Daisy's Nail Company Ltd - Limited company accounts 23.2

REGISTERED NUMBER: 08216906 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 March 2023

for

DAISY'S NAIL COMPANY LTD

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Statement of Comprehensive Income

11

Balance Sheet

12

Statement of Changes in Equity

13

Cash Flow Statement

14

Notes to the Cash Flow Statement

15

Notes to the Financial Statements

16

DIRECTORS:

D Kalnina

A J Moss

REGISTERED OFFICE:

Preston Park House

South Road

Brighton

East Sussex

BN1 6SB

BUSINESS ADDRESS:

Platform 9

Floor 6 Tower Point

44 North Road

Brighton

East Sussex

BN1 1YR

REGISTERED NUMBER:

08216906 (England and Wales)

AUDITORS:

Feist Hedgethorne Limited

Statutory Auditors

Chartered Accountants

Preston Park House

South Road

Brighton

East Sussex

BN1 6SB

The directors present their strategic report for the year ended 31 March 2023.

OUR PURPOSE

Our purpose is to meet the needs of our customers, delivering the experience, products and services that matter to them.

Our success as a business depends on delivering value to all our customers and stakeholders. We plan and anticipate what they want and develop products, services and an overall experience that meet their needs.

REVIEW OF BUSINESS

The directors are pleased with the performance of the company during the year ended 31 March 2023 which has seen a 35.16% increase in revenue.

The results for the year are shown in the statement of comprehensive income on page 11. The directors' consider that the company's balance sheet as detailed on page 12 shows a satisfactory position at the year end.

The key financial highlights are as follows:

2023

2022

Turnover

£24,600,545

£18,200,304

Gross profit

£15,804,882

£12,781,447

Gross profit margin

64.25%

70.23%

Profit before tax

£8,281,722

£8,620,312

The company has kept and continues to keep close control over costs and seeks to maximise its profit margins.

FUTURE DEVELOPMENTS

The directors are confident that the company will continue to be profitable in the forthcoming year and has been trading well during the new financial year when considering the challenging trading conditions. The company will continue to add to its successful range of cosmetic products and the directors are confident that the business will continue to grow over the coming year.

PRINCIPAL RISKS AND UNCERTAINTIES

There are several risks and uncertainties that can impact the performance of the company, some of which are beyond the control of company and its Board. These trends and risks are the focus of management meetings where each departments performance is assessed versus budget, forecast and prior year results. Key performance indicators are also used to benchmark operational performance for all departments. An annual assessment of trends and risks is an integral part of each department's annual review of its strategic plan and budget, which are submitted to the Board for consideration and approval. A combination of all of this, in what is a bottom up and top down approach, enables the Board to determine and assess the companies risk environment.

The principal risks and uncertainties facing the company are outlined below:

Key resources

The company is managed by certain key personnel, including executive directors and senior management who have significant experience within the company and who may be difficult to replace. Furthermore, the company depends on being able to recruit and retain employees of an appropriate calibre. The company has sought to mitigate this resource risk by investing in staff training programmes, competitive reward and compensation packages.

Credit risk

The company has implemented policies that require appropriate credit checks on potential customers before sales are made.

Liquidity risk

The company maintains appropriate finance and cash in hand. The company also has availability of external finance if required, which is considered sufficient to further mitigate business risks relating t market and economic uncertainties.

Market conditions

Our products are targeted at many different sectors, which include high street retailers and salons. As a result, demand is dependent on activity levels in these respective sectors, which vary by location and are subject to the usual drivers of retail activity (i.e. general economic conditions and volatility, interest rates, business/consumer confidence levels, unemployment, population growth, etc.).

Competitive pressures

The company continually faces competition and the competitive environment is a function of several factors including the number of competitors, pricing and the availability of substitute products. While such competitive forces can impact profitability in the short-term the company looks to offset such adverse effects by:

(i) a program of continuous process improvement;

(ii) a permanent emphasis on product enhancement, and

(iii) providing a best in class service to customers by offering short delivery times and products that come with a guaranteed performance.

Information technology and business continuity

The company uses a range of information technology and decision support systems across its business for efficient processing of orders, control procedures and financial management. These systems are constantly reviewed and updated to meet the needs of the company. Business continuity and disaster recovery planning is regularly assessed and tested to ensure the company is adequately resourced and maintains an appropriately robust environment including preventative processes on cybercrime. This is further mitigated through consequential loss insurance and business continuity plans which are updated regularly.

