B Barkby Group Plc We are Annual report and fi nancial accounts 2021 B Barkby Group Plc We are We are built on a history of entrepreneurship and business acumen, with a diverse portfolio of businesses within evolving markets. Relevant Our businesses include an adaptable property development business aligned to tenant demand, a rapidly expanding pub business and a diverse portfolio of investments. Restless We are focused and committed to seeking out and growing opportunities and delivering value to all our stakeholders. Respected We are built on a history of entrepreneurship and business acumen, recognised and trusted for our expertise and experience. Revenue £15.1m Pub company LFL Gross development pipeline of over Proposed Development - Wycke Hill Business Park, Maldon Client: Ambit Group Date: 13/04/21 Job/Dwg: 164080 Maldon M_01F CGI_03B in first full quarter since reopening For more details see pg02 For more details see pg10 For more details see pg36 View the latest information at: www.barkbygroup.com Annual report and fi nancial accounts 2021 Strategic Report Strategic Report Governance Governance Financial statements Financial statements 1 2021 highlights Financial highlights* Revenue (£m) £15.1m (2020: £12.0 million) Operating loss (£m) (£3.4m) (2020: (£2.3 million)) Loss before tax (£m) (£4.3m) (2020: (£3.1 million)) Net increase/(decrease) in cash (£m) £1.0m (2020: (£1.2m)) Basic earnings per share (pence) (£3.09) (2020: (£2.69)) Net assets/(liabilities) per share (pence) £0.60 (2020: £3.71) 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change Contents Strategic Report 01 Financial Highlights 02 At a Glance 04 Investment Case 06 Chairman’s Statement 08 Timeline 12 Business and Financial Review 28 Principal Risks and Uncertainties 30 Section 172 Statement 34 Sustainability Report Governance Report 36 Chairman’s introduction to Governance 38 Board of Directors 40 Corporate Governance Report 44 Audit Committee Report 45 Nomination Committee Report 46 Directors’ Report 50 Statement of Directors’ Responsibilities 51 Independent Auditor’s Report Financial Statements 56 Financial Statements 107 Company and Shareholder Information 15.1 -3.4 12.0 +3.1 -2.3 -1.1 -1.3 1.0 -4.4 -3.1 -1.2 +2.2 -3.09 -2.69 0.60 -0.40 3.71 -3.11 * The 2021 results include all businesses for the 52 week period to 1 July 2021. The 2020 prior year comparatives include Real Estate and Workshop Coffee for an extended period with the trading of the existing Barkby businesses included from 7 January 2020. Operational highlights Property Development During the lockdown periods, Barkby adjusted its development pipeline to target the demand for trade and logistic sites. We progressed three key developments at Wellingborough, Malden and Huntingdon by securing the land, obtaining the required planning consents and entering lease agreements with tenants at all sites. Covid-19 Throughout the financial year, Barkby’s pub business was impacted by the Covid-19 pandemic due to enforced trading restrictions and its impact on consumer behaviour. Barkby benefited from its diversity, with longer-term property development projects providing positive cash flow to support the most impacted businesses. Outlook As we came out of lockdown, our pub business has traded strongly. We opened all pubs in April 2021 as soon as trading restrictions allowed. Since re-opening, pub revenues consistently exceeded pre-Covid levels, driven particularly by strong accommodation and food sales, however the emergence of the Omicron variant is expected to have a negative impact on trade over the festive period and in to 2022. www.barkbygroup.com Quick reads Investment case pg04 Chairman’s statement pg06 Business model pg12 View the latest information at: www.barkbygroup.com www.barkbygroup.com 2 B Barkby Group Plc Group at a Glance Barkby focusses on its core businesses of Commercial Property Development and Barkby Pubs, alongside its diverse investments. Relevant Overview Barkby Group PLC focuses on two main business divisions – Commercial Property Development and Barkby Pubs. These are high quality businesses run by an entrepreneurial and experienced management team. In addition to these businesses, Barkby also owns a number of smaller businesses in the hospitality, consumer and life sciences industries. Barkby’s strategy is to accelerate and maximise the opportunities in its core business divisions of Commercial Property and Barkby Pubs, whilst facilitating the growth and exit potential of other group businesses. Annual report and fi nancial accounts 2021 Strategic Report Governance Financial statements 3 Relevant Our businesses Real Estate Our Real Estate business specialises in developing contract backed sites in the South East of England. The Company has a proven profi table track record of sourcing and developing commercial property projects. Barkby Pub Company Barkby Pub Company operates a portfolio of pubs that are renowned for their welcoming atmosphere located in the Cotswolds, Oxfordshire and West Sussex. We aim to deliver fi rst class food, drink and accommodation, as well as a fabulous customer experience. Investments Barkby investments includes Workshop Coff ee, a speciality coff ee roaster, and Centurian Automotive, a premium used car dealership. The group also owns Cambridge Sleep Sciences, the manufacturer of SleepHub, and has invested in Verso Biosense, a digital health company focusing on Women’s Health. For more details see pg18 For more details see pg14 For more details see pg22 www.barkbygroup.com 4 B Barkby Group Plc Investment case 1 2 3 Proven track record of sourcing and developing profitable commercial property projects in South East England. A flexible approach enables Barkby to adapt to tenant requirements and maintain a robust future development pipeline. The team has successfully completed over 20 schemes. We target a predictable EBITDA margin on each scheme of at least 20% with gross development value excluding land of between £3m and £20m. We retain a low overhead business model to maximise profits. Strong long-term relationships with national occupiers across retail, quick food service and trade sectors. Recently signed tenants include Aldi, Costa Coffee, Greggs, Formula One Autocentres, Toolstation, Just Tyres, MKM Building Supplies and Sixt Car Rental. A tenant-led approach allows Barkby to adapt quickly to changes in commercial property trends, whilst contractually agreeing all aspects of the development before committing. Barkby aims to maintain a development pipeline totalling at least £30m gross development value. At present, Barkby has 5 active developments with gross development value of £30m within a pipeline in excess of £40m. We continue to evaluate new opportunities and add to our development pipeline. Award-winning Pub operator focussed on premium pubs with rooms. Barkby is a boutique pub operator focused on premium pubs with rooms located in Oxfordshire, Gloucestershire, Berkshire and West Sussex. The portfolio has grown to seven premises following the addition of The Harcourt Arms and The Ebrington Arms. The Harcourt is a 17th century village pub that holds 2 AA Rosettes, 5 AA Gold Stars and has ten rooms. The Ebrington Arms has five luxury rooms and holds 2 AA Rosettes. The Ebrington was rated as The Times’ ‘number one UK village pub’, while the Daily Telegraph rated the pub as the best ‘UK Pub for Food’. We aim to grow our estate to 12 pubs by the end of our 2023 financial year. For more details see pg14 For more details see pg12 For more details see pg18 Annual report and fi nancial accounts 2021 Strategic Report Governance Financial statements 5 4 5 6 Combining cash- generative growth businesses alongside investments with exceptional upside opportunities. Barkby’s strategy is to accelerate and maximise opportunities within its existing core businesses of Commercial Property Development and Pub operations. Demonstrated resilience during Covid-19 and quick return to profitability when trading restrictions reduced. Barkby has weathered the Covid-19 pandemic largely due to the support of its cash generative commercial property development business, where activity has resumed at pace. It has also sourced and invested in some high-growth opportunities in the Consumer and Life Sciences industries, including SleepHub, Workshop Coffee and Centurian Automotive, as well as an investment in Verso Biosense. Barkby has completed its existing investment commitments in these businesses and, whilst acknowledging additional funding may be required, it is our intention to return value on these investments either via exit or cash generation over the next 24 months. The emergence of the Omicron variant is expected to impact festive trade over December 2021. Although the extent of its impact is uncertain, our businesses have demonstrated a strong ability to bounce back. Our pub business recorded record sales in the 3-month period to 30 September 2021, with like-for-like sales up 22% on the same period in 2019. The real estate and pub businesses are poised for significant growth and profitability. Exceptional businesses driven by exceptional people. The group and individual businesses are run by experienced and entrepreneurial management teams with a proven track record of sourcing and executing investments in growth businesses. However, the common key to success across all Barkby’s business is the importance of attracting exceptional employees, empowering them to succeed and developing a culture of excellence. Supporting the development of our people is at the core of Barkby’s operating ethos and is expected from every member of the Barkby team. For more details see pg12 For more details see pg12 For more details see pg38 www.barkbygroup.com TOBE UPDA 6 B Barkby Group Plc Executive Chairman’s statement “ All divisions developed their off ering in expectation of signifi cant market opportunities, which were capitalised on when trading restrictions reduced and economic activity resumed.” Property Development Pipeline Pub Estate: Charles Dickson Executive Chairman Barkby completed the integration of its real estate, pub and investment businesses during the 2021 fi nancial year. Introduction to Governance The Chairman’s Introduction to governance has been provided at the start of the Governance Report. For more details see pg36 Annual report and fi nancial accounts 2021 Strategic Report Governance Financial statements 7 Whilst navigating the impacts of Covid-19, we used the 2021 financial year to consolidate our operations following the combination of the existing Barkby group and the entities under the control of the Dickson family. We adapted our strategy and focussed our teams to ensure that our businesses were set up for success when lockdown and trading restrictions allowed. The Group’s investments in Workshop, Centurian, SleepHub and Verso Biosense have stabilised following the disruption from Covid-19 and we expect these businesses to generate profit and offer potentially lucrative exit opportunities over the next few years. Finally, I would once again like to recognise our most important attribute, our people, who have demonstrated solidarity and commitment across the group. Despite substantial changes within the business, and the impact of events outside our control, I have been hugely impressed and proud of the attitudes shown across all Barkby teams. I have full belief and confidence in our teams and their ability to deliver the group’s potential for success. Charles Dickson Executive Chairman 23 December 2021 Due to our diversified group structure, the pandemic impacted different businesses in different ways. We believe there are significant opportunities for growth and to generate shareholder value in our core businesses of Property Development and Pubs. We remain committed to growing these divisions, whilst managing the controlled maturity of our other group businesses and investments. Outlook Despite the ongoing and unpredictable impact of Covid-19 variants, we remain confident that underlying demand for our traditional pub experience, with delicious food, attentive service and relaxed accommodation remains strong. During the quarter to September 2021, our pub business enjoyed its first uninterrupted quarter of trade since the pandemic began. Our pub estate achieved record revenue and profit, with underlying like-for-like sales up 22% in comparison to the same period in 2019 before Covid-19. Our property development pipeline is well established, and several key developments are ready to build. We have recently acquired additional land at Wellingborough and completed the acquisition of a site in Maldon. We have also exchanged contracts to acquire land for a 30,000 sq ft development in Swindon and will shortly complete the acquisition of a site in Huntingdon. www.barkbygroup.com 8 00 B B Barkby Group Plc Barkby Group Plc May 2019 Operating agreement entered with Arkell’s to operate The Rose and Crown in Ashbury. June 2018 Barkby acquired Cotswolds-based pub portfolio comprising The Five All’s, The Bull Hotel and The Plough. Read more about our hospitality portfolio on pg18 April 2020 Barkby acquires intellectual property and begins development of “SleepHub” product. Read more about SleepHub on pg26 July 2020 Planning permission granted for a 20,000 sq. ft. mixed use retail and trade scheme at Wellingborough. July 2018 June November 2019 2020 February May January April November 2018 The George at Burpham added to the pub portfolio. February 2019 Barkby acquired Centurian Automotive Ltd, a luxury used car dealership. Read more about Centurian Automotive on pg25 Annual report and fi nancial accounts 2021 January 2020 Barkby acquires Tarncourt Property businesses and Workshop Coff ee. Read more about Workshop Coffee on pg24 January 2020 Shares admitted to trading on the Alternative Investment Market. Exercised option to subscribe for £2m Convertible Loan Notes in Vivoplex (now renamed Verso Biosense). Read more about Verso Biosense on pg26 Strategic Report Strategic Report Governance Governance Financial statements Financial statements 9 00 October 2020 SleepHub device launched. October 2020 Workshop Coff ee becomes UK distributor for re-usable drinkware brand, MiiR. August 2020 Hastings development completed with Gross Development Value of £6.9m, with Aldi Stores, Greggs and Costa Coff ee as anchor tenants. January 2021 Exchanged contracts to develop a 15,400 sq. ft. mixed-use retail and trade scheme in Maldon, Essex with an estimated gross development value of £6.0 million. June 2021 Entered into a new leasehold agreement for The Ebrington Arms, which has been rated as The Times’ ‘number one UK village pub’ and the Daily Telegraph’s ‘best UK Pub for Food’. August September October 2021 January June October October 2021 - Maldon Completion of the freehold purchase of the former Quest Motor dealership in Maldon, Essex for a consideration of £2.2m. Daily Telegraph’s ‘best UK Pub for Food’. September 2020 Acquired operating lease for The Harcourt Arms in Stanton Harcourt, a premium pub with 10 letting rooms that holds 2 AA Rosettes and 5 AA Gold Stars. Proposed Development - Wycke Hill Business Park, Maldon Date: 13/04/21 Client: Ambit Group Job/Dwg: 164080 Maldon M_01F CGI_03B October 2021 - Acquisition and development fi nance £4.4m debt facility agreed and drawn to fund Maldon and Saff ron Waldon developments. www.barkbygroup.com 10 B Barkby Group Plc Our Approach We are focused and committed to seeking out new opportunities and delivering value to all our stakeholders. Restless Overview Barkby has a clear and focussed strategy with the following aims: • Accelerate and maximise opportunities within the Group’s established core businesses of Real Estate and Pubs. • Source and invest in cash generative businesses or those with exceptional market potential and the ability to disrupt. Annual report and fi nancial accounts 2021 Restless Strategic Report Governance Financial statements 11 Barkby Ethos Customer Focus An emphasis of our businesses is to provide exceptional customer focus, care and service. This approach is at the heart of our hospitality businesses and is a distinguishing feature of our tenant-led property development business. Premium quality Understanding what it takes to successfully provide a premium product and experience is a consistent area of expertise across the Barkby Group. Enable and empower teams Barkby operates as a functional integrated group. The diverse experience of our teams provides unique insight and skills for the benefi t of the overall group. Our open culture promotes shared expertise, support and honest feedback across a fl at organisational structure. www.barkbygroup.com 12 B Barkby Group Plc Business and Financial Review In 2021 Barkby integrated its group businesses and focussed on developing the growth opportunities in its core Real Estate and Pub businesses. The 2021 results include all businesses for the 52 week period to 1 July 2021. The 2020 prior year comparatives include Real Estate and Workshop Coff ee for an extended period with the trading of the existing Barkby businesses included from 7 January 2020.” Following the acquisition in January 2020, Barkby had a brief period as an enlarged group before the Covid-19 pandemic impacted trading. Underlying trade was significantly impacted from that point until trading restrictions reduced in the summer of 2021. The commercial property development pipeline progressed significantly, with a number of land acquisitions ready to commence construction with tenants secured. As the economic outlook stabilised towards the end of the financial year, we experienced accelerated tenant demand and finalised three key developments at Wellingborough, Maldon and Huntingdon. Barkby developed its financial and operational controls during the pandemic, balancing cost control and cash preservation with the delivery of planned initiatives to improve our businesses. Focussing on our business planning has supported our view that the combined group provides financial, strategic and operational benefits beyond the capacity of each individual company. We utilised the Furlough scheme to support our workforce during periods of enforced closure and trading uncertainty, and provided additional top-up payments to support team members who may not have been eligible under the scheme. This strategy has helped retain an engaged workforce that is passionate and clearly focussed on delivering sales growth targets, improved profitability and exceptional service to our customers. Revenue by entity Real Estate Barkby Pubco Workshop Coffee Centurian Automotive Other Total Annual report and fi nancial accounts 2021 2021 £0.1m £2.7m £1.2m £11.0m £0.1m £15.1m 2020 £4.5m £0.6m £2.9m £4.0m – £12.0m Strategic Report Governance Financial statements 13 Background Image required The Ebrington Arms, Ebrington Two new leaseholds were entered during the year, including The Ebrington Arms, a 17th century village pub with five luxury rooms. The Ebrington holds 2 AA Rosettes and has been rated as The Times’ ‘number one UK village pub’, while the Daily Telegraph rated the pub as the best ‘UK Pub for Food’. New pub acquisitions: Total pubs operated: 2 7 www.barkbygroup.com See more online at https://theebringtonarms.co.uk 14 B Barkby Group Plc Our Business Real Estate Our Commercial Property Development business specialises in developing contract backed sites in the South East of England. The Company has a proven profi table track record of sourcing and developing commercial property projects. Each development project is expected to take approximately A pre-let threshold of months to complete is targeted before commencing construction Market Overview Barkby Real Estate sources and develops commercial property schemes predominantly based in the South East of England. Barkby specialises in mixed-use trade and retail parks including retail warehouses, logistics, storage, industrial, leisure and quick food service. Annual report and fi nancial accounts 2021 Real Estate Strategic Report Governance Financial statements 15 Covid-19 has resulted in delays to the commencement of some planned developments, with tenants taking longer than normal to agree commercial terms. However, there remains a strong interest in the Group’s upcoming schemes from tenants, as outlined below: Current projects Wellingborough, Northants Following the acquisition of the land in the last financial year we have now been granted full planning permission for a 14,100 sq.ft mixed use commercial scheme across five units. The scheme will have an expected GDV of £4.6m and total estimated rental value of £225,000. We have exchanged agreements to lease with Greggs Plc and Formula One Autocentres Ltd on two units and we expect to exchange a further two units in Q1 of 2022. Construction is expected to start in Q1 of 2022. Proposed Development - Deninginton Rd/London Rd Wellingborough Date: 18/02/2020 Job/Dwg: 15584 CGI 02B Client: Tarncourt Ambit Properties LTD Maldon, Essex Following acquisition of the former Quest motor dealership in October 2021 we have been granted full planning permission for a 15,200 sq.ft mixed use commercial scheme across four units. The scheme will have an expected GDV of £5.8m and total estimated rental value of £268,500. We have exchanged agreements to lease with Costa Coffee Ltd, Formula One Autocentres Ltd and Toolstation Ltd on three units and we expect to exchange the remaining unit in H1 of 2022. Construction is expected to start in Q1 of 2022. Proposed Development - Wycke Hill Business Park, Maldon Client: Ambit Group Date: 13/04/21 Job/Dwg: 164080 Maldon M_01F CGI_03B Huntingdon, Cambridgeshire Following exchange of contracts to acquire the site subject to a satisfactory planning consent in January 2020, we have now been granted full planning permission for a 31,000 sq.ft retail warehouse scheme across two units. The scheme will have an expected GDV of £8.3m and total estimated rental value of £454,000. We expect to exchange agreements to lease on both units in H1 of 2022. Construction is expected to start in Q3 of 2022. Proposed Mixed Use Development - St Peter’s Road, Huntingdon Client: Barkby Real Estate Developments Ltd Job/Dwg: 13439 M_02A CGI 01B Date: 02/09/20 Saffron Walden The land was acquired by the Company in 2010 and is still held at book cost. A series of successful planning applications have been made since the land was acquired, and the site now has planning permission for the construction of 35 residential units. The site is now under offer and completion is expected in H1 2022. Swindon, Wiltshire Following exchange of contracts to acquire the site subject to a satisfactory planning consent in December 2021, we will be submitting a planning application for a 29,800 sq.ft mixed use commercial scheme. The scheme will have an expected GDV of £7.2m and total estimated rental value of £407,000. We expect to exchange agreements to lease on both units in H1 of 2022. Construction is expected to start in 2023. www.barkbygroup.com 16 B Barkby Group Plc Business and Financial Review continued Our Process A low capital intensive process that produces high returns THE LAND Unlike many traditional developers we do not retain land. We contract to buy land subject to an acceptable planning consent. PLANNING AND AGREEMENTS TO LEASE Once we have a contracted a development site we submit our planning application and in tandem sign our prospective tenants up to agreements to lease (“AtL”). COMPLETION We deliver a completed scheme to tenants to fit out at practical completion. At this point the buyer completes the purchase and pays our remaining development profit. THE TENANTS FUNDING AND CONSTRUCTION We only contract to buy land if we have tenant interest in the scheme we are promoting and we know with certainty that we can pre-let more than 70% of the GDV of a scheme pre- construction phase. Once planning is granted and tenants are legally committed to the scheme, we then forward fund the development with an institutional buyer. The buyer refunds all costs incurred to date, pays a planning profit and will then commit to fully fund construction though to completion via monthly payments. We then build the scheme on a fixed price contract. The whole process is usually 18-24 months from start to finish, with planning and site assembly taking c.9-12 months and funding and construction taking c.9-12 months. Land Acquisitions and Planning Business Model and Strategy Barkby follows a capex light business model to de-risk the development process and ensure clear financial visibility over the lifecycle of each scheme. Barkby does not purchase land speculatively, but secures land under purchase agreements that are subject to obtaining the required planning consents for the scheme. Our tenant-led approach built on established relationships with a broad range of national occupiers and other key tenants. This gives clear visibility of potential tenant’s geographical growth strategies and allows Barkby to confirm tenant interest in a proposed scheme at an early stage. A pre-let threshold of 70 per cent is targeted before commencing construction. Typical tenants of Barkby schemes include Aldi Stores Limited, Greggs Plc, Costa Limited, MKM Building Supplies Limited, Travis Perkins plc, Halfords Group Plc and others. During the most significant periods of Covid-19 impact, land acquisition deals were less competitive due to uncertain buyer demand. However, commercial development activity has increased significantly since lockdown restrictions reduced. The Government has published proposals for reform of the land use planning system. The most significant changes aim to improve the slow and complex system of local development plans. We believe that