LOVE Creative Limited - Limited company accounts 18.2

REGISTERED NUMBER: 04207025 (England and Wales)

Strategic Report,

Report of the Directors and

Audited Financial Statements

for the Year Ended 31 December 2018

for

LOVE CREATIVE LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Statement of Comprehensive Income

6

Balance Sheet

7

Statement of Changes in Equity

8

Cash Flow Statement

9

Notes to the Cash Flow Statement

10

Notes to the Financial Statements

11

Directors:

Mr P Chorlton FCCA

Mr D Palmer

Mr T N Cairns

Registered office:

3rd Floor

31 Dale Street

Manchester

M1 1EY

Registered number:

04207025 (England and Wales)

Auditors:

Haines Watts Manchester Limited, Statutory Auditor

Northern Assurance Buildings

9-21 Princess Street

Manchester

M2 4DN

Who we are:

At LOVE, we reimagine, renovate & create brands that people LOVE not just like.

Ideas people talk about, share, spend money on and spend time with.

Yes, we're a design agency. A branding agency. A packaging agency. An innovation agency. An experiential and retail

design agency. And yes, we're an ad agency too.

We don't believe in pigeon holes because brand problems don't come in them.

Financial Review:

Turnover for LOVE is dependent upon the type of project and through costs of the client/project mix during the year. As

such the Board's focus is upon gross profit rather than turnover and managing the costs of the business accordingly.

In 2018 gross profit grew by 4.9% (2017: 4.7%). We have also been able to grow our gross profit per billable employee

to an average of £102,979 (2017: £100,447)

Staff and property costs remain the biggest single expenditures. The Board strongly believes that bringing the best

people to LOVE and rewarding them appropriately, gives us the best chance of working with the best clients and the

most creative projects, at a Global level.

During the year, staff costs grew by 6.7% (2017: 2.6%), as we invested in and rewarded our staff. In line with company's

in a similar sector, the Board measures staff and related costs relative to gross profit. In 2018, those costs accounted for

46.9% of gross profit (2017: 46.1%), which remains very competitive within the industry.

Finally, whilst gross profit rose, overall administrative expenses (including property and employment) also grew by 7.0%

(2017: 2.9%), which resulted in an increase in profit before tax of 1.6% (2017: 7.8%). This smaller increase was due to

the investment in staff during 2018, which the Board feels is important for the overall growth of LOVE.

Risks and Uncertainties:

The Board has grown a strong client base of blue-chip, globally recognised clients, with whom we maintain long

relationships. However, we are a project based and our success or failure can be viewed by the last project we

delivered. As such we need to maintain the highest standards for creativity and delivery to maintain those relationships.

Given the global nature of our clients, the Board is aware that some decisions to award projects may be taken outside of

our control, or due to local economic factors. With this in mind, we are reflective of the outcome of the Brexit

negotiations, and how the UK may be seen post-Brexit. However, at this stage, we continue to win work globally and

have not been affected by the referendum decision or on-going negotiations.

The quality and creativity of our staff is the biggest factor in our success, and the Board believes we have a great team

in place here. As we continue to grow, we continue to focus our efforts on the maintaining that quality.

On behalf of the board:

Mr P Chorlton FCCA - Director

30 July 2019

The directors present their report with the financial statements of the company for the year ended 31 December 2018.

Principal activity

The principal activity of the company in the year under review was that of a communications agency.

Dividends

The total distribution of dividends for the year ended 31 December 2018 will be £ 1,330,000 .

Directors

The directors shown below have held office during the whole of the period from 1 January 2018 to the date of this report.

Mr P Chorlton FCCA

Mr D Palmer

Mr T N Cairns

Statement of directors' responsibilities

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements

in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors

have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting

Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not

approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the

company and of the profit or loss of the company for that period. In preparing these financial statements, the directors

are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's transactions and disclose with reasonable accuracy at any time the financial position of the company and

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 hence for taking reasonable steps for the prevention and detection of fraud

and other irregularities.

Statement as to disclosure of information to auditors

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act

2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have

taken as a director in order to make himself aware of any relevant audit information and to establish that the company's

auditors are aware of that information.

Auditors

The auditors, Haines Watts Manchester Limited, Statutory Auditor, will be proposed for re-appointment in accordance

with section 487 of the Companies Act 2006.

