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Registered number: 01868341









BADGEQUO LIMITED









ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
BADGEQUO LIMITED
 
 
COMPANY INFORMATION


Directors
S Bazini 
E Macleod 
N Rodol 
M Goldstein 




Registered number
01868341



Registered office
Units B&C Orbital Forty Six
The Ridgeway Trading Estate

Iver

Buckinghamshire

SL0 9HW




Independent auditor
BDO LLP

55 Baker Street

London

W1U 7EU





 
BADGEQUO LIMITED
 

CONTENTS



Page
Strategic report
1 - 7
Directors' report
8 - 15
Independent auditors' report
16 - 20
Statement of comprehensive income
21
Statement of financial position
22
Statement of changes in equity
23
Notes to the financial statements
24 - 43


 
BADGEQUO LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
The Directors present their Strategic Report together with the audited financial statements for the year ended 31 December 2023.
The Company is part of a larger Group. The ultimate holding company is Warpaint London Plc ("Group").

Business review
 
The on-going focus of the business since acquisition back in 2017 has been to grow the sales of all year-round cosmetics in addition to maintaining and growing the company’s strong position in the gifting market.
Overall sales have grown by 17% in 2023, which builds on the strong progress made in earlier years.  As a result of the focus on the year-round proposition, sales of year-round products accounted for 68% of the total sales, up from 66% in 2022 and some way up on the 52% recorded back in 2020.
The company’s lead brand is Technic, which accounted for 75% of the overall sales compared to 68% in 2022, driven hence by this focus on the all-year round proposition. The balance of the sales is predominantly made up of gifting sales across the company’s other lead brands of Body Collection, Chit Chat and Man’s Stuff.
The company also produces own brand white label products for leading high street retailers. All opportunities are assessed on a case-by-case basis in this area and are only handled when the commercial case is strong enough to do so.
In 2023, sales in the UK were 45% of the company’s total, in line with the previous year.  The value growth was driven by sales to trading retailers and partners who continue to see the need for affordable high-quality products across their consumer base.  It was also aided by the growing online presence of the Technic brand following its first full year of managed trading on the Amazon platform.
Export, notably to the EU, remains a key market for the company’s brands. Export sales grew by 22% and accounted for 55% of the total in 2023. This is being driven not only by successful on-going relationships with trading partners notably in Spain and Scandinavia but also by new partnerships launched in the year.

Page 1

 
BADGEQUO LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Principal risks and uncertainties
 
Risk Management
The Company is exposed to a variety of risks that can have financial, operational and regulatory impacts on the Group’s business performance.  The board recognises that creating shareholder returns is the reward for taking and accepting risk.  The effective management of risk is therefore critical to supporting the delivery of the Group’s strategic objectives. 
Currency / Foreign Exchange (“FX”)
Due to the Group’s goods being manufactured outside of the UK and its extensive export business, it both generates revenues and incurs manufacturing costs in foreign currencies.  As a result, the Group is exposed to the risk that adverse exchange rate movements cause the value (relative to its reporting currency) of its revenues to decrease, or costs to increase, resulting in reduced profitability.  Management continues to review the Group’s hedging policy to ensure it remains appropriate while it increases its international business.  There is a Group FX committee made up of senior management who communicate regularly.  Whenever possible foreign currency is purchased (using forward foreign exchange contracts) at, or as close as possible to, the budget rate to cover the annual needs of the business.
Reliance on Key Suppliers
In 2023, one key supplier from China was responsible for approximately 19% (2022: 22%) of the Group’s brand ranges of colour cosmetics. This is the first time since listing on the AIM market as a quoted company that the key supplier percentage has fallen below 20% as we continue to source from new suppliers. If there were some catastrophic event that reduced or stopped deliveries from this key supplier, management are able to place orders with other existing suppliers.  However, this would take several months to implement and such an event would therefore have a material adverse effect on the Group’s financial position, results of operations and future prospects.  Management retain close relations with suppliers with relatively short lead times, and the Group typically holds four to six months of inventory at any one time, nevertheless the sourcing of new suppliers in a wider geographic location is ongoing.
Product Liability
All products are manufactured in facilities approved by relevant authorities.  The ingredients in each product are compliant with and meet the relevant standards required by the markets to which the products will be sold into. There is however always the risk that an end user could have an allergic or other reaction to an individual product leading to the possibility of compensation claims and potentially damaging the good reputation of the Group’s brands.  Management has every colour cosmetic ingredient independently checked by a qualified chemist for compliance with UK, EU, US and when necessary and any other relevant legislation, and maintain adequate product and public liability insurance to ensure that any claims have little impact on the Group’s profitability.
Significant Customers 
The Group has one customer in Denmark with over 675 stores across Denmark, Norway, France, Sweden, Finland, Portugal, Spain and Netherlands.  In 2023 this customer represented 25.9% (2022: 17.5%) of Group revenue.  We currently have an excellent working relationship with this customer and significant awareness of the Group brands has been built up by this customer.  The board believes that, should the customer decide not to sell our brands, a large amount (if not all) of the existing business will be taken up by other retailers in the countries in which the customer operates.
Location
The Group has the majority of its operations and assets split across three locations in Iver, West Drayton and Silsden in the UK; if a fire were to befall any of the Group’s premises, a significant amount of assets might be destroyed or damaged and – although the Group has insurance cover in place – the Group’s business, financial
Page 2

