Richards & Appleby Limited - Limited company accounts 18.2

REGISTERED NUMBER: 00937090 (England and Wales)

RICHARDS & APPLEBY LIMITED

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH SEPTEMBER 2018

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

13

DIRECTORS:

M L Field

D Shah

SECRETARY:

M L Field

REGISTERED OFFICE:

Unit 3

Heads Of The Valleys Industrial Estate

Rhymney

Tredegar

Gwent

NP22 5RL

REGISTERED NUMBER:

00937090 (England and Wales)

SENIOR STATUTORY AUDITOR:

Steven Davies

AUDITORS:

Sinclairs Bartrum Lerner

Statutory Auditor

39A Welbeck Street

London

W1G 8DH

The directors present their strategic report for the year ended 30th September 2018.

The key financial performance indicators are as follows:

2018

2017

2016

2015

Turnover ('000)

5,863

12,398

9,039

10,066

Gross profit margin (%)

27.29

37.27

44.32

46.02

Net profit/(loss) before tax ('000)

(2,452

)

(825

)

142

91

Liquidity ratio (%)

98.34

137.17

149.69

147.35

The principal activities of the company during the year continued to be those of manufacturing and supply of personal

care toiletries, cosmetics and self-tanning products.

REVIEW OF BUSINESS

The results of the period and financial position of the company are shown in the attached financial statements.

The Company can report that turnover for the year to 30 September 2018 is £5,863,452 with net losses of £2,452,614.

The fall in turnover followed a review of the business activities whereby the directors decided to cut their continuing

losses in 2017 and to restructure the Company. This restructure involved a rationalisation of the manufacturing

operations and a transfer of the brand activities to third parties in exchange for manufacturing contracts.

Leighton Denny Expert Nails (LD) our premium nail care brand and James Read Tan (JR) were both sublicensed to

HSNF Ltd, an unrelated company, in February 2018. The arrangements agreed a transfer of stock over an 18 month

period of circa £1.8m and goodwill of £1.5m. The two brands accounted for circa 50% of annual turnover. The

manufacturing element of the two brands was to be undertaken by both Richard & Appleby Ltd and Prestige Personal

Care Ltd (PPC), a company with common ownership/control, with an expected revenue projected at £1.68m.

Furthermore 3 other brands, Cyclax, Natural Classic and Nailoid, were sold for Goodwill and Stock at around £750k.

In September 2018, HSNF requested that the Company relieve them of their obligations to the brands deal. After

debating the legal implications the Company agreed to refund monies and the stock was returned at cost. The Leighton

Denny brand remains with the Company, but the James Read brand has subsequently been sold to Prestige Personal

Care.

The remainder of contract manufacturing side of the business accounting for about 38% of the turnover would also be

transferred to PPC in exchange for an estimated stock transfer at cost of circa £2.5m to be paid as required. Further PPC

would take over the fixed overhead and staff obligations at Rhymney as at January 2019. This arrangement provides for

R&A to contract PPC's services as and when required to continue the sale and distribution of its remaining stock and

brands.

Following the restructuring of its operation, the Company has stopped manufacturing. Sale will be done from existing

stock. The Company's main customer will be PPC but will also have trade with around a dozen of other accounts

requiring a variety of services relating to gift and kit packing and return goods recovery. Income from PPC is generated

through sale of stock, rent for the use of the warehouse in Rhymney and royalties through sales of goods sold by PPC

under the brands transferred from the Company.

The Company continues to hold significant assets in inventory, a share portfolio, its freehold and plant and equipment.

The directors have agreed an option to sell the company's property and plant and equipment to a minority shareholder in

PPC and rent a proportion back if and when required. The option to buy value the property to £1.38m and plant and

machinery at £363k. Proceeds from those sales will be sufficient to cover all of the Company's outstanding liabilities

whilst allowing it to continue trading profitably.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board acknowledges that there are risks that affect the Company and action is taken to minimise those risks. The

directors consider the principal risks and uncertainties associated with running the Company to be as follows:-

Credit risk

Credit risk is the risk that a counter party will default on its contractual obligations resulting in a financial loss to the

Company. Customers' credit accounts are operated within predetermined parameters. The Company has effective system

to closely monitor its relationship with its customers to minimise its exposure to credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial

liabilities. The Company monitors its risk to a shortage of funds by regular reviews of the Company's revenues and

expenditures from operations.

