Sweet Squared Limited
Registered number: 05900639
Annual report and
consolidated financial statements
For the year ended 31 March 2024
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SWEET SQUARED LIMITED
COMPANY INFORMATION
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Chartered Accountants & Statutory Auditor
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Santander Corporate Banking
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Leeds Corporate Banking Centre
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SWEET SQUARED LIMITED
CONTENTS
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Independent Auditor's Report
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Notes to the Financial Statements
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SWEET SQUARED LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors present their strategic report and financial statements for the year ended 31 March 2024.
The Group provides a complete offering of exclusive best in show brands for any salon professional and is committed to further advancing the range of products and educational services offered and how those services are delivered.
In February 2024 we completed the acquisition of certain business and assets of Louella Belle Ltd. This transaction further enhanced our service proposition to our existing and newly acquired professional customers, bringing five new high quality professional brands into our business. This followed on from our announcement last year to exit certain brands which did not fit within our longer term plans for the business.
We continued to invest in our systems in the year through focused improvements in user experience on our website. We have continued to invest in our people through a wide range of internal and external training courses and on job training, all supporting the professional ‘Love and Respect’ culture within our business. Our customer service feedback continues to be first class, as evidenced by a Trust Pilot rating of 4.9 out of 5, with 96% of customers rating us 5 star. This performance is underpinned by our highly trained and knowledgeable customer experience team, supported by an excellent warehouse operation which offers next day delivery for orders received up to 7.30pm. We believe this service to be ‘best in class’.
Business review and key performance indicators
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Earnings before interest, taxation, depreciation and amortisation (EBITDA), excluding fair value movements, increased to £1,354k from £685k, an increase of 97.6% and EBITDA % of revenue increased to 8.5% from 4.2%.
Gross profit increased to £8,394k from £7,981k, an increase of 5.2%. Gross margin % increased to 52.4% from 48.8%. Whilst the impact of exited brands had a slightly depressing and temporary impact on revenue in the period (which declined by 1.9%), it assisted the improvement in gross profit and margin %.
Overheads were managed carefully, with administrative expenses decreasing to £7,663k from £7,845k, a reduction of 2.3%.
An unrealised fair value movement of £1,124k was taken against our investment in non-listed shares (£524k uplift in prior year). A deferred tax credit (2023: charge) of 25% was taken against these fluctuations in fair value. The adjustments arose from the consistent application of our accounting policy to value those investment at the latest transacted value conducted at arm’s length.
The Group continues to benefit from a strong balance sheet, with net current assets of £4,714k and net assets of £9,058k compared to £4,458k and £9,338k respectively at the prior year end.
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SWEET SQUARED LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
Principal risks and uncertainties
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The Group is exposed to a number of risks and uncertainties which could have a material impact on its long term performance. The directors have identified those which they regard as being the principal risks and these are set out below:
1. Competition, market, economy and political risks
The Group’s activities expose it to the general economic landscape and competitive pressure from cheap private label brands. The Group is also exposed to the financial risks of change in foreign currency exchange rates, supply chain stability and pricing. Principal risks are managed by appropriate monitoring of the conomic, competitive and product landscape, quality and service programmes and through negotiated agreements with its major suppliers. Specific actions are taken where necessary to mitigate these risks, including measured price rises to counteract inflationary cost pressures and careful cost management in the face of well reported cost of living challenges which have affect much of the UK and world economy. Exchange rate movements are monitored and exposure to foreign currency fluctuation managed by prompt payment of suppliers, maintaining foreign currency funds and use of forward contracts.
2. Credit risk, liquidity risk and cash flow risk
The Group’s principal financial instruments comprise bank balances, trade debtors and trade creditors. The main purpose of these instruments is to finance the business' operations. All the business' cash balances are held in such a way that achieves a competitive rate of interest and use is made of settlement discounts offered by suppliers. The Group also maintains access to an unused overdraft facility to facilitate future growth.