 
BADGEQUO LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

results and prospects might be negatively affected by such an event.  Fire alarm systems are tested weekly, smoke detectors inspected quarterly, fire extinguishers tested annually, and trained fire marshals are onsite. Staff have regular fire drills and fire risk assessments are carried out to ensure compliance with fire regulations.
Brexit
From 1 January 2021, new terms of trading with EU customers have been in place using internationally recognised INCO terms.  There is now an extra layer of cross border compliance and paperwork required which the Group was well prepared for, having taken appropriate advice from customs experts and shippers.  The Group has made good use since the start of 2021 of its wholly owned subsidiary Warpaint Cosmetics (ROI) Limited in the Republic of Ireland, specifically to help protect against any UK/EU cross-border disruption, and to serve European customers from a Euro Hub to provide an alternative supply route.
Cyber Attacks
There is an increasing risk that cybercrime will cause business interruption, loss of key systems, loss of online sales, theft of data or damage to reputation.  The Group regularly reviews and invests in the development and maintenance of its IT infrastructure, systems, and security.  There is in place disaster recovery and business continuity plans that are tested annually.  The Group has a password policy in place and utilises Multifactor Authentication (MFA) before access is granted to its systems and data.
Covid-19 Type Pandemic
Covid-19 or another similar virus pandemic will cause major disruption to the business.  Staff will be absent either through illness or from isolation measures, the business strategy will be affected, delayed and perhaps will require reassessment, capital markets and foreign exchange markets will become volatile, and the supply chain and customer base may temporarily close down.  In a pandemic situation, the Group will follow Government guidelines and enable staff to work remotely where possible, until such time that they can return to work with new workplace safety measures in place, will explore and examine liquidity continuity measures and implement business continuity plans.  A committee made up of the Chief Executive Officer, the managing director of Retra and Keith Sadler, a non-executive director will be utilised to formulate and implement a Group wide response in the event of a further pandemic or other similar disruptive event.

Page 3

 
BADGEQUO LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Financial key performance indicators
 

The Board drives business performance through the setting of clearly defined and measured key performance indicators (KPI's), taking appropriate action where and when required to enhance the financial results of the business.
The KPI's are as follows:
                                                             
  2023                        2022
                                                              
Turnover                                           29,333,610               25,040,086
Gross profit margin                                 38.99%                    35.35%
Profit before taxation                           4,743,597                 3,618,298

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BADGEQUO LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Section 172 Companies Act 2006
 
The directors are well aware of their duty under section 172 of the Companies Act 2006 to act in the way which they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

the likely consequences of any decision in the long term;
the interests of the Company’s employees;
the need to foster the Company’s business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high standards of business conduct, and
the need to act fairly as between members of the Company

The board always takes decisions for the long term, and collectively and individually aims to uphold the highest standards of conduct. Similarly, the board understands that the Company can only prosper over the long term if it understands and respects the views and needs of its customers, distributors, employees, suppliers and the wider community in which it operates. A firm understanding of investor needs is also vital to the Company’s success along with a sustainable and environmentally responsible culture.

The directors are fully aware of their responsibilities to promote the success of the Company in accordance with Section 172 of the Companies Act 2006 and the board is regularly reminded of the Section 172 requirements as a board agenda with the corresponding headline decisions recorded. 

Relations with shareholders and other key stakeholders such as employees, distributors, customers and suppliers are considered in more detail in the Engagement with Key Stakeholders section of the Directors’ Report.

The board ensures that the requirements are met, and the interests of stakeholders are considered as referred to elsewhere in this report and through a combination of the following:

A rolling agenda of matters to be considered by the board through the year, which includes an annual strategy review meeting, where the strategic plan for the following year is developed, which is implemented and supported by a budget and a medium term (three year) financial plan. 
Standing agenda points and papers presented at each board meeting, which report on customers, employees and other colleagues, health and safety matters and investors. 
A review of certain of these topics through the Audit Committee and the Remuneration Committee agenda items referred to in this report. 
Detailed consideration is given to any of these factors where they are relevant to any major decisions taken by the board during the year.

Key board decisions taken during the year ended 31 December 2023, all of which have long term implications for the ultimate success of the Company, and the Section 172 and stakeholder considerations are set out below.

Page 5

 
BADGEQUO LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Section 172 Companies Act 2006 (continued)

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Page 6

 
BADGEQUO LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


This report was approved by the board and signed on its behalf.



N Rodol
Director

Date: 16 September 2024

Page 7

 
BADGEQUO LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

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

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

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

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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £3,639,440 (2022 - £2,898,822).

The dividends for the year amount to £2,000,000 (2022: £2,000,000).

Directors

The directors who served during the year were:

S Bazini 
E Macleod 
N Rodol 
M Goldstein 

Future developments

The directors are not expecting to make any significant changes in the nature of the business in the near future.
The company is a trading subsidiary of the ultimate holding company Warpaint London Plc ("Warpaint").
The company has purchased and maintained directors' and officers' liability insurance for the board. 

Page 8

 
BADGEQUO LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Engagement with Key Stakeholders

The key stakeholders for the Group are customers, distributors, suppliers, employees, shareholders and the environment and community in which we live.  Whilst interactions take place at all levels of the Group, the directors are aware of the importance of the relationships with key stakeholders and feedback is utilised wherever possible to sustain these relationships in order to drive the long-term success of the business.  

Customers
 
Feedback with trade customers is initially directed through dedicated account managers followed by engagement with administration teams. For end user consumers, feedback is garnered through the peer-to-peer review site Yotpo, and social media such as Facebook, X (Twitter), Instagram and Pinterest. 
Consumers frequently contact the Company in writing, by email, direct calls to the head office and through the website www.techniccosmetics.com where they are also able to leave comments. The Group endeavours to respond to all customers who reach out in a swift and efficient manner, typically by email or direct calls with all responses followed up to seek to achieve a positive outcome.  Trends in the cosmetic business are dynamic and swift reaction to feedback is also vital in introducing new products and updating the Group’s product range.
 
Distributors
 
The Group seeks to strengthen its relationships with distributors to garner feedback and provide support with regular meetings, attendance at trade shows and by maintaining close contact with them through sales representatives.  Distributors provide feedback on product suitability including in regions of the world where there may be cultural or other sensitivities in the product packaging and branding. Different regions may also call for particular colour mixes and shades and such feedback enables the Group to optimise and tailor products in these regions.  The aim is to align the interests of the distributor with those of the Group.
 
Suppliers
 
Suppliers are visited at least annually and regular contact maintained at other times through trade shows, meetings and other close communications. The Group’s principal suppliers are made to feel part of the organisation with an open and honest dialogue encouraged so that feedback can be communicated and a rapid response provided.  The Group has an office in Hong Kong enabling more frequent visits and enhanced supplier contact.  A strong relationship with the Group’s suppliers is vital to the long-term success of the Company. 
 