Interest rate risk

Interest risk is the risk that future cash flows associated with financial instrument will fluctuate because of changes in

interest rates. The Company's interest rate risk arises from the use of its overdrafts and loans facilities.

Competition risk

The company faces competition from other companies within the UK and abroad. To stay competitive, the Company

ensures that their products are reviewed and updated regularly and price charged to customers are at a competitive level.

Brexit risk

The effect of the UK leaving the European Union on the economy is unclear and difficult to quantify. The directors

realise that this uncertainty may have an effect on the Company and are therefore continuing to monitor this issue as it

develops.

ON BEHALF OF THE BOARD:

M L Field - Director

7th February 2020

The directors present their report with the financial statements of the company for the year ended 30th September 2018.

DIVIDENDS

No dividends will be distributed for the year ended 30th September 2018.

FUTURE DEVELOPMENTS

Refer to the Strategic Report.

DIRECTORS

D Shah has held office during the whole of the period from 1st October 2017 to the date of this report.

POST BALANCE SHEET EVENTS

Refer to the Strategic Report.

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, Sinclairs Bartrum Lerner, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

M L Field - Secretary

7th February 2020

Opinion

We have audited the financial statements of Richards & Appleby Limited (the 'company') for the year ended

30th September 2018 which comprise the Income Statement, Other 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 30th September 2018 and of its 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 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 draw attention to note 3 in the financial statements concerning the company's ability to continue as a going concern.

The Company has incurred a loss of £2,434,006 in the year and is financially dependent on the continued support from

existing loan providers and its bankers. As described in note 3, there are events or conditions which indicate that a

material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our

opinion is not modified in respect of this matter.

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 four, 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.

Steven Davies (Senior Statutory Auditor)

for and on behalf of Sinclairs Bartrum Lerner

Statutory Auditor

39A Welbeck Street

London

W1G 8DH

7th February 2020

TURNOVER

4

5,863,452

12,398,071

Cost of sales

4,263,315

7,777,909

GROSS PROFIT

1,600,137

4,620,162

Distribution costs

1,462,483

1,447,495

Administrative expenses

1,675,792

3,851,900

3,138,275

5,299,395

OPERATING LOSS

6

(1,538,138

)

(679,233

)

Amounts written off investments

7

744,604

-

Gain/loss on revaluation of investments

54,108

16,146

798,712

16,146

(2,336,850

)

(695,379

)

Interest payable and similar expenses

8

115,763

130,242

LOSS BEFORE TAXATION

(2,452,613

)

(825,621

)

Tax on loss

9

(18,607

)

(20,340

)

LOSS FOR THE FINANCIAL YEAR

(2,434,006

)

(805,281

)

LOSS FOR THE YEAR

(2,434,006

)

(805,281

)

OTHER COMPREHENSIVE INCOME

Unrealised surplus on revaluation of

property

-

298,892

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

-

298,892

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(2,434,006

)

(506,389

)

FIXED ASSETS

Intangible assets

10

3

101,100

Tangible assets

11

1,272,506

1,378,173

Investments

12

74,197

128,307

1,346,706

1,607,580

CURRENT ASSETS

Stocks

13

3,880,258

4,198,599

Debtors

14

1,588,061

3,570,472

Cash at bank and in hand

35,706

38,694

5,504,025

7,807,765

CREDITORS

Amounts falling due within one year

15

5,596,726

5,692,146

NET CURRENT (LIABILITIES)/ASSETS

(92,701

)

2,115,619

TOTAL ASSETS LESS CURRENT LIABILITIES

1,254,005

3,723,199

CREDITORS

Amounts falling due after more than one year

16

(799,543

)

(820,193

)

PROVISIONS FOR LIABILITIES

20

(18,924

)

