Company registration number 12329247 (England and Wales)
SWOON EDITIONS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
SWOON EDITIONS LTD
COMPANY INFORMATION
Directors
B R Harrison
D Williamson
Company number
12329247
Registered office
7 Bell Yard
London
England
WC2A 2JR
Auditor
Mercer & Hole LLP
21 Lombard Street
London
EC3V 9AH
SWOON EDITIONS LTD
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 22
SWOON EDITIONS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Review of the business

Swoon is a design-led furniture brand, established to create great designs at fair prices. The products are

retailed direct to consumer online and through selected retail partnerships.

 

2023 saw a return to profitability for Swoon, driven by a clear focus on improving product margins, control of

overheads and expanding distribution further with UK national retailers.

Principal risks and uncertainties

The macro-economic climate in 2023 has created challenging trading conditions for the core business and

wider furniture market. With interest rates at their highest in two decades and a slower housing market,

Swoon has felt the impact through reduced consumer spending and an unstable cost base.

 

The board has taken steps to reduce this risk by continuing to focus on delivering value through its customer

proposition, market leading designs and diversifying revenue streams through retail partnerships.

 

Financial risk

Swoon ended the year with no loans and limited FX exposure, the directors monitor these risks on an

ongoing basis and do not consider them to be significant.

Development and performance

Looking ahead, the business continues its strategy to grow distribution through new retailers in the UK and

overseas. We remain committed to improving our customer proposition, finding winning designs quickly and

distributing through our partners.

Key performance indicators

The board drives business performance through setting clearly defined budgets from which it derives key performance indicators, taking appropriate action where required to enhance the financial results of the business.

 

The main KPIs are turnover growth, gross profit margin % and EBITDA %

 

Turnover in 2023 was down 5% YoY driven by a softening of demand in the furniture market following a period of pent up demand driven by the pandemic.

 

Gross profit margins improved by 9% pts. year on year to 37% driven by reduced discounting, improvements in product quality and a return to pre pandemic freight costs.

 

The board delivered the margin improvements set out at the beginning of the financial year and are focused on further improvements into 2024.

On behalf of the board

B R Harrison
Director
26 March 2024
SWOON EDITIONS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company throughout the year was the design and retail of furniture and similar direct to consumer online and through selected retail partners.

 

Results and dividends

The results for the year are set out on page 7.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

B R Harrison
D Williamson
Auditor

In accordance with the company's articles, a resolution proposing that Mercer & Hole LLP be reappointed as auditor of the company will be put at a General Meeting.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
B R Harrison
Director
26 March 2024
SWOON EDITIONS LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

The directors are responsible for preparing the annual 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:

 

 

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.

SWOON EDITIONS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SWOON EDITIONS LTD
- 4 -
Opinion

We have audited the financial statements of Swoon Editions Ltd (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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:

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's 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 financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

SWOON EDITIONS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SWOON EDITIONS LTD
- 5 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the 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:

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 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.

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.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. These included, but were not limited to, the Companies Act 2006 and tax legislation.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure and management bias in accounting estimates.

Audit procedures performed by the engagement team included:

SWOON EDITIONS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SWOON EDITIONS LTD
- 6 -

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non- compliance and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https:// 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.

Jolene Upshall FCA
Senior Statutory Auditor
For and on behalf of Mercer & Hole LLP
26 March 2024
Chartered Accountants
Statutory Auditor
21 Lombard Street
London
EC3V 9AH
SWOON EDITIONS LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
Turnover
3
13,613,009
14,268,772
Cost of sales
(8,539,237)
(10,228,856)
Gross profit
5,073,772
4,039,916
Distribution costs
(1,577,011)
(2,185,944)
Administrative expenses
(3,308,201)
(3,840,298)
Operating profit/(loss)
4
188,560
(1,986,326)
Interest payable and similar expenses
8
-
0
(43,000)
Profit/(loss) before taxation
188,560
(2,029,326)
Tax on profit/(loss)
9
129,801
222,020
Profit/(loss) for the financial year
318,361
(1,807,306)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

SWOON EDITIONS LTD
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
Fixed assets
Goodwill
10
703,071
822,102
Other intangible assets
10
768,287
820,210
Total intangible assets
1,471,358
1,642,312
Tangible assets
11
9,101
15,875
1,480,459
1,658,187
Current assets
Stocks
12
1,179,162
1,366,820
Debtors
13
892,002
603,709
Cash at bank and in hand
2,378,991
2,157,488
4,450,155
4,128,017
Creditors: amounts falling due within one year
14
(3,531,688)
(3,705,639)
Net current assets
918,467
422,378
Net assets
2,398,926
2,080,565
Capital and reserves
Called up share capital
19
119
119
Share premium account
3,300,182
3,300,182
Profit and loss reserves
(901,375)
(1,219,736)
Total equity
2,398,926
2,080,565