The Group is exposed to credit risk with customers. Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding to credit terms and limits. The amounts presented in the balance sheet are net of allowances for doubtful debtors. Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.
Development and performance of the business
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Whilst uncertainty continues to affect UK businesses as a whole, improvements in underlying performance will continue be driven through the Group's continued commitment to service, exclusive valued products and excellence in delivering education to support customers.
This report was approved by the board on 27 August 2024 and signed on its behalf.
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SWEET SQUARED LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors present their report and the financial statements for the year ended 31 March 2024.
Directors' responsibilities statement
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The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments 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 Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The principal activity of the Group during the year was that of beauty and cosmetics distributor.
Operating profit of £824,663 (2023 - £136,641) was generated during the year. The loss for the year, after fair value movements in unlisted investments, interest and taxation, amounted to £307,632 (2023 - profit £788,446). Ordinary dividends amounting to £198,947 (2023 - £196,355) were declared during the year.
The directors who served during the year were:
The directors foresee price sensitivity due to competitiveness within the industry. Improved performance will be driven through the Company's continued commitment to service an extensive range of products and a broader customer base.
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SWEET SQUARED LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
Matters covered in the Group Strategic Report
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Certain information is not shown in the Directors' Report because it is shown in the Strategic Report on pages 1 and 2 instead under s414C(11). The Strategic Report includes a business review and information on the Company's key performance indicators.
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report on pages 1 and 2. The financial position of the Group, its cash flows, liquidity position and financial risk management are also described in the Strategic Report.
The use of the going concern basis of accounting is appropriate because, in the opinion of the directors, and in view of the Group’s strong cash position and ability to remain profitable in significant downturn scenarios there are no material uncertainties related to events or conditions that may cast significant doubt about the ability of the Group to continue as a going concern. The directors have considered a period in excess of twelve months from the date of approval of these financial statements in making their assessment.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved have confirmed that:
∙so far as the directors are aware, there is no relevant audit information of which the Company and the Group's auditor is unaware, and
∙the directors have taken all the steps that ought to have been taken as directors in order to be aware of any relevant audit information and to establish that the Company and the Group's auditor is aware of that information.
Post balance sheet events
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Dividends of £49,140 were declared after the year end in June 2024 on D Ordinary shares.
The auditor, Forvis Mazars LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 27 August 2024 and signed on its behalf.
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SWEET SQUARED LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SWEET SQUARED LIMITED
Opinion
We have audited the financial statements of Sweet Squared Limited (the ‘Parent Company’) and its subsidiaries ('the Group') for the year ended 31 March 2024 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statement of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated Statement of Cash Flows 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 FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 March 2024 and of the Group's loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's nor the Parent 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.
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SWEET SQUARED LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SWEET SQUARED 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 there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the Parent 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 by the Parent company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the Parent Company 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.
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SWEET SQUARED LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SWEET SQUARED LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 3, 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 Group and Parent 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 intend either to liquidate the Group or the Parent 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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the Group and the Parent Company and their industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: UK tax legislation, employment regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
• Inquiring of management and, where appropriate, those charged with governance, as to whether the Group and the Parent Company are in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
• Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
• Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
• Considering the risk of acts by the Group and the Parent Company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation and the Companies Act 2006.
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SWEET SQUARED LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SWEET SQUARED LIMITED
In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to stock provisioning, intangible asset valuation, assumptions applied in determining the fair value of investments, revenue recognition (which we pinpointed to the cut off assertion), and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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.
Use of the audit 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.
Christopher Hudson (Senior Statutory Auditor)
for and on behalf of
Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
5th Floor
3 Wellington Place
Leeds
LS1 4AP
27 August 2024
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SWEET SQUARED LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
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Income from fixed assets investments
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Interest receivable and similar income
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Interest payable and similar expenses
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(Loss)/profit for the financial year
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There were no recognised gains and losses for 2024 or 2023 other than those included in the consolidated statement of comprehensive income.
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There was no other comprehensive income for 2024 (2023: £NIL).
