Company No:
Contents
DIRECTOR | Gail Marie Federici |
REGISTERED OFFICE | 22 Chancery Lane |
London | |
WC2A 1LS | |
England | |
United Kingdom |
COMPANY NUMBER | 06059366 (England and Wales) |
AUDITOR | Dixon Wilson Audit Services LLP |
22 Chancery Lane | |
London | |
WC2A 1LS | |
United Kingdom |
The director present their Strategic Report for the financial year ended 31 December 2023.
REVIEW OF THE BUSINESS
Federici Brands Limited is known for disruptive innovation in the beauty industry. Customer-obsessed, renegade thinkers, we are committed to creating the highest quality products to address real, unmet consumer needs.
The business has a synergetic omni-channel distribution strategy that places it in a strong position against its competition. Our three main sales channels are Professional, Prestige Retail, and Direct-to-Consumer, which work together to fortify relationships with current customers and introduce our products to new customers. This has enabled profitability to increase year on year as the sales mix has pivoted more towards higher margin direct-to-consumer sales and away from lower margin professional sales.
The company has invested heavily in its people, systems and processes which has generated efficiencies both financially and operationally and given the brand capacity to scale its growth rapidly.
RESULTS AND PERFORMANCE
The business turnover increased to £43,718,522 ( 2022 : £15,593,908) which was a growth of 280.3% and gross profit increased to £33,013,849 (2022 : £10,959,148) which was driven by continued growth in brand equity resulting from effective marketing and advertising that communicates clearly to our customers. The innovative products are backed by science and created to solve real, unmet consumer needs which has ultimately led to the brand being seen as an industry leader in haircare.
Naturally, shareholders funds have increased in line with profit year on year.
KEY PERFORMANCE INDICATORS ('KPIS')
The company uses a range of performance measures to monitor and manage the business effectively. These are both financial and non-financial, and the most significant of these are the following:
2023 | 2022 | ||
£ | £ | ||
Turnover | 43,718,522 | 15,593,908 | |
Operating profit | 15,128,799 | 1,924,061 | |
Profit for the financial year | 11,398,300 | 1,484,112 | |
Total Shareholders' Funds | 14,296,030 | 2,897,730 |
Gross margin in the year ended 31 December 2023 has increased to 74.9% (2022 - 70.3%)
PRINCIPAL RISKS AND UNCERTAINTIES
The principal financial risks arising from the company’s activities and the company’s policies to address these risks are set out below:
Liquidity risk
The company has generated positive cash flows in the year ended 31 December 2023 and maintains tight controls on liquidity to ensure that the business continues to have liquid resources to meet the business needs and commitments.
Foreign exchange risk
The company’s Turnover is generated in sterling and certain products are manufactured internationally, which give rise to a certain level of currency risk. However, currency risk is viewed as minimal and monitored regularly.
Credit risk
The company’s revenue is generated from third party customers. There is a robust credit control process in place to minimise the risk of the third-party customers defaulting on their debt. This includes (but is not limited to) using a reputable credit reference agency to credit check new customers on the inception of the trading relationship and existing customers on at least an annual basis. In addition, the company has policies in place to insure its aged debt ledger balances.
Competitor Risk
There is an increasing level of competition in the beauty and personal care space in the UK. We believe that we manage this risk effectively by maintaining the high quality and performance of our products, by focusing on new and innovative products that solve our customer’s needs and by investing in people that drive our sales, marketing and operational strategy.
FUTURE DEVELOPMENTS
We expect that the general level of growth will continue to increase in the forthcoming financial year as we continue to invest in the brand through breakthrough advertising, innovative new products and maintaining good relationships with all key customers.
Approved by the Board of Directors and signed on its behalf by:
Gail Marie Federici
Director |
The director presents this annual report on the affairs of the Company, together with the financial statements and auditors’ report, for the financial year ended 31 December 2023.
PRINCIPAL ACTIVITIES
DIRECTOR
The director, who served during the financial year and to the date of this report except as noted, was as follows:
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AUDITOR
Each of the persons who is a director at the date of approval of this report confirms that:
* So far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
* The director has taken all the steps that they ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Dixon Wilson Audit Services LLP have expressed their willingness to continue in office as auditor and appropriate arrangements have been put in place for them to be deemed reappointed as auditors in the absence of an Annual General Meeting.