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

The financial statements were approved by the board of directors and authorised for issue on 26 March 2024 and are signed on its behalf by:
B R Harrison
Director
Company registration number 12329247 (England and Wales)
SWOON EDITIONS LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
Balance at 1 January 2022
100
639,900
587,570
1,227,570
Year ended 31 December 2022:
Loss and total comprehensive income
-
-
(1,807,306)
(1,807,306)
Issue of share capital
19
19
2,660,282
-
2,660,301
Balance at 31 December 2022
119
3,300,182
(1,219,736)
2,080,565
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
318,361
318,361
Balance at 31 December 2023
119
3,300,182
(901,375)
2,398,926
SWOON EDITIONS LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
21
635,212
(216,557)
Interest paid
-
0
(43,000)
Income taxes paid
-
0
(77,447)
Net cash inflow/(outflow) from operating activities
635,212
(337,004)
Investing activities
Purchase of intangible assets
(436,386)
(454,881)
Purchase of tangible fixed assets
(2,422)
(17,188)
Repayment of loans
25,099
(14,629)
Net cash used in investing activities
(413,709)
(486,698)
Financing activities
Proceeds from issue of shares
-
0
2,660,301
Repayment of borrowings
-
0
(1,020,263)
Net cash (used in)/generated from financing activities
-
1,640,038
Net increase in cash and cash equivalents
221,503
816,336
Cash and cash equivalents at beginning of year
2,157,488
1,341,152
Cash and cash equivalents at end of year
2,378,991
2,157,488
SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information

Swoon Editions Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 7 Bell Yard, London, England, WC2A 2JR.

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.

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 .

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of value added tax and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), 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.

1.4
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 10 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.

SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.5
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:

Software
33.33% on cost
Patents & licences
33.33% on cost
Business name
10% on cost
1.6
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Fixtures and fittings
33.33% on cost
Computers
33.33% on cost

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.

1.7
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.

SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.8
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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.

1.9
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.

1.10
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ 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.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

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, 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.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.11
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.

1.12
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.13
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.

1.14
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.15
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. Where material to the accounts, the fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

 

SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.16
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.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

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.

Stock provision

The financial statements include provisions totalling £219,229 (2022 £342,725) relating to the stock. This is a general provision of 13.5% against general stock, 40.4% against returns stock resold via third parties and 75% against stock at warehouse held for quality control. The directors deem this provision appropriate to ensure that all stock is held as at the lower of cost and net realisable value and that slow moving stock is provided for.

Sales provision

The financial statements include provisions totalling £167,227 (2022 £178,113) relating to potential refunds of December 2023 sales. The estimation is based on the historic return rates for December as a proportion of total sales for that month. The directors believe it to be prudent to include this provision as it ensures that sales aren't materially overstated.

3
Turnover
2023
2022
Turnover analysed by class of business
Furniture sales and licensing
13,613,009
14,268,772
2023
2022
Turnover analysed by geographical market
United Kingdom
13,613,009
14,268,772
SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
4
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging:
Exchange losses
19,025
36,987
Depreciation of owned tangible fixed assets
9,196
8,408
(Profit)/loss on disposal of tangible fixed assets
-
13
Amortisation of intangible assets
607,340
586,317
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
For audit services
Audit of the financial statements of the company
19,320
18,400
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
24
26

Their aggregate remuneration comprised:

2023
2022
Wages and salaries
1,709,526
2,092,745
Social security costs
145,425
177,439
Pension costs
115,253
187,222
1,970,204
2,457,406
7
Directors' remuneration
2023
2022
Remuneration for qualifying services
199,078
191,650
Company pension contributions to defined contribution schemes
22,858
82,799
221,936
274,449

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).

SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
8
Interest payable and similar expenses
2023
2022
Interest on financial liabilities measured at amortised cost:
Other interest on financial liabilities
-
0
43,000
9
Taxation
2023
2022
Current tax
UK corporation tax on profits for the current period
-
0
(29,453)
Adjustments in respect of prior periods
-
0
(156,772)
Total current tax
-
0
(186,225)
Deferred tax
Origination and reversal of timing differences
(129,801)
(35,795)
Total tax credit
(129,801)
(222,020)