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The notes on pages 16 to 42 form part of these financial statements.
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SWEET SQUARED LIMITED
REGISTERED NUMBER: 05900639
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 August 2024.
The notes on pages 16 to 42 form part of these financial statements.
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SWEET SQUARED LIMITED
REGISTERED NUMBER: 05900639
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024
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Debtors: amounts falling due within one year
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Creditors: due within one year
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Total assets less current liabilities
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Creditors: due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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Profit and loss account carried forward
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The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements. The loss after tax of the parent Company for the year was £307,632 (2023 - profit after tax of £788,446).
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 August 2024.
The notes on pages 16 to 42 form part of these financial statements.
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SWEET SQUARED LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
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Capital redemption reserve
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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Shares cancelled during the year
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Total transactions with owners
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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Shares cancelled during the year
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Total transactions with owners
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- 12 -
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SWEET SQUARED LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
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Capital redemption reserve
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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Shares cancelled during the year
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Total transactions with owners
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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Shares cancelled during the year
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Total transactions with owners
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SWEET SQUARED LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
Cash flows from operating activities
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(Loss)/profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Loss/(gain) on disposal of tangible assets
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Interest and dividends received
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(Increase)/decrease in stocks
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Increase/(decrease) in creditors
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Net fair value losses/(gains) recognised in P&L
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Purchase of unlisted investments
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Purchase of share in associates
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Net cash from investing activities
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SWEET SQUARED LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
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Cash flows from financing activities
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Net cash used in financing activities
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Net (decrease) 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 the end of year
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Cash and cash equivalents at the end of year comprise:
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- 15 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Sweet Squared Limited ("the Company") is a limited company incorporated in England and Wales, with a registered number 05900639.
The legal form of the Company is that of a company limited by shares.
The address of the registered office and principal place of business is:
Unit 2 Green Park
Coal Road
Leeds
West Yorkshire
LS14 1FB
The principal activity of the Group during the year was that of beauty and cosmetics distributor.
These financial statements have been presented in Pounds Sterling as this is the currency of the primary economic environment in which the company operates.
2.Accounting policies
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|
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 Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
YOURS Cosmetics B.V. and &Me Limited have not been included in the consolidation on the grounds that they are immaterial to the Group.
- 16 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report on page 1. The financial position of the company, its cash flows, liquidity position and financial risk management are also described in the Strategic Report.
The use of the going concern basis of accounting is appropriate because, in the opinion of the directors, there are no material uncertainties related to events or conditions that may cast significant doubt about the ability of the company to continue as a going concern. The directors have considered a period in excess of twelve months from the date of approval of these financial statements in making their assessment
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|
Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP, rounded to the nearest £1.
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 Consolidated 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'.
- 17 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group 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 Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group 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 Group 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.
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
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|
Operating leases: the Group as lessee
|
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
- 18 -
|
SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Interest income is recognised in profit or loss using the effective interest method.
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.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group 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 Group in independently administered funds.
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.
- 19 -
|
SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
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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 and the Group operate and generate 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;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
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.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the consolidated statement of comprehensive income over its useful economic life. The directors consider the useful life of goodwill to be 10 years.
Other 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.The directors consider the useful life of other intangible assets such as software to be 3 years.
- 20 -
|
SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in the Consolidated Statement of Comprehensive Income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
An entity is treated as an associated undertaking where the Group exercises significant influence in that it has the power to participate in the operating and financial policy decisions.
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated Statement of Comprehensive Income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated Statement of Financial Position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition.
Any premium on acquisition is dealt with in accordance with the goodwill policy.
- 21 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
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.
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.
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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.
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.
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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.
- 22 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group's Statement of Financial Position when the Group 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 Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
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.
- 23 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
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Financial instruments (continued)
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Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received
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 Group 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 Group will continue to recognise the value of the portion of the risks and rewards retained.
