TOM_DIXON_HOLDING_LIMITED - Accounts
TOM_DIXON_HOLDING_LIMITED - Accounts
The directors present the strategic report and financial statements for the 12 month period ended 31 March 2021.
The principal activity of the Tom Dixon group is the design of extraordinary spaces and ranges of contemporary lighting, furniture and accessory products. The products are sold globally through wholesale and retail channels.
The results for the year of the group show an decrease in turnover of 15.9% to £25,586,020 (2020: £30,404,761).
The loss for the year is £5,241,706 (2020: Loss of £11,942,108). During the previous two years, the Group embarked on an aggressive growth plan, consisting of an international expansion of its products business. The growth of the products business was partly driven by reduced pricing and an increase in operating costs associated with a larger operating infrastructure. The result was however reduced product sales exacerbated by an increase in overheads. In the year ended 31 March 2021 the Group, with a new management team, commenced a recovery programme which was centred on a rationalisation of product lines, improved pricing to return gross margin to the higher historic levels and a significant reduction in operating costs. The Group in the year also received funding support from its shareholders by way of additional loans of £3,281,035. Consequently despite the current year being significantly impacted by the disruptive elements of the pandemic resulting in further reduced sales, the Group has made good progress with it’s recovery plans whereby EBITDA has significantly improved to a loss of £1,139,770 (2020: Loss £8,097,863).
The net liabilities of the group at 31 March 2021 are (£2,293,325) (2020: net assets £3,269,535).
Future developments
Since 31 March 2021 the Group has continued to make good recovery progress increasing sales and containing cost increases. Consequently the Group expects a return to profitability at EBITDA level in 2022. Furthermore in June 2021 the Group enhanced its funding position by receiving a £2m CBIL’s loan from its bankers HSBC.
The Group saw further impacts in 2022 due to the Omicron variant, Brexit and the global shipping crisis. The result was an adverse effect on footfall for retail spaces held by the group and its partners, increased distribution costs and longer lead times in supply.
The Group has continued to make good progress in cutting cost and achieving sales growth.
As a result of the above, the Group’s recovery plan remains on track and expects to return to profitability at EBITDA level in 2022.
The further challenges faced by the Group in 2023 include the Russian invasion of Ukraine and rising inflation which are detailed in note 33. Whilst these issues are expected to have an impact on financial performance the Group will continue to monitor the situation and proceed with appropriate mitigating actions.
Vendor dependency
The skills to produce the extraordinary range of Tom Dixon products may be found in Europe, China and India. The group continues to reduce production lead time by migrating a proportion of its supplier base to Europe.
Economic climate
The uncertainty of the Brexit climate creates a risk to the group and therefore the group has opened a subsidiary in the Netherlands in 2020 as a potential platform to mitigate this risk. The group also monitors trends, creates new categories for both own product and licensing opportunities, and continues to extend the customer base in existing geographies in order to maintain growth.
Covid-19 impact
The principle geographic markets of the UK, EU and the United States have been subject to the Covid-19 lockdown from March 2020. The lockdown has impacted restaurant operations, all architectural construction projects and consumer spending on non-essential lighting, furniture and accessories.
Financial instruments
The directors regularly review the financial requirements of the group and the associated risks. The group's operations are primarily financed from retained earnings and a loan from its immediate parent company, Copper Investment S.a.r.l. In addition to the primary financial instruments, the group has other financial instruments such as debtors, prepayments, trade creditors and accruals that directly arise from the group's operations.
Liquidity risk
The group actively maintains a mixture of long-term and short-term debt finance that is designed to ensure that the group has sufficient available funds for operation and planned expansion. The group prepares regular cash flow forecasts to ensure that there is sufficient headroom for at least a forward 12-month period.
Interest rate risk
The group does not use interest rate swaps. The group matches scheduled interest and borrowing payments with expected future cash flows from the group’s trading activities.
Foreign currency risk
The group trades internationally and is exposed to foreign exchange risk in the normal course of business. The group achieves significant sales in Euros and US Dollars, and to mitigate this exchange risk, the group purchases stock in Euros and US Dollars. The group had no foreign exchange forwards in place at 31 March 2021.
Credit risk
Counterparty credit ratings are monitored and there is no significant concentration of credit risk to any single counterparty outside the group. The group has a large customer base. Counterparties for cash balances and derivative balances are with a financial institution with a strong credit rating and whilst there is exposure to losses, the group does not expect them to fail to meet their obligations, as they fall due.