The actual credit for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
Profit/(loss) before taxation
188,560
(2,029,326)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
44,349
(385,572)
Tax effect of expenses that are not deductible in determining taxable profit
178
48
Tax effect of utilisation of tax losses not previously recognised
-
0
(29,453)
Adjustments in respect of prior years
-
0
(156,772)
Deferred tax adjustments in respect of prior years
-
0
(32,716)
Remeasurement of deferred tax for changes in tax rates
2,799
(122,054)
Movement in deferred tax not recognised
(177,110)
505,479
Fixed asset differences
(17)
(980)
Taxation credit for the year
(129,801)
(222,020)
SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
10
Intangible fixed assets
Goodwill
Software
Patents & licences
Business name
Total
Cost
At 1 January 2023
1,190,317
1,557,065
30,400
144,000
2,921,782
Additions
-
0
436,386
-
0
-
0
436,386
At 31 December 2023
1,190,317
1,993,451
30,400
144,000
3,358,168
Amortisation and impairment
At 1 January 2023
368,215
837,655
30,400
43,200
1,279,470
Amortisation charged for the year
119,031
473,909
-
0
14,400
607,340
At 31 December 2023
487,246
1,311,564
30,400
57,600
1,886,810
Carrying amount
At 31 December 2023
703,071
681,887
-
0
86,400
1,471,358
At 31 December 2022
822,102
719,410
-
0
100,800
1,642,312
11
Tangible fixed assets
Fixtures and fittings
Computers
Total
Cost
At 1 January 2023
3,482
22,600
26,082
Additions
-
0
2,422
2,422
At 31 December 2023
3,482
25,022
28,504
Depreciation and impairment
At 1 January 2023
2,273
7,934
10,207
Depreciation charged in the year
1,115
8,081
9,196
At 31 December 2023
3,388
16,015
19,403
Carrying amount
At 31 December 2023
94
9,007
9,101
At 31 December 2022
1,209
14,666
15,875
12
Stocks
2023
2022
Finished goods and goods for resale
1,179,162
1,366,820
SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
13
Debtors
2023
2022
Amounts falling due within one year:
Trade debtors
603,229
469,183
Corporation tax recoverable
54,620
54,620
Other debtors
-
0
25,099
Prepayments and accrued income
104,352
54,807
762,201
603,709
2023
2022
Amounts falling due after more than one year:
Deferred tax asset (note 15)
129,801
-
0
Total debtors
892,002
603,709
14
Creditors: amounts falling due within one year
2023
2022
Notes
Trade creditors
448,922
536,232
Taxation and social security
641,946
692,070
Deferred income
16
1,869,485
2,017,106
Other creditors
53,435
72,085
Accruals
517,900
388,146
3,531,688
3,705,639
15
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Assets
Assets
2023
2022
Balances:
Accelerated capital allowances
82,353
-
Provisions
47,448
-
129,801
-
SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
15
Deferred taxation
(Continued)
- 21 -
2023
Movements in the year:
Liability at 1 January 2023
-
Credit to profit or loss
(129,801)
Asset at 31 December 2023
(129,801)

 

16
Deferred income
2023
2022
Other deferred income
1,869,485
2,017,106
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
Charge to profit or loss in respect of defined contribution schemes
115,253
187,222

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

18
Share-based payment transactions

The company set up an Enterprise Management Incentive Option Scheme on 22 October 2020. Employees of the company were granted a further 410 options over Ordinary shares in the year. At the year end 1,515 options remain in issue.

The options can be exercised only after the first of the following events: listing of the company's shares on an investment exchange; the sale of the majority of the ordinary share capital of the company or an asset sale. For this reason all 1,515 options currently in issue remain unexercised.


The shares will lapse if the option holder ceases employment with any constituent company (unless through injury, ill-health, disability, retirement or redundancy) or on the tenth anniversary of the grant. The exercise price is £0.01 per share. There is no charge recognised as it would be immaterial.

19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
Issued and fully paid
Ordinary shares of 1p each
11,850
11,850
119
119
SWOON EDITIONS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
20
Operating lease commitments

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
Within one year
111,923
341,032
Between two and five years
-
0
47,046
111,923
388,078
21
Cash generated from/(absorbed by) operations
2023
2022
£
Profit/(loss) for the year after tax
318,361
(1,807,306)
Adjustments for:
Taxation credited
(129,801)
(222,020)
Finance costs
-
0
43,000
(Gain)/loss on disposal of tangible fixed assets
-
13
Amortisation and impairment of intangible assets
607,340
586,317
Depreciation and impairment of tangible fixed assets
9,196
8,408
Movements in working capital:
Decrease in stocks
187,658
3,141
(Increase)/decrease in debtors
(183,591)
649,461
(Decrease)/increase in creditors
(26,330)
168,723
(Decrease)/increase in deferred income
(147,621)
353,706
Cash generated from/(absorbed by) operations
635,212
(216,557)
22
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
Cash at bank and in hand
2,157,488
221,503
2,378,991
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