- 24 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
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Financial instruments (continued)
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Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
- 25 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
|
Judgements in applying accounting policies and key sources of estimation uncertainty
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In applying the Company’s accounting policies, the directors are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The directors’ judgements, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made, and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
Critical judgements in applying the accounting policies
The critical judgements that the directors have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements are discussed below:
(i) Assessing indicators of impairment
In assessing whether there have been any indicators of impairment associated with investments, tangible and intangible assets, stock and receivables, the directors have considered both external and internal sources of information such as market values, changes in technological, economic and legal environments, evidence of obsolescence or physical damage of assets and declines in economic performance.
Key sources of estimation uncertainty
(i) Slow moving and obsolete stock provisions
The Group holds an extensive product range in stock. The directors apply a provision to stock lines based on age and anticipated throughput of stock, with a greater provision applied to those items with the longest stock holding periods.
(ii) Fair value of unlisted shares
The Group holds a material investment in unlisted shares which are held at fair value. The directors have estimated the fair value of these shares by reference to an active market price at the year end.
(iii) Valuation of intangible assets
During the year the company acquired the trade and assets of an unconnected limited company. The deal included contingent consideration which the directors have estimated to be £0.5m. The contingent consideration depends on the ongoing performance of the business and the directors have assumed the pre-acquisition performance will continue post aquisition.
- 26 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Analysis of turnover by country of destination:
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The operating profit is stated after charging:
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Research & development charged as an expense
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Other operating lease rentals
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Depreciation of tangible assets
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Amortisation of intangible assets
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During the year, the Group obtained the following services from the Company's auditor:
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Fees payable to the Company's auditor for the audit of the consolidated and parent Company's financial statements
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- 27 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Company contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to 2 directors (2023 - 2) in respect of defined contribution pension schemes.
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Dividends received from unlisted investments
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- 28 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Interest payable and similar expenses
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Other loan interest payable
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Adjustments in respect of prior periods
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- 29 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
13.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2023 - lower than) the standard rate of corporation tax in the UK of 25% (2023 - 19%). The differences are explained below:
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(Loss)/profit on ordinary activities before tax
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(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 19%)
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Expenses not deductible for tax purposes
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Adjustments to tax charge in respect of prior periods
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Adjustments to tax charge in respect of prior periods - deferred tax
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Chargeable gains/(losses)
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Remeasurement of deferred tax for changes in tax rates
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Other differences leading to an increase (decrease) in the tax charge
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Total tax charge for the year
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Factors that may affect future tax charges
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There were no factors that may affect future tax charges.
- 30 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
|
The goodwill additions of £805,227 relates to the acquisition of the brands bought from Louella Belle Ltd.
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- 31 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
15.Intangible assets (continued)
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The goodwill additions of £805,227 relates to the acquisition of the brands bought from Louella Belle Ltd.
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- 32 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Fit out, fixtures & fittings
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- 33 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Investments in subsidiary companies
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Investments in associates
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The Group's subsidiaries Yours Cosmetics B.V. and &Me Limited have not been included in the consolidation on the grounds that they are immaterial.
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- 34 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Investments in subsidiary companies
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Investments in associates
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During the year, the Company purchased a 20% holding in Wax Authority Limited.
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- 35 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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The following were subsidiary undertakings of the Company:
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The Icon Consultancy Limited
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The registered office of The Icon Consultancy Limited and &Me Limited is Unit 2 Green Park, Coal Road, Leeds, West Yorkshire, LS14 1FB.
The registered office of YOURS Cosmetics B.V. is Sterrenwacht 75, 3901SV, Veendendaal, Netherlands.
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The aggregate of the share capital and reserves as at 31 March 2024 and the profit or loss for the year ended on that date for the subsidiary undertakings were as follows:
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Aggregate of share capital and reserves
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The Icon Consultancy Limited
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The following were associates of the Company:
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The registered office of both associates is 2 Green Park, Coal Road, Leeds, United Kingdom, LS14 1FB.
