TOM_DIXON_HOLDING_LIMITED - Accounts

The directors present the strategic report and financial statements for the 12 month period ended 31 March 2022.

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. There is also a restaurant business within the Group.

The Group saw further impacts in current year 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. Despite these challenges the Group has continued to make good progress in cutting cost, achieving sales growth and returning to profitability at EBITDA level. Furthermore in June 2021 the Group enhanced its funding position by receiving a £2m CBILs loan from its bankers, HSBC.

The Group measures itself in a number of different ways using key performance indicators (KPIs). At the highest level these are:

• Turnover

• EBITDA

• Stock holding

The Group results for the year show an increase in turnover of 24.3% to £31,811,433 (2021: £25,586,020). The increase was attributable to the re-opening of the economy following COVID restrictions and improvements in the availability of stock.

The loss for the year is £(3,822,765) (2021: Loss of £(5,241,706)). However the underlying EBITDA was £381,209 for the current year (2021: loss of £1,130,901). The underlying year on year improvement in performance was underpinned by improvements in the availability of product and the speed of delivery. Furthermore overheads have been contained significantly below comparable pre pandemic levels.

The directors have actively reviewed the Group’s cashflow and cash requirements through the year. The cash balance increased from £1,454,182 at 31 March 2021 to £2,817,726 at 31 March 2022. The increase is due to a combination of cashflows generated by operations and the receipt of a £2m CBILs loan.

Stock balances increased from £5,864,969 at 31 March 2021 to £6,696,754 at 31 March 2022, principally due to the increased volume of business.

The net liabilities of the Group at 31 March 2022 are (£5,950,873) (2021: £2,345,137). The increase in net liabilities was due to the loss incurred in the year.

Future developments

The global inflationary impacts of COVID-19 have been exacerbated by the geopolitical uncertainty caused by Russia’s war in Ukraine. For the avoidance of doubt, the Group does not have any operations or investments in Russia. Nevertheless, the war has resulted in economic uncertainty in almost all of the markets in which the Group operates, and has adversely impacted energy pricing, commodity costs and supply chains. Our management teams in all business segments are monitoring the situation closely. This is an ongoing challenge and its impacts on the Group’s trading and investing activities will depend on the duration of the current crisis and on geopolitical repercussions.

Whilst cognisant of the challenges posed by the current economic climate, the directors have cautious optimism of the Group ability to successfully navigate this period:

• future sales will be underpinned by a range of new product launches that have been well received by the market together with tangible improvements in customer service,

• overheads continue to be well controlled despite the inflationary pressures, and

• the Group retains the good support of its shareholders who have most recently improved the long term funding of the business by providing additional loans of £1.5m.

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 current economic environment combines supply chain issues with high inflation. There is a significant risk that these factors may affect consumer discretionary spending in the short term.

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. The Group enjoys a close and positive working relationship with shareholders and third party lenders but it is important that the strategic priorities are achieved to all forecasts and projected liquidity to be delivered.

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 2022.

Credit risk

Sales in the Group's retail stores and website do not give rise to credit risk.

The Group has implemented policies on its wholesale business that require appropriate credit checks on direct channel customers before sales are made. 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 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.

Key competitor risk

The luxury goods sector that the Group operates in is a competitive marketplace where brand value and perception is very important. The Group seeks to mitigate this risk through the provision of extraordinary products, supported by a fully integrated marketing strategy.

Product line perception risk

The constant need to innovate and provide new and extraordinary products in an every changing dynamic marketplace is a risk. The Group ameliorates this risk by investing heavily in both research and development and providing its team of skilled creatives the environment to design world-class products.

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 principal risks and uncertainties, including those arising from the recent 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 economic uncertainties noted above is challenging.

Taking account of the above, the directors confirm that they have reasonable expectation that the parent Company and the Group will have adequate resources 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 which is covered in more detail in note 1.3 to the 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.