future legislation has the potential to reduce development timeframe and associated costs. Tenant Demand Covid-19 accelerated some of the existing underlying real estate trends, such as increased online delivery and working from home. Demand for logistics space has also been significant. Whilst this has generated changes in tenant demand in some sectors, others have remained relatively insulated or seen growth. Due to our flexible tenant-led approach, Barkby can focus its activity to match tenant demand. We have seen a shift away from traditional retail parks, however demand from trade and quick service food tenants has been robust. Each development project takes approximately 18- 24 months to complete, therefore many tenants adopt long-term views in their expansion strategies. Annual report and financial accounts 2021 Strategic Report Governance Financial statements 17 In line with its tenant-led approach, Barkby adopts a pro-active approach to land acquisitions. This approach can require a land-assembly of multiple parcels of land and often includes off-market purchases. Once a contracted development site has been obtained, planning applications are submitted and prospective tenants execute ‘agreement to lease’ documentation. After planning has been granted and the future tenants are legally committed to the scheme developments are often forward funded with institutional buyers, who fund costs incurred to date and commit to fully fund construction through to completion via monthly payments. The scheme is then built on a fixed price contract. In some instances, development finance is used before selling the completed scheme. The completed scheme is then delivered to the tenant to fit out at practical completion, at which point the institutional buyer completes the purchase and pays the completion profit due. Barkby Real Estate specialises in projects with a gross development value of between £3.0 million and £20.0 million and targets a minimum EBITDA margin of 20 per cent on each project. Our current pipeline includes five active developments with gross development value of £30m within a pipeline in excess of £40m. Financial Review Revenue and costs are recognised across the life of each scheme and can often span multiple financial periods. Further details of our revenue recognition policy can be found on page 53. Construction work at our Hastings development, which is anchored by Aldi Stores, Greggs and Costa Coffee, completed in June 2020 and practical completion was granted in August 2020. Hastings Borough Council completed their purchase of the site, resulting in a net balancing payment receipt of £1.8m in the financial year. St Peter’s Road, Huntingdon Proposed development of a 31,000 sq.ft. commercial scheme in a prominent and popular site. Total expected Estimated Rental Value of £454k per anum. Strong demand from occupiers with all units expected to be pre-let prior to construction commencing. Gross development value £8.3m See more online at www.barkbygroup.com/our-business/real-estate Proposed Mixed Use Development - St Peter’s Road, Huntingdon Client: Barkby Real Estate Developments Ltd Date: 02/09/20 Job/Dwg: 13439 M_02A CGI 01B www.barkbygroup.com 18 B Barkby Group Plc Our Business Barkby Pub Co Renowned for their welcoming atmosphere, our multi-award winning pubs are located in the Cotswolds, Oxfordshire and West Sussex. We aim to deliver fi rst class food, drink and accommodation, as well as a fabulous customer experience. New Barkby Pubs The Harcourt Arms, Stanton Harcourt A Michelin-rated Inn with an exceptional chef offering the most indulgent and comfortable accommodation - a rare find reflecting the passion of a young team who strive for excellence in all that they do. The Ebrington Arms, Ebrington A traditional local Inn with outstanding food and accommodation in an idyllic village at the heart of the Cotswolds golden triangle. Annual report and fi nancial accounts 2021 Strategic Report Governance Financial statements 19 Barkby Pub Co Market Overview The hospitality market was significantly impacted by Covid-19 during the financial year. Industry representative bodies have repeatedly highlighted the financial difficulties faced by all operators and the risk that many venues may not survive. This has particularly hit wet-led pubs, those dependent on office-workers and businesses that promote congested use of space such as music venues, late-night bars and nightclubs. This segment of the market recovered quickly when lockdown restrictions were lifted. This is due to our large footprint properties that are able to operate in a Covid-secure way with minimal interruption. We also experienced increased demand for domestic holidays from UK residents as a result of reduced confidence and appetite for international holiday travel alongside enforced travel restrictions. Barkby operates premium pubs with rooms located predominantly in the Cotswolds and West Sussex. The Bull Hotel, Fairford A bustling and busy coaching Inn at the heart of an unspoiled Cotswold market town, The Bull offers a very special welcome, comfortable rooms and a varied bar and dining menu. The Plough, Kelmscott A country village Pub and a real local, The Plough is a hidden gem with cosy and comfy rooms and a welcoming dining room. www.barkbygroup.com 20 B Barkby Group Plc Business and Financial Review continued During the year, Barkby added The Harcourt Arms to its portfolio. The Harcourt Arms is a 17th century village pub that holds 2 AA Rosettes and 5 AA Gold Stars. The property has been fully refurbished to the highest standards and provides nine high-quality letting rooms and one master suite. We also added the Ebrington Arms, another 17th century village pub with rooms that is renowned for the quality of its food and service. We continue to look for premium pubs with rooms in our target geographies and are in negotiations on several potential sites. It is our intention to grow the portfolio to 12 pubs by the end of the 2023 financial year. Financials Due to the impact on trading of Covid-19 during the year it is difficult to report on the underlying performance of the business during this period. We have worked hard to maintain good communication and work in a collaborative way with our employees, suppliers and landlords during this difficult time. The pub business made an operating loss of £0.1m excluding depreciation, amortisation and interest expense, during the financial year. Barkby Pub Company continued Business Model Barkby Pubs is a boutique hospitality business focused on premium pubs with rooms located in Oxfordshire, Gloucestershire, Berkshire and West Sussex. Barkby Pubs’ proposition is led by excellence in food and service, showcasing the best of English produce, alongside a passion for creating memories and delivering incredible hospitality. Barkby Pubs seeks to create premium individual pubs with accommodation to address the trend away from branded pubs and large hotels. Barkby offers market-leading pub food and exemplary service, providing classic and sophisticated modern British cuisine with seasonal and artisan ingredients alongside local produce. Barkby Pubs operated seven premises during the year, with a total of 60 rooms. Each pub has its own website to take bookings, display menus, advertise upcoming events and promote their unique atmosphere. Marketing is managed centrally with regular newsletters and local media as well as increased social media presence and digital story- telling to create an authentic connection with our customers. Strategy Our focus is to maintain the individual character and uniqueness of each location, whilst implementing operational best practice. In the next 12 months, we will invest in an improved labour planning model as well as stock control systems and processes. These activities are expected to increase the underlying profitability across the estate. Barkby has invested in developing its people, systems and processes so that it is ready to expand rapidly and acquire further sites. We have developed a site acquisition methodology to ensure new pubs fit our operational model and required financial returns. We will target a combination of leasehold and freehold acquisitions. Annual report and financial accounts 2021 21 Strategic Report GovernanceFinancial statementswww.barkbygroup.com 22 B Barkby Group Plc Our Business Investments A diverse portfolio of investments providing services and products to meet current and future needs, within evolving markets. Life Sciences Verso Biosense Focused on transforming Women’s Health, Verso Biosense is creating a meaningful impact on how clinicians and the pharmaceutical industry make better evidence-based decisions. Cambridge Sleep Sciences Cambridge Sleep Sciences creates innovative products that help improve quality of life through natural sleep. Annual report and fi nancial accounts 2021 Strategic Report Governance Financial statements 23 Investments Workshop Coffee Workshop Coffee is dedicated to sourcing, roasting and showcasing exceptional coffee. An award winning specialty coffee roastery, they supply specialty-grade coffee to wholesale and consumer markets. Centurian Automotive Centurian Automotive is a Luxury automotive dealership with a fast growing and differentiated online digital presence. www.barkbygroup.com www.barkbygroup.com 24 Investments – Workshop Coffee Workshop Coffee is a speciality coffee roaster that operates through multiple sales channels including wholesale, direct to consumer via an online webshop and subscription service, and three coffee shops located in central London. Market Overview As with Barkby’s pub business, Workshop Coffee was also significantly impacted by the Covid-19 pandemic. Independent coffee shops, hotels and other hospitality customers have been forced to close during the national lockdown periods impacting Workshop’s wholesale revenues. As working-from-home became a requirement, home delivery sales increased significantly. This created a strong market opportunity for Workshop with its existing webshop, subscription customers and strong digital presence. With significant reductions in London footfall, Workshop remains cautious about reopening its retail stores. Three units were re-opened in the summer of 2021, with a focus on cost control. As the number of workers, shoppers and tourists have returned to central London, revenues have steadily increased and the coffee shops are expected to generate positive operating profits going forward, subject to any significant ongoing impact from the Omicron variant. Business Model Wholesale Workshop Coffee supplies and supports over 90 wholesale partners across more than 30 countries, covering a range of operators, including independent coffee shops, hotels, caterers, restaurants, bars, offices and general retailers. Existing customers include Claridge’s Hotel, The Fat Duck Group, Mandarin Oriental Hotel Group, Twitter, Palantir, and The Old Vic Theatre. Workshop Coffee works with distribution partners in other territories such as the GCC (including Saudi Arabia), and Ireland, who on-sell to local customers. Online The online channel is managed and fulfilled from Workshop Coffee’s production facility. The production facility relocated from Bethnal Green to Hatfield in November 2021. In addition to selling one-off packs of coffee beans, customers can subscribe to recurring coffee orders through the website, as well as purchase coffee related hardware products, such as coffee brewers and coffee grinders. Retail Workshop operates three coffee shops in central London. The coffee shops are operated on short-term leases, therefore offering some flexibility to adapt to London footfall if there is insufficient profit potential. Strategy Workshop Coffee’s growth focus is on wholesale and B2B customers. The board believes there is a significant opportunity to grow the Workshop Coffee business organically. In addition, the surge in online sales during the pandemic has increased our online customer base and created further opportunities for growth in this area. Financials Workshop made sales of £1.2m in the year (15 months to June 2020: £2.9m) and generated an Operating loss of £0.4m (15 months to June 2020: £0.8m). Wholesale revenues were down by 7% on the same period last year. However there has been a substantial increase in online sales, which increased 76% on the same period last year. This was predominantly driven by hardware sales and coffee subscriptions as an increasing number of consumers began preparing and drinking premium coffee at home. Gross margin increased to 45% due to a change in the sales mix. Barkby Group PlcBAnnual report and financial accounts 2021 Strategic Report Governance Financial statements 25 Centurian works closely with major consumer finance companies, which enables the client experience to follow through to completion seamlessly. All external parties and contractors are expected to follow the same high quality control level expected by Centurian throughout the client journey. This leads to long term and trusted relationships with our suppliers. Strategy Centurian operates from a unique location in Kettering, Northamptonshire. In response to the acceleration in remote car viewing and enquiries, Centurian has significantly increased its digital presence and has started to generate increased sales and profits as a direct result of the outreach and appeal from digital activity. Centurian’s digital presence has continued to generate sales after lockdown restrictions reduced. Financials Centurian sales and cash flow remained robust despite the trading restrictions. The business generated sales of £11m in the year. An average margin of 10% was made on car sales, Centurian generated a net loss for the year of £66k. Investments – Centurian Automotive Market Overview Centurian Automotive is a Luxury and Supercar automotive dealership with a fast growing and differentiated online digital presence. Centurian distinguishes itself within the Automotive industry with its innovative customer journey and customisable product. Centurian’s client base has been established over 14 years and boasts a substantial, loyal customer list as well as engaging with new and aspirational future clients through its social media platforms. Trading trends have been impacted by Covid-19 due to changes in consumer behaviour alongside enforced trading restrictions. However, out of the crisis has come an advancement in innovation, with new online used car advertising platforms emerging to compete with established websites and the launch of home- delivery services. Business Model Centurian prides itself on best-in-class customer experience and aims to differentiate itself from other automotive dealerships through its superior customer service, this reflected in its glowing customer reviews with a 4.9 out of 5 rating average on Google and Autotrader. Centurian holds between 100-150 hand picked vehicles. Approximately 60-70% of these vehicles are then bespoke commissioned by the client to give a unique look to the vehicle. Bespoke sales generate higher margins and provide a unique selling point due to exclusive manufacture of customised products under licence. www.barkbygroup.com 26 B Barkby Group Plc Business and Financial Review continued Investments - Cambridge Sleep Sciences Barkby acquired the intellectual property rights to develop a device that delivers scientifically formulated sounds to improve and facilitate natural sleep. The “SleepHub” product was subsequently launched in November 2020. The importance and benefits of sleeping patterns continue to be an area of focus in health and wellness. The market is relevant to both those with sleeping disorders as well as people wanting improvements in everyday sleep. Since launch, SleepHub has received positive reviews in major publications including The Telegraph, The Daily Mail and Metro. SleepHub has also featured in magazines such as Ideal Home alongside a number of health and wellbeing titles. We have focused our sales strategy on the distributor channel and have agreements with Go10 (UK), Wenatex (Australia), M-Photo (South Africa), Lifeworks (North America/Europe). We are now selling in Harrods, Selfridges as well as online channels such as Amazon. There are significant opportunities in the Healthcare space and CSS has started clinical studies to validate the benefits of our technology. Further studies looking at disease areas where insomnia is a significant symptom are in the planning phase. We have seen positive early sleep improvement signals in patients with Parkinsons Disease. Additional SleepHub models will be added to the range. The Anywhere device, which addresses key areas of market feedback, are on track to be available from May 2022. Cambridge Sleep Sciences incurred development, marketing and administrative costs totalling £1,033k during the period. Investments - Verso Biosense Ltd Our female health investment has now been rebranded to Verso Biosense (“Verso”). that Verso’s wireless powered battery-free uterine monitoring platform can address has shown the commercial opportunity to be very significant. Barkby made an investment of £0.5m in August 2020 in the form of a Convertible Loan Agreement bringing the total investment to £2.5m. Verso has continued to make good progress. Engineering breakthroughs have led to major improvements in chip sets, monitoring functions, electronics and garment design. The team has moved into a clinical study in 2021 and are in the process of signing up commercial and clinical partners. The discovery of novel, new data in the uterine environment for the very first time has huge potential to unlock meaningful patient data, changing diagnostic paradigms and optimising treatments across IVF/fertility, endometriosis, fibrosis, menopause and oncology. The broadening of disease areas Annual report and financial accounts 2021 Strategic Report Governance Financial statements 27 Background Image required Cambridge Sleep Sciences - Sleep Hub Entered distribution agreements in 4 continents See more online at https://cambridgesleepsciences.com/ www.barkbygroup.com 28 B Barkby Group Plc Principal Risks and Uncertainties The Board is responsible for reviewing risks to ensure that the business is not exposed to unnecessary or inappropriately managed risks. Risk Potential Impact Mitigation Global or Regional Pandemic The Covid-19 virus and actions to protect public health may impact Barkby’s divisions. Ongoing infection rates may lead to delays or disruption to the property development pipeline, loss of access to physical sites impacting ability to trade and reduced customer demand. The new Omicron variant may result in enforced trading restrictions and reduced consumer confidence, which may impact our pub and coffee businesses. Diversified group structure and industry exposure, alongside multi-channel retail opportunities gives the group the option to focus activity on less impacted divisions, which can in turn support any business that is significantly impacted. The Group has proven its capability to work remotely for extended periods. The Group’s response to the unforeseen pandemic has resulted in many operational changes to help mitigate the impacts of potential future outbreaks. Economic and Political Factors Beyond the Group’s Control A downturn in the macro-economic climate may impact demand generally across our businesses. Costs may be increased by changes to government policy, including tax changes or other legislation. The Board has planned for a variety of potential scenarios including mitigations for any fundamental reduction in demand. The medium-term impact of Covid-19 is uncertain, meaning the Group has had to plan for a wider range of outcomes. The Board considers the Barkby businesses to have a relatively flexible cost base, with limited contracted fixed costs. The Group’s cost base has been tightly controlled with limited additional funding required during the financial year. The diversified structure of the group allows us to focus resources on the best relevant opportunities and enables the broader group to support individual business challenges. Land Acquisition and Planning Risk The property development pipeline is dependent on sourcing land and obtaining planning permission to meet tenant demand. Due to the nature of site acquisitions and planning applications, there is an inherent element of timing uncertainty and project feasibility which could impact the development pipeline. Real Estate Tenant Demand Barkby Real Estate follows a tenant-led approach that identifies development opportunities in response to tenant demand. Barkby has developed a range of commercial development types and maintains close links with tenants spanning a range of industries. Changes in tenant demand trends must be identified and responded to. Annual report and financial accounts 2021 The management team seeks to maintain an active forward looking pipeline to provide sufficient time to prepare sites for development. The current development pipeline includes 7 active schemes with an estimated Gross Development Value in excess of £40m. Close communication and strong relationships enable us to anticipate and react to changes in demand. We have noticed a change in demand from certain sectors of retail. Demand for mixed-use schemes including quick service food retail and trade parks remains robust. Strategic Report Governance Financial statements 29 Risk Potential Impact Mitigation Changes to Hospitality and Consumer Tastes Certain sectors of the hospitality industry have been negatively impacted by Covid-19, uncertain consumer confidence and enforced closures. The Board has planned for a variety of potential scenarios including mitigations for any contraction in demand. Short-and medium-term consumer behaviour and trading levels remain uncertain. We have maintained close communication with suppliers and landlords to ensure we can return to normal trading conditions quickly and efficiently. Innovation and New Product Development Barkby holds an investment in Verso Biosense and is the majority shareholder of Cambridge Sleep Sciences. Both of these businesses require successful product development and to bring new products to market. There is inherent uncertainty around timing and cash requirement associated with innovation. Market reception and the speed of initial sales is also difficult to predict, which creates an element of uncertainty in financial planning. Key Management Loss of key personnel could impact the Group’s ability to implement its strategy and intended pace of growth. Business plans and initiatives are prepared with input from a range of personnel to reduce reliance on single individuals. The Board believes that the pub portfolio is well positioned to return to profitable trading in line with the current government road map. This is due to its less congested food-led offer and locations that we expect to benefit from staycations. Workshop Coffee has exposure to the London retail market, which management expects to recover in the medium term. Cambridge Sleep Sciences has brought its first product “SleepHub” to market, and initial direct sales and progress with B2B distribution agreements is positive. Management continue to monitor sales levels and review sales forecasts accordingly. Cost control and marketing campaigns are planned and reviewed to ensure resources are allocated to the most effective sales channels. Verso Biosense has a clear path to commercialisation and has continued to de-risk this exposure as key milestones are met. The next milestone is a “UKCA” which is expected to be obtained by the end of 2021. Barkby has strengthened its management teams since completing the Reverse Take Over, including key appointments of Chief Financial Officer, Operations Director at Barkby Pubco and new Head of People and Head of IT roles. The Remuneration Committee seeks to ensure rewards are commensurate with performance and aid retention. For more details see pg40 www.barkbygroup.com 30 B Barkby Group Plc Section 172 Statement The Board believes that to maximise value and success in the long term it must engage and consult effectively with all stakeholders in order to develop mutually beneficial relationships with them and to make the best business decisions. S172 Statement As required by s172 of the Companies Act 2006, a director of a company must act in the way they consider, in good faith, would most likely promote the success of the company for the benefit of its shareholders. In so doing, the director must have regards amongst other matters to the: • Likely consequences of any decision in the long-term • Interests of the company’s employees • Need to foster the company’s business relationships with suppliers, customers and others • Impact of the company’s actions on the community and environment • Desirability of the company maintaining a reputation for high standards of business conduct • Need to act fairly between members of the company Our Stakeholders Material Topics How we engage Employees We have very committed and experienced teams running our business. Many of our business are “people businesses” and our employee’s interactions with customers and other stakeholders are critical to our success. • Opportunities for development • Determining the working environment • Opportunities to share ideas and initiatives • Group’s financial performance Management teams utilise a range of communication protocols, such as company-wide emails and on-site meetings with senior management to ensure effective communication and collaborative working relationships. Our group structure includes employees with specific divisional expertise as well as employees who perform a group function across divisions. Continuing