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IG Design Group plc
ANNUAL REPORT AND FINANCIAL STATEMENTS
What’s
inside
Strategic report
A review of the Group’s strategy with a more
detailed look at activity during the financial
year together with its risk management.
Governance
Information on how the Group is governed
and activities of the Board.
01 Our purpose, values and goals
56 Board of Directors
02 Our commitment to shareholders
58 Corporate governance review
04 At a glance
06 Statement from the Chair
08 Business model
10 Our strategy
16 Executive review
30 Sustainability
48 Stakeholders
50 Risk management
64 Audit Committee report
68 Nomination Committee report
70 Directors’ remuneration report
78 Directors’ report
80 Statement of Directors’ responsibilities
Financials – Group
The Group’s consolidated financial statements
and comprehensive notes covering the year
ended 31 March 2023.
Financials – Company
The Company’s financial statements
and comprehensive notes covering
the year ended 31 March 2023.
81
Independent auditors’ report
138 Company balance sheet
90 Consolidated income statement
139 Company statement of changes in equity
91 Consolidated statement of comprehensive income
140 Notes to the Company financial statements
92 Consolidated statement of changes in equity
IBC Advisers
94 Consolidated balance sheet
96 Consolidated cash flow statement
97 Notes to the consolidated financial statements
Alternative performance measures (APMs): We use both statutory reported and adjusted measures in our strategic report. Adjusted measures
in management’s view reflect the underlying performance of the business and provide a more meaningful comparison of how the business
is managed and measured day-to-day. The definition of adjusted measures is provided in our alternative performance measures section on
pages 28 to 29. In order to show when such measures have been used, the APMs are highlighted in blue throughout the executive review.
We are
Design Group
Driven by our
purpose, our values
and our goals
Our purpose
to help people create
and celebrate
Our goals
• Customers and
suppliers
• Culture
•
Investors
Our values
underpin all we do
See more on page 08
See more on page 08
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
01
STRATEGIC REPORT OUR COMMITMENT TO SHAREHOLDERS
Return to profitability(a)
Adjusted profit before tax
Adjusted profit/(loss) before tax(b)
($m)
35.8
35.7
32.8
Deliver an adjusted profit before tax by FY2024
Turnaround through organic growth and acquisitions
2019
2020
2021
9.2
2023
2022
(1.3)
Recover margins
Adjusted operating margin
Adjusted operating margin(b)
(%)
Recover to pre-pandemic levels
Rebuild a more resilient business model
Generate cash
Average leverage
6.6
6.6
4.3
2019
2020
2021
2022
0.4
1.8
2023
Average leverage(b)
1.4x
Sustain long-term average leverage below 2.0x
0.9x
1.0x
Enhance financial strength
0.6x
2019
2020
0.0x
2021
2022
2023
(a) Having returned the Group to profitability in FY2023, and as we progress with this new strategy, this commitment will be updated to sustained profit
growth, retaining these KPIs.
02
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Key performance indicators
Adjusted EBITDA(b) ($m)
$48.4m +3%
Reported profit/(loss) before tax ($m)
$(18.9)m
2023
2022
2021
2020
2019
48.4
38.3
2023
2022
(18.9)
2.2
73.3
2021
14.7
59.8
46.8
2020
2019
(0.9)
22.7
Revenue ($m)
$890.3m -8%
Return on capital employed(b) (%)
5.6%
2023
2022
2021
2020
2019
890.3
2023
5.6
965.1
2022
1.3
873.2
2021
2020
2019
624.3
587.4
15.8
20.5
22.2
Cash conversion(b) (%)
123.8%
Average bank debt ($m)
$17.1m
2023
2022
15.1
2021
2020
2019
123.8
17.1
17.2
2023
2022
2021
2.2
2020
93.2
90.7
43.6
130.5
2019
63.9
(b) For definitions please refer to detailed financial review on page 23.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
03
STRATEGIC REPORT AT A GLANCE
We’re all around
the world
We have
more than
11,000
Products are
sold across
210,000
customers worldwide
stores
We operate
in more than
70
countries
We benefit from considerable market presence around the world.
Revenue by customer destination
Americas
$607.5m
2022: $665.1m
International
$282.8m
2022: $300.0m
2023
2022
2023
2022
32%
31%
68%
69%
04
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Revenue by season
Everyday
Christmas
Minor
seasons
2023
2022
2023
2022
2023
2022
Revenue by product
Celebrations
Craft &
creative play
Gifting
‘Not-for-resale’
consumables
Stationery
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Revenue by source
Sourced
Manufactured
in-house
2023
2022
2023
2022
9%
7%
17%
16%
11%
10%
7%
7%
5%
4%
49%
53%
42%
40%
60%
63%
64%
67%
36%
33%
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
05
STRATEGIC REPORT STATEMENT FROM THE CHAIR
Stewart Gilliland
Non-Executive Chair
I am pleased to provide the overview to
a strong performance during the year
across a number of dimensions. This
places the Group in a stronger position
than twelve months ago, putting it on
the road to recovering profits, margins
and financial strength. The pivot to
focus on near-term delivery whilst
not losing sight of our longer-term
strategy required a lot of hard work
from everyone across the organisation.
I would like to thank my colleagues
throughout the Group for their hard
work, and positive approach to
addressing the challenges that face us.
As I pass on executive responsibility
to Paul Bal, our recently appointed
Group CEO, I am delighted to see a
new growth-focused strategy taking
form. This strategy will guide our
teams to deliver more sustainable
success in the coming years, built
on a resilient foundation.
Operating results
Profit delivery was a lot stronger
than our first expectations, as the
Group returned to profitability in
terms of adjusted profit before tax.
This turnaround came a year ahead
of our planning, and is testament
to the focus on simplifying the DG
Americas business model, to strong
cost management, as well as working
capital reduction and cash generation.
The challenges of high inflation
were partly countered through such
strong actions, and partly through
justifying pricing to our customers.
Times like now can put stress on
customer relationships, and so I am
proud to say that we have worked
hard to continue delivering to our
high service levels and commitments
notwithstanding the backdrop. I am
pleased to see this rewarded through
our customers’ loyalty.
It was good to see a positive
conclusion to the bank re-financing and
I was encouraged to see the support of
some of our original banking partners
who saw the potential for the future of
the Group and were keen to be part of
the financing for that.
With the new facilities in place for at
least three years, we have a secure
base from which to grow the business.
Priorities
The consumer demand backdrop
remains difficult in some of our
markets, and this makes our recovery
more challenging. Therefore the
short-term focus on recovery must
remain. However, I am also very
pleased to see the Board and the
Operating Board looking to better
leverage the opportunities for growth
ahead and secure the Group’s
relevance in a world where our
impact has to be more considered.
The emerging new strategy rightly
focuses on establishing a sound
base of talented people with strong
capabilities and unique skills, working
in our well-invested footprint to help
our customers win and our consumers
celebrate – today and tomorrow.
People
The creativity and innovation at the
heart of our products, and the high
level of service we provide daily to our
customers, relies on our people. Their
passion for, and belief in, our business
never ceases to impress me. I have
seen even more of this as we took
some difficult decisions in the year to
restructure some of our businesses to
better position them for turnaround in
performance and future success.
06
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Key senior leadership roles have been
filled during the last few months,
with DG Americas welcoming a new
CEO and CFO. In the past weeks, we
have announced new leadership of
the DG UK business as well as the
Anchor International business in DG
Europe. Both of these appointments
have been internal, demonstrating
the quality in our talent pipeline, and
further improves our gender diversity at
senior levels. These changes, coupled
with other senior appointments across
the Group are strengthening our talent
base to support our drive to grow.
Relationships
Our business model’s success
also relies on working together
with both our customers and our
suppliers in collaboration to excite
our consumers. The longevity of our
relationships with both of these is
the envy of many, especially in the
current challenging environment.
As an example, DG UK recently
received Tesco’s supplier innovation
award for our collaborative work on
category development.
Maintaining and nurturing these
relationships, and forging new links
is key to our future success. This is
therefore a key element in our future
strategy.
Board
As previously mentioned, Paul Bal
successfully moved into the role of
Group CEO, on 1 April 2023, following
a thorough recruitment process
involving both internal and external
candidates. This has enabled me to
revert to the Non-Executive Chair role
on 1 April 2023, following 9 months as
Interim Executive Chair in the absence
of a Group CEO. The Board is grateful
to Paul for the financial management of
the year and covering both executive
roles in these recent months.
Lance Burn stepped down from
the Board on 31 March 2023 and
will remain with the business
until 31 October 2023 in a
project-based role.
The Board is very grateful to him for
his years of service, and more recently
setting DG Americas on the path
to recovery through his leadership.
As highlighted in last year’s
report, Claire Binyon joined
the Board on 1 June 2022 as
a Non-Executive Director.
With these changes, I believe the
Board’s composition is appropriate
to work with the Operating Board to
oversee our recovery and return to
overall growth.
Conclusion
With a strengthened Board, additions
to senior leadership and our financing
secure, the Group is well set to
complete its recovery, and embark
on an exciting growth strategy. Whilst
the general economic backdrop could
be better, the continued support of
our customers and suppliers, working
with our talented teams positions
us well to deliver better shareholder
value. Finally, I would like to thank
our shareholders for their continued
patience and support as the business
is re-positioned.
The strategic report which follows on
pages 01 to 55 is approved by the
Board of Directors on 19 June 2023.
Rohan Cummings, previously Group
CFO at Devro plc, has agreed to join
the Board as Group CFO with effect
from 3 July 2023.
Stewart Gilliland
Non-Executive Chair
19 June 2023
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
07
STRATEGIC REPORT BUSINESS MODEL
Designed
to succeed
Our key inputs
What we do
Innovative
product design
& development
Over 230 designers,
across four continents,
producing thousands
of designs a year
Distribution
and fulfilment
Delivering over 1 billion
units annually to
customers through
optimised channels
1 Our people:
A passionate, skilled,
diverse and innovative team
2 Our products:
Trusted brands and a broad
portfolio of products
3 Our relationships:
Strong and trusted
relationships with our
customers and suppliers
4 Our financial
strength:
Strengthening balance sheet
Our goals
1 Partner of choice to our
customers and suppliers
2 Creative and winning culture
3 Deliver consistent returns to
our investors
Our values
Our values underpin all we do
Responsible
sourcing and
manufacturing
Over 80,000 SKUs
manufactured and
sourced annually
To strive for excellence in
everything we do
To behave ethically and
with integrity
To focus on our customers
and ‘go the extra mile’
To be open to feedback,
ideas and change
To be good citizens within
our communities and
take responsibility for
our impact on our planet
To be innovative and
entrepreneurial
To treat everyone with
dignity and respect
To be a team that succeeds
together, and aims to be
an ‘employer of choice’
providing fulfilment and fun
08
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
What makes us different
Creating shared value
Award-winning service
provided through our strong, long-lasting relationships
with our customers as evidenced by the recent supplier
innovation award from Tesco in the UK
Shareholders
Long-term growth in
dividends and share
price
192%
Year-on-year share
price appreciation to
31 March 2023
Geographic diversity
Sales in 77 countries
Broad range of products
across five core categories,
delivering a ‘one-stop-shop’
to our customers
Celebrations
Craft & creative play
Gifting
Employees
Training and
development,
strong teams
and relationships
3,092
Number of direct
employees
Customers
Innovative and trusted
brands at the best
prices across the
globe
11,000+
Number of customers
Environment
Recognising the need
to reduce our impact
46%
Single-use products
are fully recyclable
‘Not-for-resale’ consumables
Stationery
Communities
Local initiatives
supporting local
communities and
national charities
$1.8m
Amount donated to
charity
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
09
STRATEGIC REPORT Our
strategy
As we experience some momentum on our journey to
restoring our margins and fi nancial strength, it has been
our focus to establish a plan for the next stage of our
development. A growth-focused strategic review was
completed recently, and we are pleased to be in a position
to share our early thoughts.
Last year’s strategic focus
In recent years the Group had focused on a 3-pillar
strategy of:
• Working with the winners
• Design & innovation
• Effi ciency & scale
The speed and the scale of the challenges experienced
in FY2022 caused the Board to revisit this, favouring more
immediate plans and aspirations with the objective of quickly
making the Group’s operations more resilient, and stopping
further deterioration in profi tability. This resulted in a 5-point
focus on:
• Reducing complexity, better leveraging expertise and
scale and improving mix
Improving margins
•
• Making the supply chain more resilient
• Lowering working capital
• Strengthening leadership and teams
Notwithstanding the tough economic backdrop that we have
faced, including signifi cant infl ationary pressure, this focus on
strengthening our business model has enabled us to deliver a
stronger than anticipated improvement in profi tability, margins
and balance sheet strength over FY2023.
We have also assembled a stronger team which
has enabled us to take the fi rst steps to recovering
pre-pandemic margins by FY2025 in line with the Board’s
aspirations. Details of our delivery over FY2023 are set
out in the Executive Review.
Our people are vital as we look to take the next steps on our
journey. Over the last 12 months we have hired a new CFO,
new DG Americas CEO and CFO, and internally promoted
new MDs in DG UK and the Anchor International business
within DG Europe. This new leadership has the experience
and strategic thinking that is required to bring the business
back to delivering organic growth. In addition, we are also
committed to providing all our colleagues with training
and development opportunities to ensure they have the
capabilities to drive our new strategy to successful outcomes.
We did not lose sight of the original three pillars and
have continued to use them to guide our overall strategic
direction. We remain committed to working with the winners,
fostering design and innovation throughout our business as
well as being a business of scale. Our progress in this regard
is highlighted in the following pages.
10
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
STRATEGIC REPORT
Working with the winners
Increasing revenue through growth with the winning retailers of now and the future,
in the growing channels and product categories.