Employees

The Group places enormous importance on the contributions of its employees and aims to keep them informed of developments in the Group through a combination of meetings and electronic communication. The Group operates an open-door policy, everyone is known by name to the senior managers and executive directors with the Chief Executive Officer and the Managing Director engaging daily with employees across the business.  Communication is encouraged both on an informal basis and through regular departmental meetings, where input from colleagues is welcomed in any area. Communication channels within the business are key and the open-door policy and regular meetings aid this. Where practicable, consideration is given to flexible working. 

The Company aims for inclusivity with its products and encourages and promotes diversity, equality of pay and opportunity across the Group.  The health, safety and wellbeing of our workforce is of paramount importance, and we seek to support and benefit the wider community where possible.

The health and well-being of staff is paramount. The Group has an extremely loyal and diverse workforce and promotes equality of pay and opportunity throughout.  The Group has a low staff churn rate, and employees are encouraged and nurtured to attain positions to the best of their ability. Employees are encouraged and nurtured to attain positions best suited to their ability, with promotions made from within wherever possible, offering staff mobility from the warehouse floor to administrative roles and managerial positions. A reward structure is in place,
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BADGEQUO LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

which includes the grant of share options, enabling members of staff to participate in the growth of the Company, as appropriate.

Employee communication is encouraged throughout the Group both on an informal basis and through regular departmental meetings, where input from colleagues is welcomed in any area. Communication is key and the open-door policy operated by the Group and regular meetings aid this.  

Whilst the board does not have a formal policy or targets for diversity, it consists of three female members and members from a variety of cultural backgrounds. It is very aware of the importance of diversity and the benefits it brings in attitude and outlook. Diversity is always considered when any appointments are made to the board.

The Group’s employment policy is set out in the Directors’ Report. At senior management level there are 14 female managers and seven male managers, excluding the board. Throughout the Group, the proportion of female to male employees is approximately 67% to 33%.

Shareholders

The interests of shareholders are considered paramount to the decision-making process and strategic direction of the Group and good communication allows the Company to convey its strategy, business model and performance to its investors and, to understand and respond to the needs and expectations of shareholders. The Company’s principal means of communication with shareholders is through its Financial Statements.

Community and Social Responsibilities

Wherever possible, the Group employs staff from the local areas and encourages the use of car sharing and public transport to reduce the impact on local roads. The times of our incoming and outgoing deliveries are managed to limit any disturbance to residents in the local area.  As a rule, the Group uses local trade’s people for goods and services creating employment and income within the area.  

In addition to supporting a number of local and national charities and events each year, the Group has recently aligned with and made long-term commitments to several chosen charities working with young people and people living with cancer. 
 
“iHeart” – The Company has a long-term commitment to support a young person’s mental health charity, “iHeart”, with a donation of funds and visits to schools in Greater London.  This charity supports young people by providing a range of courses and programmes on mental health education, resilience and wellbeing.
 
“Look Good Feel Better” – This charity runs wellbeing workshops and classes for people living with cancer and is supported by the Group by money raising and the donation of sample products. Fundraising and support will continue across 2024.
 
The Technic Brand became official sponsor of Farsley Celtic U16s, a local girls netball team. A recent survey by Women in Sport found that more than 1.3 million girls in the UK who enjoyed sport at primary school lose interest in physical activity as teenagers, with the main reasons being a fear of being judged, and a lack of confidence.  The Group has supported the team with the purchase of their kit, donated products for local fundraising and provided work experience at the Silsden HQ, helping the girls to develop self-confidence, image positivity and commercial understanding.
 
Current primary school education and the wider market is limited in sustainability content that ignites an interest in children and sparks an appetite for further learning.  UK based company Anniemals have created a book that helps children to understand the impact of plastic on the environment through the magic of storytelling.  The Company became an established corporate partner of Anniemals and has funded book
Page 10

 
BADGEQUO LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

donations to primary schools close to the Silsden office.
 
Environment and Sustainability
 
The board of directors is conscious of its environmental responsibilities and has embedded environmental goals within its long-term strategy, with the aim of continually improving all aspects of its environmental performance, as far as economically feasible. 
 
As the Group reports on its environmental and sustainability impact in the financial year ended 2023, the board is proud of the progress made to date and continues to strive for a future where the planet is cared for, and value is created not only for our Company, but for the collective success of all our stakeholders.
 
The Group is prioritising the ESG issues that offer the greatest potential for the Group to create shared value, and the board has adopted a Sustainability Strategy focusing on four key pillars:
 
Planet: In 2023 the Group continued to work with Planet Mark to measure and report against its Scope 1 and 2 emissions, review onsite energy, water and recycling management, and to support the development of our factory sustainability assessments.  The Company has achieved a year 1 business certification with Planet Mark, demonstrating the Group’s measurement of key environmental measures and have identified targets for 2024. 
 
Products: The product and packaging reduction and alternative strategy introduced in 2022 has been developed through 2023, accelerating compliance with product and packaging regulations, and rationalising the Group’s packaging supply sources.  The Group joined PETA’s “Beauty Without Bunnies Program”, helping to provide clarity to its customers and consumers that the Group’s products are cruelty free. 
 
People: The Company’s commitment to its employees remains at the forefront of its focus along with the development of corporate and community charity initiatives.
 
Performance: The Group’s progress against defined goals and targets will be measured and reported on for the year ended 2024.
 
Climate change is one of today’s greatest challenges, profoundly affecting all regions of the world and all sectors of society.  All individuals and industries must work together to halt the climate crisis and embrace long term sustainability.
 
CO2 is a powerful greenhouse gas that has been proved to have the biggest impact on air pollution and global warming, and by 2050 every UK business must be net-zero by law.
 
The measurement of the Group’s carbon footprint plays a fundamental role in creating an environmental strategy that mitigates risk and maximises the opportunities to reduce CO2 emissions and start the journey towards net-zero.  As a business the Company is committed to reporting its progress with transparency, verifiable data and science-based methodologies to support its long-term strategy and drive improvements.
 