Going Concern
In adopting the going concern basis for preparing the financial statements, the directors have considered the business activities and the parent company and the group's principle risks and uncertainties, including those arising from the current Covid-19 pandemic, the economic uncertainties from inflationary pressures, rising energy costs and any potential downturn or recessionary impacts in the group’s main markets it operates in and any government's and the group’s response to it.
The group meets its day-to-day working capital requirements through use of its cash, overdraft and banking facilities, and support from its shareholders.
In assessing the appropriateness of the going concern assumption, the directors have prepared detailed cash flow forecasts for the group and company extending to March 2025. In the modelled forecast scenarios the directors are satisfied that the group can continue to operate within its current cash and other facilities. However, the directors acknowledge that the environment is continuously changing and, as such, projecting the impacts of COVID-19 and the other economic uncertainties noted above is challenging.
Additionally following guidelines issued by the Financial Reporting Council, the group has applied reverse stress testing to gauge the effects on its forecasts, were the pandemic to affect the retail industry into the longer term (which the guidance makes clear cannot be discounted). Due to the impact on consumer spending related to uncertain economic pressures noted above and the potential for further lockdowns, revenue has been identified as the key variable on which reverse stress testing has been performed. Under such analysis the directors are confident there is flexibility to adapt the group's longer-term strategy to such circumstances, including scaling its operations appropriately, along with the benefit of the resources referred to in the foregoing.
The directors have assumed in their modelling that the current bank facilities, that are renewable annually, will not be recalled in the going concern period and will be renewed in April 2023 for a period of twelve months and providing this is agreed, in conjunction with the above long-term strategy, the group is able to operate within its committed facilities and meet its liabilities as they fall due for the 12 months following the signing of the financial statements. The group is dependent on continued access to current bank facilities which are subject to review annually in April and therefore there is a risk of either recall in the next 12 months or the facility not being renewed in April 2023 at the same level of facility.
Post the year end the Group also obtained a CBILS loan of £2m in June 2021. The group have received covenant waivers from the bank for the June 2022 and September 2022 quarters and are not forecasting in the next 12 months any breaches to the covenants.
The Group have total shareholder loans of £13.9m as of September 2022. £2.1m of these loans that were provided in 2015 under agreed terms of the loans being interest free and are repayable only on exit. In relation to the remaining £11.8m of shareholder loans, the directors have continued to work closely with Copper Holding S.a.r.l., the parent company of Tom Dixon Holding Limited to finalise a convertible loan agreement confirming that these loans are designated as convertible loan notes repayable on the earlier of exit or 31 December 2024. However, this loan agreement has not been finalized as yet and subject to the finalisation of this loan agreement the group have obtained a letter of confirmation of commitment from Copper Holding S.a.r.l. that they do not intend to seek repayment of the £11.8m in the next twelve months from the date of the audit report in the financial statements which the Directors believe provides evidence to the support of the parent company in the absence of a signed loan agreement and support to the going concern assertion.
The group has reported a net liability position of £2,293,325 in FY 2021, however this includes the shareholder loan of £13.9m as a creditor falling due after more than one year which has been disclosed above.
Copper Holding S.a.r.l. have also confirmed that based on the information available to them in August 2022, it will undertake to continue to provide such operational, commercial and financial support to Tom Dixon Holding Ltd and subsidiaries as is necessary so as to enable them to both meet their liabilities as they fall due and carry on their business for the foreseeable future for a period of not less than 12 months from the date of the audit report in the financial statements. The forecasts prepared by management which include no recall of the bank facilities in the next 12 months, a renewal of the bank facilities in April 2023 and no repayment of the shareholder loans do not indicate a need for such further financial support.
In light of the risk around the bank facility and its renewal in April 2023 and in the absence of a signed legal loan agreement with the parent company the directors have identified that a material uncertainty exists that may cast significant doubt over the group and company’s ability to continue as a going concern for the foreseeable future (which under current UK generally accepted accounting principles means a period of at least 12 months from the signing date of the financial statements), and therefore that they may be unable to realise their assets and settle their liabilities in the normal course of business.
The financial statements do not include adjustments that would result if the group were unable to continue as a going concern.
In accordance with section 172 of the Companies Act, each of our directors acts in the way he considers, in good faith, would most likely promote the success of the group for the benefit of its members as a whole. Our directors have regard, amongst other matters, to the:
likely consequences of any decisions in the long term;
interests of the company's employees;
need to foster the company's business relationships with suppliers, customer and others;
impact of the company's operations on the community and environment;
desirability of the company maintaining a reputation for high standards of business conduct; and
need to act fairly as between members of the group
As is normal for large companies, we delegate authority for day to day management of the company to senior managers and then engage management in setting, approving and overseeing the execution of strategy and related policies. During the year, we reviewed the group's financial and operational performance; key transactions; regulation; funding and pension matters, mechanisms of stakeholder engagement and diversity and inclusion. The Board review, discuss and approve, as necessary, all of these matters.
