ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Company registration number:
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE PERIOD ENDED 30 JUNE 2019
The directors present their strategic report on the company for the period ended 30 June 2019.
Clive Christian Perfume Limited is a purveyor of luxury perfumes, which it sells globally through wholesale, retail and distribution channels.
Combined group performance Management assesses the performance of Clive Christian Perfume on a consolidated basis and therefore, for the purposes of the remainder of this report, sales and Key Performance Indicators (KPI’s) represent the combined operations of Clive Christian Perfume Limited and its US subsidiary, Clive Christian Perfume LLP (“combined group”). During this six months, the combined group introduced Noble XVII Baroque for the first time in the US market. The sales (excluding intercompany sales) came in at £3.7m (June 2018: £4.4m), decreasing against the same period in the previous year. The decrease affected mainly EMEA regions, contrasted by an increase of sales in US market. On the Financial Statement Position, during the 6 months, the increase of the stock is mainly a consequence of the reduced sales. The reduction of the debtors has been reflected in an increase of cash; and the total creditors have been increased mainly due to the cash injections of Nichebox SRL (£ 2.2m), explained below. On 28th May 2019, the parent company, Clive Christian Limited, was sold to Nichebox S.R.L. Since acquisition Nichebox S.R.L has made cash injections into the business totalling £2.2m which included the repayment of all UK and US debt. Nichebox SRL has also committed to continue support the combined group with additional financing when required (see note 2.3 page 13.) The focus for 2019-2020 is to return the combined group to profitability, through sales opportunities in new territories; moderate organic growth within the existing distribution network; improvements in gross margin through savings in components, production costs and warehousing and logistics; ensuring all US counters are profitable or, if not feasible, are exited; and streamlining operations and therefore reducing the central costs bases in the UK and US subsidiary in areas such as facilities and personnel.
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STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2019
The group continues to operate within specific policies, agreed by the board, to control and monitor risks within the group. Primary areas of risk are as follows:
Update on the Impact of COVID-19 Since the COVID -19 outbreak, the negative impact on luxury demand has intensified and is now impacting the industry in all regions. We have been working to keep our employees as safe as possible, putting in place across the business technology to allow employees to work from home where applicable. At the same time, we continue working in partnership with our customers and are in touch with them on a regular basis. We are making the best effort to contain our costs and protect our financial position. Currency The company involves certain sales in foreign currencies and is therefore exposed to the risk of an adverse change in exchange rates. The situation is constantly being monitored and is mitigated by financial instruments. Raw material price inflation The company relies on certainty of supply and pricing of its raw materials. As such it endeavours to maintain more than one supplier of critical materials to minimise the risk of an unexpected price increase or the inability of a supplier to provide material of a sufficient quality when required. Intellectual property infringement The board is very aware of the need to protect the brand and the design features for which the company is famous. In order to do this, it actively pursues a policy of trademark and design right registration and rigorously defends these whenever arise. Brexit On the 31st of January 2020, UK has left Europe and a transition period has taken effect until the 31st December 2020. Therefore, the directors note that the on-going uncertainty related to the impacts on the business remains for the Company, especially regarding the possible import and export duties that will affect not only the Company itself, but also its clients and suppliers. The directors will continue monitor the situation. Cashflow and liquidity As with most companies, cashflow is a major focus for the company and the directors. Management of cashflow, working capital and profitability are monitored closely by the board through monthly board meetings. During 2018, liquidity was provided from the parent company Clive Christian Limited. In 2019 Nichebox S.R.L. has been made future cash injections into the business and has committed to continue support with additional financing when required see note 2.3. Environment The company takes its environmental obligations seriously and wherever possible action is taken to minimise any deleterious effect that its activities may cause. The raw materials are sourced from sustainable managed supplies and waste from the manufacturing process and office consumables are reused and recycles as much as practicable. Employment The company is aware of its obligations as an employer with regards to equal opportunities and health and safety. It is also aware that staff development benefits both the group and the employee and actively encourages training where necessary.
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STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2019
KPIs of the company are:
*Excluding intercompany sales
The Perfume Division sells largely to retail partners across the world, ranging from small independents to large department store chains, as well as specialist distributors in certain key markets who manage the relationship with local retailers; it also has its own transactional website and one retail outlet which opened in Q2 2018. In total the fragrances were sold in 341 outlets in 2019, a net decrease of six outlets, largely due to the closing of unproductive outlets, 3 in Europe and 3 in US. In 2019-2020 management has decided to close the retail outlet and to focus only on retailers and distributors, expanding outlets with existing partners and consolidating its e commerce operations which were launched in 2016 in the UK and 2018 in the US, as well as seeking opportunities in new territories worldwide. Gross profit margin is defined by the company as sales less, cost of the goods sold, and all other costs directly related to the sale of those goods, including logistics, retail staff, and direct marketing. The increase in margin percentage from 28% in 2018 to 31% in 2019 is confirming the commitment of the management to create efficiency in all the costs involved. Going forward into 2019-2020 management will continue to increase the margin through savings in components, productions costs and logistics. In additional the revenue in each geographic region for the group is monitored, the global sales (excluding intercompany sales) including the US division are as follows:
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE PERIOD ENDED 30 JUNE 2019
The Directors present their report and the financial statements for the period ended 30 June 2019.
The Directors are responsible for preparing the Strategic Report, the Directors' Report 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 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 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 for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the period, after taxation, amounted to £1,547,479 (2018 - loss £2,691,010).
The directors do not recommend the payment of a dividend (2018: £Nil).