to develop and maintain an environment in which all employees can thrive and support each other is very important to Barkby. Shareholders As a listed business, we recognise the important role that shareholders play in providing capital, insight into successful strategies, advice on risks to be avoided and in monitoring and safeguarding the governance of the Group. • Financial and operational performance • Business strategy and model • Market conditions • Capital allocation • Dividend policy Banks Our banking partners play an important role in our business and help us to take advantage of opportunities. We maintain close and supportive relationships through open communication and mutual understanding. • Financial and operational performance • Strategy • Market and opportunities • Cash generation Annual report and financial accounts 2021 We have an open and collaborative style which ignores hierarchy. Our teams work closely together and therefore build close relationships. There are a lot of opportunities to share ideas and to understand new initiatives informally. We are very conscious of the need to actively communicate with shareholders. We achieve this through our AGM, our RNSs, our website and via contact through our advisors. Our Non-Executive Directors are available to meet with shareholders to discuss governance matters. We maintain regular contact with our banking partners and host meetings to provide updates on our current performance and strategy. We regularly supply financial information and commentary to lenders as required under borrowing agreements. Strategic Report Governance Financial statements 31 Our Stakeholders Material Topics How we engage Suppliers We value our supplier relationships and recognise the contribution they make to the success of each of our businesses. To remain as a provider of a market- leading premium offering that appeals to new and existing customers, it is important that the company fosters mutually beneficial relationships with the best suppliers. Regulators We recognise the continual push by consumers, society and government for protection through regulation. Regulators clearly have an important role to play in the development of the economy and the property sector. Compliance to high standards is at the core of our values and our focus on respect. Community We are mindful that our customers and other stakeholders often live in the local communities that we serve and therefore have an interest in ensuring that we operate in a respectful manor and maintain the highest standards across our businesses. • Group’s financial performance • Growth plans • Credit arrangements • Quality control procedures • Collaborative approach to product innovation We maintain close relationships and regular communication with our suppliers. The nature of the supply relationships varies across our business, but we maintain a consistent, collaborative approach. Since lockdown restrictions reduced, there has been reported disruption in supply chains across the country. We thank all of our suppliers for their support during this period. • Compliance with the legislation • Openness and transparency • Lack of relationship between regulators and sector • Capabilities of representative bodies We have grown accustomed to reacting to change. We rarely engage directly with Regulators, seeking to rely on our trade bodies to represent us. However, once change is upon us, we seek out advice from Regulators to ensure that we are and remain compliant. • Involvement in local organisations • Providing valuable local insight to customers • Sponsorship • Compliance with regulations Actively engaging on social media and using the digital marketing techniques at our disposal to provide useful information to local communities. Setting out clearly what we do, how we do it and how we support the local community. www.barkbygroup.com 32 B Barkby Group Plc Principal decisions in 2021 Principal decisions in 2021 We have considered the decisions taken by the Board which will have an impact on the longer term performance and prospects for our Group. Barkby will focus on the exceptional opportunities identified in its Real Estate business and Pub company. Significant decision The impact of Covid-19 required the board to review the strategic focus of the diversifieied group. In many instances, diversification was a strong strength for Barkby. However, the board believes that there are improved immediate opportunities in the property development and pub company divisions and has therefore focussed group resources to maximise these opportunities. We remain committed to the success of our investments, which are all on clear paths to profitability and value realisation from potential exits. Stakeholders affected and engagement Shareholders Assessment of the increased potential to generate shareholder value and returns as a larger diversified group. Regulators Advisors supported the reverse takeover and AIM admission process. Employees Set out our strategic objective and the opportunities this may present. Banks Updated on our strategic decision, future strategy and potential funding. requirements Annual report and financial accounts 2021 Annual report and financial accounts 2020 Strategic Report Governance Financial statements 33 Progress Barkby has strengthened the teams leading the Real Estate and Pub company Businesses. Clear plans have been prepared and are being followed to grow both businesses. Reason for decision The Board believes that the opportunities available in the Real Estate and Pub company businesses have significantly increased during the financial year. The experienced and entrepreneurial management team planned to grow Barkby’s market presence in these sectors by increasing investment and focus. Barkby will retain its diverse operations and market exposure, but its primary focus is on the key business divisions of property development and pubs. Anticipated effects We believe this will maximise the potential return available to our shareholders. Douglas Benzie Chief Financial Officer 23 December 2021 www.barkbygroup.com Annual report and financial accounts 2021 34 B Barkby Group Plc Sustainability Report We are committed to championing sustainable and ethical practices both within our group and with the organisations we engage with. As Barkby grows, we will create expanded policies to ensure clear responsibility and accountability for sustainability across the Group. We plan to collaborate with specialists to increase knowledge and validate the impact of our activity. Packaging and Waste A key area of our focus is to eliminate single-use plastic packaging and move to recyclable replacements. We strive to ensure that production and supply operations minimise both the resources they use and the levels of waste material created. We are particularly focussed on minimising food waste in our hospitality businesses and to divert waste from landfill. Sourcing and supply chain We consider the sustainability credentials of suppliers before engaging with them. We invest significant time and resources to ensure the quality of our suppliers, which range from local producers to multi-national manufacturers depending on our business requirements. Energy and Carbon We are working to improve our understanding of the energy we use across the Group. This will enable to us to identify opportunities to reduce usage via innovation, new systems and campaigns. Our communities We are privileged to serve a range of communities, from local pub venues to car enthusiasts. Our communities are at the heart of our operations and we ensure our activities provide a positive and valued contribution. Our team Our teams are key ingredients in our businesses. We are committed to diversity, inclusion and equality of opportunity, and are making progress on many fronts. Annual report and financial accounts 2021 Strategic Report Governance Financial statements 35 Case study – Workshop Coffee – Sustainability as a process leader in coffee variety research, they are supporting the development of coffee varieties that are high yielding, demonstrably resilient in the field and delicious – an audacious but laudable objective that is already paying dividends in coffee producing countries across the world. Also integral to improving our sustainable practices is making it as easy as possible for our customers to make the right decision. Alongside carbon neutral coffee bags, we dispatch all of our packages in either recyclable cardboard boxes or home compostable mailer bags. We also work with like- minded brands, such as MiiR, who are certified carbon neutral, a B Corporation and members of 1% for the Planet. For us, sustainability is not an end-point, but an ongoing project; a series of informed and considered decisions that not only help reduce our environmental impact, but also improve the quality of the coffees we showcase. This begins at origin. Showcasing exceptional coffees from countries across East Africa, Central America and, most recently, South America means forging and developing relationships with quality- focused producers, exporters and co-operatives – those that are willing to develop, evolve and adapt as together we target ever-improving quality in the cup. By working with the same people year- on-year and paying prices that far exceed those of the market and Fairtrade, our aim is to support reinvestment into better and more sustainable coffee farming practices. This in turn helps to create better quality coffee. Our efforts extend beyond coffee production and processing. Like many species of flora and fauna, coffee is under threat. Climate change, pests and disease are already affecting the long-term viability of quality coffee and, as a result, its long- term availability is not a foregone conclusion. We therefore donate to World Coffee Research for every kilo of green coffee we purchase. A world Annual report and financial accounts 2021 www.barkbygroup.com 36 B Barkby Group Plc Governance Report The Directors recognise the importance of sound corporate governance commensurate with the size and nature of the Group and the interests of its shareholders, customers, suppliers and employees. Respected Chairman’s Introduction to Governance In this section of our report we have set out our approach to governance and provided further information on how the Board and its Committees operate. The Board believes that it complies with the principles of The QCA Corporate Governance Code (QCA code). The corporate governance framework which the Group operates, including Board leadership and effectiveness, Board remuneration, and internal control is based upon practices which the Board believes are proportional to the size, risks, complexity and operations of the business and reflective of the Group’s values. The Board believes that it complies with the principles of The QCA Corporate Governance Code (QCA code).” Annual report and fi nancial accounts 2021 Strategic Report Governance Financial statements 37 Respected Board of Directors Following the Reverse Takeover, Charles Dickson was appointed as Executive Chairman with effect from the AIM admission date. Each of Giles Clarke, Stephen Cook and Duncan Harvey stepped down from the Board on Admission. At the same time Jonathan Warburton and Matt Wood joined the new Board as Independent Non-Executive Directors. Rupert Fraser remained as Group Managing Director of the Enlarged Group and Jeremy Sparrow remained as an Independent Independent Non-Executive Director. Emma Dark remained as Finance Director before stepping down in September 2020 at which point Douglas Benzie was appointed as Chief Financial Officer. The current Board comprises three executive directors and three non-executive directors as follows: • Charles Dickson (Executive Chairman) • Rupert Fraser (Group Managing Director) • Douglas Benzie (Chief Financial Officer) • Jonathan Warburton (Senior Independent Non-Executive Director) • Jeremy Sparrow (Independent Non-Executive Director) • Matt Wood (Independent Non-Executive Director) www.barkbygroup.com 38 B Barkby Group Plc Board of Directors Charles Dickson Executive Chairman (age 39) Rupert Fraser Group Managing Director (age 52) Douglas Benzie Group Chief Financial Officer (age 40) Committee membership Committee membership Committee membership N Charles has over 15 years’ experience running the Dickson family office, Tarncourt Group, which he has built into a successful and diverse business. Experience Charles began his career with Ernst & Young LLP, where he qualified as a Chartered Accountant before moving to work in Corporate Finance with McQueen Limited (now Houlihan Lokey Limited). Charles is a non-executive director of Apache Capital Partners Limited. Rupert has over 25 years of experience in the investment banking industry involving exposure to leading UK, US and international institutions. Doug is a an experienced finance leader who has worked extensively in the hospitality industry and in high growth companies. Experience Experience He was Head of Equities at Evolution Securities Limited from 2009 to 2011, prior to which he spent 16 years at Dresdner Kleinwort Limited, where in 2005 he was appointed Managing Director, Global Head of Equity Distribution. Rupert was founding partner of Kildare Partners where he was responsible for investment origination across Europe and the United Kingdom. Rupert is a non- executive director of Woodforde’s Brewery. Doug joined Barkby from Pure, the London-based healthy fast-food chain and a Whitbread Plc backed company, where he was Finance Director for three years. Prior to this, Doug held the roles of Group Financial Controller and Chief Accountant at Pret A Manger and was part of the team that helped grow Pret before its sale to JAB Holding Company. Doug began his career at EY where he worked for 8 years in the strategic growth markets practice and qualified as a Chartered Accountant. Committee membership key A Audit Committee R Remuneration Committee N Nomination Committee Chair of Committee Annual report and financial accounts 2021 Strategic Report Governance Financial statements 39 Jeremy Sparrow Non-Executive Director (age 53) Jonathan Warburton Non-Executive Director (age 63) Matthew Wood Non-Executive Director (age 48) Committee membership Committee membership Committee membership A R N A R N A R N Jeremy is an adviser to Alvarium, an independent multi-family office, and has over 25 years of extensive deal making experience leading teams in London, New York and Hong Kong. Experience He was most recently head of Investec Resource Investment Banking for Asia and Australia, after serving as CEO of Renaissance Capital, where he established the company’s first Asian office. Previously, he spent 12 years with Renaissance Capital as a Managing Director, being Head of Equity Products in New York and the UK, and has also served as Vice President at Morgan Stanley. Jonathan assumed control of the Warburton bakery business in 1991. He first joined the company at the age of 23 after spending time in organisations outside Warburtons to gain insight into the baking industry, as well as experience in sales and marketing experience through his time spent with Unilever. Experience He joined the family business as a member of the Sales Team, progressing to National Account Manager and to Sales Director before he set up the Marketing Team. As Marketing Director, he led the development of Warburtons first ever TV advert. In the decade that followed, Jonathan held the role of Commercial Director and joint Managing Director. Since Jonathan became Chairman in 2001, Warburtons has grown from a small, regional business into the second biggest UK grocery brand behind Coca-Cola Plc. Jonathan has also held Non-Executive director positions with AG Barr and Samworth Brothers. An experienced non-executive director, Mr Wood graduated with a First Class honours degree in Economics in 1996 and qualified as a chartered accountant in 1999. Experience He subsequently joined the corporate finance department of Beeson Gregory in 2000 where he advised growing companies on transactions including IPOs, secondary fundraisings, M&A and corporate restructuring. Matt also advised corporate clients on the UK regulatory framework including the Listing Rules, the AIM Rules, the Takeover Code and general corporate governance matters. In 2006 he founded ONE Advisory, a London-based corporate advisory group providing its 100+ corporate clients with corporate administration, company secretarial, corporate governance and compliance services, outsourced finance function, IFRS conversions, FPPP preparation and PPA valuations. www.barkbygroup.com 40 B Barkby Group Plc Corporate Governance Report How the Board Operates The Board is responsible for the Group’s strategy and for its overall management. The strategic report on pages 1 to 27 summarises the Board’s approach to promote sustainable long-term growth and value for shareholders. The responsibilities of the Board include matters relating to: • The Group’s strategic aims and objectives. • The structure and capital of the Group. • Financial reporting, financial controls and dividend policy. • Setting budgets and forecasts. • Internal control, risk and the Group’s risk appetite. • The approval of significant contracts and expenditure. • Effective communication with shareholders. • Any changes to Board membership or structure. • Oversight of the Executive committee Board Meetings The Board held scheduled meetings during the period. All board members attended the meetings held during the financial year. Board and Committee meetings provide time for collective discussion and decision-making, but informal communication channels also operate to ensure open dialogue and information sharing with the Non-executive Directors continues between meetings. The board held a number of unscheduled meetings to discuss specific issues or matters of an urgent nature. In particular, the Board maintained formal and informal communication to discuss the evolving Covid-19 situation, its impact and to determine the Group’s response, including identifying opportunities. Internal Controls & Risk Management The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its effectiveness. Any such system of internal control can provide reasonable, but not absolute, assurance against material misstatement or loss. However, the Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group. The principal risks faced by the business are summarised on pages 28 and 29. Following the reverse take over, the enlarged Group initially operated on a number of different finance systems. A new finance system called Oracle NetSuite, was implemented across the group. NetSuite is considered a best-in-class finance system that has the capacity to grow with the Group as it expands. Having a consistent finance system across all Annual report and financial accounts 2021 businesses enables faster financial reporting and improved controls. The principal elements of the Group’s internal control system include: • monthly management meetings attended by the executive directors and the senior management team from each Group business to discuss strategy as well as day-to-day activities of each business; • an organisational structure with defined levels of responsibility, which promotes entrepreneurial decision making and agile implementation whilst mitigating risks; • segregation of duties so no individual can have undue influence or control over an activity, process or transaction; • a comprehensive annual budgeting process, producing a detailed integrated profit and loss, balance sheet and cash flow, which is approved by the Board; • detailed monthly reporting of performance; and • central control over key areas such as capital expenditure authorisation and banking facilities. The Group continues to review its system of internal control to ensure adherence to best practice, whilst also having regard to its size and the resources available. The Board considers that the introduction of an internal audit function is not appropriate at this juncture, but will keep this under review. The Board conducts annual reviews of its register of key risks and on a bi-annual basis reviews the risk landscape in detail, including a consideration of risks, likelihood, scale of potential impact and the existence of assurance, mitigation or appropriate contingencies. Strategic Report Governance Financial statements 41 Business Culture, Values and Behaviours Respect is a core value of the Barkby Group that is consistently promoted across every business. The Barkby culture encourages all employees to take responsibility for their actions and to adopt a “Do the right thing” mindset. Each individual trading division is proud to be part of the Barkby Group and Respect is both an internal attitude between colleagues as well as an objective for Barkby’s external perception and reputation. During the Covid-19 pandemic, we have witnessed a solidarity and commitment across our workforce, which inspires a strong confidence in the group’s potential for future success. As a relatively new group, the Directors acknowledge that it will take time to build a consistent culture. A newly created Head of People role retains primary responsibility for the Group’s objectives across Culture, Values and Behaviours. There is a shared belief that true culture is best defined not as a written policy but by the actions of Barkby team members on a daily basis. Development The Company Secretary ensures that all Directors are kept abreast of changes in relevant legislation and regulations, with the assistance of the Group’s advisers where appropriate. Executive Directors will be subject to the Group’s performance review process through which their performance against predetermined objectives is reviewed and their personal and professional development needs considered. An annual performance appraisal of Non-executive Directors will be undertaken by the Chairman as part of the Board evaluation process, at which time any training or development needs will be addressed. Board members attend relevant business conferences and briefings to keep their knowledge of industry trends and compliance requirements up to date. Conflicts of Interest At each meeting the Board considers Directors’ conflicts of interest. The Group’s Articles of Association provide for the Board to authorise any actual or potential conflicts of interest. External Appointments As appropriate, the Board may authorise Executive Directors to take Non-Executive positions in other companies and organisations, provided the time commitment does not conflict with the Director’s duties to the Group, since such appointments should broaden their experience. The acceptance of appointment to such positions is subject to the approval of the Executive Chairman. Directors’ and Officers’ Liability Insurance The Group has purchased Directors’ and Officers’ liability insurance during the period as allowed by the Group’s articles. Election of Directors All continuing Directors of the Group will offer themselves for re-election at the Annual General Meeting. Relations with Stakeholders The Group maintains communication with a wide range of stakeholders to ensure that their needs, interests and expectations are understood and reflected within the Group’s strategy. Customer feedback is collected directly from customers at each business locations and remotely for online customers. Each business regularly monitors social media and other inbound customer queries and endeavours to respond in a comprehensive and timely manner. We carefully consider how we source products within our supply chain, especially in relation to fresh produce in our pub business and coffee beans purchased by Workshop Coffee. Employee feedback is sought via regular anonymous surveys, with the opportunity to discuss topics directly with the Head of People, the Board or via an intermediary to present topics on their behalf. www.barkbygroup.com 42 B Barkby Group Plc Corporate Governance Report continued Relations with Shareholders The Group maintains communication with institutional shareholders through individual meetings with Executive Directors, particularly following publication of the Group’s interim and full period results. Private shareholders are encouraged to attend the Annual General Meeting at which the Group’s activities are discussed. General information about the Group is available on the Group’s website (www.barkbygroup.com). The Executive Chairman and independent Non-executive Directors will attend meetings with investors and analysts as required. Investor relations activity and a review of the share register are regular items on the Board’s agenda. Annual General Meeting (AGM) The Notice of Annual General Meeting and the ordinary and special resolutions to be put to the meeting are included in the Notice of AGM accompanying this Annual Report. QCA Code Compliance Governance Principal Compliant Explanation Further Reading Deliver Growth Establish a strategy and business model to promote long-term value for shareholders. Seek to understand and meet shareholder needs and expectations. Take into account wider stakeholder and social responsibilities and their implications for long-term success. Embed effective risk management, considering both opportunities and threats, throughout the organisation. The strategy for each division and the Group as a whole is determined by the Board. Strategic progress milestones are set and tracked between the Directors and senior management. Regular meetings are held with investors and analysts and the Board regularly considers how decisions could impact and be received by shareholders. Our AGM provides an opportunity for all shareholders to hear from and meet with our Directors. Wider stakeholder responsibilities have been front of mind during the pandemic. The Board identifies the main stakeholders in the business and regularly discusses how employees, suppliers, customers and others might be affected by decisions and developments in the business. We believe that social responsibilities are not only a responsibility but a requirement to be a successful business. Both the Board and Audit Committee regularly review risks, including new threats, and the processes to mitigate and contain them. Whilst the Board is responsible for risk, our culture seeks to empower all colleagues to manage risk effectively across all our businesses. To find out more about our strategy and business model see pg4 For more information on our relations with shareholders see pg41 Corporate Governance Report and Sustainability Report pgs 34 and p36 We have summarised the main risks faced by the business and how they are being managed on pg28-29 Annual report and financial accounts 2021 Strategic Report Governance Financial statements 43 Governance Principal Compliant Explanation Further Reading Maintain a dynamic management framework Maintain the Board as a well-functioning, balanced team led by the Chair. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. Promote a corporate culture that is based on ethical values and behaviours. Maintain governance structures and processes that are fit for purpose and support good decision- making by the Board. Build Trust Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders. Our Board works well together as a team and contains complimentary experience across property, hospitality and life sciences industries, as well as the required experience in compliance, governance and financial management. We assess the adequacy of the Board’s collective skills and experience as part of the annual Board evaluation. Directors’ individual development needs will be discussed annually with the Chairman. An annual Board evaluation will be undertaken to review the Board’s effectiveness, track improvements since the previous year and plan additional actions. Respect is a core value of the Barkby Group that is consistently promoted across every business. Each individual trading division is proud to be part of the Barkby Group. We have witnessed a solidarity and commitment across our workforce during the pandemic, which instils a huge amount of confidence in the group’s potential for future success through a supportive culture. The Directors recognise the importance of sound corporate governance and have therefore adopted the QCA code to support decision making at board level. We communicate with a range of stakeholders. Employee concerns and issues are represented by a newly created “Head of People” role, which has overall responsibility for this area. We have maintained good communication and endeavoured to work collaboratively with our suppliers, especially in relation to the challenges caused by the pandemic. Our Directors and details of their individual roles, backgrounds and experience are provided on pg38-39 Corporate Governance Report Evaluation will be reviewed by the Nomination Committee. Corporate Governance Report More detailed information about our governance structures and processes can be found in our corporate governance report Further information on our dialogue with stakeholders and shareholders can be found on pg41 and in our corporate governance statement on pg36 See more information relevant to our wider stakeholders on our website www.barkbygroup.com www.barkbygroup.com 44 B Barkby Group Plc Audit Committee Report Following admission to AIM in January 2020, a new Audit Committee was formed comprising of Jonathan Warburton as Chairman, Jeremy Sparrow and Matt Wood. The Audit Committee met twice during the financial year and will meet at least three times in each financial year going forward and at any other time when it is appropriate to consider and discuss audit and accounting related issues. The Audit Committee is responsible for determining the application of the financial reporting and internal control principles, including reviewing the effectiveness of the Enlarged Group’s financial reporting, internal control and risk-management procedures, and the scope, quality and results of the external audit. The Audit Committee approved the appointment of Crowe U.K. LLP as auditors for the enlarged group as well as focussing on the accounting requirements of the Reverse Takeover transaction. Following the completion of the 2020 audit, the audit partner had been in situ for five years. Considering the significant changes that occurred to the Company and the Group during 2020, the Audit Committee requested the audit partner to remain for a further two years. Jonathan Warburton was chairman of the Audit Committee during the financial year. After the year end, Jonathan Warburton stepped down as Chairman of the Audit Committee and Matt Wood undertook this role. Jonathan Warburton remains the Senior Independent Non-Executive Director. Remuneration Committee Report The Remuneration Committee comprises Jonathan Warburton as Chairman, Jeremy Sparrow and Matt Wood. The Remuneration Committee reviews the performance of the Executive Directors and sets the scale and structure of their remuneration and the basis of their service agreements with due regards to the interests of Shareholders. In determining the remuneration of Executive Directors, the Remuneration Committee will seek to enable the enlarged Group to attract and retain Executives of the highest calibre. The Remuneration Committee also makes recommendations to the Board concerning the allocation and administration of share options. No Director is permitted to participate in discussions or decisions concerning their own remuneration. The Remuneration Committee intends to meet at least twice in each financial year. However, committee meetings were not held during the financial year ending June 2021 as the newly formed Board focussed on stabilising the group through the impacts of Covid-19. The Remuneration Committee subsequently met in November 2021. Directors Remuneration The following table summarises the total gross remuneration of the Directors who served during the period to 1 July 2021 and 2 July 2020. No performance bonuses relating to group profitability were paid. Appointment Appointment Date Date Resignation Resignation Date Date Basic Salary and Fees Basic Salary and Fees Benefits Benefits Cash Bonus Cash Bonus Share Award Share Award Total Total 2021 2020 2020 2019 2020 2021 2020 2019 2021 2020 2019 2020 2020 2021 2020 2019 2020 2021 2020 2019 2020 2021 2020 2019 Charles Dickson Charles Dickson Rupert Fraser Rupert Fraser Douglas Benzie Douglas Benzie Jonathan Warburton Jonathan Warburton Matthew Wood Matthew Wood Jeremy Sparrow Jeremy Sparrow 07/01/2020 07/01/2020 26/06/2018 26/06/2018 30/09/2020 30/09/2020 07/01/2020 07/01/2020 07/01/2020 07/01/2020 18/07/2016 18/07/2016 180,000.00 110,000.00 110,000.00 - 120,000.00 85,166.68 85,166.68 - 566.05 813.36 566.05 - 160,000.00 36,800.33 36,800.33 - 1,200.88 - 8,000.00 - - 4,000.00 4,000.00 - - 4,000.00 4,000.00 - - 10,000.00 10,000.00 8,000.00 Duncan Harvey Duncan Harvey 26/06/2018 26/06/2018 07/01/2020 07/01/2020 - - - 5,040.00 Emma Dark Emma Dark Giles Clarke Giles Clarke 13/05/2019 30/09/2020 13/05/2019 30/09/2020 - 75,134.25 75,134.25 56,473.00 566.05 - 566.05 - 30/12/2015 30/12/2015 07/01/2020 07/01/2020 - 17,000.00 17,000.00 - Stephen Cook Stephen Cook 30/01/2019 30/01/2019 07/01/2020 07/01/2020 - 74,785.95 74,785.95 99,206.09 473.25 - 473.25 - 45,000.00 - 45,000.00 - 877.20 - 803.79 877.20 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 180,000.00 110,000.00 110,000.00 - 120,813.36 85,732.73 85,732.73 - 169,200.88 36,800.33 36,800.33 - 4,000.00 - 4,000.00 - 4,000.00 - 4,000.00 - 10,000.00 - 10,000.00 8,000.00 - - 5,040.00 - 75,700.30 - 56,473.00 75,700.30 17,000.00 - 17,000.00 - 121,136.40 - 100,009.88 121,136.40 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Defined Defined Contribution Contribution Pension Pension - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Annual report and financial accounts 2021 Strategic Report Governance Financial statements 45 Nomination Committee Report The Nomination Committee comprises Charles Dickson as Chairman, Jeremy Sparrow, Jonathan Warburton and Matt Wood. The Nomination Committee is responsible for reviewing the structure, size and composition of the board, preparing a description of the role and capabilities required for a particular appointment and identifying and nominating candidates to fill board positions as and when they arise. The Nomination Committee intends to meet at least twice in each financial year. However, committee meetings were not held during the financial year ending June 2021 as the newly formed Board focussed on stabilising the group through the impacts of Covid-19. The Nomination Committee subsequently met in November 2021. Appointment Appointment Resignation Resignation Date Date Date Date Basic Salary and Fees Basic Salary and Fees Benefits Benefits Cash Bonus Cash Bonus Defined Defined Contribution Contribution Pension Pension Share Award Share Award Total Total 2020 2021 2020 2019 2021 2020 2020 2019 2021 2020 2020 2019 2021 2020 2020 2019 2021 2020 2020 2019 2021 2020 2020 2019 Charles Dickson Charles Dickson Rupert Fraser Rupert Fraser Douglas Benzie Douglas Benzie Jonathan Warburton Jonathan Warburton Matthew Wood Matthew Wood Jeremy Sparrow Jeremy Sparrow 07/01/2020 07/01/2020 26/06/2018 26/06/2018 30/09/2020 30/09/2020 07/01/2020 07/01/2020 07/01/2020 07/01/2020 18/07/2016 18/07/2016 110,000.00 180,000.00 110,000.00 - - - - - 120,000.00 85,166.68 85,166.68 - 813.36 566.05 566.05 - 160,000.00 36,800.33 36,800.33 - 1,200.88 - 4,000.00 - 4,000.00 - 4,000.00 - 4,000.00 - 10,000.00 - 10,000.00 8,000.00 - - - - - - - - - - - - - - - - - - Duncan Harvey Duncan Harvey 26/06/2018 26/06/2018 07/01/2020 07/01/2020 - - 5,040.00 - Emma Dark Emma Dark Giles Clarke Giles Clarke 13/05/2019 30/09/2020 13/05/2019 30/09/2020 75,134.25 - 56,473.00 75,134.25 - 566.05 566.05 - 30/12/2015 30/12/2015 07/01/2020 07/01/2020 17,000.00 - 17,000.00 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8,000.00 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Stephen Cook Stephen Cook 30/01/2019 30/01/2019 07/01/2020 07/01/2020 74,785.95 - 99,206.09 74,785.95 - 473.25 473.25 - 45,000.00 - 45,000.00 - - 877.20 877.20 803.79 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 180,000.00 110,000.00 110,000.00 - 120,813.36 85,732.73 85,732.73 - 169,200.88 36,800.33 36,800.33 - - 4,000.00 4,000.00 - - 4,000.00 4,000.00 - - 10,000.00 10,000.00 8,000.00 - - - 5,040.00 - 75,700.30 75,700.30 56,473.00 - 17,000.00 17,000.00 - - 121,136.40 121,136.40 100,009.88 www.barkbygroup.com 46 B Barkby Group Plc Directors’ Report The Directors present their report together with the audited financial statements for the 52-week period ended 1 July 2021. The corporate governance statement on pages 36 to 45 also forms part of this Directors’ report. Review of Business The Chairman’s statement on page 6 and the strategic report on pages 1 to 27 provides a review of the business, the Group’s trading for the period ended 1 July 2021, key performance indicators and an indication of future developments. Result and Dividend The Group has reported its Consolidated Financial Statements in accordance with International Accounting Standards in conformity with the Companies Act 2006. The Group’s results for the period are set out in the Statement of profit or loss and other comprehensive income on page 56. The Company financial statements have been prepared under IFRS 101. The Group’s revenue of £15.1m (FY20: £12.0m), gross margin of 13.2% (FY20: 7.1%) and loss after tax of £4.4m (FY20: loss of £3.1m) reflect the challenging circumstances relating to Covid-19 and government action taken to protect public health. In the prior financial year on 19 December 2019 Barkby Group Plc announced that it had entered into conditional agreements to acquire the entire issued share capital of each of Tarncourt Ambit Properties Ltd, Tarncourt Ambit Ltd and Workshop Trading Holdings Ltd. The transaction was completed on 7 January 2020 and Barkby’s shares were then admitted to trading on the AIM market. Workshop Trading Holdings Ltd retains 100% ownership of its trading subsidiary Workshop Trading London Ltd. Tarncourt Ambit Properties Limited and Tarncourt Ambit Limited were subsequently renamed to Barkby Real Estate Development Ltd and Barkby Real Estate Ltd respectively. The transaction was deemed to be a reverse take over, which has consequently been reflected in the consolidation accounting under IFRS. The consolidated statement of profit and loss includes the prior year results of the Dickson Controlled Entities for the 15 month period to 2 July 2020 and the results of Barkby Group Plc and Centurian Automotive Ltd for the period from 7 January 2020 to 2 July 2020. Cambridge Sleep Sciences Ltd was incorporated on 14 January 2020, therefore its results are included in the prior year Consolidated Income Statement from that date to 2 July 2020. Barkby Group Plc holds 85% of the ordinary share capital of Cambridge Sleep Sciences Ltd. The 2021 financial year includes the results of all group companies for the 52 week period ended on 1 July 2021. Annual report and financial accounts 2021 Strategic Report Strategic Report Governance Governance Financial statements Financial statements 47 00 The composition of the prior year Consolidated Statement of Profit and Loss is summarised below: Entity Barkby Group Plc Centurian Automotive Ltd Barkby Real Estate Developments Ltd Barkby Real Estate Ltd Workshop Trading Holdings Ltd Workshop Trading London Ltd Cambridge Sleep Sciences Consolidated Income Statement Period From Months of Trade Included in Consolidated Income Statement (Rounded) 7-Jan-20 7-Jan-20 1-Apr-19 1-Apr-19 1-Apr-19 1-Apr-19 14-Jan-20 6 6 15 15 15 15 5.5 The summary financial KPIs are as follows: Period Ended Revenue (£m) Gross margin % Loss after tax (£m) 1 July 2021 2 July 2020 £15.1m 13.2% £4.4m £12.0m 7.1% £3.1m Please refer to the Operating and Financial Report for further review of trading performance The Board is not recommending a dividend. Directors The Directors of the Group during the period were: Charles Dickson Rupert Fraser Douglas Benzie Jonathan Warburton Jeremy Sparrow Matthew Wood Executive Non- Executive The names of the Directors, along with their brief biographical details are given on pg38-39 www.barkbygroup.com Annual report and financial accounts 2021 www.barkbygroup.com 48 B Barkby Group Plc Directors’ Report continued Directors’ Interests Charles Dickson Rupert Fraser Jonathan Warburton 33,279,757 1,764,713 250,000 No Director has any beneficial interest in the share capital of any subsidiary undertaking. The Group purchased and maintained throughout the financial period Directors’ and Officers’ liability insurance in respect of itself and its Directors. Political Donations The Group made no political donations in the financial period. Disclosure of Information to Auditors As far as the Directors are aware, there is no relevant audit information (that is, information needed by the Group’s auditor in connection with preparing their report) of which the Group’s auditor is unaware, and each Director has taken all reasonable steps that he or she ought to have taken as a Director in order to make himself or herself aware of any relevant audit information and to establish that the Group’s auditor is aware of that information. Financial Instruments The financial risk management objectives of the Group, including credit risk, interest rate risk and foreign exchange risk, are provided in Note 27 to the Consolidated Financial Statements on page 97. Share Capital Structure At 1 July 2021, the Company’s issued share capital was £1,178,980.55 divided into 136,948,282 ordinary shares of £0.00860675675675676 each. The holders of ordinary shares are entitled to one vote per share at the general meetings of the Company. Annual report and financial accounts 2021 Substantial Shareholders At 1 July 2021, the Company had been notified of the following substantial shareholders comprising of 4% or more of the issued ordinary share capital: Charles Dickson 24.2% Davina Dickson 20.3% James Dickson 13.0% Purchase of Own Shares There was no purchase of own shares in the period. Going Concern After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Further detail on going concern is on page 64. Strategic Report Governance Financial statements 49 Post Balance Sheet Events Wellingborough additional land acquisition The group completed the acquisition of additional land from Wrenn School in September 2021 as part of our Wellingborough development site. Huntingdon Planning Permission Planning permission was granted for a 32,000 sq.ft. scheme at Huntingdon in August 2021. Maldon acquisition and finance Barkby completed the freehold purchase of the former Quest Motor dealership in Maldon, Essex for a consideration of £2.2m in October 2021. The group entered a £4.4m debt facility to fund the acquisition of Maldon and refinance debt secured on the Saffron Waldon site. Exchange of Contracts at Swindon Exchanged contracts in December 2021 for a commercial development site in Swindon, Wiltshire. It is proposed that the Group will develop a 30,000 sq. ft. mixed-use retail and trade scheme at the site. Under the proposed development, the site has an estimated gross development value of £7.5 million. The Board considers that no other material post balance sheet events occurred between the end of the period and the date of publication of this report. The Group will not make assumptions about a person’s ability to carry out their work, for example based on their ethnic origin, gender, sexual orientation, marital status, religion or other philosophical beliefs, age or disability. Likewise, it won’t make general assumptions about capabilities, characteristics and interests of particular groups that may influence the treatment of individuals, the assessment of their abilities and their access to opportunities for training, development and promotion. Auditor Crowe U.K. LLP has expressed its willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting. Annual General Meeting The Annual General Meeting ordinary business comprises receipt of the Directors’ report and audited financial statements for the period ended 1 July 2021, the re-election of Directors, the reappointment of Crowe U.K LLP as auditor and authorisation of the Directors to determine the auditor’s remuneration. Notice of the AGM date will be sent to shareholders in January 2022. Future Developments The Board intends to continue to pursue the business strategy as outlined in the strategic report on pages 14 to 35. Approval The Directors’ Report was approved by the Board of Directors on 23 December 2021 and signed on its behalf by Charles Dickson and Douglas Benzie. Charles Dickson Douglas Benzie 23 December 2021 Stakeholder Involvement Policies The Directors believe that the involvement of employees, customers and suppliers is an important part of the business culture and contributes to the successes achieved to date (view our sustainability report on pages 34 and 35). Equal Opportunities The Group is committed to eliminating discrimination and encouraging diversity. Its aim is that its people will be truly representative of all sections of society and that each person feels respected and is able to perform to the best of their ability. The Group aims for its people to reflect the businesses diverse customer base. www.barkbygroup.com 50 B Barkby Group Plc Statement of Directors’ Responsibilities The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare Group and Company financial statements for each financial year. Under that law and as required by the Alternative Investment Market rules of the London Stock Exchange, the directors have elected to prepare the Group financial statements in accordance with International Accounting Standards in conformity with the requirements of the Companies act 2006 and the Company financial statements in accordance with Financial Reporting Standard 101, “Reduced Disclosure Framework”. 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 for that period. In preparing these financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies act 2006; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of 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. Website Publication The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of Financial Statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the on-going integrity of the Financial Statements contained therein. This report was approved by the board on 23 December 2021 and signed on its behalf by: Charles Dickson Douglas Benzie Annual report and fi nancial accounts 2021 Strategic Report Governance Financial statements 51 Independent Auditor’s Report Independent Auditor’s Report to the Members of Barkby Group Plc. the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion We have audited the financial statements of Barkby Group Plc (the “parent company”) and its subsidiaries (the “group”) for the period ended 1 July 2021 which comprise the Statement of Consolidated Profit or Loss and Other Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the group financial statements is international accounting standards in conformity with the Companies Act 2006. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosures Framework (United Kingdom Generally Accepted Accounting Practice). In our opinion: • the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 1 July 2021 and of the group’s loss for the period then ended; • the group financial statements have been properly prepared in accordance with international accounting standards in conformity with the Companies Act 2006; • the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in Conclusions relating to going concern In auditing the financial statements, we have concluded that the Director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the director’s assessment of the entity’s ability to continue to adopt the going concern basis of accounting included: • Obtaining management’s assessment of going concern and the underlying financial projections which support that assessment; • testing to ensure the mathematical accuracy of the model presented; • reviewing the assumptions used about future cash flows and timings; • challenging the basis of management’s estimates and assumptions in relation to profitability and cash flow for each business and available cost mitigations; • confirming the existence of facilities which will be relied on; • considering a range of sensitivities to assess reasonably likely changes to key inputs; and • reviewing the appropriateness of the disclosures in the financial statements. Based on the audit 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 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 section of this report. accordance with the requirements of the Companies Act 2006. Materiality Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified. • £218,000 is the group level of materiality determined for the financial statements as a whole, this has been determined based on approximately 5% of the consolidated result for the period. As the Group is a diversified trading group we determined that a www.barkbygroup.com 52 B Barkby Group Plc Independent Auditor’s Report continued trading based metric was the most appropriate to use for determining materiality. • £164,000 is the group level of performance materiality. Performance materiality is used to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment. Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors’ remuneration. • £6,000 is the group level of triviality agreed with the Audit Committee. Errors above this threshold are reported to the Audit Committee, errors below this threshold would also be reported to the Audit Committee if, in our opinion as auditor, disclosure was required on qualitative grounds. The parent company materiality was assessed as £110,000 based on approximately 5% of the result. As the parent company trades in its own right we determined that a trading based metric was the most appropriate to use for determining materiality. Parent company performance materiality was £82,000. Overview of the scope of our audit There are four significant components group, the parent company which includes Barkby Pubco, Centurian Automotive, Workshop Coffee and Real Estate. We audited all of the significant components of the group. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Key audit matter Impairment of goodwill Note 17 The Group’s intangible assets predominantly comprises goodwill arising from the recent reverse acquisition in the prior year. The total carrying value of the goodwill was £8m at 1 July 2021 (2 July 2020: £8m). How the scope of our audit addressed the key audit matter We obtained management’s assessment of goodwill impairment and discussed the key inputs into the assessment with management. We performed audit procedures, including challenge regarding reasonableness on the inputs into the model as follows: • the forecast cash flows within the assessment period; • the expected growth rate; and • the discount rate applied to the forecast. We considered managements’ sensitivity analysis and also performed an additional range of sensitivities to assess whether a reasonably likely change to a key input would result in an impairment charge. Annual report and financial accounts 2021 53 Key audit matter How the scope of our audit addressed the key audit matter For the parent company we identified one key audit matter: Carrying value of investments in subsidiaries and intercompany receivables Note 18 At the reporting date the carrying value of investments in subsidiaries in the balance sheet of the parent entity was £26 million and amounts receivable from subsidiaries was £0.8 million. We considered the risk that the carrying value of investments in subsidiaries and intercompany receivables was impaired. Given the significant increase in this balance during the prior year, we considered that there was a risk that balance could be misstated due to impairment. Any impairment of investments in subsidiaries or intercompany receivables would reduce distributable profits and potentially impact the ability of the parent company to pay dividends. We obtained management’s assessment of the impairment of investments in subsidiaries and intercompany receivables. Our scope specifically considered the following matters: • the appropriateness of the assumptions used by management in assessing the ability of the subsidiary companies to generate cash and remit that to the parent company; and • the mathematical accuracy of the underlying forecasts • recalculation of the impairment recognised • the appropriateness of the disclosure. Strategic Report GovernanceFinancial statementswww.barkbygroup.com 54 B Barkby Group Plc Independent Auditor’s Report continued Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matters individually and we express no such opinion. Other information Matters on which we are required to report by exception 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. The directors are responsible for the other information. The other information comprises the information included in the annual report, 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. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinion on other matter prescribed by the Companies Act 2006 In our opinion based on the work undertaken in the course of our audit • the information given in the strategic report and the 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. • 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; or • we have not received all the information and explanations we require for our audit • Responsibilities of directors As explained more fully in the directors’ responsibilities statement set out on page 50, 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. Annual report and financial accounts 2021 Strategic Report Governance Financial statements 55 Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 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 frameworks within which the Group operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were relevant company law and taxation legislation in the UK which is the principal jurisdictions in which the Group operates. We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals and reviewing accounting estimates for biases. Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non- compliance and cannot be expected to detect non- compliance with all laws and regulations. These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Stephen Bullock Senior Statutory Auditor For and on behalf of Crowe U.K. LLP Statutory Auditor London 23 December 2021 www.barkbygroup.com 56 Statement of profit or loss and other comprehensive income For the year ended 1 July 2021 Revenue Cost of sales Gross profit Other operating income Administrative expenses Loss from operations Finance expense Finance income Loss before tax Income tax expense Loss and total comprehensive income for the period Loss for the year is attributable to: Non-controlling interest Owners of Barkby Group Plc Group Year ended 1 July 2021 £’000s Period ended 2 July 2020 £’000s Notes 5 7 6 7 7 8 25 15,142 (13,145) 1,997 350 (5,787) (3,440) (978) 40 (4,378) - (4,378) 12,048 (11,188) 860 367 (3,538) (2,311) (949) 125 (3,135) (4) (3,139) (164) (4,214) (4,378) (44) (3,095) (3,139) Pence Pence Loss per share for profit attributable to the owners of Barkby Group Plc Basic and diluted loss per share 36 (3.09) (2.69) All of the loss of the year is from continuing operations. The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Barkby Group PlcBAnnual report and financial accounts 2021 Strategic Report Governance Financial statements 57 Consolidated statement of financial position As at 1 July 2021 Assets Non-current assets Property, plant and equipment Intangible assets Right-of-use assets Investments Other non-current assets Total non-current assets Current assets Inventory Trade and other receivables Contract assets Prepayments Other current assets Cash and cash equivalents Total current assets Total assets Liabilities Current liabilities Trade payables Borrowings Lease liabilities Income tax Other current liabilities Total current liabilities Non-current liabilities Borrowings Lease liabilities Provisions Total non-current liabilities Total liabilities Net assets/(liabilities) Equity Share capital Share premium Capital redemption reserve Merger reserve Issued equity Retained losses Equity attributable to the owners of Barkby Group Plc Non-controlling interest Total equity Group Notes 1 July 2021 £’000s 2 July 2020 £’000s 15 17 16 18 14 12 10 11 13 9 19 20 21 22 19 20 23 24 26 26 26 25 33 1,480 8,503 2,977 2,542 219 15,721 6,096 220 - 380 84 84 6,864 22,585 (1,826) (7,395) (531) (25) (4,347) (14,124) (4,652) (2,938) (48) (7,638) (21,762) 823 1,179 4,493 - (422) 5,250 (4,219) 1,031 (208) 823 1,554 8,355 2,643 2,042 127 14,721 4,226 446 4,898 401 641 306 10,938 25,659 (1,937) (8,999) (491) (107) (1,833) (13,367) (4,899) (2,349) (28) (7,276) (20,643) 5,016 1,164 4,323 - (422) 5,065 (5) 5,060 (44) 5,016 The above statement of financial position should be read in conjunction with the accompanying notes. The Financial Statements were approved by the Board of Directors on 23 December 2021 and were signed by Charles Dickson and Douglas Benzie. www.barkbygroup.com 58 B Barkby Group Plc Statement of financial position As at 1 July 2021 Assets Non-current assets Property, plant and equipment Intangible assets Right-of-use assets Investments Other non-current assets Total non-current assets Current assets Inventory Trade and other receivables Receivable from subsidiary undertaking Other current assets Prepayments Cash and cash equivalents Total current assets Total assets Liabilities Current liabilities Trade and other payables Other current liabilities Borrowings Lease liabilities Payable to subsidiary undertaking Total current liabilities Non-current liabilities Borrowings Lease liabilities Provisions Total non-current liabilities Total liabilities Net assets / (liabilities) Equity Share capital Share premium Capital redemption reserve Merger relief reserve Retained losses Total equity Company Notes 1 July 2021 £’000s 2 July 2020 £’000s 15 17 16 18 14 12 9 22 19 20 19 20 23 24 26 26 26 25 1,084 1,126 2,874 26,159 83 31,326 105 32 809 51 143 11 1,151 32,477 1,122 1,074 2,301 30,940 83 35,520 35 - 4,145 - 141 69 4,390 39,910 (830) (2,173) (914) (432) - (691) (1,260) (1,509) (282) (25) (4,349) (3,767) (683) (2,871) (48) (3,602) (7,951) 24,526 1,179 4,493 - 29,747 (10,893) 24,526 (295) (2,187) (28) (2,510) (6,277) 33,633 1,164 4,323 - 29,747 (1,601) 33,633 The loss for the year (3 July 2020 to 1 July 2021) for the Company was £9,292,000 (Loss for the period from 1 June 2019 to 2 July 2020: £1,916,000). In the prior period, the pre-acquisition business combination loss (in the period 1 June 2019 to 6 January 2020) was £411,000 and the loss in the period since the business combination (7 January 2020 to 2 July 2020) was £1,505,000. The above statement of financial position should be read in conjunction with the accompanying notes. The Financial Statements of Barkby Group Plc (company number 07139678) were approved by the Board of Directors on 23 December 2021 and were signed by Charles Dickson and Douglas Benzie. Annual report and fi nancial accounts 2021 Statement of changes in equity For the year ended 1 July 2021 59 Group Balance at 1 April 2019 Loss after income tax and total comprehensive loss for the period Capital reduction Shares issued to settle acquisition fees Shares issued to acquire subsidiaries Costs associated with issuance of shares - - 3 879 - - - (6,347) (3,078) 92 - (626) Transactions with owners in their capacity as owners: Shares issued for cash (a) 143 4,857 Payment to shareholders in respect of acquisition (b) Shares issued to cancel debt (c) Balance at 2 July 2020 Balance 3 July 2020 Loss after income tax and total comprehensive loss for the year Shares issued to settle deferred consideration Transactions with owners in their capacity as owners: Shares issued following the exercise of Warrants 13 13 Share capital £’000s Share premium £’000s Capital redemption reserve £’000s Merger reserve £’000s Profit and loss reserve £’000s Non- controlling interest £’000s Total equity £’000s 139 6,347 3,078 (9,088) (5,585) - (5,109) (3,095) (44) (3,139) - - - 5,446 - 75 9,425 - - - - - (750) 3,145 3,220 (422) - (750) (5) - - - - - - - - (44) (422) (5) (44) 5,016 (4,214) (164) (4,378) - - - - - - - - - - - 95 6,325 (626) 5,075 (750) 3,145 7,470 5,016 Total equity £’000s 60 125 125 823 - - - - - - - - - - - - - - Capital redemption reserve £’000s Merger Reserve £’000s Profit and loss reserve £’000s Non- controlling interest £’000s - - - - 143 1,164 4,857 4,323 Share capital £’000s Share premium £’000s 1,164 4,323 - 2 - 58 112 112 Balance at 1 July 2021 1,179 4,493 (422) (4,219) (208) The above statement of changes in equity should be read in conjunction with the accompanying notes. Notes (a) (b) (c) Shares issued for cash includes £75,000 of equity issued by Workshop Trading Holdings Limited prior to the business combination between the Barkby Group and the Dickson Controlled Entities. Payment to shareholders in respect of the acquisition was made to certain shareholders of Tarncourt Ambit Limited in their capacity as shareholders of Barkby Group, as part of the business combination between Barkby Group and the Dickson Controlled Entities. Shares issued to cancel debt were issued by The Dickson Controlled Entities prior to the business combinations between Barkby Group and the Dickson Controlled Entities. www.barkbygroup.comStrategic Report GovernanceFinancial statements 60 Statement of changes in equity For the year ended 1 July 2021 Share capital £’000s Share premium £’000s Capital redemption reverse £’000s Merger relief reserve £’000s Profit and loss reserve £’000s Total equity £’000s Company Balance at 1 June 2019 139 6,347 3,078 Profit after income tax and total comprehensive income for the period Capital reduction Shares issued to settle acquisition fees Shares issued to acquire subsidiaries Costs associated with issuance of shares - - 3 879 - - - (6,347) (3,078) 92 - (626) Transactions with owners in their capacity as owners: Shares issued for cash 143 4,857 Payment in respect of acquisition of Tarncourt Ambit Limited Balance at 2 July 2020 Balance at 3 July 2020 Profit after income tax and total comprehensive income for the year Shares issued to settle deferred consideration Transactions with owners in their capacity as owners: Shares issued following the exercise of Warrants - - 1,164 4,323 Share capital £’000s Share premium £’000s 1,164 4,323 - 2 13 - 58 112 Balance at 1 July 2021 1,179 4,493 - - - - 29,747 - - - (8,360) 1,204 (1,916) (1,916) 9,425 - - - - - 95 30,626 (626) 5,000 (750) (750) 29,747 (1,601) 33,633 - - - - - - Capital redemption reverse £’000s Merger relief reserve £’000s Profit and loss reserve £’000s Total equity £’000s - - - - - 29,747 (1,601) 33,633 - - - (9,292) (9,292) - - 60 125 29,747 (10,893) 24,526 The above statement of changes in equity should be read in conjunction with the accompanying notes. Barkby Group PlcBAnnual report and financial accounts 2021 Statement of cash flows For the year ended 1 July 2021 Cash flows from operating activities Loss before tax Adjustments to reconcile loss before tax to net cash flows Depreciation of property, plant and equipment and right-of-use assets Amortisation of intangible assets Finance income Finance expense Working capital changes Decrease/(increase) in trade receivables, contract assets and prepayments Increase in inventories Increase/(decrease)in trade and other payables Total working capital changes Interest paid Interest received Income tax paid Net cash flow from operating activities Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired Purchase of investments Purchase of property, plant and equipment Purchase of intangible assets Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowings Share issue transaction costs Payment to shareholders Repayment of borrowings Repayment of lease liabilities Net cash raised in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 9 The above statement of cash flows should be read in conjunction with the accompanying notes. 61 Group Year ended 1 July 2021 £’000s Period ended 2 July 2020 £’000s Notes (4,378) (3,135) 32 774 137 (40) 978 5,630 (1,870) 2,517 6,277 (720) 24 (82) (778) 2,970 (55) (500) (264) (285) 576 5 (125) 949 (4,431) (144) (916) (5,491) (775) 1 - (774) (7,995) (549) (1,950) (194) (287) (1,104) (2,980) 125 14,472 - - (15,200) (310) (913) 953 (1,174) (221) 5,075 8,985 (531) (375) (2,981) (393) 9,780 (1,195) 21 (1,174) www.barkbygroup.comStrategic Report GovernanceFinancial statements 62 Notes to the financial statements For the period ended 1 July 2021 Note 1. Company information The consolidated financial statements of Barkby Group Plc for the year ended 1 July 2021 were authorised for issue in accordance with a resolution of the directors on 23 December 2021. Barkby Group Plc is a public limited company incorporated and domiciled in the UK. The company’s number is 07139678 and the registered office is located at 115b Innovation Drive, Milton, Abingdon, Oxfordshire OX14 4RZ. The Group’s principal activities consist of real estate development, consumer and hospitality businesses and life sciences. During the year the Company change its name from The Barkby Group Plc to Barkby Group PLC. Note 2. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board (‘IASB’) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Basis of preparation These consolidated financial statements of Barkby Group Plc (or “the Group”) have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies act 2006. In accordance with IFRS 3, the prior period financial statements were prepared as a reverse acquisition of Barkby Group Plc by the Dickson Controlled Entities, see note 32 for more details. Therefore, although the prior period consolidated financial statements were issued in the name of Barkby Group Plc, the legal acquirer, the Group’s activity was in substance, the continuation of the financial information of the Dickson Controlled Entities. The comparative consolidated financial statements therefore comprise the results of the Dickson Controlled Entities for the full period, and the results of Barkby Group Plc from 7 January 2020, the date of the reverse acquisition. The Company financial statements have been prepared in accordance with Financial Reporting Standard 101, “Reduced Disclosure Framework” (“FRS 101”). The following exemptions from the requirements of IFRS have been applied in the preparation of these Company financial statements, in accordance with FRS 101: • IFRS 7, “Financial Instruments: Disclosures”. • Paragraphs 91 to 99 of IFRS 13, “Fair value measurement” (disclosure of valuation techniques and inputs used for the fair value measurement of assets and liabilities). • Paragraph 38 of IAS 1, “Presentation of financial statements” – comparative information in respect of: • Paragraph 79(a) (iv) of IAS 1; • Paragraph 73(e) of IAS 16 “Property, plant and equipment”; and • Paragraph 118(e) of IAS 38, “Intangible assets” (reconciliations between the carrying amounts of the beginning and end of the period). Barkby Group PlcBAnnual report and financial accounts 2021 63 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) • The following paragraphs of IAS 1, “Presentation of financial statements”: • 10(d) (statement of cash flows); • 16 (statement of compliance with all IFRS); • 38A (requirement for a minimum of two primary statements, including cash flow statements); • 38B-D (additional comparative information); • (cash flow statement information); and • 134-136 (capital management disclosures). • IAS 7, “Statement of cash flows”. • Paragraphs 30 and 31 of IAS 8, “Accounting policies, changes in accounting estimates and errors”. • The requirements in IAS 24, “Related party disclosures” to disclose related party transactions entered into between two or more members of the group. Accounting periods The financial statements have been prepared covering the financial year ended 1 July 2021, in accordance with the Group’s policy of drawing up financial statements to the nearest Thursday to the Group’s accounting reference date of 30 June. As a result the financial year consists of a 52 week period. The accounting reference date changed in the comparative financial period ended 2 July 2020. The Dickson Controlled Entities’ previous accounting reference date was 31 March, and Barkby Group Plc’s and Centurian Automotive Limited’s were 31 May. Therefore, the Group’s consolidated financial statements cover the financial year from 3 July 2020 to 1 July 2021, with comparative financial information covering the financial period 1 April 2019 to 2 July 2020. The comparative information for the Company’s financial statements cover the financial period from 1 June 2019 to 2 July 2020. Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, deferred contingent consideration and derivative financial instruments that have been measured at fair value. The consolidated financial statements are presented in Pounds Sterling, which is Barkby Group Plc’s functional and presentation currency and all values are rounded to the nearest thousand (£’000s) unless otherwise stated. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Barkby Group Plc (‘company’ or ‘parent entity’) as at 1 July 2021 and the results of all subsidiaries for the period then ended. Barkby Group Plc and its subsidiaries together are referred to in these financial statements as the ‘Group’. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. www.barkbygroup.comStrategic Report GovernanceFinancial statements 64 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. During the comparative financial period (ended 2 July 2020), Barkby Group Plc acquired the share capital of Tarncourt Ambit Limited, Tarncourt Ambit Properties Limited and Workshop Trading Holdings Limited, which together with its subsidiary undertaking Workshop Trading (London) Limited, are called the Dickson Controlled Entities. After the transaction the shareholders of the Dickson Controlled Entities owned 86% of the share capital of the new combined entity. As a result this transaction is considered to be a reverse takeover. These financial statements therefore consist of the consolidated financial statements of the Dickson Controlled Entities, which are considered to acquire Barkby Group Plc and its subsidiary, Centurian Automotive Limited with effect from 7 January 2020, together with the company only financial statements of Barkby Group Plc. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses incurred by the Group are only attributed to the non-controlling interest to the extent to which they can be recovered from those parties. Going Concern Barkby Group PLC is a diversified group of growth businesses run by an entrepreneurial and experienced management team. The group structure aims to combine stable, cash generative businesses with growth potential alongside high growth opportunities with exceptional market potential and the ability to disrupt. Throughout the financial year and since the reporting date, Barkby’s hospitality and consumer division was impacted by the Covid-19 pandemic due to its impacts on consumer behaviour as well as enforced trading restrictions. Barkby has weathered the Covid-19 pandemic largely due to the support of its cash generative commercial property development business. The Board has managed cash tightly through all three national lockdowns and has increased cash headroom by refinancing the £3.5 million Tarncourt facility into a new £5 million facility with an expiry date of 30 June 2023. The Group has financed the acquisition of development sites via secured borrowings. The Group currently has net cash available of c. £1.5 million as at December 2021. In addition, the Board have taken the steps of consulting with their major shareholders regarding a potential equity raise and our major shareholders have confirmed their continued support should this become necessary. Despite good progress in our property development pipeline, with several sites ready to commence construction, and strong trade in our pub business since lockdown restrictions reduced, we are still in a period of significant economic uncertainty as the potential impact of Covid-19 variants remains present. The Board has therefore prepared a profitability and cash flow forecast to June 2023 for each business incorporating assumptions that reflect a severe but plausible downturn scenario. A key feature of Barkby’s businesses is that they have a low fixed cost base. The property development business has predominantly flexible costs. Centurian operates from a unique showroom setting that carries a lower cost than typical car dealerships. The hospitality businesses have engaged closely with landlords and brewers and agreed rent reductions to compensate for restricted trade. The Group’s workforce is predominantly comprised of employees on flexible contracts. Key considerations of the severe but plausible worst case scenario are as follows: Real Estate A significant proportion of our upcoming developments are already pre-let to high quality tenants on long-term leases. 