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- 36 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
|
Finished goods and goods for resale
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Amounts owed by associated undertakings
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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- 37 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Creditors: Amounts falling due after more than one year
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 2-5 years
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Financial assets measured at fair value through profit or loss
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Financial assets measured at fair value through profit or loss comprise unlisted investments.
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- 38 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Credited/(charged) to profit or loss
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Credited/(charged) to profit or loss
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Fixed asset timing differences
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Short term timing differences
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- 39 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Allotted, called up and fully paid
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104 (2023 - 104) A Ordinary shares of £0.50 each
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58 (2023 - 58) B Ordinary shares of £0.50 each
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4 (2023 - 6) C Ordinary shares of £0.50 each
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25 (2023 - 25) D Ordinary shares of £0.50 each
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Share repurchase
During the year ended 31 March 2021 an agreement was entered into for the Company to repurchase all of the issued C Ordinary shares for total consideration of £1,063,000. The beneficial interest to these shares transferred in 2021 and the legal title transfers upon Completion of the share repurchase. The remaining share repurchases are to be Completed in equal annual tranches over the subsequent 5 years. During the current year the repurchase of 2 C Ordinary shares was completed and consideration totalling £141,733 was paid in respect of this Completion. A liability for the remaining share repurchases yet to be Completed has been recognised at the year end.
Rights attached to shares
The Company's ordinary shares, which carry no right to fixed income, each carry the right to one vote at general meetings of the company. The shares rank pari passu.
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Capital redemption reserve
This reserve represents the nominal value of share capital that has been repurchased.
Profit & loss account
This reserve represents cumulative retained profits and capital contributions less dividends paid.
The Company operates a defined contributions pension scheme for all qualifying employees. 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 £156,857 (2023 - £137,845).
Contributions totalling £16,556 (2023 - £16,602) were payable to the fund at the balance sheet date and are included within creditors.
- 40 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Commitments under operating leases
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At 31 March 2024 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Later than 1 year and not later than 5 years
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- 41 -
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SWEET SQUARED LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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Related party transactions
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At the year end the directors held loan account balances which were in credit totalling £Nil (2023 -£578,780). No interest is charged on loan accounts whether in debit or credit, all amounts are repayable on demand.
During the year the repurchase of 2 C Ordinary shares was completed and consideration totalling £141,733 was paid in respect of this Completion.
During the year, the Company declared dividends totalling £198,947 (2023 - £196,355) to the shareholders.
During the year, the Company made sales totalling £743,176 (2023 - £435,236) to Companies under the common control of the shareholders of Sweet Squared Limited. A trade amount totalling £131,173 (2023 -£82,622) is outstanding at the year-end to be repaid on normal trade terms.
At the year end, a loan advanced by a connected company is outstanding totalling €700,000 (2023 -€700,000) on an interest free basis to be repaid in full in 2029. The loan is interest free and the discounted liability at the year end was £388,687 (2023: £558,386).
During the year the Company was charged rent totalling £240,000 (2023 - £240,000) from a company under the control of the majority shareholders of Sweet Squared Limited.
During the year the Company made purchases totalling £342,737 (2023 - £155,485) from Companies under the common control of the Directors of Sweet Squared Limited. At the year end, trade creditors included £3,005 (2023 - £87,723) in respect of these transactions.
During the year Sweet Squared Limited made purchases totalling £Nil (2023 - £2,560) from Companies under the control of common Directors of other related parties of Sweet Squared Limited. At the year end, trade creditors included £Nil (2023 - £Nil) in respect of these transactions.
During the year Sweet Squared Limited made purchases totalling £10,828 (2023 - £14,719) from a company that is 80% owned by Sweet Squared Limited. At the year-end trade creditors included £Nil (2023 - £760) in respect of these transactions.
During the year Sweet Squared Limited made purchases totalling £26,314 (2023 - £40,187) from Companies in which close family members of the Directors have a significant influence. At the year end, trade creditors included £9,338 (2023 - £11,139) in respect of these transactions.
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The Company is controlled by S W Sweet and S J Sweet.
- 42 -
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