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Registered number: 08967038









WARPAINT COSMETICS (2014) LIMITED









ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
WARPAINT COSMETICS (2014) LIMITED
 
 
COMPANY INFORMATION


 Directors
S Bazini 
E Macleod 
N Rodol (appointed 28 February 2024)




 Registered number
08967038



 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





 
WARPAINT COSMETICS (2014) LIMITED
 

CONTENTS



Page
Strategic report
 
1 - 4
Directors' report
 
5 - 13
Independent auditors' report
 
14 - 18
Statement of comprehensive income
 
19
Statement of financial position
 
20
Statement of changes in equity
 
21
Notes to the financial statements
 
22 - 46

 
WARPAINT COSMETICS (2014) 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 principal activity of the company is the sale of W7 own brand, fashion led, colour cosmetics in the UK, Europe and the Rest of the World.  The success of the business is based on innovative designs and the strength of our long-term relationships with both our customers and suppliers.
The Company is part of a larger Group. The ultimate holding company is Warpaint London Plc ("Group"). Warpaint Cosmetics (2014) Limited is the main trading subsidiary of the Group. 

Business review
 
The Company’s lead brand is W7, with sales in 2023 increasing by 56% to £55.4 million, accounting for 56% of total Company’s revenue (2022: £35.6 million/55%).
In the UK, W7 revenue was up 22% year-on-year, representing 35% of W7 sales in the year (2022: 37%), as stronger sales growth was generated in regions outside of the UK.  W7 revenue in the UK grew through increased sales into many of the Company’s larger customers, including Tesco and Boots.  W7 sales in the UK also received a further boost with a successful launch in an initial 71 Superdrug stores, with a roll-out into a further 63 stores planned for July 2024.  Additionally, following a successful trial in 20 New Look stores in 2022, W7 product was rolled out to a further 200 stores in 2023.
The strongest growth in 2023 was again seen in continental Europe, with sales increasing by 91% year-on-year, and continental Europe remaining the largest sales region for W7 branded products in the year, accounting for 55% of W7 sales. The Company’s post-Brexit fulfilment strategy is enabling products to enter the EU without issues, and the growth in 2023 was driven by both the range of European customers served, including a launch into Etos and the expansion in the number of outlets for certain larger customers.
In the US, W7 sales grew by 31% in 2023 compared to 2022, and accounted for 4% of overall W7 sales, with the Group benefiting from the increased number of customers and outlets in the US. 
In the rest of the world, W7 sales increased by 64%, but remain a modest proportion of overall W7 sales at 6%.
We believe that W7 has a compelling brand proposition and will continue to benefit from consumers wanting a high quality, on trend, but excellent value-for-money product.

Principal risks and uncertainties
 
The main financial risks arising from the company's activities are detailed in the Group's Directors' report.

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 board reviews the following KPI's:
Gross profit margin: 41.2% (2022: 38.8%)
Profit before tax: £14,099,404 (2022: £7,162,225)
Net assets: £10,415,767 (2022: £7,389,467)

Page 1

 
WARPAINT COSMETICS (2014) 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.
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 2

 
WARPAINT COSMETICS (2014) LIMITED
 

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

Section 172 Companies Act 2006 (continued)

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Page 3

 
WARPAINT COSMETICS (2014) LIMITED
 

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


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



S Bazini
Director

Date: 16 September 2024
Page 4

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

The directors present the Group's 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 and;

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and 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 £11,021,305 (2022 - £6,180,369).

Dividends declared and paid in the year were £7,995,005 (2022 - £4,995,003).

Directors

The directors who served during the year were:

S Bazini 
E Macleod 

Page 5

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Group and Company's 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 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.
Page 6

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


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 review and invest in the development and maintenance of our IT infrastructure, systems, and security. We have in place disaster recovery and business continuity plans that are tested annually. The Group have a password policy in place and utilises Multifactor Authentication (MFA) before access is granted to its systems and data.

Covid-19 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.