Statement by the directors on performance of their statutory duties in accordance with S172 (1) Companies Act 2006

Section 172 (1)(a) to (f) requires the directors to act in the way they consider would be most likely to promote the success of the Company for the benefit of its members, as a whole, with regard to the following matters:

a) The likely consequences of any decision in the long-term

The directors believe that they have acted in the way they consider, in good faith, to promote the long-term success of the Company.

b) The interests of the Company's employees

The directors consider our people to be our greatest asset and the interests of our employees are always taken into consideration in the decisions that are made. An "open" environment is encouraged and the Company aims to be a responsible employer in its approach to employee matters including pay and benefits, diversity and inclusion, and training, development and career opportunities.

c) The need to foster the Company's business relationships with suppliers, customers and others

The directors and management team work closely with suppliers to build long-term relationships. Our aim is to work with our suppliers in an environment that reflects the values and behaviours we would expect from our own people.

Our social responsibility is important to us. Our criteria is to trade using ethical and social principles and only buy ethical products and services where possible. These have been outlined in the Group's Code of Conduct. The Code of Conduct aims to respect fundamental human rights, employment rights and the environment.

We are very much focussed on our customers and consistently strive to provide competitive pricing, quality products and excellent customer service.

d) The impact of the Company's operations on the community and environment

Our main environmental challenge is climate change and the shortage of fossil fuels. For it is here that we can make the greatest impact as a company. The Tom Dixon Group creates products which are manufactured from renewable or recycled raw materials. Our future strategy is innovation-led to reduce environmental impact.

e) The desirability of the Company maintaining a reputation for high standards of business conduct

The directors' intentions are to behave responsibly and ensure that management operate the business in a responsible manner, adhering to the high standards of business conduct and good governance expected and, in doing so, will contribute to the continued success of the Company.

f) The need to act fairly as between members of the Company

The Group has one member, and the directors have regular and open dialogue with its representatives to ensure a suitable return on investment.

On behalf of the board

The directors present their annual report and audited consolidated financial statements for the year ended 31 March 2022.

The principal activity of the Company is a holding company for the Tom Dixon group of companies.

Future developments

Future developments are set out on page 1 of the Strategic Report.

Results and dividends

The results for the year are set out on page 13. The directors cannot recommend the payment of a dividend in respect of the year (2021: £Nil).

Matters covered in the Strategic Report

As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information, required to be in the directors' report by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.

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 £274,016 (2021:£281,683) of development expenses, excluding salaries. The directors believe that this development will lead to future profits for the Group.

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.

Blick Rothenberg Audit LLP were appointed as auditor to the Group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group and company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”), and applicable law. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the Group and Company for that period. In preparing the financial statements, the directors are required to:

•     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.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Tom Dixon Holding Limited (the 'parent company') and its subsidiaries (the ‘group’) for the year ended 31 March 2022, which comprise the group balance sheet, the company balance sheet, the group profit and loss account, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion,except for the effects of the matter described in the Basis for qualified opinion section, the financial statements:

•     give a true and fair view of the state of the group’s and parent company's affairs as at 31 March 2022 and of the group’s profit for the year then ended;

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

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

Basis for qualified opinion

The audit opinion on the financial statements of a subsidiary company, Design Research Limited, for the year ended 31 March 2021 was qualified because the observed physical stock was not able to be reconciled to the stock listing. As a consequence, we are unable to determine whether any adjustment is needed to the subsidiary stock value of £5,032,117 as at 31 March 2021 or the related impact on cost of sales for the year ended 31 March 2022.

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 United Kingdom, including the Financial Reporting Council'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 qualified opinion.

Conclusions relating to going concern

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.

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 group’s and parent 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 directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are 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.

As described in the Basis for qualified opinion section of our report, our audit opinion is qualified in respect of stock as at 31 March 2021 and cost of sales for the year ended 31 March 2022. Were any adjustment to be made to these balances, the strategic report would also need to be amended.