As set out above, decisions taken by the Board consider the interests of our key stakeholders and the impacts of these decisions.
On behalf of the board
The directors present their annual report and audited consolidated financial statements for the year ended 31 March 2021.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group invests in the development an innovation of new interior lighting products. During the year the group incurred £281,683 (2020:£216,236) of development expenses, excluding salaries. The directors believe that this development will lead to future profits for the group.
Post the year end the Group obtained a CBILS loan of £2m in June 2021. The group have received covenant waivers from the bank for the June 2022 and September 2022 quarters and are not forecasting in the next 12 months any breaches to the covenants.
Since the year end Russian forces invaded Ukraine on February 24, 2022. The conflict between Ukraine and Russia represents a risk factor for the global development and for the stability of the macroeconomic framework in Europe. At the time of writing this note, the invasion continues and it is not possible to estimate when a ceasefire will be reached.
At the moment the United Kingdom, the European Union, and the United States have imposed far-reaching economic sanctions. It is impossible to predict how long the conflict will last and what the result will be at the end. There is a real risk that economic development in Europe will be negatively affected in the short and medium term. The negative effects in Europe will vary substantially depending on the sector of activity, and from the current perspective it cannot be ruled out that the luxury homewares industry may be affected to a greater or lesser degree.
Currently, an immediate negative impact on the company's business activities has not been identified, although at this time the effect it will have if the conflict continues in the medium and long term cannot be quantified. The development of the conflict in the coming months is not foreseeable, so the assessment of the possible impact of the war on the groups business at the time of writing this report is subject to uncertainty. The escalation of the conflict in Ukraine may result in the objectives formulated for future exercises not being fully achieved. The company has taken the relevant actions to mitigate any negative impact in the business prospects.
The diversification of production and purchase points of origin to a global model facilitated by a complex worldwide shipping network has led to a situation where there are more potential points of failure.
A combination of factors including the Russian invasion of Ukraine, Brexit and Covid-19 has exacerbated this problem, with fluctuating and uncertain demand, manufacturing shutdowns, staff resourcing, and a background of rising inflation causing further potential issues in this area. The Company’s directors and management will continuously monitor the situation and proceed with appropriate mitigating actions.
Branches outside of the UK
The group has a branch in Sweden. The purpose of this branch is to employ a member of staff.
Disclosure of information to auditor
In the case of each director in office at the date the Directors’ report is approved:
so far as the director is aware, there is no relevant audit information of which the company’s auditor is unaware; and
they have taken all the steps that they ought to have taken as a director in order to make themselves
aware of any relevant audit information and to establish that the company’s auditor is aware of that
information.
The auditors, BDO LLP are deemed to be reappointed under section 487(2) of the Companies Act 2006.
select suitable accounting policies and then apply them consistently; state whether applicable United Kingdom Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements; make judgements and accounting estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2021 and of the group’s 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 qualified opinion
We observed the counting of physical stock at the end of the year ended 31 March 2021 but unable to reconcile observed physical stock with original count documents during audit. We were unable to satisfy ourselves by alternative means concerning the stock quantities held at 31 March 2021, which are included in the consolidated balance sheet at £5.9 million, by using other audit procedures. Consequently, we were unable to determine whether any adjustment to this amount at 31 March 2021 was necessary.
Furthermore, as a result of the COVID 19 pandemic the company was not able to undertake stock counts, and we are therefore unable to observe the counting of physical stock at the end of the year ended 31 March 2020. We were unable to satisfy ourselves by alternative means concerning the stock quantities held at 31 March 2020 of £6.6 million, by using other audit procedures. Consequently, we were unable to determine whether any adjustment to this amount at 31 March 2020 was necessary or whether there was any consequential effect on the cost of sales for the year ended 31 March 2021.
In addition, were any adjustment to the stock balance for the year ended 31 March 2020 or 31 March 2021 to be required, the strategic report would also need to be amended.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Independence
We are independent of the group and the parent 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.
Material uncertainty related to going concern
We draw attention to note 1.3 to the financial statements which indicates the Directors’ considerations over going concern. The group and the parent company are dependent on continued access to current bank facilities which are subject to review in April 2023 and on continued support from their shareholders in not calling for repayment of their loans to the company.