Future developments

The company continues as a non-trading Group company that sits between the ultimate holding company of the
Group, Warpaint London Plc ("Warpaint") and a trading subsidiary, Warpaint Cosmetics (2014) Limited.
The company has purchased and maintained directors' and officers' liability insurance for the board.

Group's 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.w7cosmetics.co.uk 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
Page 7

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

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, 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 Group's 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.
Page 8

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

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 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
Page 9

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

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: 
 
761.4 tCO2e measured emissions/6.8 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 Group's 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
Page 10

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

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.
 
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. 
 
Page 11

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

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.
 
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”)
Page 12

 
WARPAINT COSMETICS (2014) LIMITED
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

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.

Qualifying third party indemnity provisions

The company has put in place qualifying third party indemnity provisions for all of the directors of Warpaint Cosmetics (2014) Limited.

Going concern

The Company's going concern statement can be found in note 2.3 of the Financial Statements.

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.
 





E Macleod
Director

Date: 16 September 2024
Page 13

 
WARPAINT COSMETICS (2014) LIMITED
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WARPAINT COSMETICS (2014) 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 Warpaint Cosmetics (2014) 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 14

 
WARPAINT COSMETICS (2014) LIMITED
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WARPAINT COSMETICS (2014) 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 15

 
WARPAINT COSMETICS (2014) LIMITED
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WARPAINT COSMETICS (2014) 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; 
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 to manipulate financial statements.
Page 16

 
WARPAINT COSMETICS (2014) LIMITED
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WARPAINT COSMETICS (2014) LIMITED
 

Our procedures in respect of the above included:
Performed journal entry testing, focussing on journal entries containing defined characteristics and on unusual transactions based on our knowledge of the Group by agreeing to supporting documentation.
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.


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 17

 
WARPAINT COSMETICS (2014) LIMITED
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WARPAINT COSMETICS (2014) 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 18

 
WARPAINT COSMETICS (2014) LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
55,376,412
35,566,536

Cost of sales
  
(32,582,140)
(21,837,751)

Gross profit
  
22,794,272
13,728,785

Administrative expenses
  
(8,645,307)
(6,418,465)

Exceptional administrative expenses
  
-
(152,174)

Operating profit
 5 
14,148,965
7,158,146

Interest receivable and similar income
 9 
-
697

Interest payable and similar expenses
 10 
(49,561)
3,382

Profit before tax
  
14,099,404
7,162,225

Tax on profit
 11 
(3,078,099)
(981,856)

Profit for the financial year
  
11,021,305
6,180,369

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 22 to 46 form part of these financial statements.
Page 19

 
WARPAINT COSMETICS (2014) LIMITED
REGISTERED NUMBER:08967038

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Intangible assets
 14 
89,775
114,245

Tangible assets
 15 
948,280
1,057,195

  
1,038,055
1,171,440

Current assets
  

Stocks
 16 
18,019,373
10,786,871

Debtors: amounts falling due within one year
 17 
10,170,654
8,297,186

Cash at bank and in hand
 18 
1,023,943
2,971,812

  
29,213,970
22,055,869

Creditors: amounts falling due within one year
 19 
(19,630,208)
(15,772,885)

Net current assets
  
 
 
9,583,762
 
 
6,282,984

Total assets less current liabilities
  
10,621,817
7,454,424

Provisions for liabilities
  

Deferred tax
 21 
(206,050)
(64,957)

  
 
 
(206,050)
 
 
(64,957)

Net assets
  
10,415,767
7,389,467


Capital and reserves
  

Called up share capital 
 23 
15,000,100
15,000,100

Capital redemption reserve
 24 
9,966,809
9,966,809

Merger reserve
 24 
(20,000,000)
(20,000,000)

Profit and loss account
 24 
5,448,858
2,422,558

  
10,415,767
7,389,467


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




S Bazini
E Macleod
Director
Director

The notes on pages 22 to 46 form part of these financial statements.
Page 20

 
WARPAINT COSMETICS (2014) LIMITED
 

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


Called up share capital
Capital redemption reserve
Merger reserve
Profit and loss account
Total equity

