Professional Beauty Systems Limited - Limited company accounts 18.1.1

REGISTERED NUMBER: SC080712 (Scotland)

STRATEGIC REPORT, DIRECTORS' REPORT AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2017

FOR

PROFESSIONAL BEAUTY SYSTEMS LIMITED

Page

Company Information

1

Strategic Report

2

Directors' Report

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

DIRECTORS:

B Aitken

G P Hegarty

S J Macdonough

S McPartland

Mrs C F Macdonough

Mrs S J Cunniffe

S McLaughlin

SECRETARY:

B Aitken

REGISTERED OFFICE:

3 Newmains Avenue

Inchinnan Business Park

Renfrew

PA4 9RR

REGISTERED NUMBER:

SC080712 (Scotland)

AUDITORS:

Consilium Audit Limited (Statutory Auditor)

169 West George Street

Glasgow

G2 2LB

The directors present their strategic report for the year ended 30 September 2017.

REVIEW OF BUSINESS AND KEY PERFORMANCE INDICATORS

During the course of the year the Company continued to manufacture and sell professional haircare and beauty products to the

trade. The turnover of the Company increased by 13.9% and profit before tax decreased by 10.5%.

At the year end the Company had shareholders funds of £18,599,195 including distributable profits of £18,582,691. The directors

therefore believe the Company's position to be satisfactory especially as the Company's current assets exceed its current liabilities

by £13,594,277.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have assessed the main risk facing the Company as being from the increased costs of raw materials, energy costs and

competition from other manufacturers in similar operations.

The directors believe that the quality of our products and customer service will help mitigate this risk and hope to see continued

growth and satisfactory trading results in coming year.

FINANCIAL RISK MANAGEMENT

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

operations. Overall the Company'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 Company.

ON BEHALF OF THE BOARD:

S McLaughlin - Director

28 June 2018

The directors present their report and the financial statements of the company for the year ended 30 September 2017.

PRINCIPAL ACTIVITY

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

the trade.

DIVIDENDS

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

DIRECTORS

The directors shown below have held office during the whole of the period from 1 October 2016 to the date of this report.

B Aitken

G P Hegarty

S J Macdonough

S McPartland

Mrs C F Macdonough

Mrs S J Cunniffe

Other changes in directors holding office are as follows:

S McLaughlin - appointed 4 January 2017

CHARITABLE DONATIONS AND EXPENDITURE

During the year the Company made donations of £10,000 (2016: £nil) to local charities.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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 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.

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 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, 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

28 June 2018

Opinion

We have audited the financial statements of Professional Beauty Systems Limited (the 'Company') for the year ended

30 September 2017 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity 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).

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.

In our opinion the financial statements:

-	give a true and fair view of the state of the Company's affairs as at 30 September 2017 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

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 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 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, 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.

Opinion 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 Directors' Report for the financial year 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.

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 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, 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 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 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 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.

David Holt (Senior Statutory Auditor)

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

169 West George Street

Glasgow

G2 2LB

28 June 2018

TURNOVER

3

20,527,286

18,020,480

Cost of sales

11,791,610

9,814,374

GROSS PROFIT

8,735,676

8,206,106

Administrative expenses

6,053,508

5,149,410

2,682,168

3,056,696

Other operating income

4

260,078

252,548

OPERATING PROFIT

7

2,942,246

3,309,244

Interest receivable and similar income

8

98,274

88,710

PROFIT BEFORE TAXATION

3,040,520

3,397,954

Tax on profit

9

605,414

668,099

PROFIT FOR THE FINANCIAL YEAR

2,435,106

2,729,855

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,435,106

2,729,855

FIXED ASSETS

Tangible assets

11

5,134,558

3,325,024

CURRENT ASSETS

Stocks

12

4,049,472

3,572,870

Debtors

13

9,359,019

9,588,207

Investments

14

23,310

31,592

Cash at bank and in hand

4,366,449

3,815,175

17,798,250

17,007,844

CREDITORS

Amounts falling due within one year

15

4,203,973

4,074,636

NET CURRENT ASSETS

13,594,277

12,933,208

TOTAL ASSETS LESS CURRENT LIABILITIES

18,728,835

16,258,232

PROVISIONS FOR LIABILITIES

17

129,640

94,143

NET ASSETS

18,599,195

16,164,089

CAPITAL AND RESERVES

Called up share capital

18

100

100

Other reserves

19

16,404

24,686

Retained earnings

19

18,582,691

16,139,303

SHAREHOLDERS' FUNDS

18,599,195

16,164,089

The financial statements were approved by the Board of Directors on 28 June 2018 and were signed on its behalf by:

S McLaughlin - Director

S J Macdonough - Director

Called up

share

Retained

Other

Total

capital

earnings

reserves

equity

£

£

£

£

Balance at 1 October 2015

100

14,415,981

18,153

14,434,234

Changes in equity

Dividends

-

(1,000,000

)

-

(1,000,000

)

Total comprehensive income

-

2,729,855

-

2,729,855

Transfer to other reserves

-

(6,533

)

6,533

-

Balance at 30 September 2016

100

16,139,303

24,686

16,164,089

Changes in equity

Total comprehensive income

-

2,435,106

-

2,435,106

Transfer to other reserves

-

8,282

(8,282

)

-

Balance at 30 September 2017

100

18,582,691

16,404

18,599,195

1.	STATUTORY INFORMATION

Professional Beauty Systems 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.