In 2023 the Group has continued its work with Planet Mark, an independent consulting group experienced in the measurement, development and communication of carbon and social data and goals which provides a sustainability certification for organisations and their products. Throughout 2023 the Group collated the necessary energy consumption, waste and water usage data to enable an initial measurement to be produced and adopted and the Group’s first Planet Mark certification was obtained in Q4 2023.  The Group is measured in each calendar year and the certification produced in the following year. The Group’s first full year of key measurement metrics for 31 December 2022 were certified as follows: 
 
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BADGEQUO LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

830.8 tCO2e measured emissions/13.4 tCO2e per employee
 
Comprising 
 
Buildings: 98.9 tCO2e
Travel: 40.7 tCO2e
Waste: 23.8 tCO2e
Water: 0.4 tCO2e
Procurement: 593 tCO2e
Home Working: 74 tCO2e
 
Continuous improvement will be tracked against these key measurement metrics.
 
Targets and goals against these base level metrics will be further developed, monitored and communicated and disseminated throughout the Group and beyond to ensure that stakeholders are engaged and fully aligned with the Group’s aims, in order that progress may be achieved. 
 
Certification for the 2023 year is expected to be available in Q3 2024.
 
The Group reports annually against the SECR Streamline Energy and Carbon Reporting (“SECR”) requirements and details are set out in the Directors’ Report.  In prior years the intensity metric selected was based on the energy consumption per square metre of area of our sites, which was appropriate at that time.  However, as the business of the Group has grown, especially in 2023, it is now considered to be more relevant and appropriate to use Group sales as the correct intensity metric, and this was 1.16kg tCO2/£mil in the year (2022: 1.40kg tCO2/£mil). The Group will now use this sales driven ratio to monitor its energy efficiency performance over time.
 
The Group includes energy efficiency measures whenever possible in carrying out its business, and when making operational decisions.  In 2023, the Group continued the upgrade of internal and external lighting to LED units throughout its main corporate and warehousing premises at Iver and Silsden.  The Company is currently engaged in a process to install solar panels at the largest warehouse site at Iver to provide electricity throughout the year and to return any surplus energy back to the grid. At both Iver and Silsden Head Offices electric car charging points have been installed, which employees can use free of charge, encouraging them to adopt electric vehicles.
 
New technologies continue to be considered in order to improve the environmental performance of the Group’s sites, to reduce energy consumption and improve overall energy efficiency throughout the business. 
 
Reducing physical waste is also a key part of the Group’s sustainability objectives, and progress continues to be made in ensuring that onsite recycling is easily accessible across the Group’s offices and warehouses, including glass, plastic and paper recycling and Terracycle recycling boxes for cosmetic packaging.  The Group’s industrial waste removal programme has also been strengthened.
 
The Company continues to be mindful of its carbon footprint in the shipping and transportation of products from suppliers to the Group’s warehouses and customers, seeking to minimise its carbon footprint as much as possible, for example shipping direct from China to the US for product sales there, and using air carriage only when unavoidable.  The Group is encouraged by its shippers who are increasingly investing in the reduction of their own carbon footprint with the development of their own carbon friendly vessels and solutions.  These shippers are utilised wherever practicable.
 
Most interactions with suppliers and retail customers take place online.  This is encouraged wherever practicable, with travel (and particularly air travel) restricted, and customer, supplier, management and employee meetings held virtually where feasible.  Face-to-face meetings are held only where this is considered necessary and conducive to a more productive relationship.  This aims to reduce the environmental impact of the Group’s travel and is reflected in its travel policy, which encourages essential travel only.  Where air travel is deemed necessary the use of airlines that provide carbon offsetting is encouraged wherever possible.
 
Page 12

 
BADGEQUO LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Attendance at trade shows and exhibitions has reduced.  Virtual trade shows are attended wherever possible, with only key events attended face-to-face and, where practicable, these are combined with other customer or supplier visits. 
 
The Group’s cosmetic products are “cruelty free” and are not tested on animals irrespective of where the products are being supplied.  The Group supports cruelty free alternatives to animal testing to become compulsory and animal testing overall to cease globally. 
 
The Company joined the PETA “Beauty Without Bunnies Program” in February 2023, a globally recognised programme demonstrating a commitment to PETA’s Global Animal Test-Free standard.  In line with this standard, the Company agrees that it will not conduct, commission, or pay for animal testing of any products, nor will it conduct, commission, or pay for animal testing of ingredients used in, or formulations of, such products.  The Company commits to continue to ensure that its suppliers of ingredients do not conduct, commission, or pay for tests on any ingredients used in its products.  The Company will continue to ensure its suppliers/manufacturers of finished products do not and shall not conduct, commission or pay for animal testing of any products. 
 
The Company proudly displays the PETA company logo on our products for all new products and as packaging is updated. The Company’s commitment to the PETA programme is Group wide and covers all brands within the Group. 
 
All newly developed products are manufactured vegan friendly and without parabens.  Any remaining existing products that contain parabens are being reformulated upon any repeat order.  The Group has a dedicated vegan range, Very Vegan. 
 
No heavy metals such as TBTO (preservative) and other ingredients of concern are added to the Group’s colour cosmetic products, and all raw materials comply with the strict regulations applicable in the UK, EU, US and Canada and other markets in which we operate.
 
The Group companies are full members of the Cosmetic, Toiletry & Perfumery Association (CTPA).  The CTPA is the trade association for the UK cosmetic and personal care industry, and through this membership the Group ensures it remains aware of industry news, issues, and of course regulatory compliance both here in the UK and globally.  The Group has employees sitting on both the Compliance and Regulatory Committee – providing advice, on-going support and guidance on all regulatory and compliance matters regarding the placing on the market of cosmetic products in the UK and EU, and the Scientific Committee – providing advice, on-going support and steer on all scientific matters pertaining to the safety and integrity of cosmetic ingredients and technical aspects of manufacturing cosmetic products. 
 
