Forever Living Products (U.K.) Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02269910 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

FOR

FOREVER LIVING PRODUCTS (U.K.) LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

5

Statement of Income and Retained Earnings

7

Balance Sheet

8

Cash Flow Statement

9

Notes to the Cash Flow Statement

10

Notes to the Financial Statements

11

DIRECTORS:

R G Maughan

G E Maughan

SECRETARIES:

G E Maughan

Abogado Nominees Limited

REGISTERED OFFICE:

Longbridge Manor

Longbridge

Warwick

Warwickshire

CV34 6RB

REGISTERED NUMBER:

02269910 (England and Wales)

AUDITORS:

Luckmans Duckett Parker Limited

1110 Elliott Court

Coventry Business Park

Herald Avenue

Coventry

West Midlands

CV5 6UB

The directors present their strategic report for the year ended 31 December 2019.

REVIEW OF BUSINESS

2019 has been a less successful year for the company, with sales decreasing by 24%.

Legislation continues to be of some risk to the company, in particular the Nutrition and Health Claims

Regulations.

The company's Compliance & Regulatory Support Team continues to work with business owners on what is

compliant and what they can say in adverts and social media posts.

Forever has a strong sustainability policy and has reduced waste by 50% and increased recycling from 26%

to 61% since 2006.

One of the company's key measurements of effectiveness of its operations is calculating gross profit margin.

The company's gross profit margin for the year is up on previous years at 72% (2018 - 69%). The company

has recorded an operating loss of £256,307 in the current year compared to an operating profit of £89,286 in

2018.

The balance sheet on page 8 shows that the company's net assets at the year-end have decreased.

The company's cash levels have decreased by £4,099,803 from £9,847,154 at the end of 2018 to

£5,747,351 at the end of the current financial year.

PRINCIPAL RISKS AND UNCERTAINTIES

The Company's activities expose it to a number of financial risks including credit risk and cash flow risk.

Cash flow risk

The company purchases all its products from the from Forever Direct, a related party of the Company and

therefore is exposed to movement in the Euro to Pound Sterling exchange rate. The company minimises the

risk of exchange rate fluctuations by operating a currency bank account. The company monitors the Euro

exchange rate and purchases when the rate is favourable.

Credit risk

The Company's principal financial assets are cash and trade and other receivables.

The Company's credit risk is primarily attributable to its trade receivables. The amounts presented in the

balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where

there is an identified loss event which, based on previous experience, is evidence of a reduction in the

recoverability of the cash flows.

The Company has no significant concentration of credit risk, with exposure spread over a large number of

customers.

Liquidity risk

In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future

developments, the Company maintains sufficient cash reserves at all times.

Further details regarding liquidity risk can be found in the note 1 of the financial statements on page 12

Price risk

The price of products may increase due to changes in exchange rates and/or production costs but is

mitigated by being part of a Group purchasing arrangement whereby all of our prices are set by America and

costs are also set by a worldwide pricing structure and thus exposure is reduced.

FUTURE DEVELOPMENTS

The Directors expect the general level of activity in 2020 to fluctuate as a result of COVID-19. The initial

impact of the pandemic is expected to be somewhat offset by a significant increase in new Forever Business

Owners in April, May and June.

The Company has been planning for Brexit. It will be bringing in additional stocks into its' warehouse facility

to be able to cover any delays in bringing in bulk shipments to its' product centres following the UK's exit

from the EU.

GOING CONCERN

The company's business activities together with the factors likely to affect its future development are set out

above.

The principal risks and uncertainties of the company are set out above. The directors have considered the

financial and cash flow forecasts for a period more than 12 months from the date of signing these financial

statements and concluded that income and future cash flows will continue to be derived from the company's

principal activity and that the company has sufficient financial resources available for the foreseeable future.

As a consequence, the directors believe that the company is well placed to manage its business risks and

meet its liabilities as they fall due despite the current uncertain economic outlook. Accordingly, they continue

to adopt the going concern basis in preparing the annual report and financial statements.

ON BEHALF OF THE BOARD:

G E Maughan - Director

24 July 2020

The directors present their report with the financial statements of the company for the year ended 31 December 2019.

DIVIDENDS

No interim dividend was paid during the year. The directors recommend a final dividend of £372 per share.

