Company registration number 06909822 (England and Wales)
POWER BODY NUTRITION LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2022
POWER BODY NUTRITION LTD
COMPANY INFORMATION
Director
Mr S Szulczewski
Company number
06909822
Registered office
Unit 11 Chessingham Park
Common Road
Dunnington
York
YO19 5SE
Auditor
Azets Audit Services Limited
Triune Court
Monks Cross Drive
York
YO32 9GZ
POWER BODY NUTRITION LTD
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
POWER BODY NUTRITION LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2022
- 1 -
The director presents the strategic report for the year ended 31 May 2022.
Fair review of the business
Power Body Nutrition Ltd is a distributor of nutritional supplements, selling goods both direct to wholesalers and consumers. Key product ranges include sports nutrition, supplements, health foods and vitamins.
The financial situation remains comfortable and is consistently improving. Thanks to available credit lines and Power Body's own capital we continue to achieve our goals and increase both profit and sales.
Our primary focus continues to be stable growth and development. Investing in technology and development of our systems allows us to subsequently grow the turnover in the face of post-Brexit restrictions as well as Covid-19 pandemic consequences.
Principal risks and uncertainties
2022 has been challenging due to the continuing supply chain issues. Many suppliers had been forced to implement price increases following raw materials cost increases. Stock shortages were still present, but fulfillment rate improved slightly. Shipping delays continued throughout the year, with additional challenges of strikes in port workers and couriers. We found a solution by changing shipping methods to our customers and keeping our stock levels high in both warehouses. We continue to expand our purchasing/logistics teams.
The EU location/warehouse has continued to serve the customers in the EU to help avoid post-Brexit shipping restrictions. The volume consistently increased throughout the year.
In H2 of the year we observed the cost of living crisis affecting our customers and their spending habits. We overcame this by including trusted budget brands in our portfolio.
Key performance indicators
The company focus on a number of KPI's which are assessed at both company and product level.
Turnover, gross profit margins, and administrative costs are the key areas of focus for the business to assess performance of the company as a whole.
2022 has seen another year of sales growth for the company in which total turnover has increased by almost 28% vs 2021, up to £31.9m vs £24.9m.
Domestic sales represent 44% of total turnover and continue to be a pivotal market for the company. Specific focus on the European market has also seen turnover rise and represent 5
6
% of the total turnover of the company.
The company gross profit margin was 20.3%, so there has been an increase on 2021. Administrative costs (excluding depreciation and amortisation) have stayed at similar level as a percentage of sales between 2021 and 2022.
Staff costs have increased by around 3% compared to the 2021 year end, reflecting the ongoing steady growth of the business as well as the future growth plans.
Future developments
We plan to continue growing sales and presence in UK & EU markets steadily. We’d like to expand the territories where we operate, by employing localised/mobile sales teams. We intend to widen and enrich our portfolio in 2023 in terms of the categories of the products we distribute, according to the trends and our customers' needs. As markets continue to grow in the UK and EU we will continue to invest in our IT system and optimise purchasing, control costs and manage sales.
POWER BODY NUTRITION LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 2 -
Other information and explanations
The director is confident that the company will continue to trade successfully and remain profitable for the foreseeable future.
Mr S Szulczewski
Director
13 February 2023
POWER BODY NUTRITION LTD
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 MAY 2022
- 3 -
The director presents his annual report and financial statements for the year ended 31 May 2022.
Principal activities
The principal activity of the company continued to be that of the online retailing of nutritional supplements.
Results and dividends
The results for the year are set out on page 8.
Interim ordinary dividends were paid amounting to £180
,
992
(202
1
- £
88
,000)
. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr S Szulczewski
Auditor
The auditor, Azets Audit Services Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
On behalf of the board
Mr S Szulczewski
Director
13 February 2023
POWER BODY NUTRITION LTD
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2022
- 4 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is 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 director is 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. He is 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.
POWER BODY NUTRITION LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF POWER BODY NUTRITION LTD
- 5 -
Opinion
We have audited the financial statements of Power Body Nutrition Ltd (the 'company') for the year ended 31 May 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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 May 2022 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.
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
Auditor's
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 director's 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 director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. 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. 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 course of 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 our audit
:
-
the information given in the strategic report and the director's
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
POWER BODY NUTRITION LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF POWER BODY NUTRITION LTD
- 6 -
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 identifie
d
material misstatements in the strategic report or the director's
r
eport
. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
-
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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, the director is 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 director determines is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
director is
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 director either intends to liquidate the company or to cease operations, or has
no realistic alternative but to do so.