Data protection and back-up

The company holds a significant volume of confidential data. Failure to comply with data privacy regulations and standards (GDPR) or weakness in internet security may result in a major data privacy breach causing reputational damage to the company's brands and financial loss.

Breach of IT security may cause data to be lost, corrupted or accessed by unauthorised users, impacting the company's reputation. This could give rise to legal or regulatory penalties as well as commercial costs. The company has processes and procedures in place to monitor effectiveness of customer back-up and is continually upgrading security equipment and software and making improvements to physical security processes.

GOING CONCERN

After receiving the company's forecasts and projections, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.

ON BEHALF OF THE BOARD:

A J Moss - Director

18 December 2023

The directors present their report with the financial statements of the company for the year ended 31 March 2023.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the wholesale and retail of cosmetic products.

DIVIDENDS

Interim dividends totalling £9,500,000 per Ordinary share of £1 each were paid during the year. The directors do not recommend the payment of a final dividend.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 April 2022 to the date of this report.

D Kalnina

A J Moss

POLITICAL DONATIONS AND EXPENDITURE

All donations made during the year were to charities.

GOING CONCERN

The directors have a reasonable expectation that the company has adequate resources to continue in existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.

ENGAGEMENT WITH EMPLOYEES

The company recognises the importance of good communications and relations with staff and uses a number of methods of keeping staff informed of performance and developments in the group.

New members of staff attend an induction course which gives them an initial understanding of the company and its business and makes them aware of matters directly concerning their employment. Great importance is attached to staff training and development and all levels.

DISCLOSURE IN THE STRATEGIC REPORT

Certain matters required by regulation to be dealt with in the annual report have been dealt with in the Strategic Report rather than in the Directors' Report. These include principal risks and uncertainties.

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), 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 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 or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Feist Hedgethorne Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

A J Moss - Director

18 December 2023

Opinion

We have audited the financial statements of Daisy's Nail Company Ltd (the 'company') for the year ended 31 March 2023 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 March 2023 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

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 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 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 this gives rise to 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 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 five, 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.

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. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

The extent to which the audit was considered capable of detecting irregularities, including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

-

the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

-

we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the industry;

-

we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation;

-

we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

-

identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

-

making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

-

considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

-

performed analytical procedures to identify any unusual or unexpected relationships;

-

tested journal entries to identify unusual transactions;

-

assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

-

investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

-

agreeing financial statement disclosures to underlying supporting documentation;

--

enquiring of management as to actual and potential litigation and claims; andreviewing correspondence with HMRC, relevant regulators and the company's legal advisors, where applicable.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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.

Chris Morey (Senior Statutory Auditor)

for and on behalf of Feist Hedgethorne Limited

Statutory Auditors

Chartered Accountants

Preston Park House

South Road

Brighton

East Sussex

BN1 6SB

18 December 2023

TURNOVER

24,600,545

18,200,304

Cost of sales

(8,795,663

)

(5,418,857

)

GROSS PROFIT

15,804,882

12,781,447

Administrative expenses

(7,790,502

)

(4,428,236

)

8,014,380

8,353,211

Other operating income

297,568

263,239

OPERATING PROFIT

5

8,311,948

8,616,450

Interest receivable and similar income

(1,470

)

3,864

8,310,478

8,620,314

Interest payable and similar expenses

6

(28,756

)

(2

)

PROFIT BEFORE TAXATION

8,281,722

8,620,312

Tax on profit

7

(1,451,591

)

(1,590,769

)

PROFIT FOR THE FINANCIAL YEAR

6,830,131

7,029,543

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

6,830,131

7,029,543

FIXED ASSETS

Intangible assets

9

28,501

2,780

Tangible assets

10

423,756

268,474

452,257

271,254

CURRENT ASSETS

Stocks

11

3,864,581

3,349,770

Debtors

12

10,393,630

10,693,912

Cash at bank

1,911,685

5,241,428

16,169,896

19,285,110

CREDITORS

Amounts falling due within one year

13

(6,372,453

)

(6,704,527

)