“Good Manufacturing Practice Certificates” are provided by suppliers for all of the factories used in the manufacture of the Group’s goods.  The Group’s main suppliers also produce for many international brands, and additional comfort is taken from the public ethical and sustainability stance around the world of these brands.  The Group’s suppliers are encouraged to share the results of their BSCI and Sedex audits when they have taken place and, for all its branded products the Group has adopted a vendor assessment policy that includes ethical and sustainability criteria. 
 
The Company is committed to ethical and responsible sourcing practices aligned with international standards and protocols for human rights, worker rights, environmental and human health and safety.  In support of this commitment, the Group seeks to enhance its responsible and ethical sourcing practices to better address the risks and challenges in an increasingly complex global supply chain.
 
The Group is committed to becoming an industry leader for sustainable products and packaging. All unrecyclable plastics have now been removed from outer gifting packaging, and the Group is progressing well with its journey of removing unrecyclable plastics from the packaging of all- year-round products as well.
 
Page 13

 
BADGEQUO LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

The Group has a robust strategy to eliminate all unrecyclable plastics as per the ‘UK Plastic Pack’, an accredited body who drives improvements to industry standards through DEFRA (UK Department for Environment, Food and Rural Affairs). The Group has also changed certain products into alternative fully recyclable materials, and has proactively removed the majority of plastics from most outer packaging, aiming to use paper and cardboard product packaging wherever practicable. This enables the Group, its customers and end consumers to recycle the waste effectively. 
 
Some Group products are already plastic free, and there are plans in place to change to sustainable FSC, virgin or recycled packaging where feasible, with ambitions to become one of the market leaders in this area.
 
The use of plastics in product casings has previously been challenging to remove, but with material developments and understanding, the Group is actively working on testing and sampling new materials. Where the use of plastic is unavoidable, recyclable packaging will be used wherever possible.  By providing clear instructions on our product labelling, consumers will know how to dispose of the packaging in sustainable ways. 
 
The Group is encouraged by the progress made by its product teams in building processes to challenge the plastics in product casings and is equally encouraged by the support received from suppliers in the move to more recyclable packaging.  This will continue to be challenging until the most recyclable materials become available at an appropriate price for the mass market.  In the meantime, a large proportion of the Group’s NPD in 2023 has passed through our changed protocols and this will continue into 2024. Technic NPD processes also include an accompanying packaging development protocol alongside the development of the products themselves, to ensure that recyclable packaging is considered with all NPD, wherever possible.
 
Management is confident that current unrecyclable plastics within the Group’s products will be replaced with the most reusable and recycled plastic materials available, ensuring the achievement of Government Guidelines for brand and producer responsibilities.  Once this development is complete, these will be implemented to reduce and ensure recyclability for these plastic products before the new Extended Producer Responsibility (“EPR”) regulations come into force in the near future.  The NPD team is actively engaging with DEFRA on the introduction of the new EPR regulations, participating in seminars and surveys, wherever possible. 
 
The Group’s dedicated Packaging and Sustainability Lead is responsible for seeking sustainable solutions for products and packaging, aligned to our environmental responsibilities and goals.  This individual is also responsible for ensuring Group compliance with the increasing regulation in this area, enabling its mission to provide an extensive range of high-quality cosmetics at an affordable price and to grow the business for the benefit of our stakeholders can be continued.
 
The Group seeks to ensure no product is wasted, and for example in conjunction with Tesco, any W7 products remaining in store after short term promotions are donated to be placed in the food bank collection points, which are positioned at the front of all large Tesco stores. 
 
Any Technic and Body Collection excess stock is also donated to local hospital staff and charities such as the “Look Good Feel Better” cancer charity, having a positive social impact on the community as well as supporting waste reduction.
 
The Group has introduced virtual cosmetic product testers for a number of core W7 lip, face and eye products. These are more hygienic than actual product testers, provide cost savings and are more eco-friendly.

Going concern

The Company's going concern statement can be found in the Financial Statements on page 23.

Page 14

 
BADGEQUO LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Auditors

The auditorsBDO LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.
 





N Rodol
Director

Date: 16 September 2024

Page 15

 
BADGEQUO LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BADGEQUO LIMITED
 

Opinion on the financial statements

In our opinion the financial statements:
 
give a true and fair view of the state of the Company’s affairs as at 31 December 2023 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.

We have audited the financial statements of Badgequo Limited (“the Company”) for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the 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). 

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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

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.

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 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.
Page 16

 
BADGEQUO LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BADGEQUO LIMITED
 

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.

Other Companies Act 2006 reporting 

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

the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.

In the light of 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:

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, 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.
Page 17

 
BADGEQUO LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BADGEQUO LIMITED
 

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:

Non-compliance with laws and regulations

Based on:
Our understanding of the Company and the industry in which it operates;
Discussion with management and those charged with governance;
Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and regulations; and

We gained an understanding of the legal and regulatory framework applicable to the Company and considered the risk of fraud and non-compliance with applicable laws and regulations. These included but were not limited to the Companies Act 2006, Corporate tax and VAT legislation in the jurisdictions in which the Group operates.

The Company is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations.

Our procedures in respect of the above included:
Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations; 
Review of correspondence with tax authorities for any instances of non-compliance with laws and regulations; 
Review of financial statement disclosures and agreeing to supporting documentation; 
Involvement of tax specialists in the audit;
Review of legal expenditure accounts to understand the nature of expenditure incurred. 

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
Enquiry with management and those charged with governance regarding any known or suspected instances of fraud; 
Obtaining an understanding of the Company’s policies and procedures relating to:
°Detecting and responding to the risks of fraud; and 
°Internal controls established to mitigate risks related to fraud. 
Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; 
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; 
Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these. 