As stated in note 1.3, these events or conditions along with other matters as set forth in note 1.3, indicate that a material uncertainty exists that may cast significant doubt on the group’s and parent company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report and financial statements, other than the financial statements and our auditor’s report 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. 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.
As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the stock quantities held at both 31 March 2020 and 31 March 2021 and whether there was any consequential effect on the cost of sales for the year ended 31 March 2021. We have concluded that where the other information refers to the stock balance or other related balances such as cost of sales, it may be materially misstated for the same reason.
Other Companies Act 2006 reporting
Except for the possible effects of the matter described in the basis for qualified opinion section of our report, 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.
Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the group and parent 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.
Arising from the limitation on the scope of our work referred to above:
we have not obtained all of the information and explanations that we considered necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records have been kept by the parent company.
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:
returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made.
As explained more fully in the Directors’ responsibilities statement, 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 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 Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
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.
Extent to which the audit was 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, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory framework applicable to the group and the parent company and the industry in which it operates and considered the significant laws and regulations to be those relating to the industry, financial reporting framework and tax legislation. We considered management override of controls, revenue recognition and key estimates and judgements as potential areas of irregularity including fraud.
We held discussion with management to consider any known or suspected instances of non-compliance with laws and regulations or fraud identified by them.
Based on the understanding obtained we designed audit procedures to identify non-compliance with the laws and regulations, as noted above. This included enquiries of management, review of board minutes, and review of relevant correspondence.
We agreed a sample of journal entries to supporting documentation, focusing on journal entries containing characteristics of audit interest such as manual journals and journals relating to revenue.
We tested and challenged the key estimates and judgements made by management in preparing the financial statements for indications of bias or management override when presenting the results and financial position of the group and parent company.
We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. In addition, the extent to which the audit was capable of detecting irregularities, including fraud was limited by the matter described in the basis for qualified opinion section of our report.
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.
Use of our report
This report is made solely to the Parent 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 Parent Company’s members those matters we are required to state to them 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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The consolidated income statement has been prepared on the basis that all operations are continuing operations.
Company income statement and statement of comprehensive income
As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The Company’s loss for the financial period was £1,905,755 (2020: loss of £928,044). The company incurred costs during the year which were not recovered via a management charge to its subsidiaries.
Tom Dixon Holding Limited (“the Company”) is a limited company domiciled and incorporated in England and Wales. The registered office is The Coal Office, 1 Bagley Walk, Kings Cross, London, N1C 4PQ
The Group consists of Tom Dixon Holding Limited and all of its subsidiaries.
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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared on the historical cost convention. The principal accounting policies adopted are set out below.
Parent company disclosure exemptions
In preparing the separate financial statements of the parent company, the company has taken advantage of the following disclosure exemptions available in FRS 102;
The requirements of Section 4 Statement of Financial Position paragraph 4.12(a)(iv);
The requirements of Section 7 Statement of Cash Flows;
The requirements of Section 3 Financial Statement Presentation paragraph 3.14(d);
The requirements of Section 11 Financial Instruments paragraphs 11.39 to 11.48A;
The requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.29; and
The requirements of Section33 Related Party Disclosures paragraph 33.7.
The financial statements of the Company are included within these consolidated financial statements.
Company income statement and statement of comprehensive income
As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The Company’s loss for the financial period was £1,905,755 (2020: loss of £928,044). The company incurred costs during the year which were not recovered via a management charge to its subsidiaries.
The consolidated financial statements incorporate those of Tom Dixon Holding Limited and all of its subsidiaries (i.e. entities that the Group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the period are consolidated using the purchase method. Their results are incorporated from the date that control passes. All financial statements are made up to 31 March 2021.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.
The consolidated group financial statements consist of the financial statements of the parent company Tom Dixon Holding Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2021. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates. In the group financial statements, associates are accounted for using the equity method.
Entities in which the group holds an interest, and which are jointly controlled by the group and one or more other parties under a contractual arrangement are treated as joint ventures. In the group financial statements, joint ventures are accounted for using the equity method.
In adopting the going concern basis for preparing the financial statements, the directors have considered the business activities and the parent company and the group's principle risks and uncertainties, including those arising from the current Covid-19 pandemic, the economic uncertainties from inflationary pressures, rising energy costs and any potential downturn or recessionary impacts in the group’s main markets it operates in and any government's and the group’s response to it.
The group meets its day-to-day working capital requirements through use of its cash, overdraft and banking facilities, and support from its shareholders.