(33,462

)

NET ASSETS

435,538

2,869,544

CAPITAL AND RESERVES

Called up share capital

21

51,000

51,000

Revaluation reserve

22

606,331

668,707

Retained earnings

22

(221,793

)

2,149,837

SHAREHOLDERS' FUNDS

435,538

2,869,544

The financial statements were approved and authorised for issue by the Board of Directors on 7th February 2020 and were signed on its behalf by:

M L Field - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1st April 2016

51,000

2,895,340

429,593

3,375,933

Changes in equity

Total comprehensive income

-

(745,503

)

239,114

(506,389

)

Balance at 30th September 2017

51,000

2,149,837

668,707

2,869,544

Changes in equity

Total comprehensive income

-

(2,371,630

)

(62,376

)

(2,434,006

)

Balance at 30th September 2018

51,000

(221,793

)

606,331

435,538

Cash flows from operating activities

Cash generated from operations

1

266,613

596,934

Interest paid

(107,554

)

(123,301

)

Interest element of hire purchase payments paid

(8,209

)

(6,941

)

Tax paid

19,155

18,566

Net cash from operating activities

170,005

485,258

Cash flows from investing activities

Purchase of tangible fixed assets

(8,175

)

(93,806

)

Sale of intangible fixed assets

235,000

-

Sale of tangible fixed assets

44,924

4,600

Net cash from investing activities

271,749

(89,206

)

Cash flows from financing activities

New loans in year

-

1,187,503

Loan repayments in year

(409,225

)

(1,422,654

)

Capital repayments in year

(22,339

)

(41,758

)

Amount introduced by directors

-

10,000

Amount withdrawn by directors

(13,178

)

-

Net cash from financing activities

(444,742

)

(266,909

)

(Decrease)/increase in cash and cash equivalents

(2,988

)

129,143

Cash and cash equivalents at beginning of year

2

38,694

(90,449

)

Cash and cash equivalents at end of year

2

35,706

38,694

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

Period

1/4/16

Year ended

to

30/9/18

30/9/17

£

£

Loss before taxation

(2,452,613

)

(825,621

)

Depreciation charges

172,813

280,416

Profit on disposal of fixed assets

(237,795

)

(428

)

Loss on revaluation of fixed assets

54,108

16,146

Finance costs

115,763

130,242

(2,347,724

)

(399,245

)

Decrease/(increase) in stocks

318,341

(568,170

)

Decrease in trade and other debtors

1,982,411

664,976

Increase in trade and other creditors

313,585

899,373

Cash generated from operations

266,613

596,934

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 30th September 2018

30/9/18

1/10/17

£

£

Cash and cash equivalents

35,706

38,694

Period ended 30th September 2017

30/9/17

1/4/16

£

£

Cash and cash equivalents

38,694

6,435

Bank overdrafts

-

(96,884

)

38,694

(90,449

)

1.	GENERAL INFORMATION

Richards & Appleby Limited is a company domiciled in England and Wales, registration number 00937090. The

address of its registered office is Unit 3, Heads Of The Valleys Industrial Estate, Rhymney, NP22 5RL.

The company manufactures and supplies personal care toiletries, cosmetics and self-tanning products.

2.	STATUTORY INFORMATION

Richards & Appleby 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.

3.	ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements have been prepared in accordance with applicable accounting standards including

Financial Reporting Standard 102 "The Financial Reporting Standard Applicable in the UK and Republic of

Ireland" and the Companies Act 2006. The financial statements have been prepared on a going concern basis

under the historical cost convention, modified to include certain items at fair value. The financial statements are

prepared in sterling which is the functional currency of the company.

The significant accounting policies applied in the preparation of these financial statements are set out below.

These policies have been consistently applied to all years presented unless otherwise stated.

Going Concern

The company's business activities, together with the factors likely to affect its future development, performance

and position are set out in the Business Review in the Strategic report.