Based on our risk assessment, we considered the areas most susceptible to fraud to be management’s capability to override controls and the appropriateness of revenue recognition around the year end where incentive might exist to accelerate (or decelerate) earnings.
Page 18

 
BADGEQUO LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BADGEQUO LIMITED
 


Our procedures in respect of the above included:
We considered management’s estimates and judgements applied in the preparation of the financial statements throughout the audit, individually and in aggregate, to evaluate whether there were any indications of bias in the application of these judgements; 
Performed journal entry testing, focussing on journal entries containing defined characteristics and on large or unusual transactions based on our knowledge of the Group by agreeing to supporting documentation; and 
In response to the risk of fraud in revenue recognition we have tested appropriateness of unusual revenue journals posted around year end, by agreeing unusual journals to supporting documentation to check if postings made are correct and are in the correct accounting period.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.  

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: https://www.frc.org.uk /auditorsresponsibilities. This description forms part of our auditor’s report.
Page 19

 
BADGEQUO LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BADGEQUO LIMITED
 

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.






Hannah Pop FCA (Senior Statutory Auditor)

  
For and on behalf of

BDO LLP
 
Statutory Auditor
  
55 Baker Street
London
W1U 7EU
16 September 2024

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Page 20

 
BADGEQUO LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
29,333,610
25,040,086

Cost of sales
  
(17,896,690)
(16,188,245)

Gross profit
  
11,436,920
8,851,841

Distribution costs
  
(695,500)
(376,243)

Administrative expenses
  
(5,908,020)
(4,760,067)

Operating profit
 5 
4,833,400
3,715,531

Interest payable and similar expenses
 9 
(89,803)
(97,233)

Profit before tax
  
4,743,597
3,618,298

Tax on profit
 10 
(1,104,157)
(719,476)

Profit for the financial year
  
3,639,440
2,898,822

Other comprehensive income for the year
  

Total comprehensive income for the year
  
3,639,440
2,898,822

The notes on pages 24 to 43 form part of these financial statements.

Page 21

 
BADGEQUO LIMITED
REGISTERED NUMBER: 01868341

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 12 
291,830
369,618

  
291,830
369,618

Current assets
  

Stocks
 13 
8,520,391
6,524,247

Debtors: amounts falling due within one year
 14 
8,488,711
8,468,104

Cash at bank and in hand
 15 
2,509,427
1,549,204

  
19,518,529
16,541,555

Creditors: amounts falling due within one year
 16 
(8,142,381)
(6,882,635)

Net current assets
  
 
 
11,376,148
 
 
9,658,920

Total assets less current liabilities
  
11,667,978
10,028,538

  

Net assets
  
11,667,978
10,028,538


Capital and reserves
  

Called up share capital 
 19 
5,000
5,000

Profit and loss account
 20 
11,662,978
10,023,538

  
11,667,978
10,028,538


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 16 September 2024.




N Rodol
Director

The notes on pages 24 to 43 form part of these financial statements.

Page 22

 
BADGEQUO LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 January 2022
5,000
9,124,716
9,129,716


Comprehensive income for the year

Profit for the year
-
2,898,822
2,898,822
Total comprehensive income for the year
-
2,898,822
2,898,822


Contributions by and distributions to owners

Dividends: Equity capital
-
(2,000,000)
(2,000,000)


Total transactions with owners
-
(2,000,000)
(2,000,000)



At 1 January 2023
5,000
10,023,538
10,028,538


Comprehensive income for the year

Profit for the year
-
3,639,440
3,639,440
Total comprehensive income for the year
-
3,639,440
3,639,440


Contributions by and distributions to owners

Dividends: Equity capital
-
(2,000,000)
(2,000,000)


Total transactions with owners
-
(2,000,000)
(2,000,000)


At 31 December 2023
5,000
11,662,978
11,667,978


The notes on pages 24 to 43 form part of these financial statements.

Page 23

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Badgequo Limited is private company limited by shares. The company is incorporated in England and Wales and its registered office is Units B&C Orbital Forty Six, The Ridgeway Trading Estate, Iver, Buckinghamshire, SL0 9HW. The registered number is 01868341.
The principal activity of the company is that of design, import and distribution of beauty and cosmetic products.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A; and
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Warpaint London PLC as at 31 December 2023 and these financial statements may be obtained from Companies House.

The following principal accounting policies have been applied:

Page 24

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.3

Going concern

The Company has made a profit after tax of £3.6 million in the year to 31 December 2023 (2022: £2.9 million), net assets of 11.7 million as at 31 December 2023 (2022: 10.1 million) and had net current assets of £11.4 million at 31 December 2023 (2022: £9.7 million). At 31 December 2023, the Company held cash and cash equivalents of £2.5 million (2022: £1.5 million). Net current assets of the Company include net amount of £1.2 million (2022: £0.5 million) owed to Group undertakings. The Directors of the Company have concluded that it is reasonable to adopt a going concern basis in preparing the financial statements of the Company. 
The Company has been earning profits and generating cash during the year and Directors of the Company expect this to continue for next 12 months. The directors of the Group have provided a letter of support to the Company confirming their intention to maintain financial support to enable the Company to continue as a going concern for the foreseeable future and a period of at least 12 months from the date of approval of these financial statements and to enable the continuance of normal trade and settlement of Company liabilities as they fall due. The Directors assessment is that the Group has adequate resources to support the Company to continue in operational existence for at least twelve months from the date of signing of these accounts. The Directors have therefore focussed their assessment on the Group position: The Group made a profit after tax of £13.9 million in the year to 31 December 2023 (2022: £6.2 million), had net assets of £46.8 million as at 31 December 2023 (2022: £37.7 million) and had net current assets of £36.7 million at 31 December 2023 (2022: £27.7 million).  As at 30 June 2024, the Group had cash of £5.5m Million (30 June 2023: £7.1 Million), no debt and had utilised bank facility of £nil million (30 June 2023: £nil million).
Further, the Group occasionally makes use of a £6.0 million bank facility of Retra Holdings Limited ("Retra") for confidential invoice discounting, and a £3.5 million bank facility for stock finance, which is used if needed during the peak gift buying season. These facilities are ongoing without a fixed term and available for the Group. In addition, the Group has a £5.0 million (2022: £3.0 million) general purpose bank facility which was agreed in March 2024. This facility will renew annually and was put in place to support the continued growth of the business. As at the year end, the bank facilities were unutilised and the Directors expect that in 2024 the facilities will only be used to modest levels well within the facility limits, to support the day to day working capital of the business. 
The Directors have prepared forecasts for the Group, covering the period to December 2025, built from the detailed Board-approved budget for 2024. The forecasts include a number of assumptions in relation to varying levels of sales revenue. Whilst the Group's trading and cash flow forecasts have been prepared using current trading assumptions, the operating environment presents a number of challenges which could negatively impact the actual performance achieved. These challenges include, but are not limited to, achieving forecast levels of sales and order intake, the impact on customer confidence as a result of general economic conditions, achieving forecast margin improvements, supply side price inflation, increases in freight costs, and the director's ability to implement cost saving initiatives in areas of discretionary spend where required. 
The Group's cash flow forecasts and projections, taking account of reasonable and possible changes in trading performance, offset by mitigating actions within the control of management including reductions in areas of discretionary spend, show that the Group, and by extension the Company, will be able to operate comfortably through to the end of December 2025, within the level of the existing bank facilities. 
 