In assessing the appropriateness of the going concern assumption, the directors have prepared detailed cash flow forecasts for the group and company extending to March 2025. In the modelled forecast scenarios the directors are satisfied that the group can continue to operate within its current cash and other facilities. However, the directors acknowledge that the environment is continuously changing and, as such, projecting the impacts of COVID-19 and the other economic uncertainties noted above is challenging.
Additionally following guidelines issued by the Financial Reporting Council, the group has applied reverse stress testing to gauge the effects on its forecasts, were the pandemic to affect the retail industry into the longer term (which the guidance makes clear cannot be discounted). Due to the impact on consumer spending related to uncertain economic pressures noted above and the potential for further lockdowns, revenue has been identified as the key variable on which reverse stress testing has been performed. Under such analysis the directors are confident there is flexibility to adapt the group's longer-term strategy to such circumstances, including scaling its operations appropriately, along with the benefit of the resources referred to in the foregoing.
The directors have assumed in their modelling that the current bank facilities, that are renewable annually, will not be recalled in the going concern period and will be renewed in April 2023 for a period of twelve months and providing this is agreed, in conjunction with the above long-term strategy, the group is able to operate within its committed facilities and meet its liabilities as they fall due for the 12 months following the signing of the financial statements. The group is dependent on continued access to current bank facilities which are subject to review annually in April and therefore there is a risk of either recall in the next 12 months or the facility not being renewed in April 2023 at the same level of facility.
Post the year end the Group also obtained a CBILS loan of £2m in June 2021. The group have received covenant waivers from the bank for the June 2022 and September 2022 quarters and are not forecasting in the next 12 months any breaches to the covenants.
The Group have total shareholder loans of £13.9m as of September 2022. £2.1m of these loans that were provided in 2015 under agreed terms of the loans being interest free and are repayable only on exit. In relation to the remaining £11.8m of shareholder loans, the directors have continued to work closely with Copper Holding S.a.r.l., the parent company of Tom Dixon Holding Limited to finalise a convertible loan agreement confirming that these loans are designated as convertible loan notes repayable on the earlier of exit or 31 December 2024. However, this loan agreement has not been finalized as yet and subject to the finalisation of this loan agreement the group have obtained a letter of confirmation of commitment from Copper Holding S.a.r.l. that they do not intend to seek repayment of the £11.8m in the next twelve months from the date of the audit report in the financial statements which the Directors believe provides evidence to the support of the parent company in the absence of a signed loan agreement and support to the going concern assertion.
The group has reported a net liability position of £2,293,325 in FY 2021, however this includes the shareholder loan of £13.9m as a creditor falling due after more than one year which has been disclosed above.
Copper Holding S.a.r.l. have also confirmed that based on the information available to them in August 2022, it will undertake to continue to provide such operational, commercial and financial support to Tom Dixon Holding Ltd and subsidiaries as is necessary so as to enable them to both meet their liabilities as they fall due and carry on their business for the foreseeable future for a period of not less than 12 months from the date of the audit report in the financial statements. The forecasts prepared by management which include no recall of the bank facilities in the next 12 months, a renewal of the bank facilities in April 2023 and no repayment of the shareholder loans do not indicate a need for such further financial support.
In light of the risk around the bank facility and its renewal in April 2023 and in the absence of a signed legal loan agreement with the parent company the directors have identified that a material uncertainty exists that may cast significant doubt over the group and company’s ability to continue as a going concern for the foreseeable future (which under current UK generally accepted accounting principles means a period of at least 12 months from the signing date of the financial statements), and therefore that they may be unable to realise their assets and settle their liabilities in the normal course of business.
Taking account of the above, the Directors confirm that they have reasonable expectation that the parent company and the group will have adequate resources and the bank facility will be renewed in April 2023 which will allow the parent company and the group to continue in operational existence for the next 12 months from approval of these financial statements and accordingly these financial statements are prepared on a going concern basis.
The financial statements do not include adjustments that would result if the group were unable to continue as a going concern.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services 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, volume rebates and returns.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
Product revenue consists of wholesale, retail and internet sales. Wholesale and internet sales are recognised when the control of goods has transferred, being at the point the customer receives the goods. For sale of goods to retail customers, revenue is recognised at the point the customer purchases the goods at the retail outlet.
Turnover and attributable profit in relation to design services for interior concepts, installations and architectural design, are recognised in accordance with the company's right to receive revenue based on the contracted stage of completion.
Restaurant revenue is recognised at the point of sale of food and beverage items to the customer for the consideration received.
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 recognised in the profit and loss account.
Investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long- term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its 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 receipts discounted at a market rate of interest.