Judgements in applying accounting policies and key sources of estimation uncertainty

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 Company 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 Company'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.

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as

permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of Section 33 Related Party Disclosures paragraph 33.7.

Turnover

The turnover shown in the 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 Company has fulfilled its contractual obligations and the risks and rewards attaching to the product, such as

obsolescence, have been transferred to the customer.

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 buildings included within land and buildings as it is the opinion of the directors that the

residual value of the property is higher than the cost value. An impairment review is carried out 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.

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

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

Transactions denominated in foreign currencies are recorded at the rates of exchange ruling at the dates of the

transactions, or at an average rate for the period if the rates do not fluctuate significantly. Monetary assets and liabilities

are translated at year end exchange rates. The resulting exchange rate difference are charged to the profit and loss

account.

Pension costs

The Company operates a defined contribution pension scheme for employees. The assets of the scheme are held

separately from those of the Company. The annual contributions payable are charged to the Statement of Comprehensive

Income in the year in which they relate.

Operating lease costs

Rentals applicable to operating leases, where substantially all of the benefits and risks of ownership remain with the lessor,

are charged against profits on a straight line basis over the period of the lease.

Current asset investments

Current asset investments are held at their market value.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the Company.

An analysis of turnover by geographical market is given below:

2017

2016

£

£

United Kingdom

14,805,737

11,923,541

Europe

4,284,011

4,008,676

Rest of World

1,437,538

2,088,263

20,527,286

18,020,480

4.	OTHER OPERATING INCOME

2017

2016

£

£

Management charge income

260,078

252,548

5.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

5,407,593

4,668,736

Social security costs

447,065

374,503

Other pension costs

198,744

231,314

6,053,402

5,274,553

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

2017

2016

Production staff

96

90

Administrative staff

62

50

158

140

6.	DIRECTORS' EMOLUMENTS

2017

2016

£

£

Directors' remuneration

1,112,874

1,133,109

Directors' pension contributions to money purchase schemes

110,299

182,076

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

Money purchase schemes

7

5

Information regarding the highest paid director is as follows:

2017

2016

£

£

Emoluments etc

409,726

484,202

Pension contributions to money purchase schemes

24,400

13,200

The Company considers key management to be the directors of the Company. The key management remuneration for the

year is as disclosed above.

7.	OPERATING PROFIT

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

2017

2016

£

£

Depreciation - owned assets

285,809

225,195

Loss on disposal of fixed assets

-

10,955

Auditors' remuneration

12,000

12,000

Foreign exchange differences

(6,237

)

43,338

Operating lease costs - other

49,446

184,238

8.

INTEREST RECEIVABLE AND SIMILAR INCOME

2017

2016

£

£

Deposit account interest

18,274

1,866

Loan interest receivable

80,000

80,311

Change in fair value of investments

-

6,533

98,274

88,710

9.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2017

2016

£

£

Current tax:

UK corporation tax

580,663

701,643

Over provision in prior year

(10,746

)

-

Total current tax

569,917

701,643

Deferred tax

35,497

(33,544

)

Tax on profit

605,414

668,099

Reconciliation of total tax 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:

2017

2016

£

£

Profit before tax

3,040,520

3,397,954

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2016 - 20%)

577,699

679,591

Effects of:

Expenses not deductible for tax purposes

7,698

1,371

Tax chargeable at higher/(lower) rates

14,849

(12,863

)

Non-qualifying depreciation

2,891

-

Deferred tax at lower rate

13,038

-

Overprovision in prior year

(10,746

)

-

Group relief

(15

)

-

Total tax charge

605,414

668,099

10.

DIVIDENDS

2017

2016

£

£

Ordinary shares of £1 each

Paid in year

-

1,000,000

11.	TANGIBLE FIXED ASSETS

Improvements

Fixtures,

Land and

to

fittings

Motor

buildings

property

& equipment

vehicles

Totals

£

£

£

£

£

COST

At 1 October 2016

2,059,668

629,145

2,200,854

161,093

5,050,760

Additions

1,429,960

-

665,383

-

2,095,343

At 30 September 2017

3,489,628

629,145

2,866,237

161,093

7,146,103

DEPRECIATION

At 1 October 2016

-

501,338

1,121,829

102,569

1,725,736

Charge for year

-

-

247,480

38,329

285,809

At 30 September 2017

-

501,338

1,369,309

140,898

2,011,545

NET BOOK VALUE

At 30 September 2017

3,489,628

127,807

1,496,928

20,195

5,134,558

At 30 September 2016

2,059,668

127,807

1,079,025

58,524

3,325,024

Included in cost of land and buildings is freehold land of £ 186,668 (2016 - £ 186,668 ) which is not depreciated.