’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities.

We obtained an understanding of the legal and regulatory framework that the company operates in and identified the key laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements, including the UK Companies Act and tax legislation, and, those that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty.

We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.

In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgments made in accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatements due to fraud;

 

SLG Brands Limited

Independent Auditor's Report to the Members of SLG Brands Limited

enquiring of management concerning actual and potential litigation and claims and instances of non-compliance with laws and regulations; and

reading minutes of meetings of those charged with governance.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of this 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.





Ryan Hancock (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor

Staverton Court
Staverton
Cheltenham
GL51 0UX

29 September 2023

 

SLG Brands Limited

Profit and Loss Account for the Year Ended 31 December 2022

Note

2022
 £

2021
 £

Turnover

3

28,732,969

25,718,065

Cost of sales

 

(15,965,246)

(14,207,216)

Gross profit

 

12,767,723

11,510,849

Administrative expenses

 

(11,990,818)

(13,707,185)

Other operating income

4

387,872

178,847

Operating profit/(loss) before amortistion, depreciation and exceptional items

 

1,164,777

(2,017,489)

Depreciation expense

 

(173,043)

(176,444)

Amortisation expense

 

(646,245)

(646,246)

Operating profit/(loss)

5

345,489

(2,840,179)

Other interest receivable and similar income

56

944

Interest payable and similar charges

(317,184)

(288,918)

Profit/(loss) before tax

 

28,361

(3,128,153)

Taxation

8

210,439

142,124

Profit/(loss) for the financial year

 

238,800

(2,986,029)

The above results were derived from continuing operations.

The company has no other comprehensive income for the year.

 

SLG Brands Limited

(Registration number: 01911296)
Balance Sheet as at 31 December 2022

Note

2022
 £

2021
 £

Fixed assets

 

Intangible assets

9

10,477,559

11,123,804

Tangible assets

10

1,631,219

1,789,767

Investments

11

301

301

 

12,109,079

12,913,872

Current assets

 

Stocks

12

2,061,859

2,030,168

Debtors

13

7,342,270

8,446,696

Cash at bank and in hand

1,367,322

4,755

 

10,771,451

10,481,619

Creditors: Amounts falling due within one year

14

(8,628,685)

(8,515,846)

Net current assets

 

2,142,766

1,965,773

Total assets less current liabilities

 

14,251,845

14,879,645

Creditors: Amounts falling due after more than one year

14

(4,179,628)

(5,046,228)

Net assets

 

10,072,217

9,833,417

Capital and reserves

 

Called up share capital

16

284

284

Capital redemption reserve

24

24

Profit and loss account

10,071,909

9,833,109

Total equity

 

10,072,217

9,833,417

Approved and authorised by the Board of on 28 September 2023 and signed on its behalf by:
 

.........................................

R M Buckland

Director

 

SLG Brands Limited

Statement of Changes in Equity for the Year Ended 31 December 2022

Share capital
£

Capital redemption reserve
£

Profit and loss account
£

Total
£

At 1 January 2022

284

24

9,833,109

9,833,417

Profit for the year

-

-

238,800

238,800

At 31 December 2022

284

24

10,071,909

10,072,217

Share capital
£

Capital redemption reserve
£

Profit and loss account
£

Total
£

At 1 January 2021

284

24

13,119,138

13,119,446

Loss for the year

-

-

(2,986,029)

(2,986,029)

Dividends

-

-

(300,000)

(300,000)

At 31 December 2021

284

24

9,833,109

9,833,417

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Studio 19
The Brewery Quarter
Unit H2
High Street
Cheltenham
GL50 3FF

 

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' and the Companies Act 2006.

Basis of preparation

These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.

The presentational currency of the financial statements is Pounds Sterling, being the functional currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest Pound.

Summary of disclosure exemptions

The company is exempt from preparing a cashflow statement as it is a qualifying entity for the purposes of FRS102.

Name of parent of group

These financial statements are consolidated in the financial statements of SLG Allstars Limited.

The financial statements of SLG Allstars Limited may be obtained from the company's registered office.

Going concern

The directors have considered a number of different scenarios to prepare forecasts and projections. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.

Judgements

These financial statements do not contain any significant judgement or estimation uncertainty.

Group accounts not prepared

The financial statements contain information about SLG Brands Limited as an individual company and do not contain consolidated financial information as the parent of a group.

The company is exempt under section 400 of the Companies Act 2006 from the requirement to prepare consolidated financial statements as it and its subsidiary are included by full consolidation in the consolidated financial statements of its parent, SLG Allstars Limited, a company incorporated in Engalnd and Wales.

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the company.

The company recognises revenue when: The amount of revenue can be reliably measured; it is probable that future economic benefits will flow to the entity; and specific criteria have been met for each of the company's activities.