Why is this important?
How do we deliver on this?
Our businesses invest signifi cant
time in making themselves experts
in their local markets and developing
strong relationships with each of our
winning customers.
Why chosen: We pride ourselves
on having long-lasting cross-category
relationships with the world’s leading
retailers, and nurturing and maintaining
these relationships allows us to grow
alongside them.
Why chosen: Our ‘winners’ are a
broad range of customers across various
sales channels including national and
regional mass and discount retailers.
Priorities
Our key priorities in FY2024 include:
• Growing revenues with our top retail
partners whilst ensuring these revenues
drive a recovery of margins
• Reducing the complexity of our
assortment
• Improving ‘strike rates’
• Developing a more segmented
product mix
Strengthening revenue is critical to the
ongoing success and development of
the Group. Our focus on working with
the winners allows the Group to drive
revenues with our key customers by being
their partner of choice. As revenue grows,
this further underpins our relationship
with our customers.
We always aim to be our customers’
partner of choice and to be part of
their success story. The retail market is
dynamic and as it evolves we work closely
with all of our customers to ensure we are
right by their side as a trusted supplier.
To ensure we are at the forefront of our
customers’ minds, it is imperative that we
have a diverse offering of products, in the
form of a ‘one-stop-shop’, and ensure we
have the capabilities as a manufacturer
as well as leveraging our ever-improving
sourcing processes.
Our key performance indicators
Level of business with
our top 20 customers
(% of total revenue)
Defi nition: Percentage of Group revenue
from our top 20 global customers
Sales by channel (%)
Defi nition: Growing our revenues across
different sales channels, with a focus on
our ‘winners’: value and mass
Progress in FY2023
Level of business with
our top 20 customers
(% of total revenue)
Sales by channel
(%)
67%
68%
68%
66%
67%
67%
2021
2022
2023
20%
14%
2021
17%
16%
2022
16%
17%
2023
Value and mass
Independents
Specialist and online
Continuing strong relationships with
our customers remains a priority for the
Group. We partner with those customers
that we see have growth potential, and
focus on excellent customer service and
quality products at good value to ensure
we grow as our customers do.
Our top 20 customers have consistently
made up c68% of Group revenue over
the past three years. Many of these
customers belong to the value and mass
channel which have dominated the
market in recent years. Sales to the value
and mass channel represent 67% of
Group revenues.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
11
OUR STRATEGY
CONTINUED
Design & Innovation
Developing in new channels and adjacent product categories while increasing our share in the
growing number of events celebrated throughout the year.
Why is this important?
How do we deliver on this?
Design and innovation are our lifeblood
and are key to the success of the Group
going forward. Consumers are constantly
looking for exciting new products while
our customers seek new, innovative ways
to sell.
Consumers want retailers to merchandise
products that are high quality and on
trend, whilst still being value for money.
As such, our customers look to us to
help them access the products that
their customers want. These expectations
continue to grow and product design
and innovation is critical in this regard.
We pride ourselves on developing
the best designs for innovative and
quality products.
We also focus on developing new and
adjacent products and our designers are
some of the best in the industry, constantly
developing ideas to stay ahead of the
latest trends.
Innovation also extends to how we as
a business can develop and enhance
ways in which we reduce our impact on
the environment and this is a key area of
focus for our teams.
Why chosen: It is important to innovate
and introduce new segments outside
of our Celebrations range and products
that complement our existing ranges.
This helps the Group grow by diversifying
our offering.
Why chosen: We have in the past
been a heavily Christmas-based business,
and whilst this is still very important,
we also want to focus on growing the
minor seasons and everyday parts of
our business.
Priorities
Our key priorities in FY2024 include:
• Developing products and ranges in core
and adjacent categories allowing our
customers to merchandise on-trend
ranges
• Leveraging the skills of our designers
across the globe
Our key performance indicators
Product diversity (%)
Definition: The proportion of adjacent
non-celebration product category revenue
year-on-year
Diversifying revenue (%)
Definition: The share of Group revenues in
categories other than Christmas products
Progress in FY2023
Product diversity
(% of total revenue)
Diversifying revenue
(%)
40%
37%
40%
57%
60%
58%
2021
2022
2023
2021
2022
2023
Non-celebration revenues
Non-Christmas revenues
Celebration-related products are a core
part of our business. Developing on-trend
adjacent products improves our offering to
our customers. Non-celebration product
category revenues are 40% of Group sales
which is up slightly on last year, with craft
and giftware ranges such as photo frames
performing well.
Christmas remains an essential part
of our business and will continue to do
so, however in recent years we have
endeavoured to broaden our offering
to extend to other special occasions
throughout the year such as Valentines
Day. Our non-Christmas revenues now
represent 58% of our turnover.
12
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Efficiency & Scale
Driving up margins through investment in processes and people while bringing in new product
categories and unlocking synergies.
Why is this important?
How do we deliver on this?
Driving efficiencies through capital and
people investment will help strengthen
our margins, while carefully selected
acquisitions that complement our business
help deliver synergies and drive the overall
scale of the Group.
Investment in people and processes
as well as unlocking synergies following
acquisitions are an important focus
as we continue to seek to increase
operating margins.
Our ability to remain responsive to
our customers’ needs requires us to
remain competitive through investment
in state-of-the-art manufacturing
capabilities.
Our key performance indicators
Adjusted EBITDA margin
(% of total revenue)
Definition: Adjusted EBITDA as
a percentage of revenue
M&A and investment ($m)
Definition: Capital expenditure and
corporate acquisitions
Alongside this, investment in the teams
around the globe ensures we have the
right people operating our businesses
on the ground.
Why chosen: Delivering underlying value
to our customers is essential and we must
ensure we can continue to compete in
our marketplace and win against other
competitors.
Why chosen: Our ability to invest in
efficiency-improving projects helps
support our competitive position, while
our ability to execute earnings-accretive
M&A ensures the Group continues to
grow its scale and reach.
Priorities
Progress in FY2023
Adjusted EBITDA margin
(% of total revenue)
8.4%
5.4%
4.0%
M&A and investment ($m)
Our key priorities in FY2024 include:
$8.4m
$8.5m
$3.0m
$5.8m
• A focus on rebuilding resilience of the
business going forward
• Onboarding the new senior
management to ensure strong
leadership going forwards to fully
execute Group strategy
• Leveraging scale where possible across
the Group, such as improved sourcing
2021
2022
2023
2021
2022
2023
Corporate acquisitions
Capital expenditure
It has been a year of turnaround for the
Group with significant progress made in
driving efficiencies resulting in adjusted
EBITDA margin improving to 5.4%,
particularly due to the execution of a number
of strategic initiatives in DG Americas.
Capital expenditure this year has
remained at a lower level as the
Group recovered from the operational
challenges experienced last year.
The $3.0m acquisition investment
arose from the Group purchasing the
remaining 49% interest in APP.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
13
STRATEGIC REPORT OUR STRATEGY
CONTINUED
The new emerging growth-focused
Group strategy
Our experience from delivering the FY2023 results under
continued tough retail conditions, coupled with the
significant leadership and organisational changes taking
place across the Group, means that having the right strategy
is more important than ever to put the Group back onto a
sustainable organic growth trajectory. And with this intent,
during the last quarter of FY2023, in conjunction with the
Operating Board, a professional firm of external consultants
was commissioned to work with our local leadership teams
and carry out a diagnostic of the strategic challenges
faced by our businesses as they seek to grow. The findings
were reported to the Board in March, and the Board
and Operating Board have since distilled the report into
strategic priorities.
These have now been articulated as a high-level Group
strategy which we see as an evolution based upon where
the business is today, rather than a complete change in
strategy. In parallel, our Business Units started compiling
their own 3-year strategic plans taking the diagnostic work
as input. These plans should be completed and aligned
over the coming months. At our half-year reporting in
November 2023, we anticipate being able to set out further
details of our aspirations, plans and key initiatives. Further
down the line we will also share some case studies to
illustrate the activities being undertaken.
The new Group strategy
The strategy concentrates on further developing and
sustaining the critical attributes our customers require of us.
This will enable us to continue to be the partner of choice
that working together with our customers, wins in the retail
environment.
Be the partner of choice that is:
Strategic
Adaptive
Dependable
• Purposeful
• Providing good value
• Design-led
• Innovative
• Resilient supply chain
• Responsible
Strong
Collaborative
Informed
• Talent-rich
• Flexible footprint
• Open-minded
• Learning
• Data driven
• Seasoned
Enabling us to win together
Through excellent partnering
to grow our categories
• Identifying and developing the required capabilities
Bringing consumer-focused solutions
• Brand and product development
• A better shopper experience
• Sustainable products and solutions
14
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Strategic
Adaptive
Dependable
Ensuring the adoption of a
longer-term perspective with vision
and purpose, supported by clearly
defined objectives for the business
and our categories.
Mapping the journey to deliver
sustained value for the consumer,
the shopper, our customers
and ourselves, in a commercial,
disciplined and efficient manner.
Creating a strong leadership
culture throughout the business
which is relentlessly focused on
value-creation, whether through
sales growth, greater efficiency,
cost management, or flexibility.
Adopting a more consumer and
buyer-focused approach when we
innovate, design, and develop our
categories, products, offerings and
services. This will include better
segmentation, including brand
development, to make us more
responsive.
Taking a more mindful approach
toward consumer trends and the
retail experience, as well as other
societal shifts such as sustainability.
Adapting, evolving and extending
our offering and solutions to stay
consumer relevant.
De-risking our categories for our
customer as it is a critical part of the
service that we provide.
Focusing on supply chain resilience,
responsible supplier management,
and the ability to quickly respond
appropriately to changing
circumstances, be they short-term
shifts or longer-term trends.
Ensuring we keep our customers’
trust in our ability to deliver today
and tomorrow is fundamental to us.
Committing to be a responsible
business is a core principle for us.
We will play our part in addressing
the needs of our stakeholders and
the wider environment.
Strong
Collaborative
Informed
Maintaining a well-invested,
low cost, flexible manufacturing
footprint, coupled with an extensive
supplier base providing security for
our customers.
Developing and maintaining a deep
pool of international talent across
the business, including in the
important aspects of our service
delivery such as; creative, technical,
commercial and leadership.
Leveraging the complete range of
skills and resources available to the
Group, both internal and external.
This is critical to our strong,
efficient delivery to every customer
everywhere.
Identifying and unlocking the
synergies within the Group’s
global operations and its extensive
supplier network.
Underpinning our creative work
and decision-making with strong
insights developed from widely
drawn, quality data. This extends
to having a deeper understanding
of our consumers, shoppers,
customers, and markets.
Drawing from a strong bench
of experienced and seasoned
insightful managers and leaders
therefore providing additional
insight.
Excellent partnering
Assembling world-class capabilities in category
management as well as strong key account management.
Building some of these capabilities will require further
investment in the training and development of our teams.
Consumer focused solutions
Developing and curating our solutions, be they our
in-house designs, our brands, our products or our
services cognizant of the end-consumer and shopper
anticipating their needs and demands.
Identifying and developing the key skills that are
pertinent to supporting our journey ahead, such as brand
development, procurement, supply chain and financial.
Through this, developing and extending the
value-proposition of our categories, prolonging their
appeal and relevance. This includes being at the forefront
of innovations providing more environmentally-sensitive
solutions for our customers and consumers.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
15
STRATEGIC REPORT EXECUTIVE REVIEW
Overview
Twelve months ago, as we looked
at the coming year, it was expected
to be a year where our focus would
be on stabilising the Group’s falling
profitability. It is therefore pleasing
to report that during the year ended
31 March 2023 we have stabilised
profitability, delivering a significant
improvement in adjusted profit before
tax ($9.2 million up from $1.3 million
loss in the prior year). This highlights a
good start in the journey to turnaround
performance, growing profitability and
margins as a result.
Whilst FY2023 was not without its
challenges, as consumer demand
weakened in the last quarter in some
markets and paper and energy-driven
costs continued to rise, the Group
has delivered adjusted profit growth
ahead of our earlier expectations. The
adjusted operating profit more than
quadrupled to $16.1 million, with the
reported operating loss at $12.0
million which includes a non-cash
$29.1 million impairment of goodwill.
Adjusted operating profit margins
similarly more than quadrupled to
1.8%. The Group remains on track
to meet its aspiration to return to
pre-pandemic operating profit margins
by FY2025.
Paul Bal
CEO
The two main drivers behind this
result were stronger than anticipated
trading within DG International, notably
in continental Europe, and benefits
coming from the turnaround initiatives
underway in the DG Americas division
which resulted in the division returning
to profitability. During the year we
have strengthened the DG Americas
leadership team and are currently in
the process of doing the same in DG
international.
These improvements more than offset
a weakening in the UK market in the
last quarter of the year, predominantly
driven by lower consumer demand, and
will have consequences for the outlook
for the year ahead. It has also led to
a significant non-cash write-down of
historically acquired goodwill in that
market.
Adverse currency movements and
softening of demand in some of our
markets are reflected in the year’s
revenue performance. Group revenue
was down 4% in constant currency
(8% in reported terms) versus prior
year. Much of the revenue decline was
experienced in DG Americas, where
revenue was 10% lower. This resulted
from a combination of the strategic
decision to exit loss-making business,
as well as lower volume in the second
half of the year. DG International,
though down 3% in reported revenue,
grew 10% in constant currency with
growth in all markets on a full-year
basis.
The improved profit generation has
been complemented by better than
expected cash generation, with the
Group ending the year with a net cash
balance of $50.5 million, a year-on-
year improvement of over $20.0 million.
Improving working capital management
has been a focus for the year, and
this should continue to deliver further
benefits in the year ahead. We have
just completed a re-financing of the
Group, which secures the funding of
our working capital cycle for at least
3 years. Further details of the new
arrangements are set out in note 15.