The total distribution of dividends for the year ended 31 December 2019 will be £ 3,720,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date

of this report.

R G Maughan

G E Maughan

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

statements in accordance with applicable law and regulations.

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

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

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company

law the directors must not approve the financial statements unless they are satisfied that they give a true

and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In

preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

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

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

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

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

of the company and enable them to ensure that the financial statements comply with the Companies Act

2006. They are also responsible for safeguarding the assets of the company and hence for taking

reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

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

Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the

steps that he ought to have taken as a director in order to make himself aware of any relevant audit

information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Luckmans Duckett Parker Limited, will be proposed for re-appointment at the forthcoming

Annual General Meeting.

ON BEHALF OF THE BOARD:

G E Maughan - Director

24 July 2020

Opinion

We have audited the financial statements of Forever Living Products (U.K.) Limited (the 'company') for the

year ended 31 December 2019 which comprise the Statement of Income and Retained Earnings, Balance

Sheet, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements,

including a summary of significant accounting policies. The financial reporting framework that has been

applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial

Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'

(United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its loss for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the Auditors'

responsibilities for the audit of the financial statements section of our report. We are independent of the

company in accordance with the ethical requirements that are relevant to our audit of the financial

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

responsibilities in accordance with these requirements. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

report to you where:

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

-

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

Other information

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

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

Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent

otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the financial

statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we

identify such material inconsistencies or apparent material misstatements, we are required to determine

whether there is a material misstatement in the financial statements or a material misstatement of the other

information. If, based on the work we have performed, we conclude that there is a material misstatement of

this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

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

Matters on which we are required to report by exception

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

of the audit, we have not identified material misstatements in the Strategic Report or the Report of the

Directors.

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

report to you if, in our opinion:

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

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

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

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

Responsibilities of directors

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

responsible for the preparation of the financial statements and for being satisfied that they give a true and

fair view, and for such internal control as the directors determine necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the company or to cease

operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

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

free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our

Report of the Auditors.

Use of our report

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

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's

members those matters we are required to state to them in a Report of the Auditors and for no other

purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other

than the company and the company's members as a body, for our audit work, for this report, or for the

opinions we have formed.

Mark Spafford ACA FCCA (Senior Statutory Auditor)

for and on behalf of Luckmans Duckett Parker Limited

1110 Elliott Court

Coventry Business Park

Herald Avenue

Coventry

West Midlands

CV5 6UB

20 August 2020

TURNOVER

3

24,510,601

32,193,744

Cost of sales

6,870,553

9,982,161

GROSS PROFIT

17,640,048

22,211,583

Distribution costs

11,166,085

14,615,490

Administrative expenses

6,730,270

7,506,807

17,896,355

22,122,297

OPERATING (LOSS)/PROFIT

5

(256,307

)

89,286

Interest receivable and similar income

40,618

20,295

(215,689

)

109,581

Interest payable and similar expenses

6

2,548

-

(LOSS)/PROFIT BEFORE TAXATION

(218,237

)

109,581

Tax on (loss)/profit

7

(39,259

)

34,932

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

(178,978

)

74,649

Retained earnings at beginning of year

7,729,763

7,655,114

Dividends

8

(3,720,000

)

-

RETAINED EARNINGS AT END OF YEAR

3,830,785

7,729,763

FIXED ASSETS

Tangible assets

9

82,652

73,757

CURRENT ASSETS

Stocks

10

329,852

370,024

Debtors

11

1,138,299

1,278,960

Cash at bank and in hand

5,747,351

9,847,154

7,215,502

11,496,138

CREDITORS

Amounts falling due within one year

12

3,110,169

3,534,932

NET CURRENT ASSETS

4,105,333

7,961,206

TOTAL ASSETS LESS CURRENT LIABILITIES

4,187,985

8,034,963

PROVISIONS FOR LIABILITIES

14

347,200

295,200

NET ASSETS

3,840,785

7,739,763

CAPITAL AND RESERVES

Called up share capital

15

10,000

10,000

Retained earnings

16

3,830,785

7,729,763

SHAREHOLDERS' FUNDS

3,840,785

7,739,763

The financial statements were approved by the Board of Directors and authorised for issue on 24 July 2020 and were signed on its behalf by:

