Professional Beauty Systems (Holdings) L - Limited company accounts 20.1

REGISTERED NUMBER: SC313968 (Scotland)

GROUP STRATEGIC REPORT, DIRECTORS' REPORT AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2019

FOR

PROFESSIONAL BEAUTY SYSTEMS (HOLDINGS)

LIMITED

Page

Company Information

1

Group Strategic Report

2

Directors' Report

3

Report of the Independent Auditors

5

Consolidated Statement of Comprehensive Income

7

Consolidated Balance Sheet

8

Company Balance Sheet

9

Consolidated Statement of Changes in Equity

10

Company Statement of Changes in Equity

11

Consolidated Cash Flow Statement

12

Notes to the Consolidated Financial Statements

13

DIRECTORS:

B Aitken

G P Hegarty

S J Macdonough

Mrs C F Macdonough

S McLaughlin

SECRETARY:

B Aitken

REGISTERED OFFICE:

Unit 3 Newmains Avenue

Inchinnan Business Park

Renfrew

PA4 9RR

REGISTERED NUMBER:

SC313968 (Scotland)

AUDITORS:

Consilium Audit Limited (Statutory Auditor)

169 West George Street

Glasgow

G2 2LB

The directors present their strategic report of the Company and the Group for the year ended 30 September 2019.

REVIEW OF BUSINESS AND KEY PERFORMANCE INDICATORS

The Group continued to manufacture and sell professional haircare and beauty products to the trade throughout the year.

The Group's revenue increased by 13.3% to £30,629,061 and profit before tax increased by 43.3% to £4,100,978.

The directors believe the Group's financial position at the year end is very strong, due to the Group having a net current asset

position of £18,203,479. Shareholders' funds total £26,595,278, with distributable profits of £26,582,706.

COVID-19

At the time of signing the financial statement, there has been no material impact to the Group as a result of the COVID-19

pandemic. We have been able to innovate and create new opportunities which have helped mitigate the effects of the pandemic.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have assessed the main risk facing the Group as being the competition from other companies within the industry. The

directors believe that the reputation of the Group and the quality of the products will mitigate this risk.

FINANCIAL RISK MANAGEMENT

The Group finances its day-to-day operations through cash reserves and surplus cash generated through the Group's operations.

Overall the Group's exposure to price risk, credit risk, liquidity risk and cash flow risk is minimal and therefore not material for the

assessment of the assets, liabilities, financial position and profit or loss of the Group.

ON BEHALF OF THE BOARD:

S McLaughlin - Director

17 June 2020

The directors present their report with the financial statements of the Company and the Group for the year ended

30 September 2019.

PRINCIPAL ACTIVITY

The principal activity of the Group during the year was the manufacture and sale of professional haircare and beauty products to

the trade.

DIVIDENDS

Details of dividends paid are included within the notes to the financial statements.

DIRECTORS

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

B Aitken

G P Hegarty

S J Macdonough

Mrs C F Macdonough

S McLaughlin

CHARITABLE DONATIONS AND EXPENDITURE

During the year the Group made donations of £20,000 (2018: £10,000) to local charities.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group 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 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 the Group and of the profit or loss of

the Group 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 and

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

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

fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the

Company's website.

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 Group'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 Group's auditors are aware of

that information.

AUDITORS

The auditors, Consilium Audit Limited (Statutory Auditor), will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

S McLaughlin - Director

17 June 2020

Opinion

We have audited the financial statements of Professional Beauty Systems (Holdings) Limited (the 'Parent Company') and its

subsidiaries (the 'Group') for the year ended 30 September 2019 which comprise the Consolidated Statement of Comprehensive

Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement

of Changes in Equity, Consolidated Cash Flow Statement and 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 Group's and of the Parent Company affairs as at 30 September 2019 and of the Group's 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 Group in accordance with the ethical requirements that are relevant to our audit

of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in

accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our opinion.

Conclusions relating to going concern

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

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

-

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

Other information

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

Report and the Directors' Report, 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 Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Directors' Report 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 Group and the Parent Company and its environment obtained in the course

of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.

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 by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

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

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

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as

the directors determine necessary to enable the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group's and the Parent 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 Group or the Parent Company or to cease operations, or have no

realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable

assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always

detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis

of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's

website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act

2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to

state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or

assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this

report, or for the opinions we have formed.