£
£
£
£
£


At 1 January 2022
15,000,100
9,966,809
(20,000,000)
1,237,192
6,204,101


Comprehensive income for the year

Profit for the year
-
-
-
6,180,369
6,180,369
Total comprehensive income for the year
-
-
-
6,180,369
6,180,369


Contributions by and distributions to owners

Dividends: Equity capital
-
-
-
(4,995,003)
(4,995,003)


Total transactions with owners
-
-
-
(4,995,003)
(4,995,003)



At 1 January 2023
15,000,100
9,966,809
(20,000,000)
2,422,558
7,389,467


Comprehensive income for the year

Profit for the year
-
-
-
11,021,305
11,021,305
Total comprehensive income for the year
-
-
-
11,021,305
11,021,305


Contributions by and distributions to owners

Dividends: Equity capital
-
-
-
(7,995,005)
(7,995,005)


Total transactions with owners
-
-
-
(7,995,005)
(7,995,005)


At 31 December 2023
15,000,100
9,966,809
(20,000,000)
5,448,858
10,415,767


The notes on pages 22 to 46 form part of these financial statements.

Page 21

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Warpaint Cosmetics (2014) Limited is a private company, limited by shares, registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page. 
The Company’s principal activity is set out in the Strategic Report.

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.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).

 
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. Registered office address can be found on the Company Information page.

The company is exempt from preparing consolidated accounts under section 400 of the Companies Act 2006.
The following principal accounting policies have been applied.

Page 22

 
WARPAINT COSMETICS (2014) 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 £11.02 million in the year to 31 December 2023 (2022: £6.2 million), net assets of 10.4 million as at 31 December 2023 (2022: 7.3 million) and had net current assets of £9.6 million at 31 December 2023 (2022: £6.3 million). At 31 December 2023, the Company held cash and cash equivalents of £1.0 million (2022: 2.97 million). Net current assets of the Company include net amount of £6.6 million (2022: £7.0 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 £5.5 Million (30 June 2023: £7.1 Million), no debt and had utilised bank facility of £nil million (30 July 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, via the Company itself, 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 23

 
WARPAINT COSMETICS (2014) 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 the spot exchange rates at the dates of the transactions.

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.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

Page 24

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.5

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue 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 revenue is recognised:

Sale of goods

Revenue 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 revenue 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.

UK sales are recognised and invoiced to the customer once the goods have been delivered to the customer. Overseas sales are recognised and invoiced to the customer once the goods have been delivered to the customer, or collected by the customer from the company’s warehouse according to the terms of sale.
Where the company has entered in to distributor arrangements the risk and rewards are considered to be with the distributor from the date of dispatch from either the company’s overseas supplier or from the company’s UK warehouse. Revenue will therefore be recognised from the date of dispatch.

 
2.6

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
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

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 25

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.9

Share-based payments

Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the company keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.

 
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

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the company but are presented separately due to their size or incidence.

Page 26

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.12

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

 The estimated useful lives range as follows:

Patents
-
10
years
Licences
-
5
years
Website
-
5
years

 
2.13

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.

Depreciation is provided on the following basis:

Long-term leasehold property
-
20%
straight-line
Plant and machinery
-
25%
reducing balance
Motor vehicles
-
20%
straight-line
Fixtures and fittings
-
25%
reducing balance
Computer equipment
-
25%
reducing balance

 
2.14

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.

 
2.15

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.

Page 27

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.16

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.

 
2.17

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.

 
2.18

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.

 
2.19

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 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 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
Page 28

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.19
Financial instruments (continued)

traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.

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.
 
Page 29

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.19
Financial instruments (continued)


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.

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.

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

 
2.20

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.

Page 30

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

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 £16,691,728 (2022: 18,019,373) at the year end.
Critical accounting judgements
There are no critical accounting judgements used in the preparation of these financial statements.


4.