As previously anticipated, in light of the
Group’s current position on the path
to profit recovery and the challenges
around reduced consumer demand,
the Board is not proposing a dividend
in respect of the year ended 31 March
2023.
16
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
STRATEGIC REPORT
Incentive schemes
The Value Creation Scheme (VCS)
was terminated in June 2022 as it
was no longer aligning the interests of
shareholders and employees, and all
awards were cancelled.
Awards under a new Long-Term
Incentive Plan (2022-2025 LTIP) were
granted on 11 August 2022. This
incentive plan is considered a more
appropriate and standard mechanism
to align interests and reward sustained
future fi nancial delivery and value
creation. Further details are set out in
note 23.
Lance Burn, Interim Chief Operating
Offi cer (COO), stepped down from
the Board at the end of March 2023,
and will stay with the Group to the
end of October 2023. The Board is
very grateful for his dedication and
contribution to the business for over a
decade, and especially as it navigated
the various challenges of the past
eighteen months.
The leadership team of DG Americas,
which Lance had been supporting
since March 2022, has been
strengthened with the appointment of a
new DG Americas CEO and CFO. The
DG International leadership team is
also being strengthened, and this will
remove the requirement for a COO.
Claire Binyon joined as a Non-
Executive Director in June 2022.
Board changes
Paul Bal was appointed Group Chief
Financial Offi cer (CFO), joining the
Board in May 2022. Giles Willits,
the outgoing CFO left at the end of
June 2022.
In November 2022, following an
extensive selection process involving
internal and external candidates,
Paul Bal was appointed Group Chief
Executive Offi cer (CEO), effective from
April 2023 when the Chair of the Board,
Stewart Gilliland, stepped down from
the Interim Executive Chair role that he
had assumed in June 2022.
Rohan Cummings will be joining the
Board in July 2023 as the new Group
CFO. Rohan joins the Group from
Devro Limited (formerly Devro plc
which was listed on the LSE), a global
leader in the supply of collagen casing
and fi lms, where he has been the
group’s CFO since 2020. Rohan has
extensive PLC experience, as well as
signifi cant commercial and strategic
capabilities having worked in complex
global operations.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
17
17
EXECUTIVE REVIEW
CONTINUED
Our strategy
The challenges experienced in FY2022
caused the Board to revisit its priorities,
plans, strategy and aspirations. The
sheer speed and scale of the impact
required an immediate pivot toward
quickly making the Group’s operations
more resilient. This was done with a
5-point focus on:
• reducing complexity and better
leveraging expertise and scale, and
improving mix,
improving margins,
•
• a more resilient supply chain,
•
lowering working capital levels, and
• strong leadership and management
teams at all levels of the Group.
Good overall progress has been
made in these areas, ahead of our
expectations. This is witnessed through
the delivery of the improved profi t
margins, stronger cash generation in the
year, and strengthening leadership. The
current diffi cult economic environment,
with pressure on consumer spend,
dictates that we must continue to
concentrate on these areas for now.
Nevertheless, given the long planning
cycles associated with our business,
we must look beyond our current
goal of recovering to pre-pandemic
operating profi t margins, and chart a
course that will also grow the business.
To that end, in late 2022, the Board
commissioned a strategic exercise
using professional external support.
The output from that exercise has
been articulated into a high-level
strategy aimed at returning the Group
to profi table growth over the coming 3
to 4 years.
In summary, the new strategy
concentrates on two areas:
• being the partner of choice for
our customers, by strengthening
and better leveraging our unique
business model, particularly where
there is opportunity for competitive
advantage, and
• winning together with our
customers, through better execution
and developing sustained category
value
The strategy is being rolled-out
across the business units over the
summer and will be driven through
a combination of centrally co-
ordinated as well as local initiatives.
At the half-year, we hope to share
with shareholders further details
of our progress as well as sharing
case studies further down the line
to highlight some of the initiatives
underway. Further details on the
new strategy are set out on pages
14 and 15.
Outlook
FY2023’s fi nancial performance
exceeded our aspirations for the
year. Not only was the profi t decline
stabilised, but it was also turned
around. This performance puts us
ahead in our journey to restore pre-
pandemic operating profi t margins in
FY2025. The Board does however now
expect FY2024 to present continued
demand and pricing challenges given
the depressed consumer demand
experienced in several of our markets
since Christmas 2022. This may temper
some of our progress during FY2024,
but we still anticipate further operating
profi t growth and margin improvement
over the full year.
Within the year, we anticipate a return
to a more normalised H1/H2 split,
reversing the accelerated ordering
experienced in H1 FY2023. The Board
remains encouraged by the enduring
strength of our longstanding customer
relationships, which has already
generated an orderbook representing
62% of FY2024’s budgeted revenues
(71% at this stage last year). We still
believe our FY2025 operating profi t
margin aspiration to be achievable.
Additional support to deliver this
will come from the new strategy as
initiatives get underway.
The combination of continued
improvements in cash generation and
management, as well as the terms of
the new fi nancing arrangements should
limit the rise in fi nancing costs being
driven by higher market interest rates.
Over the coming year average net debt
should continue to reduce from the
current levels of c$17.0 million. This
means that operating profi t gains in the
year ahead should substantially pass
through to improved adjusted profi t
before tax.
The Board still aspires to return to
paying dividends, but based on the
immediate outlook, and the need to
strengthen the business model, the
Board does not expect to be in a
position to do so during FY2024.
18
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
The Group ended the year with a net
cash balance of $50.5 million (FY2022:
$30.2 million), reflecting our focus on
cash generation and management,
especially through working capital
improvements. Correspondingly,
average leverage for the year has
improved to 0.6 times (FY2022:
1.0 times), also benefitting from the
improved (both pre-IFRS 16 basis and
post) EBITDA.
As the Group is still on a path
to profit-recovery and given the
challenging retail outlook in a
number of markets, the Board is not
recommending a dividend in respect of
the year ended 31 March 2023.
Summary FY2023 results
Revenue at reported rates fell by 8%,
due in part to adverse currency effects.
The decline in constant currency terms
was 4%, with a 10% decline in DG
Americas more than offsetting the 10%
growth in the smaller DG International
division. The decline resulted from
a combination of softer consumer
demand in the later stages of the year
in some markets more than offsetting
growth in others, coupled with a
conscious exit from unprofitable or very
low margin business in DG Americas.
The Group’s adjusted operating
profit margin rose 140 basis points,
to 1.8%, with the growth coming from
DG Americas returning to profitability,
as the various restructuring and
turnaround initiatives gained traction
and delivered benefits. Consequently,
DG Americas’ adjusted operating
profit margin rose 230 basis points
to 0.5%. Some slippage in the DG
International adjusted operating
profit margin predominantly reflected
the adverse foreign exchange effects
and the tougher UK market. The
improved operating profits, helped by
better cash generation, kept interest
costs below expectation and resulted
in an adjusted profit before tax of
$9.2 million, versus last year’s loss of
$1.3 million.
Taking into account the tax charge,
this resulted in a small adjusted
diluted loss per share of 0.2 cents
versus last year’s loss of 7.7 cents.
The year’s adjusting items are a
net cost of $28.1 million (FY2022:
$3.5 million credit). This mainly results
from the non-cash write-down of
the goodwill allocated to the UK and
Asia Cash-Generating Unit (CGU);
offset by insurance receipts related
to a prior acquisition, net proceeds
from surplus site disposals and other
business restructurings, some minor
prior year provision releases; and the
amortisation of acquired intangibles.
The goodwill write-down results in an
enlarged reported loss before tax
of $18.9 million (FY2022: $2.2 million
profit). The effective tax rate for the
year is largely distorted by the mix of
profits and losses generated across
the jurisdictions in which the Group
operates and certain loss making
units not realising a tax benefit due to
restrictions on recognition of deferred
tax assets. The diluted reported loss
per share of 28.6 cents (FY2022: loss
of 3.3 cents) reflects the reported loss,
driven by the goodwill write-down.
Regional highlights
Overall, there was a reduction in Group revenue of 8% with adjusted operating profit up to $16.1 million (FY2022: $3.8
million) as the Group benefits from the execution of the turnaround in DG Americas. The split between our DG Americas and
DG International segments is as follows:
Segmental revenue
Adjusted operating profit/(loss)
Adjusted operating margin
% Group revenue
FY2023
FY2022
% growth
FY2023
FY2022
% growth
FY2023
FY2022
66%
34%
—
DG Americas
DG International
Elims/Central costs
100%
Total
$m
$m
$m
$m
593.0
659.0
(10.0%)
299.6
307.9
(2.7%)
(2.3)
(1.8)
890.3
965.1
(7.7%)
2.9
19.8
(6.6)
16.1
(11.7) 124.9%
20.8
(4.8%)
0.5%
6.6%
(1.8%)
6.8%
(5.3)
3.8 321.2%
1.8%
0.4%
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
19
STRATEGIC REPORT
EXECUTIVE REVIEW
CONTINUED
Design Group Americas
Our business in the US, which makes
up about two-thirds of the Group’s total
revenues, saw revenue decline 10% to
$593.0 million (FY2022: $659.0 million).
This was driven by a combination of
softer demand for certain categories
in the second-half of the year, as well
as the conscious decision to exit
loss-making, marginally profitable, and
unduly onerous business. Categories
particularly impacted by these factors
were Celebrations and Craft & creative
play, the latter having benefitted from
the Covid-19 lockdowns in recent
years. These declines more than offset
the benefits that came from catch-up
pricing through two waves in order to
recover margins lost in the previous
year.
Despite the decline in revenues, DG
Americas returned to profitability,
and delivered an adjusted operating
profit of $2.9 million (FY2022: loss of
$11.7 million). The drivers behind this
turnaround are benefits coming from
the various initiatives set in motion
last year following the collapse in the
division’s profitability.
The initiatives focused on delivering
pricing, cost-savings and simplifying
our commercial proposition. They
delivered benefits of c$56 million
at an adjusted operating profit level
in the year. The initiatives included:
the closure of 4 surplus sites; sale of
the Manhattan, Kansas site in April
2022 for net proceeds of $6.7 million,
yielding a profit on disposal of
$4.6 million; further utilisation of
Mexican facilities for near-shoring;
more effective procurement and
shipment; and a net headcount
reduction of 100. In addition, our
category teams were reorganised and
underpinned with additional support
for product development, design,
sales and account management. New
initiatives and opportunities continue
to be identified, and the Design Group
Americas team expects further value
to be generated from these activities in
FY2024 and beyond.
Capabilities are also being developed
and strengthened to support future
profitable revenue growth. This is being
complemented by further reorganisation,
investment in technology, and training
and development of our commercial
organisation to streamline our product
cycles and improve execution in the retail
environment.
Good progress was also made with
working capital reduction, especially with
inventory levels and trade receivables.
On 23 May 2022, the Group purchased
the remaining 49% interest in Anker Play
Products LLC (APP), bringing our total
ownership to 100%. This was completed
pursuant to the exercise of a put option
by the holder of the 49%, which the
Group was legally obliged to purchase
under a 2017 agreement. APP develops
and sources craft products, toys and
games for the US retail market. The
transaction, made through DG Americas,
was satisfied by a cash payment of $3.0
million funded from existing banking
facilities.
Design Group International
This division largely comprises the
Group’s businesses in the United
Kingdom, continental Europe, the Far
East and Australia. It saw a 3% revenue
year-on-year decline at reported rates,
to $299.6 million. The main driver of this
decline was adverse foreign currency
impacts due to the strength of the
US dollar versus all of the other key
currencies transacted by the businesses
in the segment. At constant exchange
rates, revenues were up 10%, with
increases experienced in all key markets.
The second half of the year saw
marked softening in DG UK, and a
slight reduction in our DG Australia joint
venture as the economic environment
deteriorated and put pressure on
consumer discretionary spend.
Adjusted operating profit at $19.8
million (FY2022: $20.8 million) was down
5%. However at constant currency
rates adjusted operating profit was
up 10%. This result was driven by the
strong trading performance from our
businesses operating in continental
Europe, which did not experience the
same degree of softness in the second
half of the year.
Consumer sentiment in Europe
was more resilient, and our key
customers emerged as “winners”
in the current value-focused retail
environment. The weakness in the UK
market in the second half of the year
was volume-driven and meant DG
International’s adjusted operating
profit margin retreated slightly by 20
basis points to 6.6%.
DG UK’s revenue for the year grew
just over 5%, but the second half was
challenging as demand declined after
Christmas. As a result, the business
only delivered a small operating profit
with continued inflation in paper
and energy costs largely offsetting
improved pricing. Our key brands in
the UK have continued to perform well
with Eco NatureTM sales and profits
growing 10% and 11% respectively,
with more details set out in the section
on sustainability on pages 30 to 47.
Our premium Tom Smith® brand
celebrated the 175th birthday of the
Christmas cracker, holding a Royal
Warrant for the supply of Christmas
crackers to the Royal Household
since 1906. Recently DG UK was
proud to receive Tesco’s supplier
innovation award for our collaborative
work on category development.
Looking ahead, in response to the
demand challenges experienced in
the second half, we have recently
undertaken a restructuring of the UK
business, which represents c15%
of the Group’s FY2023 revenues.
The intention is to develop a more
competitive and agile business model
that is better suited to today’s UK
retail environment. Whilst this has
regrettably involved a net headcount
reduction of 31, the leadership team is
being strengthened. The business has
also formed a creative collaboration
with the University of Northampton to
leverage their capabilities as well as
foster relationships with up and coming
design talent.
DG Europe benefitted from strong
demand from our more value-orientated
key customers which are winning in the
current economic climate. The business
enjoyed very strong revenue growth of
18%, which included improved pricing
to recover continued inflation in paper
and energy prices.