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. Amounts 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
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 group after deducting all of its liabilities.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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 leased asset are consumed.
Grants of a revenue nature are recognised in other income within profit or loss in the same period as the related expenditure. This includes the Government Coronavirus Job Retention Scheme (“Furlough”). The company has not directly benefited from any other forms of government assistance.
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 are included in the profit and loss account for the period.
Research and development
Research and development expenditure is written off in the year in which it is incurred.
In the application of the group’s accounting policies, the directors are 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.
The Company has set out five key areas of judgement and estimation. 1) Bad Debt Provision is on the basis of actual debt to be written off and those with a high degree of certainty will become bad debts. 2) Stock provision is on the basis of obsolete stock included in inventory at the balance sheet date and very old stock which with a high degree of certainty will become obsolete. 3) Deferred tax computations are part based on the estimation of useful economic life and depreciation rates imputed thereon. 4) Dilapidations provisions are an estimate of the future dilapidations costs on the leasehold buildings which are estimated based on industry market data costs per square foot and discounted to the future value of estimate settlement values. 5) The carrying value of investments is recorded at cost less any provision for impairment.
The carrying value of investments are reviewed for any impairment only when events indicate the carrying value may be impaired. Impairment indicators include both internal and external factors. Where impairment indicators are present, the recoverable amounts of assets are measured. No impairment was recognised in the year ended 31 March 2021. The value of the subsidiary company is determined by the discounted present value of future cash flows, using a weighted average cost of capital and growth rates as determined at the Group level. Impairment will occur when the value in use is less than the current carrying amount of the investment.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2020 - 1).
As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.
Investment income includes the following:
b) The actual charge for the year can be reconciled to the expected charge based on the profit or loss:
Details of the company's subsidiaries at 31 March 2021 are as follows:
The registered office addresses are:
Company | Registered office address |
Design Research HK Ltd | 52 Hollywood Road, Central, HK |
Design Research Ltd | 1 Bagley Walk, London N1C 4PQ |
Design Research Unit Ltd | 1 Bagley Walk, London N1C 4PQ |
Design Research USA Ltd | 23-25 Greene Street, NY 10013 |
Tom Dixon Ltd The Coal Office Restaurant Ltd | 1 Bagley Walk, London N1C 4PQ 1 Bagley Walk, London N1C 4PQ |
Tom Dixon Italia srl | 26 via Vittorio Emanuele II, Monza 20900, Italy |
Design Research Netherlands BV Tom Dixon (Shanghai) Trading Company Limited | Kingsfordweg 151, 1043GR Amsterdam, Netherlands Level 5, XinTianDi, 159 MaDong Road Shanghai 200021 |
Tom Dixon (Shanghai) Trading Co., Limited was incorporated on 21 December 2018 as a fully owned subsidiary of Design Research Hong Kong Limited. The company's registered capital is £240,000 and remains unpaid. Under Chinese Accounting Standards (CAS), unpaid capital is not shown on balance sheet and consequently the accounts for Tom Dixon (Shanghai) Trading Co., Limited do not show either the share capital or the related debtor and the accounts for Design Research Hong Kong Limited do not reflect the investment in subsidiary or the related creditor.
Investment in subsidiaries as at 31 March 2021 was £19,481,693 (2020: £19,481,693).
Impairment review
The carrying value of investments are reviewed for any impairment only when events indicate the carrying value may be impaired. Impairment indicators include both internal and external factors. Where impairment indicators are present, the recoverable amounts of assets are measured. The value of the subsidiary company is determined by the discounted present value of future cash flows, using a weighted average cost of capital and growth rates as determined at the Group level.
The directors’ have undertaken an impairment review on the company’s investment in its subsidiary undertakings. The impairment review comprised a sensitivity analysis on the discounted forecasts going forward. Turnover was identified as the variable most likely to change due to external pressure and it was found that with projections lowered by 15% (2020: 15%) the present value was still £9.2m (2020: £7.6m) above the Company’s investment in subsidiary undertakings of £31.8m (2020: £28.8m). Calculations used a weighted cost of capital based on an industry analysis for luxury branded goods. A variety of growth rates were used, with a worst-case scenario anticipated at 1.5%(2020: 1.5%) representing the minimum growth anticipated for the luxury branded goods provided by the industry analysis. The sensitivity analysis showed that in all scenarios the carrying value of the investment in subsidiary was exceeded by present value of future earnings in perpetuity, indicated that no impairment in the investment was considered necessary.
No impairment was recognised in the year ended 31 March 2021.