Page 25

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.3
Going concern (continued)


In preparing this analysis, a number of scenarios were modelled. The scenarios modelled were all based on varying levels of sales revenue, including one that assumes no growth for 2024 and 2025 as a reasonable downside scenario, and more extreme falls in revenue of up to 30% in both years as a worst-case scenario. In each scenario, mitigating actions within the control of management have been modelled. Under each of the scenarios modelled, the Group has sufficient cash to meet its liabilities as they fall due and consequently, the directors believe that the Group has sufficient financial strength to withstand the possible disruption to its activities. 
Based on the Company specific prospects and Group forecasts explained above, the Directors of the Company believe that it remains appropriate to prepare the financial statements on a going concern basis.

  
2.4

Foreign currency translation

Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using either the spot exchange rates at the dates of the transactions or the applicable forward contract rate.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

 
2.5

Revenue

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of turnover can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Page 26

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.6

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.7

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.8

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.9

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.

Page 27

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.10

Current and deferred taxation

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

The current income 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 income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
the recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

 
2.11

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Short-term leasehold property
-
20%
Straight line
Motor vehicles
-
33%
Straight line
Fixtures and fittings
-
20%
Straight line
Computer equipment
-
33%
Straight line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

Page 28

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.12

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.13

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.14

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.15

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.16

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

 
2.17

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.

The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.

Financial instruments are recognised in the Company's Statement of financial position 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
Page 29

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.17
Financial instruments (continued)

settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Other financial assets

Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Page 30

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.17
Financial instruments (continued)


Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting date. 

Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

Other financial instruments

Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.

Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
 
Page 31

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.17
Financial instruments (continued)


Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.

 
2.18

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of these financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
Judgements and estimates are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of the cost and net realisable value. There is judgement involved in assessing the level of inventory provision required in respect of slow moving inventory. Inventory is carried at a value of £8.5 million at the year end.
The Company makes a 50% provision for perishable items of stock that are greater than two years old. Should the Company increase the provision to 100% of perishable items that are greater than two years old, this would decrease profit by £0.05 million. The Company does not provide any provision on its non-perishable goods that are greater than two years old on the basis that the products have long shelf life. The value of non-perishable products in general is very low. 

Page 32

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

4.


Turnover

An analysis of turnover by class of business is as follows:


2023
2022
£
£

Sales of products
29,333,610
25,040,086

29,333,610
25,040,086


Analysis of turnover by country of destination:

2023
2022
£
£

United Kingdom
13,159,456
11,773,761

Rest of Europe
14,286,555
11,977,233

USA
582,786
384,119

Rest of world
1,304,813
904,973

29,333,610
25,040,086



5.


Operating profit

The operating profit is stated after charging:

2023
2022
£
£

Exchange differences
790,467
89,771

Other operating lease rentals
412,907
412,343

Depreciation expense
269,599
404,176

Inventory recognised as an expense
18,399,675
15,292,248


6.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors:


2023
2022
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
54,792
47,220

Page 33

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

7.


Employees

Staff costs, including directors' remuneration, were as follows:


2023
2022
£
£

Wages and salaries
2,775,221
2,311,248

Social security costs
315,810
273,788

Cost of defined contribution scheme
65,270
53,693

3,156,301
2,638,729


The average monthly number of employees, including the directors, during the year was as follows:


        2023
        2022
            No.
            No.







Directors
4
5



Administration
25
21



Management
9
9



Overseas
1
1



Distribution
18
17

57
53


8.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
236,100
177,328

Company contributions to defined contribution pension schemes
12,650
11,408

248,750
188,736


The highest paid director received remuneration of £238,025 (2022 - £177,328).

The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £12,650 (2022 - £11,408).

Page 34

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

9.


Interest payable and similar charges

2023
2022
£
£


Other interest payable
89,803
97,233

89,803
97,233


10.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
1,130,081
719,476


1,130,081
719,476


Total current tax
1,130,081
719,476

Deferred tax


Origination and reversal of timing differences
(25,924)
-

Total deferred tax
(25,924)
-


Tax on profit
1,104,157
719,476
Page 35

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
10.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - higher than) the standard rate of corporation tax in the UK of 23.5% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit on ordinary activities before tax
4,743,597
3,618,298


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.5% (2022 - 19%)
1,114,745
687,477

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
3,000
1,018

Depreciation in excess of capital allowances
(1,050)
33,846

Increase or decrease in pension fund prepayment leading to an increase in tax
128
156

Other adjustments
-
(3,021)

Other differences leading to a (decrease) in the tax charge
(12,666)
-

Total tax charge for the year
1,104,157
719,476

Page 36

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
10.Taxation (continued)


Factors that may affect future tax charges

The UK corporation tax at the standard rate for the year is 25.0% (2022: 19.0%). 
On 1 April 2023 the corporation tax rate increased to 25% for companies with profits of over £250,000. A small profits rate was introduced for companies  with profits of £50,000 or less who will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.


11.


Dividends

2023
2022
£
£


Dividends paid
2,000,000
2,000,000

2,000,000
2,000,000

Page 37

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

12.