20
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Adjusted operating profit grew 41%, and margins improved further, as the team continues to adopt a continuous
improvement approach, combined with high automation.
Similarly, DG Australia saw revenue growth of 5% as its Independents customer channel grew market share. The business
continues to be active in new product development, developing a compelling assortment. Unfortunately, labour shortages
and cost inflation in that market reduced adjusted operating profits by 10%.
Our products, brands and channels
The Group continues to aspire to be our retail customers’ “partner of choice” for our categories, and our diverse product
portfolio is a good demonstration of this.
Revenue by product category
Celebrations
Craft & creative play
Stationery
Gifting
‘Not-for-resale’ consumables
Total
FY2023
FY2022
60%
$533.7m
17%
$150.8m
5%
11%
7%
$45.0m
$96.9m
$63.9m
$890.3m
63%
16%
4%
10%
7%
$604.1m
$154.3m
$44.8m
$94.4m
$67.5m
$965.1m
The 12% decline in the Celebrations category was driven by the sales performance in DG Americas, with declines in most
product-types, but especially gift wrap and ribbons and bows. This more than offset the growth in these product types in
all DG International markets and the progress with cards in DG Americas. Whilst stationery remained stable, giftware gains
were driven by photo frames in DG International. The decline in ‘not-for-resale’ consumables came from reduced demand
for floral packaging in DG Americas. The Craft & creative play category continued to normalise from Covid-pandemic
lockdown highs.
Revenue by customer channel
FY2023
FY2022
Value & mass
Specialist
Independents
Online
Total
67%
14%
17%
2%
$597.1m
$120.4m
$153.7m
$19.1m
$890.3m
67%
15%
16%
2%
$643.9m
$144.4m
$156.5m
$20.3m
$965.1m
The Value & mass channel saw a small decline of 7% driven by the adverse DG Americas dynamics. This more than offset
good progress in all of the DG International businesses where this channel benefitted from recent consumer-driven focus on
value. Similarly, the 17% decline in Specialists is largely driven by DG Americas, where we consciously exited unprofitable
business, offsetting the progress in continental Europe. Overall, our top 20 customers represent 68% of our sales
(FY2022: 68%).
Revenue by season
Christmas
Minor seasons
Everyday
Total
FY2023
FY2022
42%
$374.7m
40%
$390.9m
9%
$76.5m
7%
$65.8m
49%
$439.1m
53%
$508.4m
$890.3m
$965.1m
The reversal of the trend seen in recent years towards more Everyday business reflects the pressures experienced in certain
markets post-Christmas 2022, particularly in DG UK. There was also a general reduction in DG Americas revenues, offsetting
strong progress in DG Europe, with photo frames in particular.
Revenue by brand
Licensed
Customer own brand/Bespoke
Design Group/Generic brand
Total
FY2023
FY2022
9%
$82.2m
54%
$474.3m
37%
$333.8m
$890.3m
9%
48%
43%
$84.2m
$459.8m
$421.1m
$965.1m
The reduction in DG branded sales reflects the adverse DG Americas revenue dynamics, which more than offset the gains in
all DG International markets.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
21
STRATEGIC REPORT
EXECUTIVE REVIEW
CONTINUED
Sustainability
The Board launched the Group’s
sustainability framework ‘helping
design a better future’ in FY2021,
which defined the Group’s approach by
identifying three pillars that will deliver
a more sustainable future. These three
pillars are People, Product and Planet.
The Group’s sustainability strategy
is underpinned by our overall aim
to minimise our impact on the
environment by constantly challenging
ourselves to find ways in which we can
use our scale and people to influence
and drive positive, proactive change.
We understand that our impact and
responsibilities extend beyond our
immediate surroundings, into the lives
of our employees, the environment,
and our local and global communities.
We continue to believe we have a moral
as well as a commercial necessity
to strive for the highest standards of
ethical behaviour and to innovate to
reduce the environmental impact of our
operations to protect and preserve our
planet, for this and future generations.
Over the past year we have continued
to refine the Group’s approach to
sustainability and the associated key
performance sustainability indicators
(KPIs). We report our performance
against these and the progress the
Group has made during the year as
seen in the Sustainability report on
pages 30 to 47. We recognise that we
are on a sustainability journey so as
we move forward, we’ll seek to further
enhance the metrics we monitor whilst
also looking to set targets by which to
measure our success.
In the year we have made more
progress in our journey towards
compliance with Taskforce for
Climate-related Financial Disclosures
(TCFD) through the completion of a
risk assessment exercise to identify
the Group’s climate-related risks
and opportunities over the short,
medium and long term. In future this
will be integrated into our wider risk
management processes.
People – Our people are key to the
success of our business, and in the
challenging times we are facing it is
even more important to ensure that
we are recognising performance and
loyalty, and investing in the many
talented individuals and teams across
the Group. Given the “cost of living
crisis” being experienced across the
world, we took various additional steps
in our businesses, over and above the
normal, to try and mitigate the impact
on our employees and their families.
This year saw the launch of the first
Group-wide employee engagement
survey: “Your Voice. Our Future”. There
was a pleasing 78% participation rate,
and it was encouraging to learn that
despite the significant changes taking
place across the business, our teams
remain positive about their roles,
Design Group as a place to work, and
its future. The survey has also provided
management with areas for further
improving the working environment,
and these are now being followed-up.
22
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Other notable achievements in
FY2023 include the launch of the
“DG Bravo” recognition programme in
DG Americas, training opportunities
such as our leadership development
programmes for emerging leaders
in DG UK and DG Americas, and
a women’s development network
providing training opportunities
for aspiring female leaders in
DG Americas. Extending beyond
leadership, the DG Europe Academy
has had another successful year with
internal training programmes available
for our employees to develop their
knowledge and skills across a range
of topics. DG UK has trained mental
health first aiders across the business
and run a monthly health programme
focused on both mental and physical
wellbeing with challenges for
employees to get involved with.
Product – There is no question that the
nature of our products requires us to be
innovative in our design to create more
sustainable solutions and collections
to promote to our customers and
theirs. A notable achievement is
the continued development of our
shrink-free wrapping paper, which
eliminates plastic waste through the
use of recyclable paper labels, with the
launch of Smartwrap™ in continental
Europe this year. This complements
our Eco NatureTM ranges already
established in the UK which have
continued to perform well. We will
look to further improve our sustainable
solutions in these markets where there
is traction with consumers. Numerous
other initiatives are underway finding
innovative solutions with both
customers and external specialists and
academic institutions to continue to
reduce the environmental impact of our
products. For example, in DG Europe,
all plastic frames now have 100%
recycled frames.
Planet – The Group has formally
incorporated Climate Change as a
principal risk (formerly an emerging
risk) acknowledging our responsibility
to protect and preserve our planet
and its environment, as well as the
sustainability of our business. Notable
achievements in FY2023 include DG
Europe being awarded Ecocert’s
climate neutral status on their giftwrap
collections following investment in
innovative Smartwrap™ technology to
provide next-generation shrink-free
solutions. This, coupled with DG
UK and DG Europe powering their
manufacturing, warehousing, and
office facilities with 100% renewable
electricity, drives us forward on our
journey towards net zero emissions.
In the area of sea freight, DG Europe
is seeking to achieve carbon neutrality
on half of its shipments. Finally,
also testament to our efforts was
DG Americas achieving Walmart’s
Giga-Guru status, recognising
our collaboration with our biggest
customer in the area of supply chain
carbon reduction.
Detailed financial review
The Group’s financial results are summarised below, setting out both the reported and the adjusted results.
Revenue
Gross profit
Overheads
Operating (loss)/profit
Finance charge
(Loss)/profit before tax
Tax
(Loss)/profit after tax
Operating (loss)/profit
Impairment of goodwill
Depreciation and impairment of PPE and software
Depreciation and impairment of right-of-use assets
Acquisition amortisation
EBITDA
FY2023
Adjusting
items
$m
—
1.4
26.7
28.1
—
28.1
(0.2)
27.9
28.1
(29.1)
—
(0.7)
(2.8)
(4.5)
Reported
$m
890.3
131.7
(143.7)
(12.0)
(6.9)
(18.9)
(7.6)
(26.5)
(12.0)
29.1
14.6
18.4
2.8
52.9
Adjusted
$m
890.3
133.1
Reported
$m
965.1
122.2
(117.0)
(114.5)
16.1
(6.9)
9.2
(7.8)
1.4
16.1
—
14.6
17.7
—
48.4
7.7
(5.5)
2.2
(2.5)
(0.3)
7.7
—
16.4
15.3
2.8
42.2
FY2022
Adjusting
items
$m
—
(2.5)
(1.4)
(3.9)
0.4
(3.5)
(0.8)
(4.3)
(3.9)
—
0.3
2.5
(2.8)
(3.9)
Adjusted
$m
965.1
119.7
(115.9)
3.8
(5.1)
(1.3)
(3.3)
(4.6)
3.8
—
16.7
17.8
—
38.3
Diluted loss per share
(28.6c)
28.4c
(0.2c)
(3.3c)
(4.4c)
(7.7c)
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
23
STRATEGIC REPORT
EXECUTIVE REVIEW
CONTINUED
Revenue for the year ended
31 March 2023 reduced by 8% to
$890.3 million (FY2022: $965.1 million)
driven by combination of adverse
foreign exchange movements in DG
International, the strategic decision
to exit loss-making business in DG
Americas, and lower volume in the
second half of the year in a number of
our markets. Constant currency Group
revenues reduced by 4% year-on-year.
Adjusted operating profit saw an
increase year-on-year to $16.1 million
(FY2022: $3.8 million) and adjusted
gross margin increased to 14.9%
(FY2022: 12.4%), reflecting stronger
than anticipated trading within DG
International particularly continental
Europe, benefits from the turnaround
initiatives in DG Americas and some
catch-up pricing to offset some of
the inflation continuing in our inputs.
Inventory provisions made in the
year were $19.3 million (FY2022:
$18.3 million) and inventory provision
releases were $6.3 million (FY2022:
$5.0 million).
Adjusting Items
Goodwill impairment
Adjusted overheads as a percentage
of revenue increased to 13.1%
(FY2022: 12.0%). Adjusted operating
margin at 1.8% (FY2022: 0.4%) was
up year-on-year, reflecting the higher
gross margins and cost management.
Overall adjusted profit before tax was
$9.2 million (FY2022: loss before tax
$1.3 million). The Group finished the
year with a reported loss before tax
of $18.9 million (FY2022: profit before
tax of $2.2 million). This is significantly
adverse to the improvement in
adjusted profit before tax reflecting
the (largely non-cash) adjusting items
in the current year of $28.1 million
compared to a net credit of $3.5 million
in the prior year. Further details of the
adjusting items are detailed below.
Adjusted profit after tax was
$1.4 million (FY2022: adjusted loss after
tax of $4.6 million) with loss after tax
for the year at $26.5 million (FY2022:
$0.3 million).
Finance charges
Finance costs were higher than the
prior year at $6.9 million (FY2022:
$5.5 million), resulting from higher
financing costs at $4.0 million (FY2022:
$2.0 million) which reflected the
significant increase in interest rates
during the year. The IFRS 16 related
lease liability interest was marginally
lower than the prior year at $2.9 million
(FY2022: $3.5 million), of which
$0.4 million was treated as an adjusting
item in the prior year.
Adjusting items
Adjusting items are material items or
items of an unusual or non-recurring
nature which represent gains or
losses which are separately presented
by virtue of their nature, size and/
or incidence. The Group’s adjusting
items in the year to 31 March 2023
result in a (largely non-cash) net
charge of $28.1 million compared to
a net credit of $3.5 million in the prior
year. Details of all adjusting items are
included below:
(Gains)/losses and transaction costs relating to acquisitions and disposals of businesses
Acquisition integration and restructuring (income)/costs
Reversal of impairment of assets
IT security incident income
Amortisation of acquired intangibles
Total
FY2023
FY2022
$29.1m
($1.5m)
($2.0m)
($0.2m)
($0.1m)
$2.8m
—
$3.7m
($1.7m)
($2.6m)
($5.7m)
$2.8m
$28.1m
($3.5m)
24
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
IT security incident income
– $0.1 million credit (FY2022:
$5.7 million credit)
The IT security incident which occurred
in DG Americas in October/November
2020 resulted in one-off costs of
$2.2 million being incurred during the
year ended 31 March 2021. This did
not include the lost profits incurred as
a result of downtime in the business for
which an insurance claim was made.
In the year final insurance income was
received of $0.1 million in relation to
this incident.
Amortisation of acquired
intangibles – $2.8 million charge
(FY2022: $2.8 million charge)
Under UK IFRS, as part of the
acquisition of a company, it is
necessary to identify intangible assets
such as customer lists and trade
names which form part of the intangible
value of the acquired business but
are not part of the acquired balance
sheet. These intangible assets are then
amortised to the income statement
over their useful economic lives. These
are not operational costs relating to the
running of the acquired business and
are directly related to the accounting
for the acquisition. These comprise
mainly trade names and brands
acquired as part of the acquisition of
Impact Innovations Inc. (Impact) and
CSS Industries Inc. (CSS) in the USA.
Goodwill impairment –
$29.1 million charge
In the year an impairment of
$29.1 million has been recorded to
write down the goodwill from historical
acquisitions in the UK and Asia CGU.
Following the deterioration of the result
experienced in UK and Asia CGU
already referred to, especially in the
second half of FY2023, the longer-
term impacts on the forecasts for
future cash flows have resulted in an
impairment.
The calculation was further
exacerbated by the significant increase
in the discount rate, mainly as a result
of higher interest rates. Further details
of this impairment are set out in note 9.