The group held no forward exchange contracts at 31 March 2021 (2020: the group held no forward exchange contracts).
There are no material differences between the replacement cost of stock and its balance sheet carrying value.
Amounts owed by group undertakings are interest free, unsecured and repayable on demand. The directors have reviewed the recoverability of amounts owed by group undertakings and have taken the decision to impair the outstanding amounts to their recoverable value. The directors consider the amount that is potentially irrecoverable to be the excess of the amounts owed against the net asset position of the subsidiary. This will be reviewed going forwards to ascertain whether the impairment is permanent in nature.
Amounts owed to group undertakings are due within one year, are interest free, unsecured and repayable on demand.
Included in bank loans and overdrafts is £750,946 pertaining to a short term secured loan from HSBC (2020: £836,140) (at an interest rate of 3.50% over Bank of England base rate (2020: 3.50%)) to a Tom Dixon group company. The Bank loan is secured on the assets of the business and repayable on demand.
The dilapidations provision relates to the dilapidations on the head office and retail premises at the year-end. This is based on the expected costs to return the properties in the original state at the end of the lease. This provision is expected to be settled at the end of the lease term of the relevant lease.
The company had no provisions at 31 March 2021 and 31 March 2020.
The other borrowings relates to amounts advanced by Copper Holding S.a.r.l., the immediate parent company.
During the year additional loans of £3,281,035 were issued in six tranches:
16 April 2020 - £125,000
27 May 2020 - £360,000
19 June 2020 - £600,000
28 July 2020 - £700,000
24 September 2020 - £552,827
2 November 2020 - £943,208
These new additional loans bears interest at 10%.
In the prior year an additional loan of £4,828,094 was extended in four tranches, to fund the operational activities of the group.
The loans are due to repaid on the subsequent sale or listing of the group and consequently are disclosed within long term liabilities. The original loans of £2,120,222 are interest free and unsecured.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The deferred tax asset and related movement during the period relates to assets for which depreciation exceeds capital allowances. It has been calculated at a rate of 19%.
The UK’s Corporation Tax rate will increase to 25% as per the 2021 Spring Budget, however as the rate change was not substantively enacted by balance sheet date, deferred tax has been recognised at 19%. The effect of the rate change is not considered material in respect of deferred tax balances.
There is an unrecognised deferred tax asset in respect of timing differences relating to the losses of £2,735,742 (2020: £2,150,108).
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
On incorporation 1 ordinary share of 0.01p was issued at par.
During the 2016 period 3,290,724 ordinary 0.01p shares were issued in a share for share exchange as consideration for the acquisition of 4,040 ordinary shares in Design Research Unit Limited and 3,333 ordinary shares in Tom Dixon Limited at a total premium of £3,287,433. A further 16,265,141 ordinary 0.01p shares were issued at a premium of 0.99p per share, giving rise to a premium on issue of £16,248,878.
In total these two transactions give rise to a combined share premium of £19,536,311 in the prior period.
On 16 April 2019 the company repurchased 180,000 ordinary shares of nominal value £0.001 each and 244,448 A ordinary shares of nominal value £0.001 each for an aggregate purchase price of £180,244.45 from a director of a subsidiary undertaking of the company. The repurchased shares were cancelled and the premium offset against the share premium account, reducing the balance on the share premium to £13,356,067.
On 16 April 2019 the company repurchased 180,000 ordinary shares of nominal value £0.001 each and 244,448 A ordinary shares of nominal value £0.001 each. On 9 January 2020 the company repurchased 977,793 C ordinary shares of nominal value £0.001 each.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The Group has the following contingent liabilities, being liabilities in respect of which there is a potential for a cash outflow in excess of any provision where the likelihood of payment is not considered probable or cannot be measured reliably at this time:
In 2019, Tom Dixon Italia S.r.l. entered into a lease agreement with Fabrica Immobiliare for the rental of a commercial real estate unit, via Manzoni no. 5 in Milan for the period of 6 years. The agreement of which includes a clause requiring Tom Dixon Italia S.r.l. to release the property in the same condition it was received at the expiry of the lease with the option for Fabrica Immobiliare to retain any modifications or improvements. In this instance:
(a) there is uncertainty as to whether a legal obligation exists;
(b) there is uncertainty as to whether a future cash outflow will arise in respect to these items; and/or
(c) it is not possible to quantify the potential exposure with sufficient reliability.
As a result, no provision has been made for the potential make good obligation in this lease.
The remuneration of key management personnel excluding directors is as follows.