Auditor's 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 an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
POWER BODY NUTRITION LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF POWER BODY NUTRITION LTD
- 7 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
-
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
-
Reviewing minutes of meetings of those charged with governance;
-
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
-
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
-
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 him in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Martin Davey (Senior Statutory Auditor)
For and on behalf of Azets Audit Services Limited
13 February 2023
Chartered Accountants
Statutory Auditor
Triune Court
Monks Cross Drive
York
YO32 9GZ
POWER BODY NUTRITION LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2022
- 8 -
2022
2021
Notes
£
£
Turnover
3
31,853,489
24,940,144
Cost of sales
(25,388,719)
(20,269,645)
Gross profit
6,464,770
4,670,499
Administrative expenses
(3,484,292)
(2,312,783)
Other operating income
19,488
146,714
Operating profit
4
2,999,966
2,504,430
Interest receivable and similar income
14
Interest payable and similar expenses
6
(96,138)
(73,498)
Profit before taxation
2,903,828
2,430,946
Tax on profit
7
(431,231)
(439,840)
Profit for the financial year
2,472,597
1,991,106
The profit and loss account has been prepared on the basis that all operations are continuing operations.
POWER BODY NUTRITION LTD
BALANCE SHEET
- 9 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
9
1,391,856
1,370,315
Tangible assets
10
153,150
121,139
1,545,006
1,491,454
Current assets
Stocks
11
12,520,805
7,636,948
Debtors
12
2,090,108
1,568,714
Cash at bank and in hand
980,390
195,995
15,591,303
9,401,657
Creditors: amounts falling due within one year
15
(8,370,372)
(6,100,655)
Net current assets
7,220,931
3,301,002
Total assets less current liabilities
8,765,937
4,792,456
Creditors: amounts falling due after more than one year
16
(1,709,881)
(28,005)
Provisions for liabilities
Deferred tax liability
17
213,000
213,000
(213,000)
(213,000)
Net assets
6,843,056
4,551,451
Capital and reserves
Called up share capital
19
10
10
Profit and loss reserves
6,843,046
4,551,441
Total equity
6,843,056
4,551,451
The financial statements were approved and signed by the director and authorised for issue on 13 February 2023
Mr S Szulczewski
Director
Company Registration No. 06909822
POWER BODY NUTRITION LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2022
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 June 2020
10
2,648,335
2,648,345
Year ended 31 May 2021:
Profit and total comprehensive income for the year
-
1,991,106
1,991,106
Dividends
8
-
(88,000)
(88,000)
Balance at 31 May 2021
10
4,551,441
4,551,451
Year ended 31 May 2022:
Profit and total comprehensive income for the year
-
2,472,597
2,472,597
Dividends
8
-
(180,992)
(180,992)
Balance at 31 May 2022
10
6,843,046
6,843,056
POWER BODY NUTRITION LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2022
- 11 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
26
1,649,179
(282,920)
Interest paid
(96,138)
(73,498)
Income taxes paid
(608,231)
(48,179)
Net cash inflow/(outflow) from operating activities
944,810
(404,597)
Investing activities
Purchase of intangible assets
(845,058)
(542,517)
Purchase of tangible fixed assets
(17,702)
(8,231)
Interest received
14
Net cash used in investing activities
(862,760)
(550,734)
Financing activities
Proceeds of new bank loans
2,000,000
1,000,000
Repayment of bank loans
(1,087,062)
(139,374)
Payment of finance leases obligations
(29,601)
(28,048)
Dividends paid
(180,992)
(88,000)
Net cash generated from financing activities
702,345
744,578
Net increase/(decrease) in cash and cash equivalents
784,395
(210,753)
Cash and cash equivalents at beginning of year
195,995
406,748
Cash and cash equivalents at end of year
980,390
195,995
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2022
- 12 -
1
Accounting policies
Company information
Power Body Nutrition Ltd is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Unit 11 Chessingham Park, Common Road, Dunnington, York, YO19 5SE.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £1.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he director has a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the
fair
value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
25% straight line
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
1
Accounting policies
(Continued)
- 13 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
8 years straight line
Plant and equipment
25% reducing balance
Fixtures and fittings
25% reducing balance
Computers
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the 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 individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
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.
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
1
Accounting policies
(Continued)
- 14 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including
creditors
, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities.
Trade creditors
are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
1
Accounting policies
(Continued)
- 16 -
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.15
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.16
Foreign exchange
Transactions in currencies other than
pounds sterling
are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
1.17
Research expenditure is written off to the profit and loss account in the year in which it is incurred. Development expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial and financial viability of individual projects. In this situation, the expenditure is deferred and amortised over the period during which the company is expected to benefit.