(Gains)/losses and transaction
costs relating to acquisitions
and disposals of businesses
– $1.5 million credit (FY2022:
$3.7 million charge)
In the year $1.5 million of insurance
income was received relating to the
Impact Innovations, Inc acquisition
Representations & Warranties
insurance settlement relating to
accounting and tax issues present at
acquisition.
Acquisition integration and
restructuring (income)/costs –
$2.0 million credit
(FY2022: $1.7 million credit)
In order to realise synergies from
acquisitions, or existing businesses,
integration and restructuring projects
are respectively undertaken that aim to
deliver future savings and efficiencies
for the Group. These are projects
outside of the normal operations
of the business and typically incur
one-time costs to ensure successful
implementation. As such it is
appropriate that costs associated with
projects of this nature be included as
adjusting items. The costs incurred in
the year relate to the reorganisation,
business simplification and impairment
expenses in DG Americas and
the reorganisation of the DG UK
businesses as follows:
Site closures – In April 2022, the
Manhattan, Kansas property was
sold for proceeds of $6.7 million
resulting in a profit on disposal of
$4.6 million recognised as an adjusting
item. In March 2023, a decision was
made to exit a surplus site in Clara
City, Minnesota. This resulted in an
impairment of the right-of-use asset
associated with the underlying lease
of $0.8 million. Additional costs of
$0.3 million were incurred in relation
to the relocation and closure of these
sites, as well as the consolidation of
other US sites.
DG America and DG UK business
reorganisation – In the year further
restructuring costs, relating to staff,
of $0.8 million have been recognised
in DG Americas following the
announcement of further business
reorganisation. Similarly, in March 2023
the UK business internally announced
a business simplification in light of the
downturn of the UK market outlook,
resulting in the recognition of one-off
restructuring costs of $0.7 million.
Reversal of impairment of
assets – $0.2 million credit
(FY2022: $2.6 million credit)
At the onset of the Covid-19
pandemic a review of inventory,
trade receivables and fixed assets
was undertaken. Inventories were
assessed at 31 March 2020 for the net
realisable value and an impairment
of $7.4 million was recognised. Trade
receivables were assessed for their
expected credit loss in line with IFRS
9 and an impairment of $3.8 million
was recognised. The UK’s bag-line
machines were impaired by $0.3 million
based on expected future cash flows
associated with the ‘not for-resale’
consumables business.
In the year a credit of $0.2 million has
been recognised relating to reversal of
impairments no longer required. There
are no remaining provisions relating to
these costs.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
25
STRATEGIC REPORT EXECUTIVE REVIEW
CONTINUED
Taxation
The Group aims to manage its tax
affairs in an open and transparent
manner, with the objective of full
compliance with all applicable rules
and regulations in tax jurisdictions in
which it operates. We have not entered
into any tax avoidance or otherwise
aggressive tax planning schemes and
the Group continues to operate its tax
affairs in this manner.
The Group’s adjusted tax charge
for the year is $7.8 million (FY2022:
$3.3 million) against an adjusted profit
before tax of $9.2 million (FY2022: loss
of $1.3 million). Deferred tax assets
relating to the entities in the UK (both
UK trading and PLC) are not being
recognised as the assessment of future
taxable profits shows insufficient future
taxable profits against which to utilise
the deferred tax assets. Consequently,
the absence of tax relief on current
year tax losses significantly inflates
the effective tax charge for the Group.
The profits in DG Europe and Australia,
which are the main contributors to
adjusted profit before tax, are taxed at
higher statutory tax rates (25.8% and
30% respectively).
In DG Americas, the impact of
movements in uncertain tax positions
together with permanent items adds to
the tax charge. Further details of this
tax charge are set out in note 11.
Tax paid in the year was $7.3 million
(FY2022: $5.2 million). This is
$2.1 million higher than the prior
year, reflecting higher profits in the
Group’s tax-paying jurisdictions.
Loss per share
Diluted adjusted loss per share
at 0.2 cents (FY2022: 7.7 cents) is
improved year-on-year driven by the
significantly higher adjusted earnings
attributable to equity holders of the
Company. Diluted loss per share
at 28.6 cents (FY2022: 3.3 cents)
is significantly lower than adjusted,
reflecting the adjusting items charge in
the FY2023 year. Further details are set
out in note 21.
Dividend
In light of the Group’s current
position on the path to profit and
margin recovery, and the challenges
due to forecast reduced consumer
demand in certain markets, the
Board are not recommending a final
dividend (FY2022: nil). As a result,
the full-year dividend is nil (FY2022:
1.68 cents (1.25 pence) based on the
interim dividend which was paid in
January 2022).
Return on capital employed
Improving the return on capital
employed continues to be a key target
for each of the business units as well as
the Group overall. The Group saw the
return on capital employed increase
year-on-year to 5.6% (FY2022: 1.3%),
reflecting the improved profitability
and our efforts to reduce our working
capital requirements.
Cash flow and net cash
The Group ended the year with its
net cash balance at $50.5 million
(FY2022: $30.2 million). The
significant increase in the cash
balance year-on-year is a direct
result of the higher EBITDA
contribution and the improved
working capital management
resulting in adjusted cash
generated from operations
significantly higher at $60.4 million
(FY2022: $5.8 million).
Cash flow
Adjusted EBITDA
Add back for share-based payment charge/(credit)
Movements in working capital
Adjusted cash generated from operations
Adjusting items within cash generated from operations
Cash generated from operations
Adjusting items within investing and financing activities
Capital expenditure (net of disposals of property, plant and equipment)
Acquisition of non-controlling interest
Tax paid
Interest paid
Lease liabilities principal repayments
Dividends paid (including those paid to non-controlling interests)
Purchase of own shares
FX and other
Movement in net cash
Opening net cash
Closing net cash
FY2023
FY2022
$48.4m
$38.3m
$0.8m
($0.8m)
$11.2m
($31.7m)
$60.4m
($1.4m)
$59.0m
$8.3m
($5.8m)
($3.0m)
($7.3m)
($5.3m)
$5.8m
($1.9m)
$3.9m
($4.3m)
($8.3m)
—
($5.2m)
($4.2m)
($20.4m)
($16.8m)
($3.0m)
($12.6m)
($0.9m)
($1.3m)
—
$1.2m
$20.3m
($46.3m)
$30.2m
$76.5m
$50.5m
$30.2m
26
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
STRATEGIC REPORT
Working capital
The working capital cash fl ow improved
from a $31.7 million outfl ow in the prior
year to a $11.2 million infl ow. This was
driven primarily by improved working
capital management across the Group.
The lowering of working capital levels
will remain a focus of the Group.
More than ever, the Group continues
to actively track debtors and credit
risk profi les of all of our customers
to mitigate as far as possible any
additional exposure to credit risk.
Doubtful debt write off in the year was
less than 0.1% of revenue (FY2022:
0.2%), refl ecting our continued
proactive approach to mitigating credit
risk exposure.
Capital expenditure
Capital expenditure in the year
reduced in relation to the prior year
at $5.8 million (FY2022: $8.3 million).
There were no signifi cant capital
projects in the year to 31 March 2023.
Capital expenditure in FY2024 is
expected to be higher with investment
in new ERP and manufacturing
capabilities.
Average leverage
Average leverage is a key measure for
the Group measuring the seasonality
of our working capital demands across
the business and the need to ensure
the Group manages its peak funding
requirements within its bank facility
limits. As at 31 March 2023 average
leverage was 0.6 times, improved from
1.0 times in the prior year. This refl ects
the improvement in adjusted EBITDA
compared to the prior year and
stabilised average debt at $17.1 million
(FY2022: $17.2 million).
Our measure of average leverage
excludes lease liabilities from our
measurement of debt and we reduce
adjusted EBITDA for lease payments.
This mirrors the approach taken by
our banks in measuring leverage for
the purposes of the banking facilities
and therefore is considered the most
relevant measure for management to
adopt.
Banking facilities
On 1 June 2022 the Company
amended and extended the term of its
revolving credit facility, and operated
under revised covenants during the
fi nancial year. The Group operated well
within these covenant requirements
with excess headroom throughout
the year.
On 2 June 2023, the Group announced
the successful negotiation of a
$125.0 million three-year refi nancing
with HSBC and NatWest banks. The
new facility is structured as an Asset
Backed Lending (ABL) arrangement
secured with an all-assets lien in the
USA and an all-assets security in the
UK. The Group has also extended its
overdraft facility provided by HSBC.
This facility replaces the previous
revolving credit facilities originally
agreed in 2019.
The new facility carries an initial bank
margin of 1.75% to 2.25%, based on
average excess availability (plus 0.1%
spread adjustment) over the forward-
looking term rate based on the US
Secured Overnight Financing Rate
(SOFR) which is lower than the margins
on the 2019 facilities.
The Board believes that the new ABL
facility, which fl exes in line with the
receivables in the USA, provide more
than suffi cient headroom to fund the
Group’s working capital needs over the
period of the facility.
Further details are set out in note 15.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
27
EXECUTIVE REVIEW
CONTINUED
Foreign exchange exposure
management
Our foreign exchange (FX) exposure is
split into two areas:
Translational FX exposure –
This exposure is the result of the
requirement for the Group to report
its results in one currency. This
necessitates the translation of
our regional business units’ local
currency fi nancial results into the
Group’s adopted reported currency.
The Group’s reporting currency is
US dollars in light of the fact that a
signifi cant proportion of the Group’s
revenues and profi ts are in US dollars.
There remains a smaller part of the
Group whose functional currency
is something other than US dollars.
The constant currency results
recalculate the prior year based on
the exchange rates of the current
year to enhance the comparability of
information between reporting periods.
The overall impact on revenue and
profi ts from currency movements in
FY2023 when compared to FY2022
is signifi cant relative to the balances.
The increase in revenue would have
been $36.4 million higher if FY2022
revenues are translated at FY2023
foreign currency exchange rates, and
the growth in adjusted loss before tax
would have been $2.4 million higher.
Transactional FX exposure – This FX
exposure is managed carefully by the
Group as it can result in additional cash
outfl ows if not managed appropriately.
In response to this risk the Group
adopts an active hedging policy to
ensure foreign exchange movements
remain mitigated as far as possible.
In addition, a reasonable proportion
of this hedging is achieved through
natural hedges whereby our purchases
and sales in US dollars are offset.
The balance of our hedging is achieved
through forward exchange contracts
and similar derivatives.
Financial position and going
concern basis
The Group’s net assets decreased
by $35.3 million to $334.4 million
at 31 March 2023 (FY2022:
$369.7 million), primarily refl ecting
impairment of goodwill in the
current year.
As at the 31 March 2023 balance sheet
date, in light of the FY2023 results and
the outlook for FY2024, the Directors
have paid particularly close attention
to their assessment of going concern
in preparation of these fi nancial
statements. The Group is appropriately
capitalised at the year end with a net
cash position of $50.5 million.
The Directors of the Group have
performed an assessment of the
overall position and future forecasts
for the purposes of going concern. The
going concern assessment has been
performed using the Group’s FY2024
and FY2025 budgets and plans. These
forecasts have been reviewed in detail
by the Board and take into account the
seasonal working capital cycle of the
business. They have been sensitised
to refl ect severe but plausible adverse
downturns in the current assumptions
including the potential impact of a
signifi cant disruption in one of our
major customer’s business, as well
as increased infl ationary pressures in
the DG International and DG Americas
business segments, beyond those risks
already factored into the budgets and
plans.
The base forecasts and additional
sensitivity analysis have been tested
against the ABL facility limits and
covenants. The analysis demonstrated
that the Group has suffi cient headroom
for the Group to meet its obligations
as they fall due for a forecast period of
more than twelve months beyond the
date of signing these accounts and will
also be compliant with all covenants
within this time frame and beyond.
As such, the Directors do not see any
practical regulatory or legal restrictions
which would limit their ability to fund
the different regions of the business
as required as the Group has suffi cient
resources.
Accordingly, the Directors have
continued to adopt the going concern
basis of accounting in preparing the
fi nancial statements.
Alternative performance
measures
This review includes alternative
performance measures (APMs) that are
presented in addition to the standard
UK IFRS metrics. The Directors
believe that these APMs provide
important additional information
regarding the underlying performance
of the business including trends,
performance and position of the
Group. APMs are used to enhance the
comparability of information between
reporting periods and segmental
business units by adjusting for
exceptional or uncontrollable factors
which affect UK IFRS measures, to
aid the understanding of the Group’s
performance. Consequently, APMs are
used by the Directors and management
for strategic and performance analysis,
planning, reporting and reward setting.
APMs refl ect the results of the business
excluding adjusting items, which are
items that are material or items of an
unusual or non-recurring nature.
28
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
STRATEGIC REPORT
The APMs and the defi nitions used are
listed below:
• Adjusted EBITDA – Profi t/
(loss) before fi nance charges,
tax, depreciation, amortisation,
impairment (EBITDA) and adjusting
items
• Adjusted gross profi t – Gross profi t
In terms of these APMs, a full
reconciliation between our adjusted
and reported results is provided in the
detailed fi nancial review above, from
which the following key performance
metrics have been derived:
• Adjusted gross margin – Adjusted
gross profi t divided by revenue
before adjusting items
• Adjusted operating margin –
• Adjusted operating profi t/(loss) –
Profi t/(loss) before fi nance charges,
tax and adjusting items
Adjusted operating profi t divided by
revenue
• Adjusted EBITDA margin – Adjusted
• Adjusted profi t/(loss) before tax –
EBITDA divided by revenue
Further details of the items categorised
as adjusting items are disclosed in
more detail in note 3.