Opinion on other matters prescribed by the Companies Act 2006

Except for the matter described in the Basis for qualified opinion section of our report, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

Except for 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 the parent company and their 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 of our work referred to above:

• we have not obtained all 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.

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 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 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.

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:

• the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non‑compliance with applicable laws and regulations;

• we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the retail sector;

• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental (including Waste Electrical and Electronic Equipment recycling (WEEE) Regulations 2013) and health and safety legislation;

• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

• identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

• performed analytical procedures to identify any unusual or unexpected relationships;

• tested a sample of journal entries to identify unusual transactions;

• assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and

• investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

• agreeing financial statement disclosures to underlying supporting documentation;

• reading the minutes of meetings of those charged with governance;

• enquiring of management as to actual and potential litigation and claims; and

• reviewing correspondence with HM Revenue and Customs, relevant regulators, and the company’s legal advisors

Our risk assessment findings for both non-compliance with laws and regulations and the susceptibility of the group’s financial statements to material misstatement arising from fraud were communicated with component auditors so that they could include them within their own risk assessment procedures and include, where appropriate audit procedures in response to such risks in their work.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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 (£1,837,281) (2021: loss of £1,905,755).

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;

• Section 3 Financial Statement Presentation paragraph 3.17(d) (inclusion of statement of cash flows);

• Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 26 ‘Share based Payment’ – Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

• Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.

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 (£1,837,281) (2021: loss of £1,905,755).

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 2022.

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.

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 recent 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 economic uncertainties noted above is challenging.

Due to the impact on consumer spending related to uncertain economic pressures noted above, revenue has been identified as the key variable on which sensitivity 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 2024 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 2024 at the same level of facility.

Post the year end the Group have received covenant waivers from the bank on its £2m CBILS loan for the quarters ended 31 December 2022 to March 2023. The Group is not forecasting in the next 12 months any further breaches to the covenants.

The Group have total shareholder loans of £13.9m as at March 2022 and £15.4m as of June 2022. 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 balances in the twelve months following the approval of these financial statements, which the directors believe provides evidence to the financial support of the parent and support to the going concern assertion.

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 2024 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.

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.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

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.

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:

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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:

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.

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.

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.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Finished goods include attributable overheads.

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.

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.

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.

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

Basic financial liabilities, including creditors, bank loans, and loans from fellow group companies, 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.

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.

Provisions are recognised when the Group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

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 Group 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 Group has set out five key areas of judgement and estimation.

• 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. The carrying value of trade debtors after bad debt provisions is detailed in note 17.

• 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. The carrying value of stock after provisions is detailed in note 16.

• Deferred tax calculations are part based on the estimation of useful economic life and depreciation rates imputed thereon. The carrying value of deferred tax assets is detailed in note 17.

• 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. The carrying amount of the dilapidations provision is detailed in note 20.

• The directors have undertaken an impairment review on the Group’s investment in its subsidiary undertakings and amounts owed by Group undertakings. The impairment review comprised a sensitivity analysis on the discounted forecasts going forward. Calculations used a weighted cost of capital (8.07%) and growth rate (2.08%) based on an industry analysis for luxury branded goods.

The sensitivity analysis showed that in the most likely scenarios the carrying value of the Company’s and Group’s assets was exceeded by present value of future earnings in perpetuity, indicated that no impairment in the investment was considered necessary. Turnover was identified as the variable most likely to change due to external pressure .

The directors impairment review further considered the nature and recoverability of amounts owed by Group undertakings. The amount recoverable was considered to be constrained to the value of amounts owed covered by the net assets in the Group undertaking. The amount impaired was £1,479,505 (2021:£584,217).

The impairment has been recognised in comprehensive income in administrative expenses.