Turnover

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


2023
2022
£
£

Sales of products
55,376,412
35,566,536

55,376,412
35,566,536


Analysis of turnover by country of destination:

2023
2022 (restated)
£
£

United Kingdom
19,404,420
15,938,310

Rest of Europe
30,468,782
15,941,090

Sales - Rest of world
3,364,298
2,051,272

Sales - USA
2,138,912
1,635,864

55,376,412
35,566,536


The comparatives have been restated for the geographical analysis of turnover due to a misclassification in the previous financial year. The total turnover had not been changed as a result of the misclassification. 

Page 31

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

5.


Operating profit

The operating profit is stated after charging/(crediting):

2023
2022 (restated)
£
£

Amortisation of intangible assets, including goodwill
27,369
27,409

Depreciation of tangible fixed assets
391,575
170,585

Exchange differences
(18,993)
(610,767)

Inventory recognised as an expense
27,284,456
16,913,083

Profit on disposal of fixed assets
-
5,548

Stock write-off
54,554
(162,335)


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
62,150
58,198

The company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent company.

Page 32

 
WARPAINT COSMETICS (2014) 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
3,525,904
3,289,350

Social security costs
353,433
342,854

Cost of defined contribution scheme
53,771
47,311

3,933,108
3,679,515


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


        2023
        2022
            No.
            No.







Directors
2
2



Administrative
7
6



Finance
6
6



Warehouse
45
41



Sales
7
5



Other
7
8

74
68

Page 33

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

8.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
777,083
543,027

777,083
543,027


The highest paid director received remuneration of £390,046 (2022 - £272,793).

The value of the company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £NIL (2022 - £NIL).

The value of the company's contributions paid to a defined benefit pension scheme in respect of the highest paid director amounted to £NIL (2022 - £NIL).

The total accrued pension provision of the highest paid director at 31 December 2023 amounted to £NIL (2022 - £NIL).

The amount of the accrued lump sum in respect of the highest paid director at 31 December 2023 amounted to £NIL (2022 - £NIL).


9.


Interest receivable

2023
2022
£
£


Other interest receivable
-
697

-
697


10.


Interest payable and similar charges

2023
2022
£
£


Bank interest payable
49,561
-

Other interest payable
-
(3,382)

49,561
(3,382)

Page 34

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

11.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
2,937,006
981,856


2,937,006
981,856


Total current tax
2,937,006
981,856

Deferred tax


Origination and reversal of timing differences
141,093
-

Total deferred tax
141,093
-


Taxation on profit on ordinary activities
3,078,099
981,856
Page 35

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - lower 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
14,099,404
7,162,225


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.5% (2022 - 19%)
3,313,360
1,360,823

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
16,973
25,373

Capital allowances for year in excess of depreciation
34,652
(90,822)

Increase or decrease in pension fund prepayment leading to an increase (decrease) in tax
(2,060)
-

Short term timing difference leading to an increase in taxation
28,511
-

Non-taxable income
-
(74,658)

Unrelieved tax losses carried forward
-
(12,726)

Movement in deferred tax
141,093
-

Other differences leading to an increase (decrease) in the tax charge
2,570
7,902

Group relief
(457,000)
(234,036)

Total tax charge for the year
3,078,099
981,856


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.

Page 36

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

12.


Dividends

2023
2022
£
£


Dividends paid
7,995,005
4,995,003

7,995,005
4,995,003


13.


Exceptional items

2023
2022
£
£


Non-recurring legal and professional fees
-
152,174

-
152,174
Page 37

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Intangible assets




Patents
Licence
Website
Total

£
£
£
£



Cost


At 1 January 2023
277,395
6,581
54,623
338,599


Additions
2,900
-
-
2,900


Disposals
(28,679)
-
(4,000)
(32,679)



At 31 December 2023

251,616
6,581
50,623
308,820



Amortisation


At 1 January 2023
171,910
6,581
45,864
224,355


Charge for the year on owned assets
24,965
-
2,404
27,369


On disposals
(28,679)
-
(4,000)
(32,679)



At 31 December 2023

168,196
6,581
44,268
219,045



Net book value



At 31 December 2023
83,420
-
6,355
89,775



At 31 December 2022
105,486
-
8,759
114,245



Page 38

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

15.