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 17 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
Depreciation and amortisation
The depreciation and amortisation polices have been set according to managements experience of the useful lives of a typical asset in each category, something which is reviewed annually. The depreciation and amortisation charged during the year was £
857,526
(20
21
- £
386,474
) which the directors feel is a fair reflection of the benefits derived from the consumption of the intangible and tangible fixed assets in use during the period.
Stock provisions
At each reporting date an assessment is made for provisions required to properly recognise wastage, damaged goods and over absorbed overheads.
Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss
and provided for in the balance sheet
. Reversals of impairment losses are also recognised in profit or loss
where these arise.
Bad debt provisions
Outstanding trade debtor balances are reviewed on a line by line basis by management to identify possible amounts where a provision is required. Management closely manage the collection of trade debtors and are therefore able to identify balances where there is uncertainty about its recoverability, and determine what provision is required (if any).
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Nutritional products
31,853,489
24,940,144
2022
2021
£
£
Turnover analysed by geographical market
UK
13,917,404
10,019,154
Europe
17,930,488
14,875,324
Rest of the World
5,597
45,666
31,853,489
24,940,144
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 18 -
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
152,169
(149,612)
Government grants
(19,488)
(91,429)
Fees payable to the company's auditor for the audit of the company's financial statements
17,380
13,950
Depreciation of owned tangible fixed assets
26,227
19,800
Depreciation of tangible fixed assets held under finance leases
7,782
17,917
Loss on disposal of tangible fixed assets
97
4,381
Amortisation of intangible assets
823,517
348,757
Operating lease charges
76,157
69,313
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Directors
1
1
Salaries and distribution
26
31
Office management
22
19
Total
49
51
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,321,494
1,295,096
Social security costs
124,261
117,002
Pension costs
25,757
22,214
1,471,512
1,434,312
6
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
94,866
69,776
Other finance costs:
Interest on finance leases and hire purchase contracts
1,272
3,722
96,138
73,498
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 19 -
7
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
430,000
383,000
Adjustments in respect of prior periods
1,231
(160)
Total current tax
431,231
382,840
Deferred tax
Origination and reversal of timing differences
6,024
Changes in tax rates
50,976
Total deferred tax
57,000
Total tax charge
431,231
439,840
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
2,903,828
2,430,946
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
551,727
461,880
Tax effect of expenses that are not deductible in determining taxable profit
927
1,026
Effect of change in corporation tax rate
50,975
Depreciation on assets not qualifying for tax allowances
174
233
Research and development tax credit
(118,868)
(73,210)
Under/(over) provided in prior years
1,231
(160)
Other tax adjustments
(3,960)
(904)
Taxation charge for the year
431,231
439,840
8
Dividends
2022
2021
£
£
Interim paid
180,992
88,000
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 20 -
9
Intangible fixed assets
Software
£
Cost
At 1 June 2021
2,856,318
Additions - internally developed
845,058
At 31 May 2022
3,701,376
Amortisation and impairment
At 1 June 2021
1,486,003
Amortisation charged for the year
823,517
At 31 May 2022
2,309,520
Carrying amount
At 31 May 2022
1,391,856
At 31 May 2021
1,370,315
During the year, there has been a change in accounting estimate and the amortisation rate applied to software has changed from 25% reducing balance to 25% straight line. This has resulted in additional amortisation charged in the year of £
371,500.
10
Tangible fixed assets
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Total
£
£
£
£
£
Cost
At 1 June 2021
244,668
88,626
30,052
363,346
Additions
8,050
45,555
7,512
4,999
66,116
Disposals
(531)
(285)
(816)
At 31 May 2022
8,050
289,692
95,853
35,051
428,646
Depreciation and impairment
At 1 June 2021
163,745
59,484
18,978
242,207
Depreciation charged in the year
419
22,228
8,110
3,252
34,009
Eliminated in respect of disposals
(457)
(263)
(720)
At 31 May 2022
419
185,516
67,331
22,230
275,496
Carrying amount
At 31 May 2022
7,631
104,176
28,522
12,821
153,150
At 31 May 2021
80,923
29,142
11,074
121,139
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
10
Tangible fixed assets
(Continued)
- 21 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Plant and equipment
67,444
53,749
11
Stocks
2022
2021
£
£
Finished goods and goods for resale
12,520,805
7,636,948
12
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
2,005,387
1,511,669
Other debtors
34,810
41,973
Prepayments and accrued income
49,911
15,072
2,090,108
1,568,714
13
Loans and overdrafts
2022
2021
£
£
Bank loans
5,864,546
3,302,250
Payable within one year
4,197,879
3,297,797
Payable after one year
1,666,667
4,453
Included within bank loans are individual supplier invoice financing totalling £
2,858,647
(202
1 -
£2,
045
,
742
). Balances fall due 90 days after the loan is advanced and interest is charged
at 1.75% over the variable rate
.