Magyar & Co Limited
Peter Magyar was a director of Tom Dixon Holding Limited until 2 March 2020 and is a director of Magyar & Co. Ltd. Magyar & Co. Ltd provides legal services to Tom Dixon Holding group.
Design Research Limited invoiced Magyar & Co. Ltd £271 (2020: £8,559) for rent of an office in the building leased by Design Research Limited.
Design Research Limited paid £nil (2020: £121,571) for legal counsel services from Magyar & Co. Ltd.
At the year end the group owed Magyar & Co Limited £nil (2020: £35,064).
Copper Holding S.a.r.l.
The principle shareholder, Copper Holding S.a.r.l., loans of £10,655,316 was extended by a further advance of £3,281,035 to give a balance of £13,936,432 at 31 March 2021 (2020: balance of £10,655,316 ). The loans are due to repaid on the subsequent sale or listing of the group at the lenders discretion and consequently are disclosed within long term liabilities. The loans are a mixture of interest free and interest bearing and are all unsecured. Accrued interest stands at £1,537,596 (2020: £480,111) and the interest charge for the year is £1,057,485 (2020: £480,111).
NEO Investment Partners LLP
NEO Investment Partners LLP manage NEO Capital Private Equity II LLP on its behalf. During the year NEO Investment Partners LLP charged Tom Dixon Holding Limited £97,364 (2020: £101,111) in fees. The balance outstanding at the year end was £121,334 (2020: £25,605).
The Tom Dixon Holding Limited group is the largest and smallest group within which the results of the group and company are consolidated.
At the reporting end date the group had outstanding financial commitments as follows:-
A guarantee dated 8 July 2014 in favour of HMRC for £200,000
A composite company unlimited multilateral guarantee dated 5 December 2017 given by Design Research Limited, Design Research Unit Limited, Tom Dixon Limited, and Tom Dixon Holding Limited, to HSBC.
A further composite company unlimited multilateral guarantee dated 4 June 2014 given by Design Research Limited and Design Research Unit Limited, to HSBC
A debenture including a fixed charge over all present freehold and leasehold property; first charge over book and other debts, chattels, goodwill and uncalled capital, both present and future; and first floating charge over all assets and undertaking both present and future, in favour of HSBC and dated 11 September 2003.
A debenture including a fixed charge over all present freehold and leasehold property; first charge over book and other debts, chattels, goodwill and uncalled capital, both present and future; and first floating charge over all assets and undertaking both present and future, in favour of HSBC and dated 10 June 2019.
A general letter of pledge in HSBC favour, dated 5 June 2015.
A general letter of pledge in HSBC favour, dated 19 June 2019.
A contract monies charge in favour of HSBC dated 28 July 2014.
A guarantee dated 22 January 2019 in favour of Fabrica Immobiliare SGR S.P.A. for €175,000.
Post the year end the Group obtained a CBILS loan of £2m in June 2021. The group have received covenant waivers from the bank for the June 2022 and September 2022 quarters and are not forecasting in the next 12 months any breaches to the covenants.
Since the year end Russian forces invaded Ukraine on February 24, 2022. The conflict between Ukraine and Russia represents a risk factor for the global development and for the stability of the macroeconomic framework in Europe. At the time of writing this note, the invasion continues and it is not possible to estimate when a ceasefire will be reached.
At the moment the United Kingdom, the European Union, and the United States have imposed far-reaching economic sanctions. It is impossible to predict how long the conflict will last and what the result will be at the end. There is a real risk that economic development in Europe will be negatively affected in the short and medium term. The negative effects in Europe will vary substantially depending on the sector of activity, and from the current perspective it cannot be ruled out that the luxury homewares industry may be affected to a greater or lesser degree.
Currently, an immediate negative impact on the company's business activities has not been identified, although at this time the effect it will have if the conflict continues in the medium and long term cannot be quantified. The development of the conflict in the coming months is not foreseeable, so the assessment of the possible impact of the war on the groups business at the time of writing this report is subject to uncertainty. The escalation of the conflict in Ukraine may result in the objectives formulated for future exercises not being fully achieved. The company has taken the relevant actions to mitigate any negative impact in the business prospects.
The diversification of production and purchase points of origin to a global model facilitated by a complex worldwide shipping network has led to a situation where there are more potential points of failure.
A combination of factors including the Russian invasion of Ukraine, Brexit and Covid-19 has exacerbated this problem, with fluctuating and uncertain demand, manufacturing shutdowns, staff resourcing, and a background of rising inflation causing further potential issues in this area. The Company’s directors and management will continuously monitor the situation and proceed with appropriate mitigating actions.