On behalf of the board:

Mr P Chorlton FCCA - Director

30 July 2019

Opinion

We have audited the financial statements of LOVE Creative Limited (the 'company') for the year ended

31 December 2018 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in

Equity, Cash Flow Statement and Notes to the Cash Flow Statement, 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 the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2018 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors' 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 opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic

Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors

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.

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.

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 Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit,

we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you

if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 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.

Auditors' 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 a Report of the Auditors 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.

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 Report of the Auditors.

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 a Report of the Auditors 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.

David Fort FCA (Senior Statutory Auditor)

for and on behalf of Haines Watts Manchester Limited, Statutory Auditor

Northern Assurance Buildings

9-21 Princess Street

Manchester

M2 4DN

30 July 2019

Turnover

4

8,345,469

9,170,740

Cost of sales

(2,976,889

)

(4,052,695

)

Gross profit

5,368,580

5,118,045

Administrative expenses

(3,460,806

)

(3,235,436

)

Operating profit

6

1,907,774

1,882,609

Interest receivable and similar income

5,655

769

1,913,429

1,883,378

Amounts written off investments

7

-

(19,231

)

Profit before taxation

1,913,429

1,864,147

Tax on profit

8

(331,370

)

(367,233

)

Profit for the financial year

1,582,059

1,496,914

Other comprehensive income

-

-

Total comprehensive income for the year

1,582,059

1,496,914

Fixed assets

Tangible assets

10

232,421

303,646

Current assets

Stocks

11

106,610

13,496

Debtors

12

1,747,369

2,587,732

Cash at bank

2,256,996

2,593,291

4,110,975

5,194,519

Creditors

Amounts falling due within one year

13

1,529,296

2,925,326

Net current assets

2,581,679

2,269,193

Total assets less current liabilities

2,814,100

2,572,839

Provisions for liabilities

15

35,927

46,725

Net assets

2,778,173

2,526,114

Capital and reserves

Called up share capital

16

1,266

1,266

Share premium

17

126,260

126,260

Capital redemption reserve

17

608

608

Retained earnings

17

2,650,039

2,397,980

Shareholders' funds

2,778,173

2,526,114

The financial statements were approved by the Board of Directors on 30 July 2019 and were signed on its behalf by:

Mr P Chorlton FCCA - Director

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1 January 2017

693

2,090,657

126,260

608

2,218,218

Changes in equity

Issue of share capital

573

-

-

-

573

Dividends

-

(1,189,591

)

-

-

(1,189,591

)

Total comprehensive income

-

1,496,914

-

-

1,496,914

Balance at 31 December 2017

1,266

2,397,980

126,260

608

2,526,114

Changes in equity

Dividends

-

(1,330,000

)

-

-

(1,330,000

)

Total comprehensive income

-

1,582,059

-

-

1,582,059

Balance at 31 December 2018

1,266

2,650,039

126,260

608

2,778,173

Cash flows from operating activities

Cash generated from operations

1

1,359,766

1,746,512

Tax paid

(440,086

)

(599,942

)

Net cash from operating activities

919,680

1,146,570

Cash flows from investing activities

Purchase of tangible fixed assets

(54,504

)

(224,657

)

Sale of fixed asset investments

-

25

Interest received

5,655

769

Net cash from investing activities

(48,849

)

(223,863

)

Cash flows from financing activities

Amount introduced by directors

122,874

330,430

Share issue

-

573

Equity dividends paid

(1,330,000

)

(1,189,591

)

Net cash from financing activities

(1,207,126

)

(858,588

)

(Decrease)/increase in cash and cash equivalents

(336,295

)

64,119

Cash and cash equivalents at beginning of year

2

2,593,291

2,529,172

Cash and cash equivalents at end of year

2

2,256,996

2,593,291

1.	Reconciliation of profit before taxation to cash generated from operations

2018

2017

£

£

Profit before taxation

1,913,429

1,864,147

Depreciation charges

125,729

128,611

Finance income

(5,655

)

(769

)

2,033,503

1,991,989

(Increase)/decrease in stocks

(93,114

)

101,590

Decrease in trade and other debtors

834,261

38,239

Decrease in trade and other creditors

(1,414,884

)

(385,306

)

Cash generated from operations

1,359,766

1,746,512

2.	Cash and cash equivalents

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of

these Balance Sheet amounts:

Year ended 31 December 2018

31/12/18

1/1/18

£

£

Cash and cash equivalents

2,256,996

2,593,291

Year ended 31 December 2017

31/12/17

1/1/17

£

£

Cash and cash equivalents

2,593,291

2,529,172

1.	Statutory information

LOVE Creative Limited is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information page.

