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TREASURED SCENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
2.Accounting policies (continued)
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Going concern (continued)
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The Directors have prepared forecasts covering the period to December 2027, built from the detailed Board-approved budget for 2026. The forecasts include a number of assumptions in relation to varying levels of sales revenue. Whilst the Group’s trading and cash flow forecasts have been prepared using current trading assumptions, the operating environment presents a number of challenges which could negatively impact the actual performance achieved. These challenges include, but are not limited to, achieving forecast levels of sales and order intake, the impact on customer confidence as a result of general economic conditions, achieving forecast margin improvements, supply side price inflation, increases in freight costs, and the director’s ability to implement cost saving initiatives in areas of discretionary spend where required.
The Group’s cash flow forecasts and projections, taking account of reasonable and possible changes in trading performance, offset by mitigating actions within the control of management including reductions in areas of discretionary spend, show that the Group will be able to operate comfortably through to the end of December 2027, and in Retra and Warpaint Cosmetics within the level of their own bank facility.
In preparing this analysis, a number of scenarios were modelled. The scenarios modelled were all based on varying levels of sales revenue, including one that assumes no growth for 2026 and 2027 as a reasonable downside scenario, and more extreme falls in revenue of up to 30% in both years as a worst-case scenario. In each scenario, mitigating actions within the control of management have been modelled. In addition, management have considered the changing US tariffs made in recent months and during 2025, even though sales into the US are a small part of the business (Sales 2025: £6.9 million, 2024: £8.7 million). Management calculated that the changes in tariff made an immaterial impact on the business and the carrying value of the goodwill in its US entity. Under each of the scenarios modelled, the Group has sufficient cash to meet its liabilities as they fall due and consequently, the directors believe that the Group has sufficient financial strength to withstand the possible disruption to its activities.
While the ongoing Middle East crisis has been monitored by management, it currently does not pose a threat to the Group’s status as a going concern. The business maintains immaterial sales exposure within the affected region, ensuring that core revenue streams remain insulated from direct geopolitical volatility. The primary impacts are operational rather than structural, specifically involving fluctuations in shipping rates and extended transit times due to rerouted logistics. These inflationary pressures and delays are being managed through proactive supply chain adjustments and are not expected to impair the Company’s ability to meet its financial obligations for the foreseeable future.
Based on the above indications the directors believe that it remains appropriate to prepare the financial statements on a going concern basis.
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Cash and cash equivalents
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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.
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