Foreign currency transactions and balances

Transactions in foreign currencies are recorded at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the closing rates at the balance sheet date. All exchange differences are included in the profit and loss account.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current corporation tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

Deferred corporation tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is provided on tangible fixed assets so as to write off the cost, less any estimated residual value, over their expected useful economic life as follows:

Asset class

Depreciation method and rate

Leasehold land and buildings

Over the term of the lease

IT, plant and machinery

10 - 25% reducing balance and 33% straight line

Intangible assets

Brand intangible assets acquired in a business combination are recognised at fair value at the acquisition date.

Brand intangible assets have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Brands

10% straight line

Investments

Fixed asset investments are stated at historical cost less provision for any diminution in value.

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Stocks

Stock and work in progress are valued at the lower of cost and net realisable value, after due regard for obsolete and slow moving stocks. Net realisable value is based on selling price less anticipated costs to completion and selling costs. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Rentals payable under operating leases are charged in the profit and loss account on a straight line basis over the lease term.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

The company operates a defined contribution pension scheme. Contributions are recognised in the profit and loss account in the period in which they become payable in accordance with the rules of the scheme.

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Financial instruments


Classification
Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the company is presented as a liability on the balance sheet. The corresponding dividends relating to the liability component are charged as interest expenses in the profit and loss account.

 Recognition and measurement
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

 Impairment
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.

A non financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.

The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows of the cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU is allocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.

Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to the assets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.

For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

3

Revenue

The analysis of the company's turnover for the year from continuing operations is as follows:

2022
£

2021
£

Sale of goods

28,732,969

25,718,065

The analysis of the company's revenue for the year by market is as follows:

2022
 £

2021
 £

UK

15,596,547

14,639,549

Europe

1,727,785

1,960,975

Rest of World

11,408,637

9,117,541

28,732,969

25,718,065

 

4

Other operating income

The analysis of the company's other operating income for the year is as follows:

2022
£

2021
£

Government grants

-

28,711

Other operating income

171,872

150,136

Reduction in earn-out liability in respect of intangible asset

216,000

-

387,872

178,847

Coronavirus Job Retention Scheme
In 2021 the company received grants in relation to the Coronavirus Job Retention Scheme (CJRS) which is accounted as a revenue grant. £28,711 was credited to the profit and loss account in relation to this grant.

Reduction in earn-out liability
Following the sales targets achieved in respect of certain products, the deferred consideration due in respect of certain intangible assets has decreased by £216,000 during the year.

 

5

Operating profit

Arrived at after charging:

2022
 £

2021
 £

Depreciation expense

173,043

176,444

Amortisation expense

646,245

646,246

Foreign exchange loss

(116,980)

(4,126)

Operating lease expense - property

514,168

464,908

Operating lease expense - other

4,542

8,910

Auditor's remuneration - The audit of the company's annual accounts

8,000

7,140

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

6

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2022
 £

2021
 £

Wages and salaries

3,835,973

3,629,958

Social security costs

403,902

383,765

Pension costs, defined contribution scheme

187,699

174,944

Other employee expense

25,925

30,511

4,453,499

4,219,178

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

2022
 No.

2021
 No.

Administration and support

117

116

 

7

Directors' remuneration

The directors' remuneration for the year was as follows:

2022
£

2021
£

Remuneration

227,148

185,469

Contributions paid to money purchase schemes

16,204

14,793

243,352

200,262

During the year the number of directors who were receiving benefits and share incentives was as follows:

2022
No.

2021
No.

Accruing benefits under defined benefit pension scheme

2

2

In respect of the highest paid director:

2022
£

2021
£

Remuneration

117,838

91,702

Company contributions to money purchase pension schemes

8,101

7,904

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

8

Taxation

Tax charged/(credited) in the profit and loss account

2022
 £

2021
 £

Current taxation

UK corporation tax adjustment to prior periods

(210,439)

-

Deferred taxation

Arising from origination and reversal of timing differences

-

(142,124)

Tax receipt in the income statement

(210,439)

(142,124)

A corporation tax credit of £210,439 (2021 - £nil) arises from Research and Development tax credits.

The tax on profit before tax for the year is lower than the standard rate of corporation tax in the UK (2021 - lower than the standard rate of corporation tax in the UK) of 19% (2021 - 19%).

The differences are reconciled below:

2022
£

2021
£

Profit/(loss) before tax

28,361

(3,128,153)

Corporation tax at standard rate

5,389

(594,349)

Effect of expense not deductible in determining taxable profit (tax loss)

5,592

-

Increase from tax losses for which no deferred tax asset was recognised

-

452,225

Deferred tax credit from unrecognised tax loss or credit

(20,283)

-

Decrease in UK and foreign current tax from adjustment for prior periods

(210,439)

-

Tax increase from effect of capital allowances and depreciation

3,748

-

Other tax effects for reconciliation between accounting profit and tax expense (income)

5,554

-

Total tax credit

(210,439)

(142,124)

 