Approved by and signed by the director:
Gail Marie Federici
Director |
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. Under company law the director must not approve the financial statements unless the director is 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 financial period.
In preparing these financial statements, the director is required to:
* Select suitable accounting policies and then apply them consistently;
* Make judgements and accounting estimates that are reasonable and prudent;
* State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
* Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. The director is 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.
Report on the audit of the financial statements
We have audited the financial statements of Federici Brands Limited (the ‘company’) for the year ended 31 December 2023 which comprise the profit and loss account, balance sheet, statement of changes in equity, statement of cashflows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion, except for the possible effects of the matter described in the basis for qualified opinion section of our report, 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;
•have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion
We were not appointed as auditor of the company until after 31 December 2022 and thus did not observe the counting of physical stock at 31 December 2022. We were unable to satisfy ourselves concerning stock quantities held at 31 December 2022, which are included in the balance sheet at £2,439,035, by using other audit procedures. Consequently, we were unable to determine whether the carrying value of stock and reserves brought forward at 1 January 2023 was materially correct and therefore, whether cost of sales in the year ended 31 December 2023 was materially correct.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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.
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
As explained more fully in the directors’ responsibilities statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line without responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the company by considering, amongst other things, the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the assessed level of risk, but recognised 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 or intentional misrepresentations, or through collusion.
We focused on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, UK Company Law and UK tax legislations.
Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management and enquiries with third parties.
As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by management that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above 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 would become aware of it. We did not identify any key audit matters relating to irregularities, including fraud.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•the information given in the strategic report and the director’s report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
•the strategic report and the director’s report has been prepared in accordance with applicable legal requirements.
Except for the matter described in the basis for qualified opinion section of our report, 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 director’s report.
Arising solely from the limitation on the scope of our work relating to stock at 1 January 2023, referred to above:
•we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
•we were unable to determine whether adequate accounting records have been kept.
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:
•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.
Other matters
The corresponding information in respect of the year ended 31 December 2022 is unaudited.
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.
For and on behalf of
Statutory Auditor
London
WC2A 1LS
United Kingdom
Note | 2023 | 2022 | ||
£ | £ | |||
Turnover | 3 |
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Cost of sales | (
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Gross profit |
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Distribution costs | (
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Administrative expenses | (
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Other operating income |
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Operating profit |
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Interest payable and similar expenses | 4 | (
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(
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Profit before taxation | 5 |
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Tax on profit | 8 | (
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Profit for the financial year |
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Note | 2023 | 2022 | ||
£ | £ | |||
Fixed assets | ||||
Tangible assets | 9 |
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Investments | 10 |
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19,347 | 15,054 | |||
Current assets | ||||
Stocks | 11 |
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Debtors | 12 |
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Cash at bank and in hand | 13 |
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24,249,534 | 10,765,194 | |||
Creditors: amounts falling due within one year | 14 | (
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(
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Net current assets | 14,276,683 | 2,882,676 | ||
Total assets less current liabilities | 14,296,030 | 2,897,730 | ||
Net assets | 14,296,030 | 2,897,730 | ||
Capital and reserves | 16 | |||
Called-up share capital |
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Profit and loss account |
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Total shareholders' funds | 14,296,030 | 2,897,730 |
The financial statements of Federici Brands Limited (registered number:
Gail Marie Federici
Director |
Called-up share capital | Profit and loss account | Total | |||
£ | £ | £ | |||
At 01 January 2022 |
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Profit for the financial year |
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Total comprehensive income |
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At 31 December 2022 |
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At 01 January 2023 |
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Profit for the financial year |
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Total comprehensive income |
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At 31 December 2023 |
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2023 | 2022 | ||
£ | £ | ||
Net cash flows from operating activities (note 18) |
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Cash flows from investing activities | |||
Purchase of plant and machinery | (
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Net cash flows from investing activities | (
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Cash flows from financing activities | |||
Net cash flows from financing activities |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of year |
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Cash and cash equivalents at end of year |
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Reconciliation to cash at bank and in hand: | |||
Cash at bank and in hand at end of year |
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Cash and cash equivalents at end of year |
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The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and to the preceding financial year, unless otherwise stated.
Federici Brands Limited (the Company) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The address of the Company's registered office is 22 Chancery Lane, London, WC2A 1LS, England, United Kingdom.