Paul Bal
Director
19 June 2023
• Cash conversion – Adjusted cash
generated from operations divided
by adjusted EBITDA
In addition, the Group calculates the
following key performance measures
using the above APMs:
• Return on capital employed –
Adjusted operating profi t divided
by monthly average net capital
employed (where capital employed
is net assets excluding net cash and
intangible assets)
• Average leverage – Average bank
debt (being average debt measured
before lease liabilities) divided by
adjusted EBITDA reduced for lease
payments
Profi t/(loss) before tax and adjusting
items
• Adjusted profi t/(loss) after tax
– Profi t/(loss) after tax before
adjusting items and associated tax
effect
• Adjusted tax – Tax before adjusting
items
• Diluted adjusted earnings/(loss) per
share – Diluted earnings/(loss) per
share before adjusting items and
associated tax effect
• Adjusted overheads – Selling
costs, administration expenses,
other operating income, profi t/
(loss) on disposal of property, plant
and equipment (overheads) before
adjusting items
• Adjusted cash generated from
operations – Cash generated from
operations before the associated
cash impact of those adjusting items
• Net cash – Cash and cash
equivalents, bank overdraft and loan
arrangement fees
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
29
SUSTAINABILITY
Helping design
a better future
As a market leader in our industry, we aim to minimise
our impact on the environment by constantly challenging
ourselves to fi nd ways in which we can use our scale and
people to infl uence and drive positive, proactive change.
We understand that our impact and responsibilities extend
beyond our immediate surroundings, into the lives of our
employees and stakeholders, the environment, and our local
and global communities.
It is a moral and commercial necessity that we strive for
the highest standards of ethical behaviour and innovate
and improve to reduce the environmental impact of our
operations to protect and preserve our planet, for this and
future generations.
Our sustainability framework ‘helping design a better
future’, aims to shape the Group’s approach to
sustainability and enable us to demonstrate, monitor
and improve our environmental, social and governance
(ESG) performance and to drive our business forward
sustainably. The framework is underpinned by the United
Nations Sustainable Development Goals (SDGs) which were
reviewed to identify the areas which are most relevant to
Design Group.
LIFE
ON LAND
LIFE
BELOW WATER
CLIMATE
ACTION
15
14
13
12
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
10
9
8
REDUCED
INEQUALITIES
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
DECENT WORK AND
ECONOMIC GROWTH
People
Product
Planet
People are at the heart of our
success
• Employee engagement, talent
and skills
• Health, safety and wellbeing
• Diversity, equality and inclusion
• Giving back to our communities
Sustainable by design
Innovating to reduce our footprint
• Sustainable sourcing
• Sustainable product
and packaging
• Reducing our environmental
footprint
• Design with the environment
in mind
Not only has the Group made progress in striving towards
TCFD reporting in the past year, we have continued
to leverage our innovation and customer relationships
to develop, produce and supply sustainable ranges.
Our performance, KPIs and progress in each of the three
pillars are reported over the next few pages.
We are pleased with our progress in recent years, however
we recognise that we are still early on in our sustainability
journey and there is further work required. We will continue
to develop our sustainability framework, in particular to
further refi ne our KPIs, targets and goals in order to drive
positive change and strive to be the most sustainable we
can be.
30
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Link to strategy
Our sustainability framework, ‘helping design a better
future’, has worked alongside our previous strategic drivers:
working with the winners; design & innovation and efficiency
& scale. We believe that adopting a holistic business-wide
approach to sustainability is a significant driver of
commercial advantage, and this is evident in the role that
this approach continues to have in the new strategy.
Link to business model
The environment is one of our key stakeholders which we
see as an integral part of our agenda going forward.
Read more on page 09
Working with the winners
Design & innovation
Efficiency & scale
We have prided ourselves on working
with the winning retailers of now and
the future. We aim to promote our
sustainability principles to all our
customers and there are many who are
already calling for sustainable solutions
as climate change and sustainability is
becoming a more pertinent matter.
In order to be our customers’ partner of
choice, our design teams have focused
on providing fresh, new and on-trend
ideas for our product ranges. This
innovation has been critical in designing
and producing sustainable products
and packaging.
Partner of choice
To uphold the highest standards
attainable as a Group, it is our aim to
foster the relationships we have with
all of our stakeholders to continue
building a considerate and sustainable
Group. This principle also extends to
our suppliers, where we endeavour to
source the most responsible materials
that we can, and manufacture as
environmentally sensitively as we can.
Increasing our sustainable product
offering and continuing to develop and
create new ranges are key in our efforts
to promote sustainability. The packaging
around our product is just as vital to
focus on. We endeavour to reduce the
amount of plastic used, particularly
non-recyclable plastic packaging, to
reduce the waste contributing to landfills,
as well as the pollution of our ecosystems
and marine life.
Both capital and people investment
have helped to drive efficiencies
and strengthen our performance.
This principle extends to sustainability
whereby product design right through
to operations and logistics have been
continually improved to reduce the
impact we are having on the environment
through reduced carbon emissions, as
well as the amount of waste which is sent
to landfill.
Winning together
Adapting our habits will drive positive
change in relation to global warming, the
pollution of our ecosystems as well as
biodiversity.
Influencing our customers and
consumers habits through offering
innovative solutions
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
31
STRATEGIC REPORT SUSTAINABILITY
CONTINUED
TCFD
We are committed to implementing the recommendations
of the Taskforce on Climate-related Financial Disclosures
(TCFD) and this year we have continued to make
progress to position us well ahead of the FY2024
reporting requirements.
Governance structure
Board
Operating Board
Sustainability Forum
Business units
The Operating Board is
responsible for the oversight
and management of climate
change and its associated
risks and opportunities.
The Board has overall
accountability and oversight
over how the Group
responds to climate change
and its associated risks and
opportunities.
The Board reviews climate
change risks in line with the
risk management framework.
In addition to this, ESG is an
agenda item of the Board
and other sub-committees.
The sustainability forum is
a cross-Group committee
made up of representatives
from each territory. Over the
past year the sustainability
forum has met fi ve times.
It is a working group with
the aim of formulating a
commercially-led response
to climate change and
its associated risks and
opportunities.
The aim is to educate
and create a holistic,
business-wide, sustainable
mindset, whilst sharing best
practice across territories.
Business units are
responsible for the
identifi cation, assessment
and mitigation of
sustainability associated
risks and opportunities.
This will be explicitly
integrated into our existing
risk management framework
and process.
Business units are also
responsible for day-to-day
management of business
and decisions relating to our
people, product and planet.
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IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
STRATEGIC REPORT
Making progress in the year towards TCFD by
conducting a climate risk assessment to identify
the Group’s risks and opportunities over the short,
medium and long-term.
Strategy
This year we have conducted a risk assessment to identify
the Group’s climate-related risks and opportunities over the
short, medium and long-term through a series of workshops
involving various stakeholders from across the Group.
These workshops centred around the TCFD recommended
categories of; physical (acute and chronic) and transitional
(policy and legal, technology, market and reputation) risks
and opportunities. These risks and opportunities were
prioritised by assessing their impact and likelihood through
scenario analysis, in line with the Group’s risk management
framework scales. The output of the scenario analysis
conducted is not a forecast, but instead a directional
understanding of the resilience of our strategy to these risks
and opportunities under different climate risk scenarios.
Risk management
Last year climate change transitioned from an emerging
risk to a principal risk for the Group. An overall approach
to risk management and a summary of our principal risks
can be found on pages 50 to 55. The risks associated with
climate change are considered in line with our existing risk
management framework. A bottom-up assessment is carried
out in each territory which is then presented to the Audit
Committee to review the Group’s established principal risks
and emerging risks.
However as part of the climate risk assessment exercise
carried out this year, the Group will now have a more
detailed climate risk register covering acute and chronic
(physical), and policy and legal, technology, market and
reputation (transition) risks. The two different streams
of risk; physical and transition are assessed in different
ways. Physical climate-related risks were assessed
using leading models and databases within the risk and
insurance industry based on the Group’s footprint. Transition
climate-related risk assessment used the Group’s enterprise
risk management approach to ensure outputs align with our
wider risk landscape. The climate risk registers will form part
of the existing risk management framework processes going
forwards.
Metrics and targets
The climate-related risks and opportunities are assessed
through the KPIs we established as part of the Group’s
‘helping design a better future’ framework and were
reviewed by the Board last year. These KPIs are reported
on pages 34 to 47. The Group’s scope 1 and 2 emissions
will be reported on from next year in line with TCFD, the
UK emissions can be seen on page 47. We will continue
to develop the sustainability framework and KPIs as we
progress through the coming year, which will then allow
us to formulate climate related targets.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
33
SUSTAINABILITY
CONTINUED
People are
at the heart
of our success
People
At Design Group we employ over 3,500 people
across four continents in a variety of roles
and operations. We value the hard work of all
our teams and recognise that Design Group
would not be who we are without their talent
and dedication. We wish to create a working
environment where our employees feel
supported and valued, with their achievements
recognised and rewarded. Though our Group
operations are varied in many ways, each part of
Design Group globally is committed to operating
in a responsible and sustainable manner, with
a focus on having a positive impact in every
interaction we have.
United Nations Sustainable Development Goals
34
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35
STRATEGIC REPORT SUSTAINABILITY
CONTINUED
People continued
Employee engagement, talent and skills
Why it’s important to us:
We want to create an engaged and motivated workforce,
giving everyone the chance to enhance their skills to
realise their full potential. We want to create a group
with a talented workforce capable of meeting our
challenging business needs. We understand the value
and importance of creating an open, comfortable and
progressive working environment and to continue to
invest in the people who give us so much.
Our key performance indicators:
Employee turnover
20% 2022: 24%
Definition: The voluntary turnover of permanent
employees in the year (%)
Why chosen: It is important to us that we create an
environment where our employees enjoy coming to
work
Employee turnover has reduced this year from 24%
to 20%, which reflects positively on our working
environment.
This year we have launched our first Group-wide
employee engagement survey, ‘Your Voice. Our Future’,
to understand our people better and learn how to
improve as an employer. Participation was anonymous
and voluntary, yet encouraged across the Group. It was
incredibly pleasing to have a high participation rate of
78% which suggests that our employees are engaged
and keen to share their views. Furthermore, despite
the vast amounts of change across the Group in recent
years, the results indicate that our employees on the
whole remain positive about their roles and the company.
The proxy for employee satisfaction was the question
“I would recommend Design Group as a good employer”,
which was positively rated by 76% of the Group. Areas
for improvement have been established and actions have
been identified following the feedback of results to all
employees.
We employ a great team of people where we encourage
personal and professional development which we have
continued to facilitate over the year. Across the Group
there are emerging leadership programmes in place
where selected employees are given the opportunity to
work with external consultants to develop leadership
and other key skills to enable career progression. These
opportunities also help to develop and mature the
Group’s talent pipeline. Our development and training
opportunities extend beyond emerging leaders, with
Design Group Academy established since 2013 in DG
Europe. Design Group Academy is an internal training
institute striving to develop knowledge and skills of our
employees through internal and external trainers across
a broad range of topics. In the US, all of our employees
are eligible for tuition reimbursement for programmes that
align with the advancement of their careers, allowing our
people to take control of their own career progression.
This year the US business launched a reward and
recognition programme, ‘DG Bravo!’, which facilitates
peer-to-peer and manager praise amongst employees to
create a positive environment where our employees feel
recognised and appreciated. The platform also provides
access to a wellbeing centre, and blog content which
is geared towards keeping employees informed and
motivated.
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IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Health, safety and wellbeing
Why it’s important to us:
We are committed to providing our employees with a safe
and healthy working environment.
Our key performance indicators:
Number of accidents
83 2022: 116
Definition: The number of accidents in the year
across our global manufacturing, warehouse and
office facilities. An accident is where first aid or other
medical treatment was required
Why chosen: Keeping people safe and healthy is a
moral and a business imperative that applies to all who
work for Design Group
As a manufacturing business, the health and safety of our
employees is paramount across our facilities. In the year,
83 accidents were recorded across our locations. This is
a lower level than last year as we have maintained a more
stable operational workforce in the year, and continued
with ongoing training. We hope to continue to improve
this through further training and collaborative meetings at
manufacturing locations to encourage open dialogue and
address any suggested improvements.
Employee wellbeing remains a key focus for our local
teams with many initiatives taking place throughout the
year. Once again, the UK division wellbeing calendar
initiative, with a different wellbeing campaign for each
month of the year continued. Men and women’s health
week was another successful event focusing on key
topics for men and women’s health. The week included
a yoga session, self defence classes, a health session
on prostate and testicular cancer, mental health
awareness and the benefits of physical activity. The UK
has also launched a menopause policy and a guide for
managers to better support colleagues going through
the menopause and provide a greater understanding
of what our colleagues experience and how to talk
positively, respectfully and openly about the menopause.
The US team has a social committee which coordinates
company events and programmes to promote wellbeing,
engagement and appreciation of colleagues across the
organisation, examples from the year include a company
cookbook, employee day of service and holiday-based
events. Across the Group we offer a free Employee
Assistance Programme to our employees to provide
mental health support. We also have an increasing
number of mental health first aiders on hand to lend a
listening ear, and provide first line support to colleagues
whilst directing to professional help where necessary.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
37
STRATEGIC REPORT SUSTAINABILITY
CONTINUED
People continued
Diversity, equality and inclusion
Why it’s important to us:
Our international culture promotes diversity, equality and inclusion and in line with our Group values, we strive to treat
everybody with dignity and respect. We strive for a workplace that has integrity, is fair and inclusive and upholds the
highest standards of human rights.