9

Intangible assets

Brands
£

Cost

At 1 January 2022 and at 31 December 2022

12,485,413

Amortisation

At 1 January 2022

1,361,609

Amortisation charge

646,245

At 31 December 2022

2,007,854

Carrying amount

At 31 December 2022

10,477,559

At 31 December 2021

11,123,804

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

10

Tangible assets

Long leasehold land and buildings
£

IT, plant and machinery
£

Total
£

Cost

At 1 January 2022

2,194,536

289,286

2,483,822

Additions

-

14,495

14,495

At 31 December 2022

2,194,536

303,781

2,498,317

Depreciation

At 1 January 2022

467,885

226,170

694,055

Charge for the year

156,969

16,074

173,043

At 31 December 2022

624,854

242,244

867,098

Carrying amount

At 31 December 2022

1,569,682

61,537

1,631,219

At 31 December 2021

1,726,651

63,116

1,789,767

 

11

Investments in subsidiaries

2022
£

2021
£

Investments in subsidiaries

301

301

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Country of incorporation

Holding

Proportion of voting rights and shares held

     

2022

2021

V3 Manufacturing Limited

England and Wales

Ordinary

100%

100%

SLG Brands (Europe) Limited

Ireland

Ordinary

100%

100%

Get Lucky Inc Ltd

England and Wales

Ordinary

100%

100%

Wonderclub Limited

England and Wales

Ordinary

100%

100%

Amie Skincare Limited

England and Wales

Ordinary

100%

100%

The principal activity of V3 Manufacturing Limited is manufacture of cosmetic products.

The principal activity of SLG Brands (Europe) Limited is dormant.

The principal activity of Get Lucky Inc Ltd is dormant.

The principal activity of Wonderclub Limited is dormant.

The principal activity of Amie Skincare Limited is dormant.

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

12

Stocks

2022
£

2021
£

Raw materials and consumables

42,400

517,570

Finished goods and goods for resale

2,019,459

1,512,598

2,061,859

2,030,168

 

13

Debtors

2022
 £

2021
 £

Trade debtors

6,014,761

6,576,090

Amounts due from related parties

876,591

1,386,143

Other receivables

2,783

-

Prepayments

448,135

484,463

7,342,270

8,446,696

 

14

Creditors

Note

2022
 £

2021
 £

Due within one year

 

Loans and borrowings

15

2,374,911

2,379,022

Trade creditors

 

2,168,685

2,197,260

Social security and other taxes

 

306,286

712,390

Outstanding defined contribution pension costs

 

54,847

47,757

Other creditors

 

720,405

176,272

Accrued expenses

 

3,003,397

3,002,991

Corporation tax liability

 

154

154

 

8,628,685

8,515,846

Due after one year

 

Loans and borrowings

15

3,381,271

3,381,271

Other creditors

 

798,357

1,664,957

 

4,179,628

5,046,228

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

15

Loans and borrowings

2022
£

2021
£

Current loans and borrowings

Bank borrowings

2,316,494

-

Bank overdrafts

58,417

2,379,022

2,374,911

2,379,022

2022
£

2021
£

Non-current loans and borrowings

Other borrowings

3,381,271

3,381,271

Other borrowings
Other borrowings relate to amounts due to certain a shareholder and director in the parent company, SLG Allstars Limited. Interest is charged at 6% per annum and is included within accruals.

The borrowings included in amounts due in more than one year are payable by 31 December 2035. These loans are unsecured.

Bank borrowings
Bank borrowings relates to a Confidential Invoice Discounting facility of £992,880 (2021 - £nil) and a Letter of Credit of £1,323,614 (2021 - £nil), all amounts are repayable within one year.

The borrowings are secured by a fixed and floating charge over the assets of the company.

 

16

Share capital

Allotted, called up and fully paid shares

 

2022

2021

 

No.

£

No.

£

Ordinary "A" shares of £0.01 each

21,000

210.00

21,000

210.00

Ordinary "B" shares of £0.01 each

5,000

50.00

5,000

50.00

Ordinary "C" shares of £0.01 each

2,400

24.00

2,400

24.00

 

28,400

284

28,400

284

All issued share capital rank pari passu in all respects other than the dividend rights where each class of share has a separate right to a dividend.

 

17

Dividends

2022
 £

2021
 £

Dividends paid

-

300,000

All dividends were paid to the parent company.

 

SLG Brands Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

18

Pension and other schemes

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £187,699 (2021 - £174,944).

Contributions totalling £54,847 (2021 - £47,757) were payable to the scheme at the end of the year and are included in creditors.

 

19

Obligations under leases

Operating leases

The total of future minimum lease payments is as follows:

2022
£

2021
£

Not later than one year

450,000

451,128

Later than one year and not later than five years

1,960,000

1,920,000

Later than five years

1,095,000

1,585,000

3,505,000

3,956,128

The amount of non-cancellable operating lease payments recognised as an expense during the year was £518,710 (2021 - £473,818).

 

20

Related party transactions

The company has taken advantage of the exemption from the requirement to disclose transactions with other group companies.

 

21

Parent and ultimate parent undertaking

The company's immediate parent is SLG Allstars Limited, incorporated in England and Wales.