Tangible fixed assets





Long-term leasehold property
Plant and machinery
Motor vehicles
Fixtures and fittings
Computer equipment
Total

£
£
£
£
£
£



Cost or valuation


At 1 January 2023
61,261
414,024
63,383
1,384,331
212,548
2,135,547


Additions
5,329
68,160
-
157,297
52,417
283,203


Disposals
-
-
-
(107,217)
-
(107,217)



At 31 December 2023

66,590
482,184
63,383
1,434,411
264,965
2,311,533



Depreciation


At 1 January 2023
34,419
149,009
34,281
750,669
109,974
1,078,352


Charge for the year on owned assets
6,760
68,164
5,919
287,408
23,327
391,578


Disposals
-
-
-
(106,677)
-
(106,677)



At 31 December 2023

41,179
217,173
40,200
931,400
133,301
1,363,253



Net book value



At 31 December 2023
25,411
265,011
23,183
503,011
131,664
948,280



At 31 December 2022
26,842
265,015
29,102
633,662
102,574
1,057,195




The net book value of land and buildings may be further analysed as follows:


2023
2022
£
£

Long leasehold
25,411
26,842

25,411
26,842


Page 39

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

16.


Stocks

2023
2022
£
£

Stocks
18,019,373
10,786,871

18,019,373
10,786,871



17.


Debtors

2023
2022
£
£


Trade debtors
3,945,698
2,366,140

Amounts owed by group undertakings
4,509,555
4,793,488

Other debtors
280,610
85,728

Prepayments and accrued income
1,434,791
1,051,830

10,170,654
8,297,186



18.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
1,023,943
2,971,812

1,023,943
2,971,812

Page 40

 
WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

19.


Creditors: Amounts falling due within one year

2023
2022
£
£

Trade creditors
877,029
537,827

Amounts owed to group undertakings
11,132,119
11,774,218

Corporation tax
1,940,557
392,221

Other taxation and social security
701,321
746,732

Other creditors
68,675
73,309

Accruals and deferred income
4,577,448
2,048,578

Financial instruments (see note 20)
333,059
200,000

19,630,208
15,772,885



20.


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 8 (2022: 2) forward foreign exchange contracts outstanding, made up of regular forward foreign exchange contracts, and more complex forward foreign exchange contracts known as Window Barrier Accruals. 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 8 (2022: Nil) regular forward foreign exchange contracts, to buy US dollars 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.
 
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WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Window Barrier Accrual forward foreign exchange contracts:
At 31 December 2023, there were Nil Window Barrier Accrual forward foreign exchange contracts to buy US dollars (2022: 2). 
 
Window Barrier Accruals have an agreed US dollar purchase Forward Rate, a start date known as the Barrier date, an end date known as the Expiration date, a rate below which the forward foreign exchange contract becomes worthless known as the Knock Out Rate, and a Notional Amount of currency to purchase at the Forward Rate depending on the US dollar Spot Rate at the Expiration Date. 
 
Each Window Barrier Accrual contract has been designed to cover the currency needs of the business throughout 2023 and includes 12 Barrier and Expiration dates, one in each calendar month, so that the forward foreign exchange contract is split evenly across the year.
 
If from month to month between the Barrier date and the following Expiration date, the Spot Rate of the US dollar falls below the Knock Out Rate, then there is no obligation, and no US dollars can be purchased. Otherwise, if on the Expiration date Spot Rate is below the Forward Rate, then the Notional Amount of US dollars will be purchased at the Forward Rate, however if on the Expiration date Spot Rate is above the Forward Rate, then double the Notional Amount of US dollars will be purchased at the Forward Rate.
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WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 Window Barrier Accrual forward foreign exchange contracts (continued):
The following table details the Window Barrier Accrual forward foreign exchange contracts outstanding as at 31 December 2022:
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As at 31 December 2023 the Company have purchased Nil (2022: $3,000,000 at an average rate of $1.2003) using the Window Barrier Accrual forward foreign exchange contracts. 
 