Our key performance indicators:
All employees
Gender diversity:
45%
55%
Female
Male
Senior management team
Gender diversity:
32%
Female
Male
68%
Age diversity:
6%5%
22%
25%
17%
25%
18-24
25-34
35-44
45-54
55-64
65+
Ethnic diversity:
14%
5%
19%
1%
56%
5%
White
Black
Asian
Hispanic/Latino
Two or more races
Other/Not available
Age diversity:
5% 7%
49%
39%
Ethnic diversity:
35-44
45-54
55-64
65+
White
Asian
32%
5%
63%
Other/Not available
Note that senior management team (SMT) is as defined locally across the Group. These figures also include the Board as at 31 March
2023. For more detail on the latest Board diversity, please see page 59.
Why chosen: Our aim is to create equal opportunities for all. At Design Group we recognise that having a diverse
workforce enables us to innovate and make better decisions and helps us meet the needs of our employees,
customers, communities and shareholders.
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IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Diversity, equality and inclusion continued
We make employment decisions in a non-discriminatory
manner; on the basis of job-related skills, achievements
and performance, using clearly defined and fair criteria.
The Group’s Code of Business Conduct lays out
our expectations which every employee must agree
and adhere to. We take human rights seriously and
continuously strive to strengthen and protect the systems
and management in this area.
Where possible we facilitate flexible working around the
Group which supports diversity in both our current teams
and in new hires, allowing us to reach a greater pool of
talent. Women are generally still the primary caregivers in
families, limiting their capacity to return to full time roles.
Greater flexibility in the workplace for everyone enables
women to progress more as it gives them the ability to
balance home and family commitments. The importance
of flexible working was also reflected in our employee
engagement survey, so we therefore recognise the
impact flexible working practices have on diversity and
opportunity, as well as on engagement, retention, and
progression in the Group.
In total across the Group, the annualised full-time
equivalent salary of women is in line with men (1% median
and 0% mean pay gap). This is a small gap partly due to
half of our workforce being hourly paid employees who
get paid the same rate within a location regardless of
gender. The other driver of our low gender pay gap is high
female representation at senior and mid-senior levels,
particularly in the USA and UK. Despite our low gender
pay gap at a Group level, amongst the senior leadership
team of the Group the pay gap is higher due to executive
director positions currently being held by men. The Board
is committed to gender equality and wishes to maintain a
fair approach to pay management across the Group going
forward.
Giving back to our communities
Why it’s important to us:
In line with one of our key values, we endeavour to be
good citizens and aspire to give back to the communities
around us with the aim of building a more considerate
and sustainable place to work.
Our key performance indicators:
Charitable donations
$1.8m 2022: $735,000
Definition: The total value of cash and inventory
donated to charity over the year
Why chosen: The communities where our Group
businesses are based, and where many of our team
members call home, are important to us. We aim to
give back in all of the communities where Design
Group is present, continuously taking actions and
promoting initiatives that create a positive impact.
Across the Group, each of our regions support local
charities and events to give back where they can
and encourage the mindset of being a good citizen.
We donate both cash and inventory to charity, the
latter making up the majority of our donations this year.
We continue to support the Trussell Trust in the UK
through the sale of Tom Smith® crackers, and as part of
this partnership we presented them with a cheque for
£88,000 in December 2022. The Trussell Trust support
a nationwide network of food banks and together they
provide emergency food and support to people locked
in poverty, and campaign for change to end the need for
food banks in the UK.
In Australia, we have donated over A$176,000 to causes
that matter to our team and our customers; the Kmart
Wishing Tree appeal, Australia’s largest and longest
running gift giving appeal, and The Salvation Army who
do significant work in the area of homelessness and drug
and alcohol support, amongst other charity work. These
amounts were generated through the sales of selected
items. The Australian team were also involved with a
community initiative in partnership with Officeworks
and Restoring Australia by tree planting to help make a
positive difference to the environment, native wildlife,
landholders and local communities around Australia.
DG Americas has donated product to a variety of causes
this year, for example our largest manufacturing site in
the US donated over 100,000 rolls of wrapping paper and
bows to the local community over the holiday season to
charities aiding abused women, women and children’s
shelters, schools and fire and police departments.
Within the UK businesses, a charity committee has been
recently established which welcomes nominations of
charities from employees which are close to their heart.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
39
STRATEGIC REPORT SUSTAINABILITY
CONTINUED
Sustainable
by design
Product
We recognise that the nature of many of our
products makes it even more important that we
leverage our innovation to create sustainable
collections to promote to our customers and
beyond. As the world develops, populations
are consuming more, which becomes an issue
when a large proportion of goods are not only
single-use but also not recycled. This leads
to more waste going to landfi ll and being
burned, contributing to global warming and
contamination of our oceans. Design Group
are committed to promote positive change; to
use sustainable sources, to design sustainable
ranges and reduce the use of single-use plastics
across both our products and their packaging.
United Nations Sustainable Development Goals
40
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
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41
STRATEGIC REPORT SUSTAINABILITY
CONTINUED
Product continued
Sustainable product and packaging
Why it’s important to us:
Successfully designing, promoting and selling our
sustainable greetings collections means we are
encouraging a circular economy which reduces waste
and the impacts of production, consumption and
disposal on the environment.
We are in a position where we can offer sustainable
product ranges at a time where popularity and demand
are only going to increase. Now is a key time for us to
support the transition to a circular economy whereby not
only are our products made from recycled raw materials,
but they are also either reused, recycled or composted at
the end of their lifecycle.
Our key performance indicators:
Fully recyclable product ranges
46% 2022: 47%
Definition: The proportion of Design Group
single-use(a) products which are fully recyclable
(a) Single-use products make up 53% of Group sales (2022: 49%).
Fully recyclable packaging
66% 2022: 66%
Definition: The proportion of Design Group consumer
sales packaging which is fully recyclable
Why chosen: We aim to leverage our design
and innovation skills to continue to develop new,
sustainable ideas to promote to our customers
46% of the Group’s single-use products such as gift wrap
and greeting cards are fully recyclable at either household
level or at local supermarkets; with single-use products
representing 53% of total Group sales. The sales value of
recyclable single-use products has remained in line year-
on-year, despite the decline in Group sales.
The proportion of fully recyclable ranges is largely in line
with last year (46% vs 47%), with the slight decline due to
changes in customer and product mix. 66% of all primary
packaging is recyclable, which is in line with prior year.
We have made progress with this KPI across the Group,
however we encountered a setback in Australia where
local recycling arrangements became less accessible,
resulting in less product packaging being able to be
classified as recyclable.
Around the Group we continue to develop, explore and
design new solutions to reduce the single-use plastic
content of our products and packaging, aiming to deliver
excellent sustainable solutions to customers, reducing
both waste and pollution of the environment.
In recent years we have invested in technology to enable
the manufacture of shrink-free gift wrap in two of our key
manufacturing locations. Shrink-free gift wrap eliminates
the use of plastic from the product and the packaging,
which reduces the volume of waste sent to landfills and
pollution of our ecosystems.
This year saw the launch of Smartwrap™ in our European
market. Smartwrap™ was created from the innovation
and research of a student working within our team in the
Netherlands, with trials, testing and investment which
followed to create a sustainable, plastic free, climate
neutral gift wrap solution. In its first year 611,000 rolls of
Smartwrap™ have been sold to 18 customers and we are
excited about its future. Similarly, the Eco Nature™ range
was launched in the UK market in FY2021 and has grown
further in the current year with products in the range
spanning from celebration products such as; gift wrap,
cards and bags to stationery ranges. The Eco Nature™
range is manufactured locally at our Wales site and is
gaining increasing support from our customers including
two of the UK’s largest retailers; Tesco and Sainsbury’s.
In FY2023 we achieved revenues of $2.0 million across
our two eco ranges.
We continue to work with the leading retailers of the
world, such as Walmart on Project Gigaton, with further
progress made by removing plastic from their gift bag
ranges. We will continue to develop sustainable solutions
across the Group going forward.
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IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Sustainable sourcing
Why it’s important to us:
The integrity of our product starts with responsible
sourcing from both an environmental context as well as
a social one. As a business where paper is one of our
largest raw materials, we are committed to ensuring
that only sustainable sources of paper are used, to go
beyond compliance and certify high standards of forest
management. Further to this, our values extend to the fair
working conditions and human rights at all stages in our
supply chain.
Our key performance indicators:
Supplier audits
600
across 354 suppliers
Definition: The number of ethical audits carried out
across our supplier base in the year
Why chosen: We recognise that having a wide
global supplier base requires a detailed level of
engagement to ensure our suppliers fundamentally
comply with regulations and guidelines and respect
human rights. Ethical audits allow us to gain insight
into supplier conduct and fair working conditions
across our supplier bases.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
43
STRATEGIC REPORT SUSTAINABILITY
CONTINUED
Innovating
to reduce
our footprint
Planet
We believe we have a responsibility to protect
and preserve our planet and its environment
and that our success as a Group signifi cantly
depends on it. The global climate change threat
is a result of many years of unsustainable
activity by the world’s growing population.
We have the ambition to reduce our impact
on our surroundings to promote the longevity
of the planet for future generations. This will
be a journey for the Group as we learn of new
methods to improve our operations to reduce
greenhouse gas emissions, as well as less waste
sent to landfi lls.
United Nations Sustainable Development Goals
44
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
STRATEGIC REPORT
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
45
SUSTAINABILITY
CONTINUED
Planet continued
Reducing our environmental footprint
Why it’s important to us:
A large part of Group operations are manufacturing
based and our operational excellence continually drives
efficiency improvements. We consider climate change in
all our activities and strive to reduce our environmental
footprint with our carbon footprint continually under
review.
Our key performance indicators:
Waste sent to landfill
28% 2022: 29%
Definition: The proportion of waste sent to landfill at
our operational facilities
Why chosen: It is important that we employ the most
sustainable practices where we can and reducing
the waste sent to landfill directly reduces our carbon
footprint.
Although the proportion of operational waste sent to
landfill this year was in line with prior year (28% vs 29%),
the tonnage of waste sent to landfill was significantly
lower. The volume of waste is 34% lower than prior year
due to last year being inflated following the exit of several
properties in the US. Our sites in the UK and Netherlands
continue to operate a no waste to landfill policy.
Design Group Europe have been awarded climate neutral
status on all their gift wrap collections. Looking forwards
into FY2024, they have also been awarded climate neutral
status on their gift bag ranges, which is another great
step forward for the Group. Across the Group the local
manufacture of giftwrap and bags, supported by our
investment in manufacturing and technology, helps to
reduce our reliance on freight and therefore our carbon
footprint, as well as supports our local economies around
the globe.
Around the Group we are using renewable electricity
where possible including in the UK and Europe. Next year
we will endeavour to report our total Group greenhouse
gas emissions which will provide more clarity around our
carbon footprint. It will also allow us to track and monitor
our emissions going forward in our journey to net zero.
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IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
UK environmental reporting
The UK businesses’ total energy use and associated greenhouse gas emissions have been reviewed in accordance with
the government’s guidance on Streamlined Energy and Carbon Reporting. The results of this review, focusing on the
combustion of gas, the consumption of fuel for transport, and electricity use for the year ended 31st March 2023 were:
CO2 emissions by source
Source
Electricity
Gas
Diesel oil
LPG
Company vehicles
Total
Energy emissions ratio:
Total tonnes CO2e
(1) million (£) annual turnover
2023
Consumption
7,654,472 kWh
Tonnes CO2e
1480.22
2022
Consumption
7,944,417 kWh
Tonnes CO2e
2,030.59
8,633,870 kWh
1,576.03
9,549,107 kWh
1,755.60
48,321 litres
2,491 kg
260,387 miles
123.82
102.50
60.48
3,343.05
65,058 litres
174.87
3,128 kg
234,510 miles
9.19
50.99
4,021.24
27.82
38.11
Methodology: The CO2e (carbon dioxide equivalent) emissions were calculated using available energy and mileage
data collected for our Climate Change Agreement (CCA) and Energy Savings Opportunities Scheme (ESOS) reporting
purposes and converted using current factors published by the Department for Business, Energy and Industrial Strategy.
The emissions cover Scope 1 and 2 (which are not practical to separate at this stage), as well as Scope 3 emissions from
business travel.
Over the last few years, the UK have looked at ways to become more energy efficient and have taken actions such as: ESOS
(Energy Savings Opportunities Scheme) activities, low energy use LED type light fittings, electric/hybrid company vehicles,
reducing waste to landfill activities, procuring more energy-efficient machinery when required, and ISO 14001 internal
objectives.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
47
STRATEGIC REPORT
STAKEHOLDERS
We value strong and open relationships where mutual trust and
respect are key.
Effective engagement with key
stakeholders is vital to Design Group
achieving its strategy. There is always
room for improvement, but through
ongoing, constructive dialogue with
our stakeholders we are committed
to ensuring that we all experience the
benefits of Design Group’s success.
Section 172 statement
We are committed to promoting the
success of the company for the benefit
of its shareholders, whilst taking into
account the long-term interests of its
employees, customers, suppliers, the
environment, and the wider community
in which we operate. In discharging
our duties, we will act with integrity,
honesty, and transparency, and seek to
maintain a culture of ethical behaviour
throughout the organisation. We
recognise the importance of engaging
with our stakeholders, listening to
their views, and taking them into
account in our decision-making
processes. Our Board and senior
management team will continue to
work collaboratively to ensure that we
meet our obligations under section 172
of the Companies Act 2006.
During FY2023, we continued to
identify five key stakeholders as critical
for the success of our future business.
Below we highlight who they are,
what they expect from us and how
we benefit from them.
Employees
We want to ensure a happy,
safe working environment
for all employees.
Fresh experiences,
personal growth and
career progression
New ideas, wider skill
set, positive challenge
Shareholders
Both institutional
and retail investors are
vital to our business.
Delivery of growth,
strong financial
position
Relevant product
ranges, innovative
solutions, collaborative
working
Customers
We are proud to
serve the best
retailers in the world.
Support, strategic
direction, finance
Tangible benefits,
local engagement,
charitable initiatives
Positive challenges,
evolving consumer
demands, collaboration
Strong partnerships,
long-term relationships,
inspirational ideas
Skilled
workforce,
positive
challenge
Quality goods
and services,
strong alliances
Communities
We aim to positively support the
communities in which we operate.