The principal activities are set out in the Strategic Report.
The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and in accordance with Financial Reporting Standard 102 (FRS 102) applicable in the UK and Republic of Ireland issued by the Financial Reporting Council and the requirements of the Companies Act 2006.
The financial statements are presented in pounds sterling which is the functional currency of the Company and rounded to the nearest £.
The Company’s business activities, together with future developments and performance are set out in the Strategic Report. The Strategic Report describes the financial results of the Company and its exposure to liquidity, foreign exchange, credit and competitor risk.
Exchange differences are recognised in the Profit and Loss Account in the period in which they arise except for exchange differences arising on gains or losses on non-monetary items which are recognised in the Statement of Comprehensive Income.
Deferred tax is recognised where applicable in respect of timing differences that have originated but not reversed at the Balance Sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the Balance Sheet date. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.
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 other creditors as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.
includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives as follows;
Plant and machinery etc. |
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The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Investments in equity shares which are not publicly traded are measured at cost less impairment.
The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventory to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling priceless costs to complete and sell; the impairment loss is recognised immediately in profit and loss.
Trade and other debtors are initially recognised at transaction price and thereafter stated at amortised cost using the effective interest method less impairment losses for bad and doubtful debts, except where the effect of discounting would be immaterial. In such cases the receivables are stated at cost less impairment losses for bad and doubtful debts. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the debtor.
suppliers. Trade creditors are classified as current liabilities if the company does not have an unconditional right, at the endof the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is anunconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade and other creditors are initially recognised at transaction price and thereafter stated at amortised cost using theeffective interest rate method, unless the effect of discounting would be immaterial, in which case they are stated at cost.
The Company has taken advantage of the exemption not to prepare consolidated accounts, on the basis that the only other group entity is a dormant company. The financial statements present information about the Company as an individual entity and not about its group.
The subsidiary is held as a fixed asset investment and is measured at cost less impairment.
The director does not consider that any critical judgements have been made from key sources of estimation uncertainty.
Turnover represents the fair value of goods provided to customers during the financial year excluding value added tax.
Breakdown by geographical market:
An analysis of the Company's turnover by geographical market is set out below.
2023 | 2022 | ||
£ | £ | ||
United Kingdom | 31,920,479 | 12,133,195 | |
Europe | 11,345,137 | 3,343,364 | |
Rest of World | 452,906 | 117,349 | |
43,718,522 | 15,593,908 |
An analysis of the Company's turnover is as follows:
2023 | 2022 | ||
£ | £ | ||
Sale of goods |
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2023 | 2022 | ||
£ | £ | ||
Interest payable and similar expenses |
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Profit before taxation is stated after charging/(crediting):
2023 | 2022 | ||
£ | £ | ||
Depreciation of tangible fixed assets (note 9) |
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Research and development |
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Foreign exchange (gains)/losses | (
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An analysis of the auditor's remuneration is as follows:
2023 | 2022 | ||
£ | £ | ||
Fees payable to the Company’s auditor and its associates for the audit of the Company's annual financial statements: | 18,000 | 0 | |
Total audit fees |
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Taxation compliance services |
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Other services |
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Total non-audit fees |
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2023 | 2022 | ||
Number | Number | ||
The average monthly number of employees (including directors) was: | |||
Administration |
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Sales |
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Marketing |
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Operations |
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Management |
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Their aggregate remuneration comprised:
2023 | 2022 | ||
£ | £ | ||
Wages and salaries |
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Social security costs |
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Other retirement benefit costs |
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2,100,731 | 1,430,927 |
The Director received no remuneration during the current or previous financial year.