Also included in bank loans
are two additional loan facilities. The first facility has a balance of £2,000,000 (2021 - £nil) and
a final repayment date of
March 2026. The loan is
repayable in
41
instalments of £
47,619 and i
nterest is charged at
4.65
% above the Bank of England base rate.
The second facility has a balance of
£
nil
(202
1 -
£
1,000,000
)
and
a final repayment date of January 2022. The loan is repayable in six instalments of £166,667 and interest is charged at 3.49% above the Bank of England base rate.
Also included in bank loans is a
balance of £1,005,899 (2021 - £169,445) relat
ing
to invoice financing.
Bank loans are secured over the trade and assets of the company.
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 22 -
14
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
22,746
22,899
In two to five years
46,459
25,042
69,205
47,941
Less: future finance charges
(5,934)
(3,484)
63,271
44,457
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years from inception. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Finance lease obligations are secured on the asset to which they relate.
15
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans
13
4,197,879
3,297,797
Obligations under finance leases
14
20,057
20,905
Trade creditors
3,181,741
2,036,309
Corporation tax
206,000
383,000
Other taxation and social security
290,556
72,934
Other creditors
376,773
262,523
Accruals and deferred income
97,366
27,187
8,370,372
6,100,655
Bank loans
and obligations under
finance leases are secured over the trade and assets of the company.
16
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
13
1,666,667
4,453
Obligations under finance leases
14
43,214
23,552
1,709,881
28,005
Bank loans
and obligations under
finance leases are secured over the trade and assets of the company.
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 23 -
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
213,000
213,000
There were no deferred tax movements in the year.
18
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
25,757
22,214
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
Contributions totalling £
6
,0
93
(20
21
- £
4
,
057
) were payable to the fund at the year end and are included in creditors.
19
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
10
10
10
10
20
Financial commitments, guarantees and contingent liabilities
The company's director has personal guarantees totalling £260,000 (2021: £60,000) in place over the company's borrowings.
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
120,000
38,170
Between two and five years
290,000
410,000
38,170
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 24 -
22
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2022
2021
£
£
Aggregate compensation
547,229
348,857
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Sales
Purchases
Purchases
2022
2021
2022
2021
£
£
£
£
Entities controlled by a common director
4,744,173
4,179,813
1,497
78,640
IT supplier and trade loan provider
-
-
785,979
468,626
The following amounts were outstanding at the reporting end date:
2022
2021
Amounts due to related parties
£
£
Entities controlled by a common director
180,746
164,976
IT supplier and trade loan provider
55
56,979
23
Directors' transactions
Dividends totalling £180,992 (2021 - £88,000) were paid in the year in respect of shares held by the company's directors.
24
Ultimate controlling party
The company is controlled by Mr S Szulczewski, the director of the company.
25
Director's remuneration
2022
2021
£
£
Remuneration for qualifying services
11,951
10,393
Company pension contributions to defined contribution schemes
3,600
3,600
15,551
13,993
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to
1
(20
21 - 1
).
POWER BODY NUTRITION LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2022
- 25 -
26
Cash generated from/(absorbed by) operations
2022
2021
£
£
Profit for the year after tax
2,472,597
1,991,106
Adjustments for:
Taxation charged
431,231
439,840
Finance costs
96,138
73,498
Investment income
(14)
Loss on disposal of tangible fixed assets
97
4,381
Amortisation and impairment of intangible assets
823,517
348,757
Depreciation and impairment of tangible fixed assets
34,009
37,717
Movements in working capital:
Increase in stocks
(4,883,857)
(2,756,354)
Increase in debtors
(521,394)
(302,974)
Increase/(decrease) in creditors
3,196,841
(118,877)
Cash generated from/(absorbed by) operations
1,649,179
(282,920)
27
Analysis of changes in net debt
1 June 2021
Cash flows
31 May 2022
£
£
£
Cash at bank and in hand
195,995
784,395
980,390
Borrowings excluding overdrafts
(3,302,250)
(2,562,296)
(5,864,546)
Obligations under finance leases
(44,457)
(18,814)
(63,271)
(3,150,712)
(1,796,715)
(4,947,427)
2022-05-31
2021-06-01
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2022-05-31
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