G E Maughan - Director

Cash flows from operating activities

Cash generated from operations

1

(298,966

)

2,640,942

Interest paid

(2,548

)

-

Tax paid

(75,180

)

(221,000

)

Net cash from operating activities

(376,694

)

2,419,942

Cash flows from investing activities

Purchase of tangible fixed assets

(43,810

)

(9,996

)

Sale of tangible fixed assets

83

7,000

Interest received

40,618

20,295

Net cash from investing activities

(3,109

)

17,299

Cash flows from financing activities

Equity dividends paid

(3,720,000

)

-

Net cash from financing activities

(3,720,000

)

-

(Decrease)/increase in cash and cash equivalents

(4,099,803

)

2,437,241

Cash and cash equivalents at beginning of year

2

9,847,154

7,409,913

Cash and cash equivalents at end of year

2

5,747,351

9,847,154

1.	RECONCILIATION OF (LOSS)/PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

(Loss)/profit before taxation

(218,237

)

109,581

Depreciation charges

34,915

47,246

(Profit)/loss on disposal of fixed assets

(83

)

418

Finance costs

2,548

-

Finance income

(40,618

)

(20,295

)

(221,475

)

136,950

Decrease in stocks

40,172

956,838

Decrease in trade and other debtors

221,084

2,008,925

Decrease in trade and other creditors

(338,747

)

(461,771

)

Cash generated from operations

(298,966

)

2,640,942

2.	CASH AND CASH EQUIVALENTS

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

respect of these Balance Sheet amounts:

Year ended 31 December 2019

31.12.19

1.1.19

£

£

Cash and cash equivalents

5,747,351

9,847,154

Year ended 31 December 2018

31.12.18

1.1.18

£

£

Cash and cash equivalents

9,847,154

7,409,913

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.19

Cash flow

At 31.12.19

£

£

£

Net cash

Cash at bank and in hand

9,847,154

(4,099,803

)

5,747,351

9,847,154

(4,099,803

)

5,747,351

Total

9,847,154

(4,099,803

)

5,747,351

1.	STATUTORY INFORMATION

Forever Living Products (U.K.) Limited is a private company, limited by shares , registered in England

and Wales. The company's registered number and registered office address can be found on the

Company Information page.

The address of the registered office is given on the Company Information page. The nature of the

group's operations and its principal activities are set out in the Strategic Report on pages 1 and 2.

The functional currency of Forever Living Products (U.K.) Limited is considered to be pounds sterling

because that is the currency of the primary economic environment in which the Company operates.

The financial statements are also presented in pounds 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.

Going concern

The Directors have considered the financial and cash flow forecast for a period of more than 12

months from the date of signing these financial statements and concluded that income and future

cash flows will continue to be derived from the Company's principal activity and that the Company has

sufficient financial resources available for the foreseeable future. As a consequence, the Directors

believe that the Company is well placed to manage its business risks despite the current uncertain

economic outlook. Accordingly, they continue to adopt the going concern basis in preparing the

annual report and financial statements.

Significant judgements and estimates

There are no critical judgements and estimates that the directors have made in the process of

applying the Company's accounting policies.

Turnover

Turnover represents the aggregate of amounts receivable for services and goods supplied in the

ordinary course of business, excluding value added tax. Turnover from the sale of goods is

recognised when the goods have been ordered and despatched to the business owner or retail

customer.

Tangible fixed assets

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

Fixtures and fittings

-

20% on cost

Motor vehicles

-

25% on cost

Computer equipment

-

33% on cost

Stocks

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

obsolete and slow moving items.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement,

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

equity.

Current or deferred taxation assets and liabilities are not discounted.

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

enacted or substantively enacted by the balance sheet date.

Deferred tax

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

the balance sheet date.

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

different from those in which they are recognised in financial statements. Deferred tax is measured

using tax rates and laws that have been enacted or substantively enacted by the year end and that

are expected to apply to the reversal of the timing difference.

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

probable that they will be recovered against the reversal of deferred tax liabilities or other future

taxable profits.

Foreign currencies

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

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

exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at

the operating result.

Hire purchase and leasing commitments

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

period of the lease.