David Holt (Senior Statutory Auditor)

for and on behalf of Consilium Audit Limited (Statutory Auditor)

169 West George Street

Glasgow

G2 2LB

19 June 2020

TURNOVER

3

30,629,061

27,038,107

Cost of sales

16,309,905

14,732,378

GROSS PROFIT

14,319,156

12,305,729

Administrative expenses

10,239,725

9,453,677

OPERATING PROFIT

5

4,079,431

2,852,052

Interest receivable and similar income

6

24,046

10,338

PROFIT BEFORE TAXATION

4,103,477

2,862,390

Tax on profit

7

845,538

611,722

PROFIT FOR THE FINANCIAL YEAR

3,257,939

2,250,668

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

3,257,939

2,250,668

Profit attributable to:

Owners of the parent

3,361,578

2,386,361

Non-controlling interests

(103,639

)

(135,693

)

3,257,939

2,250,668

Total comprehensive income attributable to:

Owners of the parent

3,361,578

2,386,361

Non-controlling interests

(103,639

)

(135,693

)

3,257,939

2,250,668

FIXED ASSETS

Intangible assets

10

3,275,628

3,140,101

Tangible assets

11

5,312,234

5,296,923

Investments

12

-

-

8,587,862

8,437,024

CURRENT ASSETS

Stocks

13

7,433,019

5,613,935

Debtors

14

9,664,157

6,934,268

Investments

15

19,338

23,310

Cash at bank and in hand

7,771,552

8,109,019

24,888,066

20,680,532

CREDITORS

Amounts falling due within one year

16

6,684,587

5,537,995

NET CURRENT ASSETS

18,203,479

15,142,537

TOTAL ASSETS LESS CURRENT LIABILITIES

26,791,341

23,579,561

PROVISIONS FOR LIABILITIES

19

196,063

162,222

NET ASSETS

26,595,278

23,417,339

CAPITAL AND RESERVES

Called up share capital

20

2,375

2,375

Capital redemption reserve

21

125

125

Other reserves

21

10,072

14,004

Retained earnings

21

26,582,706

23,400,835

SHAREHOLDERS' FUNDS

26,595,278

23,417,339

The financial statements were approved by the Board of Directors and authorised for issue on 17 June 2020 and were signed on its

behalf by:

S McLaughlin - Director

S J Macdonough - Director

FIXED ASSETS

Intangible assets

10

-

-

Tangible assets

11

-

-

Investments

12

3,066,634

3,066,634

3,066,634

3,066,634

CURRENT ASSETS

Debtors

14

1,924,421

2,850,251

Cash at bank and in hand

132,540

12,645

2,056,961

2,862,896

CREDITORS

Amounts falling due within one year

16

929,625

1,229,625

NET CURRENT ASSETS

1,127,336

1,633,271

TOTAL ASSETS LESS CURRENT LIABILITIES

4,193,970

4,699,905

CREDITORS

Amounts falling due after more than one year

17

1,214,481

2,140,311

NET ASSETS

2,979,489

2,559,594

CAPITAL AND RESERVES

Called up share capital

20

2,375

2,375

Capital redemption reserve

21

125

125

Retained earnings

21

2,976,989

2,557,094

SHAREHOLDERS' FUNDS

2,979,489

2,559,594

Company's profit for the financial year

499,895

584,919

The financial statements were approved by the Board of Directors and authorised for issue on 17 June 2020 and were signed on its behalf by:

S McLaughlin - Director

S J Macdonough - Director

Called up

Capital

share

Retained

redemption

capital

earnings

reserve

£

£

£

Balance at 1 October 2017

2,437

21,306,127

63

Changes in equity

Repurchase of share capital

(62

)

(62,000

)

62

Dividends

-

(94,000

)

-

Transfer of minority interest losses

-

(135,653

)

-

Total comprehensive income

-

2,386,361

-

2,375

23,400,835

125

Non-controlling interest arising on business combination

-

-

-

Balance at 30 September 2018

2,375

23,400,835

125

Changes in equity

Dividends

-

(80,000

)

-

Transfer to other reserves

-

3,932

-

Transfer of minority interest losses

-

(103,639

)

-

Total comprehensive income

-

3,361,578

-

Balance at 30 September 2019

2,375

26,582,706

125

Other

Non-controlling

Total

reserves

Total

interests

equity

£

£

£

£

Balance at 1 October 2017

14,004

21,322,631

-

21,322,631

Changes in equity

Repurchase of share capital

-

(62,000

)

-

(62,000

)

Dividends

-

(94,000

)

-

(94,000

)

Transfer of minority interest losses

-

(135,653

)

135,653

-

Total comprehensive income

-

2,386,361

(135,693

)

2,250,668

14,004

23,417,339

(40

)

23,417,299

Non-controlling interest arising on business combination

-

-

40

40

Balance at 30 September 2018

14,004

23,417,339

-

23,417,339

Changes in equity

Dividends

-

(80,000

)

-

(80,000

)

Transfer to other reserves

(3,932

)

-

-

-

Transfer of minority interest losses

-

(103,639

)

103,639

-

Total comprehensive income

-

3,361,578

(103,639

)

3,257,939

Balance at 30 September 2019

10,072

26,595,278

-

26,595,278

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 October 2017

2,437

2,128,175

63

2,130,675

Changes in equity

Repurchase of share capital

(62

)

(62,000

)

62

(62,000

)

Dividends

-

(94,000

)

-

(94,000

)