At the year ended 31 December 2022, the management had applied a Monte Carlo model approach when calculating the fair value of the Window Barrier Accrual foreign exchange hedging instruments at the year end. This involved making assumptions and judgements around the future likely value of the US dollar compared to the Forward Rate of the exchange contracts, using statistical trials based around historic data of the US dollar exchange rate versus pound sterling. The Monte Carlo model predicted that the Window Barrier Accrual forward foreign exchange contracts would in total allow the Group to purchase $9 million, out of a possible maximum $12 million.
 
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.
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WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

21.


Deferred taxation




2023


£






At 1 Jan 2023
(64,957)


Charged to profit or loss
(141,093)



At 31 Dec 2023
(206,050)

The provision for deferred taxation is made up as follows:

2023
2022
£
£


Accelerated capital allowances
(206,050)
(64,957)

(206,050)
(64,957)


Financial instruments are measured in accordance with the accounting policy set out in Note 2.20. 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.


22.


Provision

The Company was in dispute with a third party relating to the historic use of content on our social media platforms, in the period 2018 through to early 2021. As a result of legal advice received as to the likely quantum of liability a provision of £0.37m was made at 31 December 2021 as the directors’ best estimate of the expected liability and associated legal costs. The payment and the restriction of content use will not affect the ongoing running of the business. During 2022, the claim was settled by the Company making a payment of £0.52m. 


23.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



15,000,100 (2022 - 15,000,100) Ordinary shares of £1.00 each
15,000,100
15,000,100


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WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

24.


Reserves

Capital redemption reserve

The capital contribution reserve represents the financing of the Company’s activities in relation to the de-merger of Warpaint Cosmetics Limited on 21 November 2016. There is no requirement for the company to repay the contribution. The capital contributions do not contain an obligation to transfer economic benefits and are therefore dealt with through equity. 

Merger Reserve

The merger reserve arose due to the acquisition of Warpaint Cosmetics Limited by Warpaint Cosmetics (2014) Limited in 2014. The shareholders of Warpaint Cosmetics Limited transferred their shares to Warpaint Cosmetics (2014) Limited in exchange for shares in Warpaint Cosmetics (2014) Limited, the difference in fair value of the consideration was adjusted through the merger reserve as it is considered part of the consideration paid by Warpaint Cosmetics (2014) Limited to acquire Warpaint Cosmetics Limited.

Profit and loss account

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


25.


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 £53,770 (2022: £47,311). Contributions totalling £Nil (2022: £Nil) were payable to the fund at the Statement of financial position date. 


26.


Related party transactions

The Company has taken advantage of exemptions available in FRS 102 not to disclose transactions with wholly owned members of the Group.
During the year the company paid rent of £138,000 (2022: £138,000) to Trading Scents Group Limited, of which E Macleod is a director. Including in creditors at the year end is an amount of £34,500 (2022: £34,500) owed to Trading Scents Ltd which E Macleod is a director.
The company paid rent of £138,000 (2022: £138,000) to Direct Supplies (2014) Group Limited, of which S Bazini is a director. Including in creditors at the year end is an amount of £34,500 (2022: £34,500) owed to Direct Supplies (2014) Group Limited which S Bazini is a director.
The company paid rent of £303,966 (2022: £138,000) to Warpaint Cosmetics Limited, of which S Bazini and E Macleod are directors. Including in creditor at the year end is an amount of £62,063 (2022: £34,500) owed to Warpaint Cosmetics Limited, of which S Bazini and E Macleod are directors.

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WARPAINT COSMETICS (2014) LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

27.


Controlling party

The immediate parent undertaking is Warpaint Cosmetics Group Limited.
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 he results of the company are consolidated is that headed by Warpaint London Plc, whose registered office is 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. 

 
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