2023 | 2022 | ||
£ | £ | ||
Current tax on profit | |||
UK corporation tax |
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Adjustments in respect of prior years | |||
UK corporation tax |
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(
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Total current tax |
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Total tax on profit |
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The tax assessed for the year is higher than (2022: higher than) the standard rate of corporation tax in the UK:
2023 | 2022 | ||
£ | £ | ||
Profit before taxation | 14,912,566 | 1,832,360 | |
Tax on profit at standard UK corporation tax rate of 23.52% (2022: 19.00%) |
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Effects of: | |||
Expenses not deductible for tax purposes |
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Income not taxable in determining taxable profit | (
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Adjustments in respect of prior years |
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(
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- Capital allowances for year in excess of depreciation | (1,010) | (258) | |
Total tax charge for year | 3,514,266 | 348,248 |
Plant and machinery etc. | Total | ||
£ | £ | ||
Cost | |||
At 01 January 2023 |
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Additions |
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At 31 December 2023 |
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Accumulated depreciation | |||
At 01 January 2023 |
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Charge for the financial year |
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At 31 December 2023 |
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Net book value | |||
At 31 December 2023 |
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At 31 December 2022 |
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2023 | 2022 | ||
£ | £ | ||
Subsidiary undertakings |
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Investments in subsidiaries
2023 | |
£ | |
Cost | |
At 01 January 2023 |
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At 31 December 2023 |
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Carrying value at 31 December 2023 |
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Carrying value at 31 December 2022 |
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Investments in shares
Name of entity | Registered office | Principal activity | Class of shares |
Ownership 31.12.2023 |
Ownership 31.12.2022 |
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9/10 Fenain Street, Dublin, Ireland | Dormant |
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2023 | 2022 | ||
£ | £ | ||
Raw materials |
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Finished goods |
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2023 | 2022 | ||
£ | £ | ||
Trade debtors |
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Other debtors |
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Prepayments |
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Deposits |
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2023 | 2022 | ||
£ | £ | ||
Cash at bank and in hand |
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2023 | 2022 | ||
£ | £ | ||
Director loans (note 19) |
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Trade creditors |
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Amounts owed to Group undertakings (note 19) |
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Amounts owed to connected companies (note 19) |
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Payroll taxes payable |
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Taxation and social security |
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VAT |
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Accruals |
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Other creditors |
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The carrying values of the Company’s financial assets and liabilities are summarised by category below:
2023 | 2022 | ||
£ | £ | ||
Financial assets | |||
Measured at undiscounted amount receivable | |||
Trade debtors (note 12) |
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Other debtors (note 12) |
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6,996,095 | 3,022,712 | ||
Financial liabilities | |||
Measured at undiscounted amount payable | |||
Trade creditors (note 14) | (
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(
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Other payables (note 14) | (
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(
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Amounts owed to Group undertakings (note 14) | (
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(
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Amounts owed to connected companies (note 14) | (
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(
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Amounts owed to director (note 14) | (
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(4,545,028) | (7,092,588) |
2023 | 2022 | ||
£ | £ | ||
Allotted, called-up and fully-paid | |||
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Presented as follows: | |||
Called-up share capital presented as equity | 1,000 | 1,000 |
The profit and loss reserve represents cumulative profits or losses.
Commitments
Total future minimum lease payments under non-cancellable operating leases are as follows:
2023 | 2022 | ||
£ | £ | ||
within one year |
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between one and five years |
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Pensions
The Company operates a defined contribution pension scheme for the director and employees. The assets of the scheme are held separately from those of the Company in an independently administered fund.
2023 | 2022 | ||
£ | £ | ||
Unpaid contributions due to the fund (inc. in other creditors) |
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2023 | 2022 | ||
£ | £ | ||
Operating profit |
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Adjustment for: | |||
Depreciation and amortisation |
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Operating cash flows before movement in working capital |
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Increase in stocks | (
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Increase in debtors | (
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(Decrease)/increase in creditors | (
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Cash generated by operations |
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Income taxes paid | (
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(
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Interest paid | (
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(
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Net cash flows from operating activities |
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Transactions with group companies
Amounts owed to Group undertakings
2023 | 2022 | ||
£ | £ | ||
Due to FBRP Limited (Ireland) |
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The amounts owed to FBRP Limited (Ireland) are unsecured and repayable on demand.
Transactions with related parties or connected persons
Amounts owed to
2023 | 2022 | ||
£ | £ | ||
Due to Federici Brands LLC - US |
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Federici Brands LLC is a connected company due to having the same majority shareholders.
During the year, the Company made sales of goods of £33,495 (2022 - £nil) to its connected company Federici Brands LLC.
During the year, the Company paid management expenses and royalty fees of £6,540,933 (2022 - £2,328,004) to its connected company, Federici Brands LLC.
During the year, the Company paid interest of £216,233 (2022 - £91,701) to its connected company, Federici Brands LLC.
Transactions with the entity’s director (or members of its governing body)
Amounts owed to director
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Amounts owed to Director |
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