The Directors who served during the period and for the subsequent year up to the date of approving the financial statements together with the dates of appointment and dates of resignation where appropriate are shown below:
Consolato Pace (appointed 3 January 2020)
Priority for the new management is to achieve break even through an accurate cost management and a better prioritization of the investments. Once achieved, in the shortest time possible, the Company will push its top line growth through: 1) a like for like increase of the sell-out performances of the existing product range; 2) a flawless execution of the new launches in pipe; 3) the opening of new markets where the brand is currently not listed, despite a strong demand for it and/or good business opportunity to catch; 4) investment to support the partnerships in place with our distributors (existing and new ones); 5) a new website and ecommerce platform, more user friendly and responsive.
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DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2019
Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
The company vacated their short term leasehold premises after the period end, consequently short term leasehold assets and fixtures and fittings in relation to these premises have been disposed of after the balance sheet date. On the date of disposal the assets had a net book value of £268,912 and the company received disposal proceeds of £130,000. The net book value of these assets at 30th June 2019 included within these accounts amount to £284,039.
The auditors, Menzies LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLIVE CHRISTIAN PERFUME LIMITED
We have audited the financial statements of Clive Christian Perfume Limited (the 'Company') for the period ended 30 June 2019, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, 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:
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 United Kingdom, including the Financial Reporting Council'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.
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.
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 Auditors' 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.
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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLIVE CHRISTIAN PERFUME LIMITED (CONTINUED)
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 period 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.
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 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:
As explained more fully in the Directors' Responsibilities Statement on page 4, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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 Auditors' 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.
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 Auditors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CLIVE CHRISTIAN PERFUME LIMITED (CONTINUED)
This report is made solely to the Company's members 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 Auditors' 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 for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditor
Lynton House
7-12 Tavistock Square
London
WC1H 9LT
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2019
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STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 12 to 24 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
Clive Christian Perfume Limited is a private company, limited by shares, incorporated in England & Wales under the Companies Act 2006. The registered office is stated on the company information page. The nature of the company's operations and its principal activities is that of a wholesaler, retailer and distributor of luxury perfumes.
2.Accounting policies
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 financial statements are prepared for a period of 6 months as the company changed its financial year to end to align its reporting period with the group. As a result the financial statements are not directly comparable with the comparative 12 month period.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Clive Christian Limited as at 30 June 2019 and the address of their registered office is 18 Soho Square, London, England W1D 3QL.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
2.Accounting policies (continued)
The directors have prepared detailed forecasts for the next 3 years which incorporate the strategic business plans following the change in ownership. The restructuring plan focuses on significantly reducing costs and improving profitability. These forecasts factor in the additional funding required from its parent company Nichebox S.R.L to meet its liabilities as they fall due. The company is dependent on the continuing support and funding from its ultimate parent company. The board of the ultimate parent company have provided a letter of support to the directors confirming their intention to support the company by providing sufficient funding to enable the company to meet its liabilities as they fall due and continue in operational existence for a period of at least twelve months from the date of approval of these accounts. The ultimate parent company also has the intention to convert the debt of £6,372,358 owed to it by the company into equity in the future. The directors are confident that the company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Functional and presentation currency
The Company's functional and presentational currency is GBP.
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 the Statement of Comprehensive Income 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 Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Statement of Comprehensive Income within 'other operating income'.
Revenue represents the value, net of value added tax and discounts, of goods provided to customers. Revenue is recognised at the point where risks and rewards transfer to the customer, which is at the point of sale for retail stores and at the point of despatch for wholesale and website sales.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
2.Accounting policies (continued)
Rentals income from operating leases is credited to the Statement of Comprehensive Income on a straight line basis over the term of the relevant lease.
Rentals paid under operating leases are charged to the Statement of Comprehensive Income 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.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Comprehensive Income 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 Company in independently administered funds.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Amortisation is provided on the following bases:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
2.Accounting policies (continued)
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.
Depreciation is provided on the following basis:
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 the Statement of Comprehensive Income.
Investments in subsidiaries are measured at cost less accumulated impairment.
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 outbasis. 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.
The financial statements contain information about Clive Christian Perfume Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company has taken advantage of the exemption conferred by section 400 of the Companies Act 2006 not to produce consolidated financial statements as it is included in group accounts of a larger group headed by Clive Christian Limited, a company incorporated in England and Wales. Copies of the consolidated financial statements of Clive Christian Limited are available from Companies House, 80 Petty France, Westminster, London, SW1H 9EX.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
In preparing these financial statements, the Directors have had to make the following judgements:
Impairment of tangible and intangible fixed assets (see note 12 and 13)
Determine whether there are indicators of impairment of the Company's tangible and intangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Other key sources of estimation uncertainty
Stock provisioning (see note 16) Stock is carried in the statement of financial position at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving stock. The directors have used their knowledge and experience of the industry to determine the level of provisioning required based on the ageing profile of stock.
Recoverability of amounts due from group undertakings (see note 17)
Provision for impairment of the carrying value of amounts due from group undertakings is made based on management's estimate of the prospect of recovering the amounts due, which includes considering the solvency of the counterparty and its future outlook, based on budgets and forecasts prepared by management.
All revenue is attributable to fragrance production and wholesale.
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
The company has not recognised a deferred tax asset of £1,154,878 including a current year movement of £65,189
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019
The company is an immediate subsidiary of Clive Christian Limited, a company incorporated in England and Wales. On the 28th May 2019, the ultimate parent company became Nichebox S.R.L, a company incorporated in Italy, prior to the 28th May 2019 the company's ultimate company was Souter SBS Holdings Limited, a company incorporated in Scotland. In the opinion of the directors, there is no single controlling party.
The largest and smallest group in to which the results of the company are consolidated at 30 June 2019 is that headed by Clive Christian Limited, a company incorporated in England and Wales. The consolidated accounts for this entity will be available to the public and may be obtained from Companies House, 80 Petty France, Westminster, London, SW1H 9EX.
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