Total comprehensive income

-

584,919

-

584,919

Balance at 30 September 2018

2,375

2,557,094

125

2,559,594

Changes in equity

Dividends

-

(80,000

)

-

(80,000

)

Total comprehensive income

-

499,895

-

499,895

Balance at 30 September 2019

2,375

2,976,989

125

2,979,489

Cash flows from operating activities

Cash generated from operations

25

1,338,195

4,129,138

Tax paid

(638,143

)

(792,008

)

Net cash from operating activities

700,052

3,337,130

Cash flows from investing activities

Purchase of intangible fixed assets

(650,000

)

(294,467

)

Purchase of tangible fixed assets

(340,564

)

(485,056

)

Sale of tangible fixed assets

5,027

27,000

Interest received

28,018

10,338

Net cash from investing activities

(957,519

)

(742,185

)

Cash flows from financing activities

Share buyback

-

(62,000

)

Equity dividends paid

(80,000

)

(94,000

)

Net cash from financing activities

(80,000

)

(156,000

)

(Decrease)/increase in cash and cash equivalents

(337,467

)

2,438,945

Cash and cash equivalents at beginning of year

26

8,109,019

5,670,074

Cash and cash equivalents at end of year

26

7,771,552

8,109,019

1.	STATUTORY INFORMATION

Professional Beauty Systems (Holdings) Limited is a private company, limited by shares, registered in Scotland. 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 (£).

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.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all Group undertakings.

These are adjusted, where appropriate, to conform to Group accounting policies. Acquisitions are accounted for under the

acquisition method and goodwill on consolidation is capitalised and written off over ten years from the year of acquisition.

The subsidiaries, Jerome Russell Limited, Hive of Beauty Limited and The Knot Dr. Limited are accounted for using the

acquisition method. Professional Beauty Systems Limited is consolidated under merger accounting. The results of

companies acquired or disposed of are included in the Consolidated Statement of Comprehensive Income after or up to

date that control passes retrospectively. As a Consolidated Statement of Comprehensive Income is published, a separate

income statement for the parent Company is omitted from the Group financial statements by virtue of section 408 of the

companies.

Significant judgements and estimates

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

the financial statements the directors have made the following judgements:

-

Determine whether leases entered into by the Group as a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.

-

Determine whether there are indicators of impairment of the Group's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.

-

Determine whether any bad debt provision is required via review of trade debtors, with debts provided for on a specific basis. Factors considered include customer payment history and agreed credit terms.

-

Determine whether any stock provision is required via comparison of cost and net realisable value of stock on an item by item basis.

-

Determine the whether there are indicators of impairment of the Group's intangible assets (including goodwill). Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.

Turnover

The turnover shown in the Consolidated Statement of Comprehensive Income represents the value of all goods sold during

the year, less returns received and services delivered at a selling price exclusive of Value Added Tax. Sales are recognised at

the point at which the Group has fulfilled its contractual obligations and the risks and rewards attaching to the product,

such as obsolescence, have been transferred to the customer.

Goodwill

Purchased goodwill, being the amount paid in connection with the acquisition of businesses in 2015 & 2018, is being

amortised evenly over its estimated useful life of ten years.

Goodwill arising on consolidation is being amortised evenly over its estimated useful life of ten years as detailed in the

above "basis of consolidation" accounting policy.

Trademarks, brands, licences and intellectual property

Trademarks, brands, licences and intellectual property were initially measured at cost and amortised in equal instalments

over 10 years based on the directors' estimate of their useful economic life. They are tested for impairment whenever

events give rise to concerns over their carrying value. They are assessed by comparing the carrying value of the assets to

the higher of net realisable value and value in use.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each

asset over its estimated useful life.

Land and buildings

-

not provided

Improvements to property

-

15% reducing balance

Fixtures, fittings & equipment

-

15% on cost and 15% reducing balance

Motor vehicles

-

25% on cost

Tangible fixed assets are stated at cost less depreciation. Cost represents purchase price together with any incidental costs

of acquisition. Assets are not depreciated until they are brought into use.

Depreciation is not charged on land and buildings as it is the opinion of the directors that the residual value of the property

is lower than the residual value of the the land and buildings. An annual impairment review is carried out under Financial

Reporting Standard 102 on that property.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving

items.

Cost consists of the purchase price of materials and an appropriate proportion of production overheads, where applicable.

Financial instruments

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

Financial instruments are classified and accounted for as financial assets, financial liabilities or equity instruments,

according to the substance of the contractual arrangement.

Financial instruments which are assets are stated at cost less any provision for impairment. Financial liabilities are stated at

principal capital amounts outstanding at the period end. Issue costs relating to financial liabilities are deducted from the

outstanding balance and are amortised over the period to the due date for repayment of the financial liability.

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of

its liabilities. A financial liability is any contractual arrangement for an entity to deliver cash to the holder of the associated

financial instrument.