98.5% of the development space across Maldon, Wellingborough and Huntingdon is currently pre-let or in legals. Our tenants are predominantly large corporates, with long-term commitment to expansion. The contractual certainty of the property development pipeline provides a stable underlying cash flow for the group. Barkby Group PlcBAnnual report and financial accounts 2021 65 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) Barkby Pubs The pandemic particularly hit wet-led pubs, those dependent on office-workers and business that promote congested use of space such as music venues, late-night bars and nightclubs. Barkby operates premium pubs with rooms located in areas of outstanding natural beauty that are popular with tourists and serve a captive market of local communities. The directors anticipate this segment of the hospitality industry to be one of the earliest to recover when trading restrictions are lifted in 2021. This expectation is due to Barkby’s large footprint properties that can operate in a Covid-secure way with minimal interruption. The majority of Barkby’s trade is food-led and we typically serve groups of six or less. Our pubs traded strongly when trading restrictions were reduced, with like-for-like sales up 22% in the quarter to September 2021 in comparison to pre-Covid sales in the same quarter in 2019. We have experienced an increased demand for staycations as a result of reduced confidence and appetite for international holiday travel. If trading was to be restricted again without government support, we would take pro-active action to minimise the cost base, which would not be worse than continuing to trade under severe restrictions. The Pubs business plan is to increase the size of the estate however we are not committed to any acquisitions and can therefore reduce cash outflows by delaying expansion if necessary. Centurian Automotive Experience during the pandemic indicated that demand from Centurian’s target market of car enthusiasts remained robust, despite sales being restricted by the reduction in walk-in customers. When non-essential retail was fully restricted, customers could only purchase cars via pre-booked contactless handover. Despite these severe trading restrictions, Centurian generated positive EBITDA in the financial year, therefore the directors believe this is a reasonable worst-case base to project going forward. Centurian operates from a significantly lower cost base when compared to larger and traditional car dealerships. Centurian has a unique customer showroom setting that has a low annual rental, which enables Centurian to maintain profit levels during lower volume trading periods. Centurian’s workforce is predominantly employed on flexible contracts and a significant portion of senior employee remuneration is commission-based and via discretionary bonuses. Workshop Coffee As with Barkby’s pub business, Workshop Coffee has exposure to the Covid-19 pandemic. Independent coffee shops, hotels and other hospitality customers were forced to close during the national lockdown periods, which impacted Workshop’s wholesale revenues. As working-from-home became a requirement, online direct-to-consumer sales of premium coffee increased. This created a strong market opportunity for Workshop with its existing webshop, subscription customers and established digital presence with over 50,000 followers on Instagram. When retain trading restrictions were imposed, retail and wholesale revenues decreased, offset by higher online sales as consumers drank more premium coffee at home. Therefore, we have seen a natural hedge between online and wholesale sales depending on consumer behaviour. Since lockdown restrictions eased, revenue has increased steadily. However, the return of London footfall has been slower than other UK cities, therefore we have delayed reopening some of our London coffee shops. In consideration of this, the management team have completed a strategic review and significantly reduced Workshop’s cost base. This includes a reduction in headcount and relocating the roastery to cheaper premises. The lower cost base will enable Workshop to be profitable even if sales do not increase from current subdued levels. Group overhead The cost of the group function can be flexed as required to adapt to the growth and profitability of the subsidiary companies. There are only a small number of long-term contracted costs, and all other costs can be reduced in the short term. If trading conditions did not meet expectation, the group could further reduce costs. www.barkbygroup.comStrategic Report GovernanceFinancial statements 66 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) Debt and Borrowings The group currently has the following third party debt: Tarncourt: The Tarncourt facility is a related party facility owed to a vehicle controlled by the Dickson Family. The board has received confirmation that this facility will be extended until 30 June 2023, with no payments required until that date. HSBC: The group banks with HSBC across the majority of its companies. The bank has been supportive in providing working capital facilities (overdraft and CBIL) to meet the company’s requirements. The directors maintain regular communication with HSBC and maintain an open dialogue regarding future funding requirements. For the purpose of the going concern projection, the directors have assumed that the overdraft is renewed. Other facilities: There are a number of smaller legacy borrowings in place within the group subsidiaries. The cash flow forecast assumes these facilities are repaid in accordance with their contractual terms. Centurian stocking finance: Centurian utilises short term stocking finance facilities secured against specific vehicles. Any slow moving stock requires periodic equity contributions of increasing amounts. Therefore, the realisable value of the stock is always expected to exceed the financing that is in place. The Group had net cash available of approximately £1.5 million as at December 2021. Barkby has not raised any external equity or borrowings during the pandemic, other than the related party facility with Tarncourt and secured facilities for property acquisitions. Therefore, the board is confident that its shareholders would be supportive if additional funding was required. Summary During the Covid-19 pandemic, Barkby’s diversification has been a significant strength enabling financial and operational support across the group. Barkby benefited from its diversity, with longer-term property development projects providing positive cash flow to support the most impacted businesses. As we come out of lockdown, management considers that the pubs and coffee business are well positioned for a return to profitability and that the Group is in a strong position to benefit from the lifting of government lockdown restrictions. Based on its profitability and cash flow forecasts for each business incorporating assumptions that reflect a severe but plausible downturn scenario the directors consider going concern basis of preparation to be an appropriate basis for the preparation of these financial statements. Operating segments Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM are responsible for the allocation of resources to operating segments and assessing their performance. Foreign currency translation Foreign currency transactions are translated into Pounds Sterling using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Revenue recognition The Group recognises revenue as follows: Property business – Revenue from contracts with customers Real estate revenue principally consists of the development and ultimately the sale of real estate sites on behalf of customers. Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of Barkby Group PlcBAnnual report and financial accounts 2021 67 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects changes to specifications required by customers and any other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Consumer & Hospitality business revenue Consumer and hospitality revenue principally consists of the sale of coffee and associated equipment, and food and drink (Workshop Coffee), food, drink and accommodation (Barkby Pubs) and premium used cars and associated services (Centurian Automotive). These are broadly divided into the sale of goods and the rendering of services. Sale of goods (also applies to Life Sciences business) Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery or consumption by the customer. Revenue from the sale of food and drink is recognised when the customer has both been served and has paid for their bill (or it is added to an agreed account or room bill). Customers typically either pay on ordering (drinks, café style food and takeaways) or settle their bills when they are ready to leave. Revenue from the sale by mail order of coffee and associated equipment is recognised when the product is shipped to the customer based on a confirmed, paid for order. Revenue from the sale of a car is recognised when the car is delivered to the customer, or the customer drives the car away from the showroom. For the vast majority of sales the customer pays or arranges financing in advance of taking control of the car. Rendering of services Revenue from accommodation is recognised on a daily basis following check-in by the customer at the value agreed with the customer for that booking. Revenue from services associated with the sale of a car is recognised at the later of the point of the receipt of the specific service or the sale of the car. Other revenue Other revenue is recognised when it is received or when the unconditional right to receive payment is established. Income tax The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. www.barkbygroup.comStrategic Report GovernanceFinancial statements 68 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Cash and cash equivalents Cash and cash equivalents includes cash on hand, cash in transit, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position. Trade and other receivables Trade receivables are initially recognised at fair value transaction price and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Contract assets Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. Barkby Group PlcBAnnual report and financial accounts 2021 69 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) Inventories Raw materials, being food and drink supplies, coffee beans and other items for consumption within the business, work in progress on real estate projects, vehicle stock and electronic devices are stated at the lower of cost and net realisable value. Cost comprises direct materials and delivery costs, import duties and other taxes. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset’s carrying value with a corresponding expense through profit or loss. www.barkbygroup.comStrategic Report GovernanceFinancial statements 70 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) Property, plant and equipment Plant, property and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Freehold land is not depreciated. For all other property, plant and equipment, depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Freehold buildings Leasehold improvements Plant and equipment Computer equipment Furniture & Fixtures Right of use assets Up to 100 years 3-10 years or over the lifetime of lease 3-7 years 3 years 5 years Life time of the leasing arrangement The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. During the year ended 1 July 2021 the Group negotiated reductions in lease payments with landlords as a result of the Covid-19 pandemic and its effect on the Group’s business. The Group has utilised the amendment to IFRS 16 for Covid-19 related rent concessions and has accounted for the concessions in the form of forgiveness of lease payments as a resolution of a contingency that fixes previously variable lease payments. This has resulted in the Group reducing the lease liability with a corresponding adjustment to the right-of-use asset. The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. Intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Barkby Group PlcBAnnual report and financial accounts 2021 71 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) Goodwill Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed. Product design and development Research costs are expensed in the period in which they are incurred. Development costs, including product design costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the asset; the Group has sufficient resources and intent to complete the development; and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years. Patents, trademarks and other intellectual property Significant costs associated with patents, trademarks and the acquisition of other intellectual property licenses are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years. Impairment of non-financial assets Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in- use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial period and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. www.barkbygroup.comStrategic Report GovernanceFinancial statements 72 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Provisions Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre- tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Defined contribution pension contributions Contributions to defined contribution pension plans are expensed in the period in which they are incurred. Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Issued equity Issued equity consists of the Company’s share capital, share premium and capital redemption reserve, together with the other equity reserve in Group’s consolidated financial statements. Ordinary shares are classified as equity. The difference between the nominal value of the shares issued and the actual value relating to the specific transaction is accounted for as share premium, unless: 1. The Company is issuing shares to acquire the share capital of another company, in which case as long as the shares issued represent greater than 90% of the consideration, the excess of the value of the shares issued over their nominal value is recorded in the merger reserve, or Barkby Group PlcBAnnual report and financial accounts 2021 73 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) 2. The Group is undertaking a reverse takeover, in which case the excess of the value of the share issued over their nominal value is recorded in the other equity reserve. The other equity reserve reflects the accounting required by the reverse takeover transactions such that the issued equity at the point of transaction equals the equity of the Dickson Controlled Entities plus that notional consideration for the acquisition of Barkby Group. Pre-acquisition, the other reserve adjusts the Company’s equity to that of the Dickson Controlled Entities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Dividends Dividends are recognised when declared during the financial year and no longer at the discretion of the company. Business combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non- controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre- existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition- date, but only after a reassessment of the identification and measurement of the net assets acquired, the non- controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition- date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Barkby Group Plc, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year. www.barkbygroup.comStrategic Report GovernanceFinancial statements 74 Notes to the financial statements continued 1 July 2021 Note 2. Significant accounting policies (continued) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Value-Added Tax (‘VAT’) and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated VAT, unless the VAT incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of VAT receivable or payable. The net amount of VAT recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Commitments and contingencies are disclosed net of the amount of VAT recoverable from, or payable to, the tax authority. Furlough payments The Group has taken advantage of the Government’s Coronavirus Job Retention Scheme (furlough) and has furloughed staff and claimed money under the scheme since March 2020. The Group has accounted for the receipts from the Government as a reduction in the overall wages and salaries costs, in the period in which the amount claimed relates to. The amounts claimed and resultant reduction in salaries and wages costs are shown in Note 7. Rounding of amounts Amounts in this report have been rounded off to the nearest thousand Pounds Sterling, or in certain cases, the nearest Pound Sterling. New Accounting Standards and Interpretations not yet mandatory or early adopted Accounting Standards that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting year ended 1 July 2021. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. Note 3. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Reverse acquisition accounting – identifying the accounting acquirer As disclosed in the basis of preparation (note 2) and Note 32 management have used judgement to determine an appropriate accounting policy to account for the business combination in the prior period. The most significant judgement is in determining the accounting acquirer as the conclusion of this has a fundamental impact on the presentation of the financial statements. In arriving at that judgement management had regard to the revised Conceptual Framework for Financial Reporting issued in March 2018 which states that a reporting entity is not necessarily a legal entity. Management also considered the guidance in IFRS 3 to identify the accounting acquirer and on this basis determined the Dickson Controlled Entities combined were the accounting acquirer and therefore presented the financial statements as disclosed in note 32. Barkby Group PlcBAnnual report and financial accounts 2021 75 Notes to the financial statements continued 1 July 2021 Note 3. Critical accounting judgements, estimates and assumptions (continued) Coronavirus (Covid-19) pandemic Judgement has been exercised in considering the effects that the Coronavirus (Covid-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic region in which the Group operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (Covid-19) pandemic. Provision for impairment of inventories The provision for impairment of inventories assessment requires a degree of estimation and judgement. There is a judgement as to whether inventory is impaired, or not and then, if judged impaired estimation of the level of provision required by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence. Goodwill, other indefinite life intangibles and investments in subsidiaries The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill, other indefinite life intangible assets and the parent company’s investments in subsidiaries have suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. The impairment assessment is detailed in Note 17. Non-current assets-intangibles and Note 18. Investments. Lease term The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the Group’s operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. The Group’s leases are detailed in Note 16. Non-current assets - right-of-use assets and Note 20. Lease liabilities. Incremental borrowing rate Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Group estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. www.barkbygroup.comStrategic Report GovernanceFinancial statements 76 Notes to the financial statements continued 1 July 2021 Note 4. Operating segments Identification of reportable operating segments The Group is organised into three operating segments based on differences in products and services provided: Real Estate, Barkby Pubs and Investments. Investments is further sub-divided into three segments: Barkby Pubs, Workshop Coffee, Centurian Automotive and Life Sciences. These operating segments are based on the internal reports that are reviewed and used by the Executive Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. The CODM review profitability, working capital and cash flow. The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis. Types of products and services The principal products and services of each of these operating segments are as follows: Real Estate Barkby Pubs Investments Acquisition and subsequent development of parcels of land for resale. (High quality pubs with accommodation) The Barkby Pubs segment includes the Group’s central costs and the Group’s treasury function. Workshop Coffee (coffee shops and sale of coffee and associated equipment) and Centurian Automotive (sale of premium used cars and associated services) and Life Sciences (development of Sleep Hub product). Intersegment transactions There was minimal intersegment trading during the year ended 1 July 2021 and the period ended 2 July 2020. Intersegment transactions are eliminated on consolidation. Intersegment receivables, payables and loans The intersegment receivables and payables represent the day to day funding of the Group’s businesses between Barkby Pubs, acting as the Group’s treasury function and the rest of the Group’s subsidiaries. Intersegment balances are initially recognised at the consideration received. Intersegment receivables and payables that earn or incur interest do so at a market rate. Non-interest bearing balances repayable on demand are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation. Barkby Group PlcBAnnual report and financial accounts 2021 77 Notes to the financial statements continued 1 July 2021 Note 4. Operating segments (continued) Operating segment information Group - 2021 Revenue Sales to external customers Intersegment sales Total revenue Cost of sales Gross profit Real Estate £’000s Barkby Pubs £’000s Investment Workshop Coffee £’000s Investment Centurian Automotive £’000s Investment Life Sciences £’000s Total Investments £’000s Total £’000s 114 - 114 2,710 1,244 10,954 120 12,318 15,142 - - - - - - 2,710 1,244 10,954 120 12,318 15,142 (107) (2,103) (688) (10,141) (106) (10,935) (13,145) 7 607 556 813 14 1,383 1,997 Administrative expenses (74) (2,791) (1,250) (639) (1,033) (2,922) (5,787) Other income Net finance costs Profit/(loss) before income tax expense Income tax expense Profit/(loss) after income tax expense Included within administrative expenses: Group costs Depreciation and amortisation Assets Segment assets Intersegment eliminations Total assets Total assets includes: Acquisition of non-current assets Liabilities Segment liabilities Intersegment eliminations Total liabilities 4 285 (416) (479) - (479) (143) (2,042) - (2,042) 73 (66) (687) - (687) - (240) (66) - (66) (12) (73) (1,104) - (1,104) 61 350 (379) (1,857) - (1,857) (938) (4,378) - (4,378) - (1) (1,350) - - - - (1,350) (483) (246) (34) (147) (427) (911) 8,245 32,656 2,384 3,699 1,124 7,207 48,108 (25,523) 22,585 - 1,270 33 21 290 344 1,614 (7,522) (7,909) (7,220) (5,028) (2,512) (14,760) (30,191) 8,429 (21,762) www.barkbygroup.comStrategic Report GovernanceFinancial statements 78 Notes to the financial statements continued 1 July 2021 Note 4. Operating segments (continued) Operating segment information Group - 2020 Revenue Sales to external customers Intersegment sales Total revenue Cost of sales Gross profit/(loss) Administrative expenses Other income Net finance costs Loss before income tax expense Income tax expense Loss after income tax expense Included within administrative expenses: Group costs Depreciation and amortisation Assets Segment assets Intersegment eliminations Total assets Total assets includes: Acquisition of non-current assets Liabilities Segment liabilities Intersegment eliminations Total liabilities Real Estate £’000s Barkby Pubs £’000s Investment Workshop Coffee £’000s Investment Centurian Automotive £’000s Investment Life Sciences £’000s Total Investments £’000s Total £’000s 4,518 - 4,518 591 - 591 2,902 - 2,902 4,037 - 4,037 (4,319) 199 (1,295) (704) (1,799) 1,103 (3,775) 262 - - - - - 6,939 - 6,939 (5,574) 1,365 12,048 - 12,048 (11,188) 860 (136) (961) (1,897) (266) (278) (2,441) (3,538) - (391) (328) (4) (332) 269 (115) (1,511) - (1,511) 73 (129) (850) - (850) 25 (174) (153) - (153) - 98 (15) (318) 367 (824) (293) (1,296) (3,135) - (293) - (1,296) (4) (3,139) - - (774) (155) - (390) - (14) - - - (404) (774) (582) 12,540 38,927 1,120 5,096 386 6,602 58,069 (32,410) 25,659 1,952 137 42 19 281 342 2,431 (11,368) (5,612) (5,375) (4,619) (679) (10,673) (27,653) 7,010 (20,643) The above table has been amended to show the segments consistently with the current year. There is no change to the overall total or the individual segments. Geographical information United Kingdom Rest of the world Sales to external customers Geographical non-current assets 2021 £’000s 14,986 156 15,142 2020 £’000s 11,482 566 12,048 2021 £’000s 15,644 - 15,644 2020 £’000s 14,721 - 14,721 Barkby Group PlcBAnnual report and financial accounts 2021 Notes to the financial statements continued 1 July 2021 Note 5. Revenue From continuing operations Revenue from contracts with customers Sale of real estate property Other revenue Food and drink Accommodation Car sales and associated services Life sciences Revenue Note 6. Other income Covid-19 grants Gain on re-negotiation of lease Recovery of costs from related parties Miscellaneous items Other income Covid-19 grants 79 Group 2021 £’000s 2020 £’000s 114 4,518 3,496 458 10,954 120 3,409 84 4,037 - 15,142 12,048 Group 2021 £’000s 298 - 48 4 350 2020 £’000s 294 73 - - 367 These grants are income received from local government available as a result of the restrictions placed on the Group’s businesses as a result of the various lockdowns imposed as a result of the Covid-19 pandemic. Recovery of costs from related parties The group provides finance and administration services to certain related parties. The costs associated with these services are charged to the relevant related party. www.barkbygroup.comStrategic Report GovernanceFinancial statements 80 Notes to the financial statements continued 1 July 2021 Note 7. Expenses Profit before income tax includes the following specific expenses: Cost of sales Property cost of sales - purchases Vehicle cost of sales - purchases Barkby Pubs cost of sales - purchases Barkby Pubs costs of sales - employee costs Life Sciences - purchases Workshop Coffee cost of sales - purchases Administration expenses Employee costs Professional fees Buildings and facility related costs Depreciation and amortisation (see below) Other administrative costs Advertising and promotion Research and development Donations Acquisition costs and listing costs recognised in expenses Depreciation – owned assets Leasehold improvements Freehold buildings Plant and equipment Fixtures and fittings Computer equipment Depreciation – right of use assets Buildings Pubs Service concessions Amortisation Patents and licenses Product design and development Computer software Total depreciation and amortisation Finance costs Interest and finance charges paid/payable on borrowings Interest and finance charges paid/payable on lease liabilities Finance costs expensed Group 2021 £’000s 2020 £’000s 107 10,141 842 1,261 106 688 13,145 2,232 940 797 911 485 418 - 4 - 5,787 83 3 92 101 59 338 132 291 13 436 57 44 36 137 911 766 212 978 4,319 3,775 195 1,575 - 1,324 11,188 961 595 533 582 428 198 9 2 230 3,538 117 3 24 68 24 236 210 102 29 341 5 - - 5 582 794 155 949 Barkby Group PlcBAnnual report and financial accounts 2021 Notes to the financial statements continued 1 July 2021 Note 7. Expenses (continued) Net foreign exchange loss Net foreign exchange loss Leases Variable lease payments Short-term and low-value lease payments Pension expense Defined contribution pension contributions Employee costs Wages and salaries Social security costs Other employee related costs Pensions costs Employee costs are charged to both Cost of sales and Administration expenses as follows: Employee costs within cost of sales Employee costs within administration expenses Furlough claims Employee costs are net of the following amount claimed under the Coronavirus Job Retention Scheme Workshop Coffee Barkby Pubs (and group functions) Centurian Automotive Cambridge Sleep Sciences Employee numbers The group employed the following numbers of people on average during the financial period Workshop Coffee Barkby Pubs (and group function) (2020: average since January 2020) Centurian Automotive (2020: average since January 2020) Cambridge Sleep Sciences Auditors Remuneration Fees for auditing these accounts Other Services Fees for the auditing the financial statements of the Group’s other subsidiaries Services relating to corporate finance transactions 81 Group 2021 £’000s 2020 £’000s 13 38 53 91 61 3,124 239 86 61 40 48 30 78 34 2,205 202 95 34 3,510 2,536 1,261 2,249 3,510 1,575 961 2,536 264 484 32 5 785 29 118 9 5 161 32 58 - 90 189 244 17 - 450 44 121 4 - 169 55 35 100 190 www.barkbygroup.comStrategic Report GovernanceFinancial statements 82 Notes to the financial statements continued 1 July 2021 Note 8. Income tax expense Income tax expense UK corporation tax charge Adjustment recognised for prior periods Aggregate income tax expense Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax credit at the statutory tax rate of 19% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Expenses non-deductible for tax purpose Deferred tax asset not recognised Adjustment recognised for prior periods Income tax expense Group 2021 £’000s 2020 £’000s - - - - 4 4 (4,378) (3,153) (832) (595) 38 794 - - 103 492 4 4 Deferred tax assets totalling £4,124,000 relating to tax losses have not been recognisned at 1 July 2021 (£2,308,000 at 2 July 2020). Note 9. Current assets – cash and cash equivalents Cash at bank Cash in transit Petty cash Reconciliation to cash and cash equivalents at the end of the financial year The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows: Balances as above Bank overdraft (note 35) Balance as per statement of cash flows Cash in transit Petty cash Note 10. Current assets – trade and other receivables Trade receivables Less: Allowance for expected credit losses Receivable from employee Allowance for expected credit losses Group 1 July 2021 £’000s 2 July 2020 £’000s 70 10 4 84 236 69 1 306 84 (305) (221) 306 (1,480) (1,174) Company 1 July 2021 £’000s 2 July 2020 £’000s 10 1 11 69 - 69 Group 1 July 2021 £’000s 2 July 2020 £’000s 131 (33) 122 220 395 - 71 466 The Group has recognised a credit of £50,000 in administrative expenses within the loss for the period ended 2 July 2020 in respect of recovery of trade receivables that have previously been provided for. Barkby Group PlcBAnnual report and financial accounts 2021 83 Notes to the financial statements continued 1 July 2021 Note 11. Current assets - contract assets Contract assets Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below: Opening balance Additions Transfer to trade receivables Closing balance Group 1 July 2021 £’000s 2 July 2020 £’000s - 4,898 4,898 - (4,898) - 520 4,378 - 4,898 The contract assets balance at 2 July 2020 related to the Hastings development in the Group’s Real Estate business. The balance was invoiced in the year ended 1 July 2021 following the completion and handover of the development. Note 12. Current assets – inventories Coffee, food, drink and other raw materials Property development work in progress Vehicle inventory Electronic devices Provision for obsolete inventory Food, drink and other raw materials Note 13. Current assets – other Receivable from related party Deposits VAT recoverable Other current assets Note 14. Other non-current assets Lease and contract deposits Lease and contract deposits Group 1 July 2021 £’000s 2 July 2020 £’000s 233 2,085 3,400 433 (55) 144 1,298 2,864 - (80) 6,096 4,226 Company 1 July 2021 £’000s 2 July 2020 £’000s 105 35 Group 1 July 2021 £’000s 2 July 2020 £’000s – – 14 70 84 375 150 97 19 641 Group 1 July 2021 £’000s 2 July 2020 £’000s 219 127 Company 1 July 2021 £’000s 2 July 2020 £’000s 83 83 The deposits are held by the lessors of the leased pubs and buildings, and certain suppliers of services. The discounting on the deposits is not considered material. www.barkbygroup.comStrategic Report GovernanceFinancial statements 84 Notes to the financial statements continued 1 July 2021 Note 15. Non-current assets – property, plant and equipment Land and buildings £’000s Leasehold improve- ments £’000s Plant and equipment £’000s Computer equipment £’000s Fixtures and fittings £’000s Total £’000s Group Cost Balance at 1 April 2019 Additions in period Additions by business combinations Disposals in period Balance at 2 July 2020 Additions in year Disposals in year Balance at 1 July 2021 Accumulated depreciation Balance at 1 April 2019 Charge for the period Additions by business combinations Disposals in period Balance at 2 July 2020 Charge for the year Disposal in year Balance at 1 July 2021 Net Book Value At 2 July 2020 At 1 July 2021 - - 672 - 672 - - 1,155 17 2 (239) 935 14 - 672 949 (713) (117) - 239 (592) (83) - - (3) - - (3) (3) - (6) 492 23 215 - 730 185 (2) 913 (483) (24) (101) - (608) (92) 2 106 17 122 - 245 40 - 285 (88) (24) (17) - (129) (59) - 249 137 500 - 2,002 194 1,511 (239) 886 3,468 25 - 911 264 (2) 3,730 (179) (1,463) (68) (335) - (582) (101) - (236) (453) 239 (1,914) (338) 2 (675) (698) (188) (683) (2,250) 669 666 344 274 122 215 115 97 304 228 1,554 1,480 Land and buildings includes £300,000 of freehold land, acquired during the period ended 2 July 2020. Freehold land is not depreciated. Company Cost Balance at 2 July 2020 Additions in period Balance at 1 July 2021 Accumulated depreciation Balance at 2 July 2020 Charge for the period Balance at 1 July 2021 Net Book Value At 2 July 2020 At 1 July 2021 Land and buildings £’000s Plant and equipment £’000s Computer equipment £’000s Fixtures and fittings £’000s Total £’000s 672 - 672 (3) (3) (6) 669 666 238 85 323 (116) (49) (165) 122 158 122 26 148 (25) (45) (70) 97 78 592 22 614 (358) (74) (432) 1,624 133 1,757 (502) (171) (673) 234 182 1,122 1,084 Barkby Group PlcBAnnual report and financial accounts 2021 Notes to the financial statements continued 1 July 2021 Note 16. Non-current assets - right-of-use assets Right of use assets - cost Balance at 1 April 2019 Acquired in business combinations Adjustments to leases Covid-19 relief Balance at 2 July 2020 New leases Adjustments to leases Covid-19 relief Balance at 1 July 2021 Accumulated depreciation Balance at 1 April 2019 Acquired in business combinations Charge for the period Balance at 2 July 2020 Charge for the period Lease adjustment Balance at 1 July 2021 Net Book Value At 1 April 2019 At 2 July 2020 At 1 July 2021 85 Group Buildings £’000s Pubs £’000s Service concessions £’000s 1,686 - 61 2,767 (594) (29) 1,124 - (102) (91) 931 (570) (19) (210) (799) (132) 102 - (67) 2,700 1,064 - (200) 3,564 - (297) (102) (399) (291) - 69 - - (8) 61 - - (4) 57 (15) - (29) (44) (13) - Total £’000s 1,755 2,828 (594) (104) 3,885 1,064 (102) (295) 4,552 (585) (316) (341) (1,242) (436) 102 (828) (690) (57) (1,575) 1,116 325 103 - 2,301 2,874 54 17 - 1,170 2,643 2,977 The adjustment to the building lease related to the renegotiation of a lease on to a turnover rent basis. Covid-19 relief represents rents foregone by landlords as a result of the pandemic. The balance represents agreed reductions in rent in the year ended 1 July 2021. The Group leases land and buildings for its offices, coffee shops and car showroom. The leases run for between 1.5 and 9.5 years. The Group leases six pubs, with the leases running for between 3 and 21 years. www.barkbygroup.comStrategic Report GovernanceFinancial statements 86 Notes to the financial statements continued 1 July 2021 Note 16. Non-current assets - right-of-use assets (continued) The Group also leased plant and machinery and operates one service concession which is classified as a lease. Company Right of use assets - cost Balance at 1 June 2019 Additions of new leases Adjustments to leases Covid-19 relief Balance at 2 July 2020 New leases Covid-19 relief Balance at 1 July 2021 Accumulated depreciation Balance at 1 June 2019 Charge for the period Balance at 2 July 2020 Charge for the year Balance at 1 July 2021 Net Book Value At 1 June 2019 At 2 July 2020 At 1 July 2021 Pubs £’000s 2,683 46 38 (67) 2,700 1,064 (200) 3,564 (171) (228) (399) (291) (690) 2,512 2,301 2,874 The adjustment to the Pub lease in the period ended 2 July 2020 was an annual RPI-based indexation increase in the lease for one pub. Note 17. Non-current assets - intangibles Group Cost Balance at 1 April 2019 Additions through business combinations (note 32) Additions during the period Balance at 2 July 2020 Additions during the year Balance at 1 July 2021 Accumulated amortisation and impairments Balance at 1 April 2019 Charge for the period Balance at 2 July 2020 Charge for the year Balance at 1 July 2021 Net book value At 1 April 2019 At 2 July 2020 At 1 July 2021 Product design and development £’000s Goodwill £’000s Patents and trademarks £’000s Computer software £’000s Total £’000s 106 8,037 - 8,143 - 8,143 (106) - (106) - (106) - 8,037 8,037 - - 69 69 49 118 - - - (44) (44) - 69 74 50 - 218 268 126 394 (14) (5) (19) (57) (76) 36 249 318 - - - - 110 110 - - - (36) (36) - - 74 156 8,037 287 8,480 285 8,765 (120) (5) (125) (137) (262) 36 8,355 8,503 The Company has a goodwill balance of £1,074,000 at 1 July 2021 and 2 July 2020. The goodwill arose on the acquisition of the assets and businesses of Turf to Table Limited in 2018. There is no accumulated amortisation or impairment against this balance. Barkby Group PlcBAnnual report and financial accounts 2021 87 Notes to the financial statements continued 1 July 2021 Note 17. Non-current assets - intangibles (continued) Impairment testing Goodwill acquired through business combinations has been allocated to the following cash-generating units (“CGU”): Barkby Pubs Investments - Centurian Automotive Group 2021 £’000s 6,296 1,741 8,037 2020 £’000s 6,296 1,741 8,037 The recoverable amount of the Group’s goodwill has been determined by a value-in-use calculation using a discounted cash flow model, based on a 4 year projection period approved by management and extrapolated for a further 1 year using a steady rate, together with a terminal value. Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive. The following key assumptions were used in the discounted cash flow model for the Barkby Pubs division: • 8% WACC; • 2% per annum projected revenue growth rate; The discount rate of 8% reflects management’s estimate of the time value of money and the Group’s weighted average cost of capital. Management believes the projected 2% revenue growth rate is prudent and justified, based on the general market conditions and long run expectations for the industry. There were no other key assumptions for the Barkby Pubs CGU. Based on the above, the recoverable amount of the Barkby Pubs cash generating unit exceeded the carrying amount by £3,073,000 (2020: £1,291,000). The following key assumptions were used in the discounted cash flow model for the Investments - Centurian CGU: • 8% WACC; • 2% per annum projected revenue growth rate. The discount rate of 8% reflects management’s estimate of the time value of money and the Group’s weighted average cost of capital. There were no other key assumptions for the Centurian CGU. Based on the above, the recoverable amount of the Investments - Centurian exceeded the carrying amount by £1,571,000 (2020: £2,470,000). As disclosed in note 3, the directors have made judgements and estimates in respect of impairment testing of goodwill. Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. The sensitivities are as follows: • Revenue would need to decrease by more than 4% for Barkby Pubs and 0.7% for Centurian the CGU before goodwill would need to be impaired, with all other assumptions remaining constant. • The discount rate would be required to increase by 3% for Barkby Pubs and 6% for Centurian before goodwill would need to be impaired, with all other assumptions remaining constant. Management believes that other reasonable changes in the key assumptions on which the recoverable amount of either CGU’s goodwill is based would not cause the relevant cash-generating unit’s carrying amount to exceed its recoverable amount. www.barkbygroup.comStrategic Report GovernanceFinancial statements 88 Notes to the financial statements continued 1 July 2021 Note 18. Non-current assets - Investments Investment in equity of Verso Biosense Ltd (formerly VivoPlex) Group 1 July 2021 £’000s 2,542 2 July 2020 £’000s 2,042 The Group, through its subsidiary Barkby Real Estate Developments Limited, excised its option to subscribe in VivoPlex Loan Notes in the period ended 2 July 2020. Subsequently the Loan Notes were converted into share capital. In the year ended 1 July 2021, the Group increased its investment in Verso Biosense Ltd (formerly VivoPlex) by £500,000. The investment in equity of Verso Biosence Ltd is measured at fair value through profit or loss following designation as such upon initial recognition. The was no movement in fair value in the year ended 1 July 2021, other than the increase in the Group’s investment. Opening balance Acquisitions of share capital in subsidiary undertakings: Tarncourt Ambit Properties Limited (now Barkby Real Estate Development Limited) Tarncourt Ambit Limited (now Barkby Real Estate Limited) Workshop Trading Holdings Limited Cambridge Sleep Sciences Limited* Impairment Company 1 July 2021 £’000s 30,940 2 July 2020 £’000s 314 - - - - (4,781) 26,159 14,645 11,200 4,781 - - 30,940 The Company has tested its investments in subsidiaries following a review for indicators of impairment at 1 July 2021. It was noted that the market value of the Company’s shares was greater than the Company’s net assets at 1 July 2021. Based on this indicator of impairment, the directors have decided to impair the Company’s investment in Workshop Trading Holdings Limited. Of the Company’s investments this investment was deemed to have the lowest recoverable amount. The Company acquired the entire share capital of Tarncourt Ambit Properties Limited by issuing 48,816,667 ordinary shares to the shareholders of Tarncourt Ambit Properties Limited on 7 January 2020 as part of the business combination transaction with the Dickson Controlled Entities. The shares are valued at £0.30 per share, being the price that shareholders subscribed for shares in Barkby Group Plc in a placing and subscription linked to the business combination and undertaken on the same day. The Company acquired the entire share capital of Tarncourt Ambit Limited by issuing 37,333,334 ordinary shares to the shareholders of Tarncourt Ambit Limited on 7 January 2020 as part of the business combination transaction with the Dickson Controlled Entities. The shares are valued at £0.30 per share, being the price that shareholders subscribed for shares in Barkby Group Plc in a placing and subscription linked to the business combination and undertaken on the same day. The Company acquired the entire share capital of Workshop Trading Holdings Limited by issuing 15,936,166 ordinary shares to the shareholders of Workshop Trading Holdings Limited on 7 January 2020 as part of the business combination transaction with the Dickson Controlled Entities. The shares are valued at £0.30 per share, being the price that shareholders subscribed for shares in Barkby Group Plc in a placing and subscription linked to the business combination and undertaken on the same day. *The Company subscribed in cash for £71.40 of share capital of Cambridge Sleep Sciences Limited in the period ended 2 July 2020, representing 84.5% of Cambridge Sleep Sciences Limited’s issued equity. Barkby Group PlcBAnnual report and financial accounts 2021 89 Notes to the financial statements continued 1 July 2021 Note 19. Borrowings Bank overdrafts Vehicle finance and associated loans Bank loans Other loans Loans from related parties Bank overdrafts Bank loans Other loans 1 July 2021 £ 000s Non- current - 42 667 16 3,927 4,652 1 July 2021 £ 000s Non- current - 667 16 683 £’000s Current 305 3,857 642 2,113 478 7,395 £’000s Current 199 642 73 914 Group 2 July 2020 £ 000s Total 305 3,899 1,309 2,129 4,405 12,047 Company £ 000s Total 199 1,309 89 1,597 £ 000s Current 1,480 3,050 37 4,359 73 8,999 £ 000s Current 1,480 29 - 1,509 £ 000s Non- current - 328 295 2,026 2,250 4,899 2 July 2020 £ 000s Non- current - 295 - 295 Total £’000s 1,480 3,378 332 6,385 2,323 13,898 Total £’000s 1,480 324 - 1,804 Refer to note 27 for further information on financial instruments. Total secured liabilities The total secured liabilities (current and non-current) are as follows: Bank overdraft Vehicle finance and associated loans Bank loans Other loans Loans from related parties Assets pledged as security Group 1 July 2021 £’000s 305 3,899 1,309 2,032 446 7,991 2 July 2020 £’000s 1,480 3,378 332 6,178 - 11,368 The bank overdraft and loans are secured by charges over the Group’s assets. Vehicle finance and associated loans are secured against the Group’s vehicle inventory, with each facility being linked to a specific vehicle or vehicles. Certain other loans are secured on either one of the Group’s real estate development properties or specific assets. One of the loans from related parties is secured on one of the Group’s real estate development properties. Financing arrangements The Group has access to a term loan facility with Tarncourt Investments LLP, a related party. The facility was refinanced in the year increasing to £5.0 million (2 July 2020 £3.5 million) and is repayable in June 2023 (2 July 2020: repayable in July 2021). The facility bears interest at 3.5% (previous facility: 3.5%). At 1 July 2021, the Group had drawn £3,843,000 (2 July 2020: £1,978,000) and so had unused financing available of £1,157,000 (2 July 2021: £1,522,000). www.barkbygroup.comStrategic Report GovernanceFinancial statements 90 Notes to the financial statements continued 1 July 2021 Note 20. Lease liabilities Building lease liabilities Pub lease liabilities Kitchen equipment lease liabilities Service concession lease liabilities Pub lease liabilities Kitchen equipment lease liabilities 1 July 2021 2 July 2020 Group £’000s Current 99 432 - - £ 000s Non- current 67 £ 000s Total 166 2,871 3,303 - - - - 531 2,938 3,469 £ 000s Current 185 273 9 24 491 £ 000s Non- current 162 2,187 - - Total £’000s 347 2,460 9 24 2,349 2,840 Company 1 July 2021 £ 000s Non- current £’000s Current £ 000s Total £ 000s Current 2 July 2020 £ 000s Non- current Total £’000s 432 2,871 3,303 - - - 432 2,871 3,303 273 9 282 2,178 2,460 - 9 2,187 2,469 Refer to note 27 for further information on financial instruments. Kitchen equipment lease liabilities were reported within non-current borrowings in the Company’s 31 May 2019 balance sheet. Note 21. Current liabilities - income tax Provision for Corporation Tax Group 1 July 2021 £’000s 2 July 2020 £’000s 25 107 Barkby Group PlcBAnnual report and financial accounts 2021 Notes to the financial statements continued 1 July 2021 Note 22. Current liabilities - other Accruals Tax and social security payable Pension contributions payable Retentions Deferred consideration Customer deposits Other payables Accruals Tax and social security payable Pension contributions payable Deferred consideration Customer deposits Other payables 91 Group 1 July 2021 £’000s 2 July 2020 £’000s 1,108 1,531 13 59 225 152 1,259 4,347 577 477 11 115 592 56 5 1,833 Company 1 July 2021 £’000s 2 July 2020 £’000s 577 1,042 9 225 152 168 296 301 2 592 56 13 2,173 1,260 Deferred consideration relates to the acquisition of Turf to Table (25 June 2018) by The Barkby Group Plc, and £225,000 (1 July 2020: £375,000) payable to three shareholders under the terms of the acquisition of Tarncourt Ambit Limited (now Barkby Real Estate Limited) on 7 January 2020. During the year ended 1 July 2021 payments totalling £150,000 were made as partial settlement of this deferred consideration. The remaining balance of £225,000 is expected to be settled in the next financial year. During the year ended 1 July 2021 Barkby Group and Turf to Table Ltd agreed an amendment to the deferred consideration due to Turf to Table. As a result of this agreement, the Company paid £115,000 in lieu of the balance of existing deferred consideration of £150,000 due under the original agreement. £60,000 of the outstanding £115,000 due was satisfied by the issue and allotment on 1 October 2020 of 260,869 ordinary shares in the capital of Barkby (“Ordinary Shares”) at a price of 23 pence per Ordinary Share, and the balance of £55,000 was paid in cash. The difference between the balance due of £150,000 and that ultimately paid of £115,000 of £35,000 was released to profit and loss. The balance of deferred consideration in relation to turf to Table at 2 July 2020 was £217,000, resulting in a further release to profit and loss of £67,000 in the year ended 1 July 2021. www.barkbygroup.comStrategic Report GovernanceFinancial statements 92 Notes to the financial statements continued 1 July 2021 Note 23. Non-current liabilities - provisions Dilapidations provisions Dilapidations provisions Dilapidations provisions Group 1 July 2021 £’000s 2 July 2020 £’000s 48 28 Company 1 July 2021 £’000s 2 July 2020 £’000s 48 28 The provision represents the present value of the estimated costs to make good the Pub premises leased by the Group (and Company) at the end of the respective lease terms. Movements in provisions Movements in each class of provision during the current financial year (and previous financial period) are set out below: Group Carrying amount at 3 July 2020 (1 April 2019) Fair value of provisions acquired in business combination Dilapidations provision for new Pub leases in period Carrying amount at 1 July 2021 (2 July 2020) Company Carrying amount at 3 July 2020 (1 June 2019) Dilapidations associated with new Pub lease in period Carrying amount at 1 July 2021 (2 July 2020) Dilapidations provision 2021 £’000s 2020 £’000s 28 - 20 48 - 28 - 28 Dilapidations provision 2021 £’000s 2020 £’000s 28 20 48 25 3 28 Barkby Group PlcBAnnual report and financial accounts 2021 93 Notes to the financial statements continued 1 July 2021 Note 24. Equity - issued capital New ordinary shares - fully paid (£0.00860675675675676 per share) Group and Company 1 July 2021 Shares 2 July 2020 Shares 1 July 2021 £’000s 2 July 2020 £’000s 136,948,282 135,235,066 1,179 1,164 During the year ended 1 July 2021 the Company undertook the following transactions in relation to its issued share capital: a) Turf to Table deferred consideration on 1 October 2020 As part of the amended deferred consideration agreement with Turf to Table, the Company issued and allotted 260,869 ordinary shares on 1 October 2020 at a price of 23 pence per share to satisfy £60,000 of the amended deferred consideration totalling £115,000. b) Exercise of warrants on 24 December 2020 The Company allotted 1,452,347 shares on 24 December 2020 following the exercise of warrants by Giles Clarke. During the prior period ended 2 July 2020 the Company undertook the following transactions in relation to its issued share capital: c) Share consolidation on 18 December 2019 157 existing shares of 0.33p per share were issued to ensure that the number of shares in issue was divisible by 193. This was then followed by 74 new ordinary shares being issued for every 193 existing ordinary shares, resulting in the cancellation of 42,164,324 ordinary shares and the issuance of 16,166,632 new ordinary shares of 0.860675675675676p per share. d) Consideration shares on 7 January 2020 As part of the acquisition of the Dickson Controlled Entities, the Company issued 102,086,167 shares on 7 January 2020 in order to acquire the entire share capital of Tarncourt Ambit Limited, Tarncourt Ambit Properties Limited and Workshop Trading Holdings Limited. For the purposes of the legal acquisition of the share capital of the above entities, The Barkby Group Plc shares were valued at 30p per share, with the excess of the price over the nominal value of the share capital being booked to the Company’s merger reserve. e) Placing and subscription on 7 January 2020 The Company issued 16,666,667 shares on 7 January 2020 for cash at 30p per share as a result of a placing and subscription. The total proceeds raised were £5 million and the excess of the price per share over the nominal value of the share capital was booked to the Company’s share premium account. f) Fee shares on 7 January 2020 The Company issued 315,600 shares to FinnCap, the Company’s advisers to the reverse takeover transaction, share capital placing and subscription and the Company’s listing on AIM, which all took effect on 7 January 2020. The shares were valued at 30p per share, giving a total value of £94,680, being the value of the services received by the Company from FinnCap. The excess of the price per share over the nominal value of the share capital was booked to the Company’s share premium account. www.barkbygroup.comStrategic Report GovernanceFinancial statements 94 Notes to the financial statements continued 1 July 2021 Note 24. Equity - issued capital (continued) Movements in ordinary share capital – Group and Company Details Balance Shares issued Date Nominal value £ per share Shares 31 March and 31 May 2019 42,164,167 0.0033 18 December 2019 157 0.0033 £’000 139 - Share consolidation - cancellation of existing shares Share consolidation - issue of new shares Shares issued - Dickson Controlled Entities acquisition Shares placed for cash proceeds Shares issued for fees Balance 7 January 2020 7 January 2020 7 January 2020 7 January 2020 7 January 2020 2 July 2020 Shares issued to settle deferred consideration 1 October 2020 Shares issued following exercise of warrants 24 December 2020 (42,164,324) 0.0033 (139) 16,166,632 0.0086 139 102,086,167 0.0086 16,666,667 0.0086 315,600 0.0086 879 143 3 135,235,066 0.0086 1,164 260,869 0.0086 1,452,347 0.0086 2 13 Balance Ordinary shares 1 July 2021 136,948,282 0.0086 1,179 The nominal value of the ordinary shares is £0.00860675675675676 per share. This is shown as £0.0086 in the table above for clarity. Warrants The Company has the following Warrants outstanding at 1 July 2021 and 2 July 2020: Giles Clarke Rupert Fraser Jeremy Sparrow Number outstanding Date granted 1 July 2021 2 July 2020 Price (£ per share) Warrants - 1,452,347 30/12/2015 0.0860 Warrants 1,452,347 1,452,347 30/12/2015 0.0860 Warrants 255,612 255,612 22/07/2016 0.1979 1,707,959 3,160,306 The Warrants issued to Giles Clarke and Rupert Fraser are exercisable at any time during the period of five years to 30 December 2020 with certain exceptions that could restrict the timing or the number of warrants that could be exercised at a particular point in time. On 24 December 2020, Giles Clarke exercised his Warrants and the Company issued 1,452,347 shares. In addition, on 24 December 2020, the expiry date of the Warrants issued to Rupert Fraser was extended by one year to 