NET CURRENT ASSETS

9,797,443

12,580,583

TOTAL ASSETS LESS CURRENT LIABILITIES

10,249,700

12,851,837

CREDITORS

Amounts falling due after more than one year

14

(55,461

)

-

PROVISIONS FOR LIABILITIES

17

(74,647

)

(62,376

)

NET ASSETS

10,119,592

12,789,461

CAPITAL AND RESERVES

Called up share capital

18

1

1

Retained earnings

19

10,119,591

12,789,460

SHAREHOLDERS' FUNDS

10,119,592

12,789,461

The financial statements were approved by the Board of Directors and authorised for issue on 18 December 2023 and were signed on its behalf by:

A J Moss - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 April 2021

1

7,759,917

7,759,918

Changes in equity

Dividends

-

(2,000,000

)

(2,000,000

)

Total comprehensive income

-

7,029,543

7,029,543

Balance at 31 March 2022

1

12,789,460

12,789,461

Changes in equity

Dividends

-

(9,500,000

)

(9,500,000

)

Total comprehensive income

-

6,830,131

6,830,131

Balance at 31 March 2023

1

10,119,591

10,119,592

Cash flows from operating activities

Cash generated from operations

1

8,313,600

7,088,842

Interest paid

(28,756

)

(2

)

Tax paid

(1,356,625

)

(1,788,884

)

Net cash from operating activities

6,928,219

5,299,956

Cash flows from investing activities

Purchase of intangible fixed assets

(26,912

)

-

Purchase of tangible fixed assets

(270,860

)

(120,774

)

Sale of tangible fixed assets

2,241

1,290

Interest received

(1,470

)

3,864

Net cash from investing activities

(297,001

)

(115,620

)

Cash flows from financing activities

Capital repayments in year

62,061

-

Amount withdrawn by directors

(523,022

)

(2,515,956

)

Equity dividends paid

(9,500,000

)

(2,000,000

)

Net cash from financing activities

(9,960,961

)

(4,515,956

)

(Decrease)/increase in cash and cash equivalents

(3,329,743

)

668,380

Cash and cash equivalents at beginning of year

2

5,241,428

4,573,048

Cash and cash equivalents at end of year

2

1,911,685

5,241,428

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

2023

2022

£

£

Profit before taxation

8,281,722

8,620,312

Depreciation charges

116,769

73,400

Profit on disposal of fixed assets

(2,241

)

(33

)

Finance costs

28,756

2

Finance income

1,470

(3,864

)

8,426,476

8,689,817

Increase in stocks

(514,811

)

(932,124

)

(Increase)/decrease in trade and other debtors

(295,617

)

91,968

Increase/(decrease) in trade and other creditors

697,552

(760,819

)

Cash generated from operations

8,313,600

7,088,842

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 March 2023

31.3.23

1.4.22

£

£

Cash and cash equivalents

1,911,685

5,241,428

Year ended 31 March 2022

31.3.22

1.4.21

£

£

Cash and cash equivalents

5,241,428

4,573,048

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.4.22

Cash flow

At 31.3.23

£

£

£

Net cash

Cash at bank

5,241,428

(3,329,743

)

1,911,685

5,241,428

(3,329,743

)

1,911,685

Debt

Finance leases

-

(62,061

)

(62,061

)

-

(62,061

)

(62,061

)

Total

5,241,428

(3,391,804

)

1,849,624

1.	STATUTORY INFORMATION

Daisy's Nail Company Ltd 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 presentation currency of the financial statements is the Pound Sterling (£).

Monetary amounts in these financial statements are rounded to the nearest pound.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Significant judgements and estimates

Preparation of the financial statements requires management to make significant judgements and estimates and these 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.

The items in the financial statements where these judgements and estimates have been made include the useful economic life of tangible fixed assets, the depreciation and amortisation of these assets, stock obsolescence, provisions, and the recoverability of debtors.

Key sources of estimation uncertainty:

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 depreciated over the approved depreciation rates. The carrying amount of tangible fixed assets is £423,756 (2022: £268,474) as noted in note 10.

The value of stock for the year ended 31 March 2023 has been increased by an estimate of 20% (2022: 20%) of the closing stock value to represent shipping and import costs.

No significant judgements have been made by management in preparing these financial statements.

Employee benefits

The company provides a range of benefits to employees, including paid holiday arrangements and defined contribution pension plans and the costs of short-term employee benefits are recognised as a liability and an expense.