The company's trading address is 31 Dale Street, Manchester, M1 1EY.

2.	Statement of compliance

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

3.	Accounting policies

Basis of preparing the financial statements

The financial statements have been prepared under the historical cost convention.

Turnover

Turnover represents amounts chargeable, net of value added tax, in respect of the provision of services to

customers.Turnover is recognised when services are rendered to the customer.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life.

Leasehold improvements

-

20% straight line

Office equipment

-

33% straight line

Fixtures and fittings

-

20% straight line

Computer equipment

-

33% straight line

Assets not yet in use are not being depreciated.

Investments in associates

Investments in associate undertakings are recognised at cost.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive

Income, except to the extent that it relates to items recognised in other comprehensive income or directly in

equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the

balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws

that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal

of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they

will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling

at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the

lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension

scheme are charged to profit or loss in the period to which they relate.

Financial instruments

The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

Financial assets

Basic financial assets, including trade and other debtors and cash and bank balances, are initially recognised at

transaction price, 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.

Such assets are subsequently carried forward at amortised cost using the effective interest method.

There are no assets which are initially measured at fair value.

Financial liabilities

Basic financial liabilities, including trade and other creditors, are initially recognised at transaction price, unless

the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value

of the future receipts discounted at a market rate of interest.

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

Trade creditors are obligations to pay for good or services that have been acquired in the ordinary course of

business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year

or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction

price and subsequently measured at amortised cost using the effective interest method.

4.

Turnover

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2018

2017

£

£

United Kingdom

2,809,222

4,640,394

Europe

1,043,425

1,687,416

Outside EU

4,492,822

2,842,930

8,345,469

9,170,740

5.	Employees and directors

2018

2017

£

£

Wages and salaries

2,217,594

2,135,874

Social security costs

252,258

204,331

Other pension costs

199,787

138,282

2,669,639

2,478,487

The average number of employees during the year was as follows:

2018

2017

Directors

3

3

Client services

14

14

Creative

38

37

Administration

3

3

58

57

2018

2017

£

£

Directors' remuneration

45,000

45,000

Directors' pension contributions to money purchase schemes

106,000

72,000

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

3

3

6.	Operating profit

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

2018

2017

£

£

Other operating leases

152,308

133,823

Depreciation - owned assets

125,729

128,611

Auditors' remuneration

9,083

7,000

Foreign exchange differences

463

(3,564

)

7.

Amounts written off investments

2018

2017

£

£

Amounts written off

investments

-

19,231

8.

Taxation

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2018

2017

£

£

Current tax:

UK corporation tax

342,168

359,180

Deferred tax

(10,798

)

8,053

Tax on profit

331,370

367,233

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is

explained below:

2018

2017

£

£

Profit before tax

1,913,429

1,864,147

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 19.247%)

363,552

358,792

Effects of:

Expenses not deductible for tax purposes

5,033

8,946

Capital allowances in excess of depreciation

-

(505

)

Depreciation in excess of capital allowances

2,811

-

R&D Claim

(24,952

)

-

Withholding Tax

(15,074

)

-

Total tax charge

331,370

367,233

9.

Dividends

2018

2017

£

£

A ordinary shares of £1 each

Interim

1,330,000

1,189,591

10.	Tangible fixed assets

Fixtures

Leasehold

Office

and

Computer

improvements

equipment

fittings

equipment

Totals

£

£

£

£

£

Cost

At 1 January 2018

272,500

26,339

117,758

268,442

685,039

Additions

5,634

-

-

48,870

54,504

At 31 December 2018

278,134

26,339

117,758

317,312

739,543

Depreciation

At 1 January 2018

103,648

20,508

48,808

208,429

381,393

Charge for year

55,765

2,759

22,894

44,311

125,729

At 31 December 2018

159,413

23,267

71,702

252,740

507,122

Net book value

At 31 December 2018

118,721

3,072

46,056

64,572

232,421

At 31 December 2017

168,852

5,831

68,950

60,013

303,646

11.

Stocks

2018

2017

£

£

Work-in-progress

106,610

13,496