Tangible fixed assets





Short-term leasehold property
Motor vehicles
Fixtures and fittings
Computer equipment
Total

£
£
£
£
£



Cost or valuation


At 1 January 2023
990,697
13,951
1,110,378
837,470
2,952,496


Additions
77,735
-
58,768
95,242
231,745


Disposals
-
-
(641,852)
-
(641,852)



At 31 December 2023

1,068,432
13,951
527,294
932,712
2,542,389



Depreciation


At 1 January 2023
905,323
13,951
865,871
797,734
2,582,879


Charge for the year on owned assets
39,732
-
197,787
32,081
269,600


Disposals
-
-
(601,920)
-
(601,920)



At 31 December 2023

945,055
13,951
461,738
829,815
2,250,559



Net book value



At 31 December 2023
123,377
-
65,556
102,897
291,830



At 31 December 2022
85,374
-
244,507
39,737
369,618


13.


Stocks

2023
2022
£
£

Finished goods and goods for resale
8,520,391
6,524,247

8,520,391
6,524,247


The cost of stock recognised as an expense and included in ‘cost of sales’ amounted to £18,399,675 in
the year ended 31 December 2023 (2022: £15,292,248).

Page 38

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Debtors

2023
2022
£
£


Trade debtors
3,070,121
3,596,384

Amounts owed by group undertakings
4,698,127
4,387,991

Other debtors
123,802
158

Prepayments and accrued income
570,737
476,026

Deferred taxation
25,924
-

Financial instruments
-
7,545

8,488,711
8,468,104



15.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
2,509,427
1,549,204

2,509,427
1,549,204



16.


Creditors: amounts falling due within one year

2023
2022
£
£

Trade creditors
882,195
754,762

Amounts owed to group undertakings
5,915,586
4,907,141

Corporation tax
406,705
406,918

Other taxation and social security
638,990
498,550

Other creditors
798
2,591

Accruals and deferred income
113,291
312,673

Financial instruments
184,816
-

8,142,381
6,882,635


The borrowings of the company are secured by a debenture including a fixed charge over the present leasehold property, a fixed charge over book and other debts and a floating charge over all assets. There is also a composite company unlimited multilateral guarantee given by Retra Holdings Limited and Retra Own Label Limited.

Page 39

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

17.


Other financial instruments

Derivatives: Foreign currency forward contracts
The Company enters into forward foreign exchange contracts and options to manage the risk associated with anticipated sale and purchase transactions which are denominated in foreign currencies. 
 
Derivatives are recognised initially at their fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised immediately in the profit or loss unless the derivative is designed and effective as a hedging instrument, in which event the timing and recognition in the profit or loss depends on the nature of the hedging relationship.
 
As at 31 December 2023, the Company has in total 44 (2022:30) regular forward exchange contracts. Derivative financial instruments are carried at fair value.
The company enters into forward foreign exchange contracts and options to manage the risk associated with anticipated sale and purchase transactions which are denominated in foreign currencies. 
Regular forward foreign exchange contracts:
At 31 December 2023, there were 44 (2022: 30) regular forward foreign exchange contracts, to buy US dollars and sell Euro's for an agreed amount of foreign currency on a specific future date. The purchase or sale is made at a predetermined exchange rate. The outcome is certain and will deliver a known fixed amount. The following table details the regular forward foreign exchange contracts outstanding as at the balance sheet date. 

Page 40

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
ole0c96.png

Foreign currency forward contract assets and liabilities are presented in the line ‘Derivative financial instruments’ (either as asset or as liabilities) within the Statement of Financial Position.
 
Fair value of financial assets and liabilities
 
Financial instruments are measured in accordance with the accounting policy set out in Note 2. All financial instruments carrying value approximates its fair value with the exception of foreign currency forward contracts and options which are considered Level 2. The Directors consider that there is no significant difference between the book value and fair value of the Group’s financial assets and liabilities and is considered to be immaterial.

Page 41

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

18.


Deferred taxation




2023


£






Charged to profit or loss
25,924



At end of year
25,924

The deferred tax asset is made up as follows:

2023
2022
£
£


Accelerated capital allowances
25,924
-

25,924
-


19.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



5,000 (2022 - 5,000) Ordinary shares of £1.00 each
5,000
5,000



20.


Reserves

Profit and loss account

"Profit and loss account" represents retained profits and losses.


21.


Contingent liabilities

The Company has an unlimited cross guarantee with fellow subsidiary Retra Brand Licensing Limited, and Retra Holdings Limited, the parent undertaking to secure any borrowings.


22.


Pension commitments

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £65,269 (2022: £53,693). Contributions totalling £13,672 (2022: £12,402) were payable to the fund at the reporting date and are included in other creditors.

Page 42

 
BADGEQUO LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

23.


Commitments under operating leases

At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£


Not later than 1 year
420,764
418,515

Later than 1 year and not later than 5 years
1,324,571
1,643,230

Later than 5 years
-
68,351

1,745,335
2,130,096


24.


Related party transactions

During 2023, the company paid rent in the sum of £410,107 (2022: £406,043) to Warpaint Cosmetics Limited, of which E Macleod and S Bazini are directors.
The company has taken advantage of the exemption contained in Section 33 of FRS 102 "Related Party Disclosures" from disclosing transactions with entities which are part of the group, since 100% of the voting rights in the company are controlled within the group and the company is included within the group accounts which are publicly available.
The total remuneration for key management personnel for the year totalled £742,013 (2022: £585,126).


25.


Controlling party

The immediate parent undertaking is Retra Holdings Limited, a company registered in England and Wales.
The ultimate parent undertaking is Warpaint London PLC. Copies of Warpaint London Plc consolidated financial statements can be obtained from the company website www.warpaintlondonplc.com. The largest and smallest group in which results of the company are consolidated is that headed by Warpaint London Plc, whose registered office is at Units B&C Orbital Forty Six, The Ridgeway Trading Estate, Iver, Buckinghamshire, SL0 9HW. 
In the opinion of the directors there is no ultimate controlling party.

 
Page 43