In accordance with FRS 102, the cost of any unused holiday entitlement should be recognised in the period in which the employee's services are received. The company has reviewed the potential provision and has considered the amount to be immaterial.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

The company operates a defined contribution pension plan to enable staff to save for a private retirement income. Both the company and staff contribute to the pension plan. Contributions are recognised as an expenses when they are due. Any amounts not paid arr shown as an accrual in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

Turnover

Turnover represents the fair value of consideration received or receivable net of VAT and trade discounts and represents the amount receivable for goods supplied and services rendered.

Revenue from the sale of cosmetics is recognised when goods are invoiced and despatched to customers and is therefore recognised when the significant risks and rewards of ownership of the goods have transferred to the buyer.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated impairment losses.

Patents and licenses are being amortised evenly over their estimated useful life of 10 years or to their legal expiry date.

Computer software is being amortised evenly over it's estimated useful life of 3 years.

Tangible fixed assets

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

Improvements to property

-

over the period of the leases

Fixtures and fittings

-

25% on cost and 10% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

25% on cost and 10% on cost

Tangible fixed assets are stated at cost (or deemed cost) less accumulated depreciation and accumulated impairment losses. Cost includes costs directly attributable to making the asset capable of operating as intended by management.

Stocks

Stocks, which consist of cosmetic products, are valued at the lower of cost and estimated selling price less costs to complete and sell, after making due allowance for obsolete and slow moving items. Estimated selling price less costs to complete and sell is based on the estimated selling price of the goods less any estimated completion or selling costs likely to be incurred on the sale.

When stocks are sold, the carrying amount of those stocks is recognised as an expense in the period

in which the related revenue is recognised. At the end of each reporting period, stocks are assessed for impairment and the identified inventory is written down to estimated selling price less costs to complete and sell, and all losses of stocks are recognised as an expense in the period in which the write-down or loss occur. The amount of any reversal of any write-down of stock is recognised as a reduction in the amount of stocks recognised as an expense in the period in which the reversal occurs.

Stock is valued using the average cost method.

Financial instruments

The company's financial instruments comprise cash, debtors (trade, intercompany debtors and other debtors) and creditors (trade, other, intercompany creditors, accruals and deferred income). A financial asset or a financial liability is recognised when the company becomes party to the contractual provisions of the instrument. The de-recognition of a financial instrument takes place when the company no longer controls substantially all the risks and regards.

At each balance sheet date, the company reviews the carrying amount of its assets to determine whether there is any indication that any items have suffered an impairment loss. If any such indication exists, the recoverable amount of an asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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.

Research and development

Expenditure on research and development is written off in the year in which it is incurred.

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 plan for its employees. A defined contribution pension plan is a pension plan under which the company pays contributions into a separate entity. Once the contributions have been paid, the company has no further obligations.

The contributions are recognised as an expense in the statement of comprehensive income when they fall due. Amounts owed but not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the Company in independently administered funds.

Impairment

At each balance sheet date, the company reviews the carrying amount of its assets to determine whether there is any indication that any items have suffered an impairment loss. If any such indication exists, the recoverable amount of an asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

3.	EMPLOYEES AND DIRECTORS

2023

2022

£

£

Wages and salaries

4,296,323

2,480,717

Social security costs

489,750

265,573

Other pension costs

65,414

36,161

4,851,487

2,782,451

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

2023

2022

Directors

2

2

Finance

4

3

Sales and administration

81

59

87

64

4.	DIRECTORS' EMOLUMENTS

2023

2022

£

£

Directors' remuneration

277,320

248,500

Directors' pension contributions to money purchase schemes

1,321

1,321

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

Money purchase schemes

1

1

Information regarding the highest paid director is as follows:

2023

2022

£

£

Emoluments etc

264,750

236,000

Pension contributions to money purchase schemes

1,321

1,321

5.	OPERATING PROFIT

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

2023

2022

£

£

Hire of plant and machinery

9,365

7,451

Other operating leases

518,760

333,359

Depreciation - owned assets

115,578

72,207

Profit on disposal of fixed assets

(2,241

)

(33

)

Intellectual property amortisation

1,191

1,192

Auditors' remuneration

12,086

10,000

Foreign exchange differences

85,038

30,262