30 December 2021. The Warrants issued to Jeremy Sparrow are exercisable at any time during the period from 28 July 2016 to 29 July 2021 with certain exceptions that could restrict the timing or the number of warrants that could be exercised at a particular point in time. Barkby Group PlcBAnnual report and financial accounts 2021 Notes to the financial statements continued 1 July 2021 Note 25. Equity - retained losses Retained loss at the beginning of the period/year Loss after income tax expense for the period/year attributable to shareholders of the Company Payment to shareholders of Tarncourt Ambit Limited Capital reduction Retained losses at the end of the financial period/year Retained loss at the beginning of the financial period Loss after income tax expense for the period Payment to shareholders of Tarncourt Ambit limited Capital reduction Retained losses at the end of the financial period Capital reduction 95 Group 2021 £’000s 2020 £’000s (5) (5,585) (4,214) - - (4,219) Company 2021 £’000s (1,601) (9,292) - - (10,893) (3,095) (750) 9,425 (5) 2020 £’000s (8,360) (1,916) (750) 9,425 (1,601) The Company undertook a capital reduction by Court Order during the financial period ended 2 July 2020. The court sanctioned the Order on 25 June 2020, reducing the Company’s capital and resulting in a transfer of £9,425,000 to retained losses. Payment to shareholders of Tarncourt Ambit Limited As part of the business combination, it was agreed to pay £750,000 to certain shareholders of the Company who had been shareholders of Tarncourt Ambit Limited. This has been treated as a transaction with shareholders in their capacity as shareholders and so has been recorded in equity. www.barkbygroup.comStrategic Report GovernanceFinancial statements 96 Notes to the financial statements continued 1 July 2021 Note 26. Equity – other reserves Balance at 1 April 2019 Capital reduction Shares issued to settle fees Shares issued for business combinations Costs associated with issuance of shares Shares issued for cash Shares issued to cancel liabilities Balance at 2 July 2020 Shares issued to settle deferred consideration Shares issued following exercise of warrants Balance at 1 July 2021 Balance at 1 June 2019 Capital reduction Shares issued to settle fees Shares issued to acquire subsidiaries Costs associated with issuance of shares Shares issued for cash Balance at 2 July 2020 Shares issued to settle deferred consideration Shares issued following exercise of warrants Balance at 1 July 2021 Capital reduction Group Share premium £’000s 6,347 (6,347) 92 - (626) 4,857 - 4,323 58 112 4,493 Company Share premium £’000s 6,347 (6,347) 92 - (626) 4,857 4,323 58 112 4,493 Capital redemption reserve £’000s 3,078 (3,078) - - - - - - - - - Capital redemption reserve £’000s 3,078 (3,078) - - - - - - - - Merger reserve £’000s (9,088) - - 5,446 - 75 3,145 (422) - - (422) Merger reserve relief £’000s - - - 29,747 - - 29,747 - - 29,747 Note 24 24, 32 24 24 24 Note 24 24 24 24 24 The Company undertook a capital reduction by court order during the financial period ended 2 July 2020. The court sanctioned the Order on 25 June 2020, reducing the Company’s share premium by £6,347,000 and utilising the entirety of the Company’s capital redemption reserve (£3,078,000), resulting in a reduction in the Company’s retained losses of £9,425,000. Shares issued for cash In addition to the shares issued by The Barkby Group Plc as part of the placing and subscription aligned to the business combination on 7 January 2020, the Dickson Controlled Entities issued equity of £75,000 for cash consideration in the period from 1 April 2019 to 6 January 2020. Shares issued to cancel liabilities In the period from 1 April 2019 to 6 January 2020, the Dickson Controlled Entities issued £3,145,000 of equity in order to satisfy liabilities of the same value. Barkby Group PlcBAnnual report and financial accounts 2021 97 Notes to the financial statements continued 1 July 2021 Note 27. Financial instruments Financial risk management objectives The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group, on occasion, uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, and ageing analysis for credit risk. Risk management is carried out by senior finance executives (‘finance’) under policies approved by the Board of Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group’s operating units. Finance reports to the Board on a monthly basis. Market risk Foreign currency risk The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. In order to protect against exchange rate movements, the Group, on occasion, enters into forward foreign exchange contracts. These contracts are hedging highly probable forecasted cash flows for the ensuing financial year. There were no contracts extant at either 2 July 2020, or 1 July 2021. The Group had no foreign currency denominated financial assets at either 2 July 2020, or 1 July 2021. The carrying amount of the Group’s foreign currency denominated financial assets and financial liabilities at the reporting date were as follows: Group US dollars Euros Total Liabilities 1 July 2020 £’000s 2 July 2020 £’000s 118 22 140 77 - 77 The Group had net liabilities denominated in foreign currencies of £140,000 as at 1 July 2021 (2 July 2020: £77,000). Based on this exposure, had Pound Sterling weakened by 10%/strengthened by 10% (2 July 2020: weakened by 10%/strengthened by 10%) against these foreign currencies with all other variables held constant, the Group’s loss before tax for the period would have been £14,000 higher/£14,000 lower (2 July 2020: £7,000 higher/£8,000 lower). Equity would have been £14,000 lower/£14,000 higher (2 July 2020: £7,000 lower/£8,000 higher). The percentage change is the expected overall volatility of the significant currencies, which is based on management’s assessment of reasonable possible fluctuations taking into consideration movements over the financial period and the spot rate at each reporting date. The actual foreign exchange gain for the period ended 1 July 2021 was £11,000 (2019: loss of £40,000). The Company had no foreign currency denominated financial assets or liabilities at either 2 July 2020 or 1 July 2021. www.barkbygroup.comStrategic Report GovernanceFinancial statements 98 Notes to the financial statements continued 1 July 2021 Note 27. Financial instruments (continued) Price risk The Group is not exposed to any significant price risk. Interest rate risk The Group’s main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value risk. The Group’s policy is to maintain a range of borrowings appropriate for the individual businesses. For example, Centurian relies on specific trade finance that is secured on the value of its vehicle inventory. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group does not hold any collateral. The Group has no concentration of credit risk exposure. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. Liquidity risk Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Financing arrangements Unused borrowing facilities at the reporting date are shown in Note 19. Barkby Group PlcBAnnual report and financial accounts 2021 99 Notes to the financial statements continued 1 July 2021 Note 27. Financial instruments (continued) Remaining contractual maturities The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Group - 2021 Non-interest bearing Trade payables Other payables Loans from related parties Interest bearing – variable Bank overdraft Bank loans Interest-bearing – fixed rate Vehicle finance Other loans Lease liabilities Loans from related parties Total Group - 2020 Non-interest bearing Trade payables Other payables Loans from related parties Interest bearing – variable Bank overdraft Bank loans Interest-bearing – fixed rate Vehicle finance Other loans Lease liabilities Loans from related parties Total Weighted average interest rate % 1 year or less £’000s Between 1 and 2 years £’000s Between 2 and 5 years £’000s Over 5 years £’000s Remaining contractual maturities £’000s - - - 3.5% 3.9% 8.4% 7.4% 4.9% 3.5% 1,826 1,543 - 305 643 3,857 2,113 554 478 11,319 - - 84 - 333 42 16 543 3,843 4,861 - - - - 333 - - - - - - - - - 1,515 1,874 - - 1,826 1,543 84 305 1,309 3,899 2,129 4,486 4,321 1,848 1,874 19,902 Weighted average interest rate % 1 year or less £’000s Between 1 and 2 years £’000s Between 2 and 5 years £’000s Over 5 years £’000s Remaining contractual maturities £’000s - - - 3.5% 3.7% 8.4% 7.4% 5.0% 3.5% 1,937 711 - 1,480 38 3,073 4,451 508 73 12,271 - - 272 - 30 88 2,001 371 1,978 4,740 - - - - 300 258 - - - - - - - - 918 2,059 - - 1,937 711 272 1,480 368 3,419 6,452 3,856 2,051 1,476 2,059 20,546 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. www.barkbygroup.comStrategic Report GovernanceFinancial statements 100 Notes to the financial statements continued 1 July 2021 Note 28. Fair value measurement Fair value hierarchy The following tables detail the Group’s assets, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability The Group had no liabilities measured or disclosed at fair value at either 2 July 2020 or 1 July 2021. Group – Assets 2 July 2020 Ordinary shares at fair value through profit or loss 1 July 2021 Ordinary shares at fair value through profit or loss There were no transfers between levels during the financial year. Level 1 £’000s Level 2 £’000s Level 3 £’000s Total £’000s - - - - 2,042 2,042 2,542 2,542 The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature. Valuation techniques for fair value measurements categorised within Level 2 and Level 3 Unquoted investments have been valued using a range of methods, taking into account the cost of the investments and other information available to the Group’s Directors on the financial and non-financial performance of the investment, including the prices unrelated parties have invested at and the expected price at which the next equity raise would be undertaken at. On the basis that Verso Biosense is in the early stages of its development and therefore is significant inherent uncertainty on its forecast cashflows, the Directors consider costs to be the best approximation of fair value. No indicators of impairment have been identified and so the investment is held at cost at 1 July 2021 (and 2 July 2020). Level 3 assets and liabilities Movements in Level 3 assets and liabilities during the current and previous financial year are set out below: Group Balance at 1 April 2019 Gains recognised in profit or loss Gains recognised in other comprehensive income Additions Balance at 2 July 2020 Gains recognised in profit or loss Gains recognised in other comprehensive income Additions Balance at 1 July 2021 Ordinary shares at fair value through P&L £’000s Ordinary shares at fair value through OCI £’000s - - - 2,042 2,042 - - 500 2,542 - - - - - - - - - Total £’000s - - - 2,042 2,042 - - 500 2,542 Barkby Group PlcBAnnual report and financial accounts 2021 101 Notes to the financial statements continued 1 July 2021 Note 29. Directors’ remuneration Compensation The aggregate compensation made to directors of the Group is set out below: Salaries Cash bonus Contributions to defined contribution pensions Other benefits Group 2021 £’000s 460 - 9 - 469 2020 £’000s 415 45 16 2 463 The highest paid director received total remuneration of £180,000 in the period ended 1 July 2020 (£121,000 for the period ended 2 July 2020). Note 30. Commitments Capital commitments Committed at the reporting date but not recognised as liabilities, payable: Intangible assets Note 31. Related party transactions Parent entity Barkby Group Plc is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 33. Key management personnel Disclosures relating to key management personnel are set out in note 29. Transactions with related parties The following transactions occurred with related parties: Sales of cars to related parties Purchases of cars from related parties Recovery of costs from related parties Purchases of services from related parties Receivable from and payable to related parties Group 1 July 2021 £’000s 2 July 2020 £’000s - 120 Group 2021 £’000s 2020 £’000s 65 - 48 - 149 38 - 75 The following balances are outstanding at the reporting date in relation to transactions with related parties: Current receivables: Trade receivables due from related parties Other receivables due from related parties Group 2021 £’000s 2020 £’000s - 115 28 70 www.barkbygroup.comStrategic Report GovernanceFinancial statements 102 Notes to the financial statements continued 1 July 2021 Note 31. Related party transactions (continued) Loans from related parties The following loan balances are outstanding at the reporting date in relation to related parties: Loans from related parties Current liabilities: Interest bearing loans Non-current liabilities: Non-interest bearing loans Interest bearing loans Terms and conditions Group 2021 £’000s 2020 £’000s 478 73 84 3,843 272 1,978 All transactions were made on normal commercial terms and conditions and at market rates. Note 32. Business combinations In the prior financial period, on 7 January 2020 The Barkby Group Plc, acquired 100% of the ordinary shares of Tarncourt Ambit Limited, Tarncourt Ambit Properties Limited and Workshop Trading Holdings Limited. These entities, together with Workshop Trading Holdings Limited’s subsidiary Workshop Trading (London) Limited were the Dickson Controlled Entities, so called as they were under the common control of members of the Dickson family. The Barkby Group Plc issued 102,086,167 ordinary shares to the shareholders of the Dickson Controlled Entities. As these shareholders ended up owning 86% of the enlarged group, the transaction was considered a reverse takeover under the provisions of IFRS 3. In accounting for a reverse acquisition (rather than an acquisition) the combined financial statements were deemed to be a continuation of the operations of the legal acquiree (the Dickson Controlled Entities) rather than a continuation of those of the legal acquirer (The Barkby Group Plc). The assets and liabilities of the Dickson Controlled Entities are recognised and measured in the Group financial statements at the pre-combination carrying amounts, without restatement to fair value and no goodwill arises in relation to them. Conversely, the assets of The Barkby Group Plc are consolidated at their fair values. The overall effect was that the consolidated financial statements were prepared from the perspective of the Dickson Controlled Entities rather than The Barkby Group Plc, in summary this means: • The comparative consolidated financial information was that of an aggregation of the Dickson Controlled Entities rather than that of The Barkby Group Plc. • The results for the period and consolidated cumulative profit and loss reserves were those of the Dickson Controlled Entities plus the post-acquisition results of The Barkby Group Plc. • A merger reserve of £422,000 (debit balance) was created. • The share capital, share premium account and merger reserve were that of The Barkby Group Plc. • The cost of the combination was determined from the perspective of the Dickson Controlled Entities. Goodwill arose on the reverse acquisition as a result of comparing the deemed fair value consideration of the Dickson Controlled Entities for the acquisition of the shares of The Barkby Group Plc. The fair value of the consideration is the market capitalisation of The Barkby Group Plc at acquisition based on the share price immediately prior to the announcement of the acquisition. Barkby Group PlcBAnnual report and financial accounts 2021 Notes to the financial statements continued 1 July 2021 Note 32. Business combinations (continued) Details of the acquisition are as follows: Cash and cash equivalents Trade receivables Other receivables and current assets Prepayments Property, plant and equipment - owned assets Property, plant and equipment - Right of Use assets Investments Inventories Trade payables Other payables and accruals Borrowings Overdraft Lease liabilities Provisions Employee benefits Net liabilities acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Shares issued Acquisition costs expensed* Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents acquired Cash Overdrafts Net cash used 103 Fair value £’000s 42 44 341 831 1,057 2,512 50 2,995 (1.325) (1,266) (3,736) (591) (2,598) (28) (40) (1,712) 8,037 6,325 6,325 230 230 (42) 591 779 *Acquisition costs shown are the element taken to profit or loss out of the total costs of £856,000 for the business combination, share placing and listing on AIM that were all undertaken at the same time. The acquisition consideration, net assets and goodwill were based upon the reverse acquisition of The Barkby Group Plc by the Dickson Controlled entities. The fair value of the consideration was the market capitalisation of The Barkby Group Plc at acquisition. The value of the consideration shares recognised by The Barkby Group Plc in its entity financial statements was £30,626,000 based upon the 30.0p per share that the placing and subscription shares issued at the same time were priced at. Transaction costs of equity transactions relating to the issue and re-admission of the Company’s shares were accounted for as a deduction from equity where they relate to the issue of new shares and listing costs are charged to the Consolidated Statement of Comprehensive Income. The fair value of the net liabilities acquired and shown in the table above was £1,712,000. The fair value of the consideration was £6,325,000 resulting in goodwill on reverse acquisition of £8,037,000. If The Barkby Group Plc and its subsidiary undertaking, Centurian Automotive Limited, had been part of the group for their full prior financial period (1 June 2019 to 2 July 2020), they would have contributed revenue of £12,741,000 and a loss for the period of £4,047,000. www.barkbygroup.comStrategic Report GovernanceFinancial statements 104 Notes to the financial statements continued 1 July 2021 Note 33. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following wholly- owned subsidiaries in accordance with the accounting policy described in note 2: Name Barkby Real Estate Limited, formerly Tarncourt Ambit Limited Barkby Real Estate Developments Limited, Principal place of business and Country of incorporation Ownership interest 1 July 2021 % 2 July 2020 % United Kingdom 100% 100% formerly Tarncourt Ambit Properties Limited United Kingdom Workshop Trading Holdings Limited Workshop Trading (London) Limited Centurian Automotive Limited United Kingdom United Kingdom United Kingdom 100% 100% 100% 100% 100% 100% 100% 100% The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary with non-controlling interests in accordance with the accounting policy described in note 2: Name Principal place of business and Country of incorporation Principal activities Parent Non-controlling interest Ownership interest 2021 % Ownership interest 2020 % Ownership interest 2021 % Ownership interest 2020 % Cambridge Sleep Sciences Limited United Kingdom Life Sciences 85% 85% 15% 15% Summarised financial information Summarised financial information of the subsidiary with non-controlling interests that are material to the Group are set out below: Summarised statement of financial position Current assets Non-current assets Total assets Current liabilities Net assets Summarised statement of profit or loss and other comprehensive income Start up expense Other (net expenses) Loss before income tax expense Income tax expense Profit after income tax expense and total comprehensive loss for the period Statement of cash flows Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Other financial information Loss attributable to non-controlling interests Accumulated non-controlling interests at the end of reporting period 1 July 2021 £’000s 2 July 2020 £’000s 701 423 1,124 (2,512) (1,388) (1,033) (71) (1,104) - (1,104) (84) (290) - (373) (164) - 105 281 386 (679) (293) (293) - (293) - (293) 280 (280) - - (44) - Barkby Group PlcBAnnual report and financial accounts 2021 105 Notes to the financial statements continued 1 July 2021 Note 34. Post Balance Sheet Events Wellingborough additional land acquisition The group completed the acquisition of additional land from Wrenn School in September 2021 as part of our Wellingborough development site. Huntingdon Planning Permission Planning permission was granted for a 32,000 sq.ft. scheme at the group’s Huntingdon development site in August 2021. Maldon acquisition and finance The group completed the freehold purchase of the former Quest Motor dealership in Maldon, Essex for a consideration of £2.2 million in October 2021. It is planned to re-developed this site. At the same time the group entered a £4.4 million debt facility to fund the acquisition of Maldon and refinance debt secured on the Saffron Waldon site. Exchange of Contracts at Swindon The group exchanged contracts in December 2021 for a commercial development site in Swindon, Wiltshire. It is proposed that the Group will develop a 30,000 sq. ft. mixed-use retail and trade scheme at the site. Under the proposed development, the site has an estimated gross development value of £7.5 million. The Board considers that no other material post balance sheet events occurred between the end of the period and the date of publication of this report. Note 35. Movements in borrowings in the period Group Overdrafts Bank loans Vehicle finance Other loans Loans from related parties Leases Total borrowings and lease liabilities Reported as Current liabilities Non-current liabilities Total borrowings and lease liabilities Balance at 3 July 2020 £’000s 1,480 332 3,377 6,386 2,323 2,840 16,738 9,490 7,248 16,738 Movement in year ended 1 July 2021 Proceeds of borrowings £’000s Non-cash movements £’000s Repayments £’000s Balance at 1 July 2021 £’000s 378 1,000 9,125 2,018 2,330 - 14,851 - - - 52 - 939 991 (1,553) (23) (8,603) (6,326) (248) (310) (17,063) 305 1,309 3,899 2,130 4,405 3,469 15,516 7,926 7,590 15,516 Movement in period ended 2 July 2020 Balance at 1 April 2019 £’000s Acquired in business combination £’000s Proceeds of borrowings £’000s Non-cash movements £’000s Repayments £’000s Balance at 2 July 2020 £’000s Overdrafts Bank loans Vehicle finance Other loans Loans from related parties Leases Total borrowings and lease liabilities Reported as Current liabilities Non-current liabilities Total borrowings and lease liabilities - - - 2,527 1,150 1,250 4,927 914 4,013 4,927 591 349 3,172 120 95 2,598 6,926 939 - 3,004 3,795 2,187 - - - - - (1,000) (615) (50) (17) (2,799) (56) (109) (393) 9,925 (1,615) (3,424) 1,480 332 3,377 6,386 2,323 2,840 16,738 8,999 4,898 16,738 www.barkbygroup.comStrategic Report GovernanceFinancial statements 106 Notes to the financial statements continued 1 July 2021 Note 36. Loss per share Earnings per share for profit (all from continuing operations) Loss after income tax Non-controlling interest Profit after income tax attributable to the owners of The Barkby Group Plc (Basic and diluted calculations) Basic earnings per share Diluted earnings per share Consolidated 2021 £’000s 2020 £’000s (4,378) 164 (3,139) 44 (4,214) (3,095) pence (3.09) (3.09) pence (2.69) (2.69) Number Number Weighted average number of ordinary shares Weighted average number of ordinary shares used in calculating basic earnings per share 136,187,437 114,896,986 Adjustments for calculation of diluted earnings per share: Warrants over ordinary shares 2,404,125 Weighted average number of ordinary shares used in calculating diluted earnings per share 138,591,563 1,221,341 116,118,327 The dilutive effect of the warrants over ordinary shares is presented for information only, The theoretical adjustment is antidilutive and so the diluted loss per share is the same as the basic loss per share. Barkby Group PlcBAnnual report and financial accounts 2021 107 Shareholder Infomation 1 July 2021 Senior personnel, committees, banks, advisers and others Directors Charles Dickson Executive Chairman Rupert Fraser Group Managing Director Douglas Benzie Chief Financial Officer Jonathan Warburton Non-executive and senior independent Jeremy Sparrow Non-executive Matthew Wood Non-executive Company Secretary Douglas Benzie Audit Committee Jonathan Warburton Jeremy Sparrow Matthew Wood Remuneration Committee Jonathan Warburton Jeremy Sparrow Matthew Wood Nomination Committee Charles Dickson Jonathan Warburton Jeremy Sparrow Matthew Wood Banks HSBC UK Bank Plc 2 Cannon St Bedminster Bristol BS3 1BW Auditor Crowe U.K. LLP 55 Ludgate Hill, London, EC4M 7JW Nominated Advisor FinnCap One Bartholomew Close London EC1A 7BL Financial Public Relations Advisers Camarco 107 Cheapside London EC2V 6DN Solicitors Kuit Steinart Levy LLP 3 St Mary’s Parsonage Manchester M3 2RD Shareholder information Registrar Queries The company’s registrar is Share Registrars Limited. They can be contacted at The Courtyard, 17 West Street, Farnham, Surry GU9 7DR. Their telephone no. is 01252 821390. If a shareholder has any questions about their shareholding or if they require other guidance (e.g. to notify a change of address or to give instructions for dividends to be paid directly into a bank account), please contact Share Registrars Limited (see above). Registered office and company number 115b Innovation Drive Milton Abingdon England OX14 4RZ Registered number: 07139678 Further information please visit www.barkbygroup.com www.barkbygroup.comStrategic Report GovernanceFinancial statements Printed in the UK by Pureprint, a certified CarbonNeutral® printing company, using vegetable based inks and water based sealants. The printer and paper manufacturing mill are both certified with ISO 14001 Environmental Management systems standards and both are Forest Stewardship Council® (FSC®) certified. www.barkbygroup.com