The current economic environment has been difficult and the company has reported an operating loss for the

year. The directors consider that the outlook presents significant challenges in terms of the level of demand of

the company's products. Whilst the directors have instituted measures to preserve cash and secure finance, these

circumstances create material uncertainties over future trading results and cash flows.

As explained in the Strategic Report, the directors have implemented various changes to the company's

operation. The company has stopped manufacturing, and future sales will mainly relate to the selling off of

existing stock. The Company's main customer in this respect will be Prestige Personal Care Limited (PPC), a

company under common ownership and control. The company will also continue to trade with around a dozen

other existing accounts that require a variety of services relating to gift and kit packing and return goods

recovery. In addition to these ongoing activities, the company will derive income through rent for the use of the

warehouse in Rhymney to PPC, and the company will receive royalties through sales of goods sold by PPC under

the brands transferred from the Company.

As part of the directors' assessment of going concern they have prepared detailed cash flow and profit and loss

forecasts for the 12 months from the date of approval of these accounts. These forecasts have been prepared on

an appropriate basis, taking into account the current difficult economic conditions and the operation changes

being implemented.

There are currently negotiation to sell the company's property and plant and equipment to a minority shareholder

in PPC and rent a proportion back if and when required. The option to buy value the property to £1.38m and

plant and machinery at £363k. Proceeds from those sales will be sufficient to cover all of the Company's

outstanding liabilities whilst allowing it to continue trading profitably.

The directors believe that the company can operate within the level of its current bank facility. There is no major

loan repayment and the directors believe that the Company will continue to have its bank's support. The company

enjoys several loans with related parties. Although those are repayable on demand, the directors have confirmed

that those loans will not have to be repaid in the next 12 months.

The directors have also given guarantees that should the company not be able to repay its creditors, they will

meet those liabilities.

Because of the events and conditions described above, there are material uncertainties which may cast significant

doubt on the Company's ability to continue as a going concern and it may therefore be unable to realise assets

and discharge liabilities in the ordinary course of business.

The directors have a reasonable expectation that the company has adequate resources to continue in operational

existence for the foreseeable future.

For these reasons, the directors continue to adopt the going concern basis in preparing the annual report and

financial statements.

Significant judgements and estimates

Estimates and judgements are continually evaluated and are based on historical experience and other factors,

including expectations of future events that are believed to be reasonable under the circumstances.

Judgements in applying the entity's accounting policies

The company has elected to use the previous UK GAAP valuation of certain items of land and building as the

deemed cost on transition to FRS 102. The items are being depreciated from the date of transition in accordance

with the company's accounting policies.

Accounting estimates and assumptions

The company makes estimates and assumptions concerning the future. The resulting accounting estimates will,

by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk

of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year

are addressed below.

(a) Useful economic lives of assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives

and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They

are amended when necessary to reflect current estimates, based on future investments, economic utilisation and

the physical condition of the assets.

(b) Stock provision

The company manufactures toiletries and cosmetics and is subject to changing consumer demands and trends. As

a result it is necessary to consider the recoverability of the cost of stock and the associated provisioning required.

When calculating the stock provision, management considers the nature and condition of the stock, as well as

applying assumptions around anticipated saleability of finished goods and future usage of raw materials.

(c) Impairment of debtors

The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment

of trade and other debtors, management considers factors including the current credit rating of the debtor, the

ageing profile of debtors and historical experience.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents the amount

receivable for goods supplied or services rendered, net of returns, discounts and rebates allowed by the company

and value added tax.

The company bases its estimates of returns on historical results, taking into consideration the type of customer,

the type of transaction and the specifics of each arrangement.

The company recognises revenue when (a) the significant risk and rewards of ownership have been transferred to

the buyer; (b) the company retains no continuing involvement or control over the goods and (c) the amount of

revenue can be measured reliably.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost

less any accumulated amortisation and any accumulated impairment losses.

An impairment loss has been recognised in the Income Statement, following an assessment at the Balance Sheet

date indicating the recoverable amount was less than its carrying value.

Patents and licences are being amortised evenly over their estimated useful life of nil years.

Development costs are being amortised evenly over their estimated useful life of nil years.