Pension costs and other post-retirement benefits

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

company's pension scheme are charged to profit or loss in the period to which they relate.

Provisions for liabilities

Provisions are recognised when the company has a present obligation (legal or constructive) as a

result of a past event, it is probable that the group will be required to settle the obligation, and a

reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the

present obligation at the end of the reporting period, taking into account the risks and uncertainties

surrounding the obligation.

3.

TURNOVER

The turnover and loss (2018 - profit) before taxation are attributable to the one principal activity of the

company.

An analysis of turnover by class of business is given below:

2019

2018

£

£

Sale of goods

22,944,557

30,213,437

Delivery revenue

951,962

1,333,742

Event revenue

125,202

246,344

Literature revenue

203,763

363,487

Other income

285,117

36,734

24,510,601

32,193,744

4.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

2,043,640

2,234,050

Social security costs

177,879

173,917

Other pension costs

259,054

220,653

2,480,573

2,628,620

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

2019

2018

Administrative

63

58

Manual

13

20

76

78

2019

2018

£

£

Directors' remuneration

37,765

50,969

5.	OPERATING (LOSS)/PROFIT

The operating loss (2018 - operating profit) is stated after charging/(crediting):

2019

2018

£

£

Other operating leases

521,617

569,831

Depreciation - owned assets

34,915

43,102

(Profit)/loss on disposal of fixed assets

(83

)

418

Auditors' remuneration

14,980

20,722

Auditors' remuneration for non audit work

(248

)

5,600

Foreign exchange differences

(3,707

)

5,543

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2019

2018

£

£

Bank interest

2,548

-

7.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the loss for the year was as follows:

2019

2018

£

£

Current tax:

UK corporation tax

(19,989

)

34,932

Deferred tax

(19,270

)

-

Tax on (loss)/profit

(39,259

)

34,932

Reconciliation of total tax (credit)/charge included in profit and loss

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

difference is explained below:

2019

2018

£

£

(Loss)/profit before tax

(218,237

)

109,581

(Loss)/profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

(41,465

)

20,820

Effects of:

Expenses not deductible for tax purposes

2,206

13,322

Adjustments to tax charge in respect of previous periods

-

97

Tax rate change

-

693

Total tax (credit)/charge

(39,259

)

34,932

A reduction in the UK corporation rate from 19% to 17% (effective from 1 April 2020) was substantially

enacted on 6 September 2016. This will reduce the company's future current tax charge accordingly.

The deferred tax liability at 31 December 2018 has been calculated based on these rates.

Following the UK election 12 December 2019, it is expected that that the rate reduction from 19% to

17% will not take place, as planned, effective from 1 April 2020. The deferred tax liability at 31

December 2019 has been calculated based on these rates.

8.

DIVIDENDS

2019

2018

£

£

Ordinary shares of £1 each

Final

3,720,000

-

9.	TANGIBLE FIXED ASSETS

Fixtures

and

Motor

Computer

fittings

vehicles

equipment

Totals

£

£

£

£

COST

At 1 January 2019

349,873

15,870

225,790

591,533

Additions

38,154

-

5,656

43,810

Disposals

(674

)

-

-

(674

)

At 31 December 2019

387,353

15,870

231,446

634,669

DEPRECIATION

At 1 January 2019

287,876

15,870

214,030

517,776

Charge for year

27,553

-

7,362

34,915

Eliminated on disposal

(674

)

-

-

(674

)

At 31 December 2019

314,755

15,870

221,392

552,017

NET BOOK VALUE

At 31 December 2019

72,598

-

10,054

82,652

At 31 December 2018

61,997

-

11,760

73,757

10.

STOCKS

2019

2018

£

£

Stocks

329,852

370,024

11.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Trade debtors

414,520

453,566

Amounts owed by group undertakings

164,762

275,554

Tax

61,153

-

Deferred tax asset

67,143

47,873

Prepayments and accrued income

430,721

501,967

1,138,299

1,278,960

12.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Trade creditors

400,878

296,223

Amounts owed to group undertakings

62,856

26,612

Tax

-

34,016

Social security and other taxes

463,068

679,220

Accruals and deferred income

2,183,367

2,498,861

3,110,169

3,534,932