During the preparation of the financial statements for the year ended 31 March 2022 the following prior year adjustments were identified:

Maturity of creditor

A loan from a shareholder had been classified as a long term creditor as at 31 March 2021 when it was repayable on demand. The impact of this adjustment is to increase creditors due in less than one year by £2,120,222 and decrease creditors due in more than one year by £2,120,222 as at 31 March 2021. There was no impact on the result for the year or retained earnings.

Lease incentive

A lease incentive on one of the Group's premises had not been charged to the profit and loss account on a straight line basis over the term of the relevant lease. The impact of this adjustment is to increase creditors due in less than one year by £60,000 and creditors due in more than one year by £349,326 as at 31 March 2021. The net effect of this adjustment was a reduction to retained earnings as at 31 March 2021 of £409,326.

Fixed asset reclassification

In 2018 certain fixed assets were reclassified in the financial statement from fixtures, fittings and equipment. The change was not updated in the Group's fixed asset register and as such an incorrect depreciation rate was applied since 2018. The impact of this adjustment was to increase tangible fixed assets by £357,514 as at 31 March 2021. The net effect of this adjustment was an increase to retained earnings as at 31 March 2021 of £357,514.

The impact of the above adjustments to the profit and loss account relating to the year ended 31 March 2021 were deemed immaterial and as such have not been adjusted for.

The total impact of the above adjustments on retained earnings as at 31 March 2021 was a reduction of £51,812.

An analysis of the group's turnover is as follows:

Their aggregate remuneration comprised:

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 2022 are as follows:

The registered office addresses are:

Company

Investment in subsidiaries as at 31 March 2022 was £19,481,693 (2021: £19,481,693).

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.

Bank loans represent the short term portion of a CBILS loan from HSBC. The loan is repayable in 60 monthly instalments commencing from July 2022 and bears interest at 3.99% over the Bank of England base rate. The loan is secured over the assets of the subsidiary it is held in.

Bank loans represent the long term portion of a CBILS loan from HSBC. The loan is repayable in 60 monthly instalments commencing from July 2022 and bears interest at 3.99% over the Bank of England base rate. The loan is secured over the assets of the subsidiary it is held in.

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 2022 and 31 March 2021.

The loans from immediate parent relates to amounts advanced by Copper Holding S.a.r.l.

In the prior year an additional loan of £3,281,035 was extended in six tranches, to fund the operational activities of the Group. Loans bear interest at 10% and are subordinated to the bank borrowings.

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 25%.

The UK’s Corporation Tax rate will increase to 25% as per the 2021 Spring Budget, and deferred tax has been recognised at 25%.

There is an unrecognised deferred tax asset in respect of timing differences relating to the losses of £3,094,073 (2021: £1,877,650).

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.

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:

A subsidiary company sub-leases parts of its leasehold premises. A portion of the property is sub-leased to a third party for £13,150 per month on a rolling six month contract. The lease in existence at the year-end expired on 14 May 2022 and has been replaced by a new lease on revised terms.

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.

Copper Holding S.a.r.l.

The principal shareholder, Copper Holding S.a.r.l., loans of £13,936,432 was outstanding at the end of the year at 31 March 2022 (2021: balance of £13,936,432). 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, which is disclosed in other creditors, stands at £2,251,897 (2021: £1,070,285) and the interest charge for the year is £1,181,613 (2021: £1,057,485).

NEO Investment Partners LLP

NEO Investment Partners LLP manage NEO Capital General Partner II LP, the Company's PSC, on its behalf. During the year NEO Investment Partners LLP charged Tom Dixon Holding Limited £83,627 (2021: £97,364) in fees. The balance outstanding at the year end was £Nil (2021: £121,334).

Design Research Limited invoiced Neo Investment Partners LLP £ 5,830 (2021: £Nil) for Tom Dixon products.

At the year end the year Neo Investment Partners LLP owed Design Research Ltd £4,667 (2021: £nil).

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 guarantee dated 18 February 2022 in favour of HSBC Continental Europe for €175,000.