Suppliers
We use our internal and external
supply chain to turn ideas into
high quality products.
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IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
The following are some of the discussions and decisions taken by either the Board or its Committees during the year and
the considerations given to stakeholder interests:
Employees
Customers and Suppliers
How we engage
• Structured onboarding and induction programmes
• Ongoing training and development, including wellbeing
initiatives
How we engage
Each business is structured to ensure strong, dedicated
engagement with customers and suppliers via key account
managers and strong supporting teams.
• Regular employee briefings including ‘town hall’ briefings
through to team briefings and one-to-ones
Regular meetings held with with customers and suppliers both
in-person and online.
Outcomes of engagement/key decisions
this year
In order to boost awareness and co-operation with the wider
workforce, the Board made a number of trips to visit the majority
of our businesses this year. In addition the HR directors from DG
Americas and DG UK were invited to become regular attendees
of the Remuneration Committee and regular contributors to
the Nomination Committee. This has provided the Board with
valuable insight into the challenges and successes which our
employees face and how the Board can support them. We also
held the Group’s first ever Group-wide employee engagement
survey and were extremely pleased to see a high participation
rate and strong support from our employees with a high number
stating that they would recommend Design Group as a good
employer.
Outcomes of engagement/key decisions
this year
Ongoing external challenges have meant that our businesses
have had to rely on their close relationships with both customers
and suppliers over the past year. The Board has been keen to
hear about the positive conversations and the new initiatives that
have resulted.
At the latter end of FY2023 BDO, our external business
assurance providers, undertook a review of the Group’s supply
chain which to date has been led by the individual businesses.
The outcomes of that review are currently being digested and
the Board is keen to see the improvements and cross-Group
initiatives which will no doubt result from that.
Communities
Shareholders
How we engage
With a Group of businesses spread across the globe and across
regions within specific countries, it is important that community
initiatives are led by each business and focused on the specific
needs of the communities in which they are based.
Outcomes of engagement/key decisions
this year
Our employees were supported to engage with local community
projects and initiatives that had a positive impact on the areas
we work in. Examples of some of these initiatives can be found
on page 39.
How we engage
Individual meetings are held with large institutional shareholders
throughout the year and particularly following interim and
full-year results.
Investor information, regular trading updates and reports are
posted on our website.
Shareholders are invited to attend the Annual General Meeting
and submit questions.
Outcomes of engagement/key decisions
this year
FY2023 has continued to bring change particularly in our senior
executive team and therefore the Board was keen to bring our
shareholders on the journey with us. Our Chair continued his
visibility and availability to shareholders and we have continued
to provide regular updates on matters which we believe to be of
key concern and note to our shareholders.
Our Remuneration Committee Chair also wrote to key
institutional shareholders to update them on remuneration
decisions and give them an opportunity for feedback on future
remuneration plans.
Across Design Group there are many examples of stakeholder engagement:
• Employees – see pages 22 and 34 to 39
• Shareholders – see page 63
• Customers – see pages 11 to 13
• Communities – see page 39
• Suppliers – see pages 42 to 43 and 53
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
49
STRATEGIC REPORT RISK MANAGEMENT
Risk is an inherent part of business, especially as Design Group
seeks to become more resilient in its performance going forward.
Our risk management framework
Governance
Design Group operates a well-established structure for the
management of risk, where responsibilities and ownership
are clearly defined:
The Board
• Ownership and monitoring of risk management
• Evaluates the most significant strategic risks and sets
risk objectives
• Determines overall risk appetite for the Group
Audit Committee
• Responsible for advising the Board on risk exposures
• Risk analysis both top down and bottom up
• Review of internal controls that help manage risks
Operating Board
• Responsible for the overview of management of key risks
at business unit level
• Assessment of materiality of key risks
Group risk function
• Monitoring and collation of risks and actions by business
unit management from across the Group
• Review and oversight of the Group’s risk management process
Business units
• Identification, assessment and mitigation associated with
key risks
• Day-to-day management of risks within the business units
with focus on considering risk as part of decision-making
and management of external relationships
Risk strategy and appetite
As part of the risk management process each principal risk,
as identified in the next few pages, is considered in the
context of achieving the Group’s strategy.
Risk appetite is an expression of the types and amount of
risk that the Group is willing to take or accept to achieve
its objectives. Our risk appetite has been set for each risk
category at a Board level and ranges from minimal to open.
Our risk appetite is set to balance opportunities for growth
and increased return, whilst maintaining our reputation
and robust risk mitigation strategies. Determining our
risk appetite allows us to make consistent and informed
decisions across the Group in relation to key risks and
helps ensure that they are managed within our tolerated
levels of risk.
Risk management approach
Design Group operates a decentralised model where risk
management is embedded within strategic and operational
decision-making. An overarching role is played by the
Group team and the Board to ensure oversight in the risk
management process.
Design Group’s approach to risk management is bottom up,
with each of our business units maintaining standardised
risk registers for their territories, identifying key risks,
monitoring them and determining mitigation plans for their
businesses, whilst measuring against the Group’s risk
tolerance level alongside their own tolerances.
The risks are scored using a risk impact matrix which
considers both financial and non-financial assessments
to determine an overall score for each risk. Each principal
risk is also evaluated against the Group’s risk appetite
and considered in the context of the Group’s strategic
objectives. All of this focuses the Group on where the higher
risks sit and prioritises additional mitigation strategies that
may be required.
The Group’s risk management framework operates within a
‘three lines of defence’ assurances model. The first line of
defence lies with the operational owners who are the teams
within the business managing and mitigating risks as part
of their operational model. The second line of defence is
internal via corporate oversight, whereby individuals who are
independent to the day-to-day operations perform a second
layer review or verification of the mitigations and controls
in place. The third line of defence is outsourced, providing
the Audit Committee with independent assurance over the
management of risks around the Group.
Emerging risks
As part of the risk management process, we discuss and
review emerging risk areas to determine whether they
should be considered as principal risks and be actively
monitored as a principal risk within the risk management
process going forward. There are no emerging risks
identified this year.
50
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Principal risks
Macroeconomic uncertainty
Consumers
Global economic developments including political and social
change may result in a significant impact on our business
trading and operations which could affect our main cost areas
of raw materials, freight and people
Inability to identify and adapt to changing consumer behaviours
and demand, resulting in reduction of revenue and margins
Pre-mitigation:
Post-mitigation:
Pre-mitigation:
Post-mitigation:
High
High
High
Medium
MITIGATION
• Diversification strategy in terms of regions and products
• Regular monitoring of the economic conditions in which
we operate and impact analysis and response plans for
significant changes to trade agreements utilising external
specialists where necessary
• Innovation and product design to mitigate any increased
costs of raw materials
• Maintaining open dialogue and strong relationships with
our customers to allow for contract renegotiations where
necessary
MITIGATION
• Continued focus on design, innovation, product quality
and exceptional service including ongoing new product
development to grow and improve sustainable product
ranges
• Maintain a blended and diversified portfolio of products and
customers, both by market segment and geography
• Close working relationships with key customers to be
‘ahead of the curve’ on trends they are implementing, as
well as leveraging Group understanding of trends to share
knowledge and ideas
• Annual budget and business review process including
market developments
Change:
Unchanged
This risk remains significant. There has been a succession
of geopolitical events impacting our business: Covid-19, the
Ukraine/ Russia conflict, and the cost of living crisis triggered
by sudden high inflation. The impact of these span our
suppliers, customers, consumers and workforce. Over the past
twelve months the impact has been mitigated where possible,
however the Group remains partially vulnerable to changes
in the cost and availability of raw materials and freight which
ultimately impact our margin.
Change:
Unchanged
This risk is significant with the current cost of living
crisis and high inflation resulting in reduced consumer
discretionary spend.
Link to previous strategy:
Link to previous strategy:
Key
Working with the winners
Design & innovation
Efficiency & scale
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
51
STRATEGIC REPORT RISK MANAGEMENT
CONTINUED
Principal risks continued
Strategy
A lack of appropriate corporate
strategy (organic and M&A) could
affect attainment of the Group’s
growth ambitions, leading to
shareholder dissatisfaction
Financing
capacity
A loss of support from our principal
banking partners restricting our ability
to deliver on our strategy
Financial control
and insight
A failure in adherence with the Group’s
financial control framework and lack of
insight into performance may result in
financial under/over performance
Pre-mitigation:
Post-mitigation:
Pre-mitigation:
Post-mitigation:
Pre-mitigation:
Post-mitigation:
High
Medium
High
Medium
Medium
Medium
MITIGATION
• Ongoing review of market
opportunities and trends
• Regular Operating Board meetings
to discuss business updates along
with operational and strategic
decisions
• Review and monitor long-term key
performance indicators
• Maintaining regular open dialogue
with major shareholders
• New growth-focused strategy has
recently been developed and is
being rolled out
MITIGATION
• Continued ongoing communication
with active shareholders
• Maintaining strong relationships and
communication with existing banks
• An asset-backed lending facility, with
two lending partners, better suited
to financing our seasonal working
capital
• Regular cash budgeting, forecasting
and monitoring across the Group
and senior management
MITIGATION
• Group policy to hire qualified
individuals into key financial roles
• Group financial policies in place
in addition to minimum controls
framework and bi-annual self
certification of adherence to Group
controls
• Regular communications with
finance teams around the Group
• Business assurance third party
review of key financial controls
• Regular forecasts and projections
for the business
Change:
Change:
Change:
Unchanged
Unchanged
Unchanged
New strategy requires embedding
within the organisation.
The Group has secured a new financing
arrangement to June 2026.
Link to previous strategy:
Link to previous strategy:
Link to previous strategy:
Key
52
Working with the winners
Design & innovation
Efficiency & scale
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Information
security
Risk of a cyber attack resulting in
significant business downtime, data
loss or reputational damage
Climate change
Supply chain
and sourcing
An inability to effectively transition to
a low-carbon economy or anticipate
the physical effects of climate change
which could lead to a disruption to
business, reduced revenues, increased
operating costs and reduced margins
An inability to access the right terms,
quality and compliance from our
suppliers alongside a lack of a resilient
supply chain could lead to a loss of
revenue and margin
Pre-mitigation:
Post-mitigation:
Pre-mitigation:
Post-mitigation:
Pre-mitigation:
Post-mitigation:
High
Medium
Medium
Medium
Medium
Medium
MITIGATION
• Policies, procedures and regular
training for employees
MITIGATION
• Development of sustainable
product ranges
• IT directors in each territory to
ensure global best practice sharing
• Investment in improvement to
carbon footprint of operations
• Enhanced physical and logical
security controls, in addition to
appropriate network design and
segregation
• SOC service and SIEM software
• Strategic plans to address climate
change risk
• Engagement with key stakeholders
MITIGATION
• Working closely with suppliers to
maintain good relationships and
limit cost impact
• Expansion and review of
supplier base
• Regular supplier evaluation, audits
and vendor due diligence, including
commercial and legal risk review for
new contracts
• Leveraging our sourcing offices
in Asia to manage and maintain
supply relationships
Change:
Change:
Change:
Unchanged
Unchanged
Unchanged
Link to previous strategy:
Link to previous strategy:
Link to previous strategy:
Key
Working with the winners
Design & innovation
Efficiency & scale
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
53
STRATEGIC REPORT RISK MANAGEMENT
CONTINUED
Principal risks continued
Manufacturing
operations
An inability to deliver lowest cost
manufacturing could restrict our
competitive advantage
People
Acquisition
investment
Inappropriate organisational design
and talent strategy that cannot
keep pace with the demands of the
business leading to a failure to deliver
business objectives
Poorly executed M&A and a lack
of post-acquisition integration
management could affect the success
of the Group’s M&A strategy
Pre-mitigation:
Post-mitigation:
Pre-mitigation:
Post-mitigation:
Pre-mitigation:
Post-mitigation:
High
Medium
Medium
Medium
High
Medium
MITIGATION
• Monitor key operations performance
indicators to give early indication of
any disruption to plan
• Monitor and research to ensure best
manufacturing or supply methods
maintained
• Retaining high skilled staff with
experience to manage any disruption
• Appropriate and regular
maintenance/site risk assessments
performed
• Group insurance policy for a range
of operational risks
MITIGATION
• A focus on succession planning and
building strong teams around key
individuals in each business unit
• Appropriate review of executive and
senior management remuneration
packages
• Appropriate policies around hiring
key team members focusing on
qualifications and appropriate
experience for the relevant role
• A focus on management
development to improve
competencies across the business
• Implementation of staff surveys,
feedback and review meetings
• Implementation of cross-learning
programmes to ensure all the
senior management team understand
other roles
MITIGATION
• Harmonisation plans for all
acquisitions with regular reporting
to a focused steering committee
consisting of Executives alongside
regular Board updates
• Investment in people and capital
expenditure to realise synergies and
harmonisation
• Reduced M&A agenda
Change:
Change:
Change:
Unchanged
Unchanged
Unchanged
Link to previous strategy:
Link to previous strategy:
Link to previous strategy:
Key
54
Working with the winners
Design & innovation
Efficiency & scale
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Governance
and compliance
Service
and quality
Increased legal and regulatory
exposure across the numerous
territories in which we operate with
a heightened risk as a result of the
decentralised nature of the business
Loss of revenue and margin from
key customers due to poor quality or
performance having a bigger impact
due to customer concentration
Pre-mitigation:
Post-mitigation:
Pre-mitigation:
Post-mitigation:
Medium
Medium
Medium
Low
MITIGATION
• Policies and procedures for main
risk areas, including a Code of
Conduct signed by all employees
and a whistleblowing hotline
• Group General Counsel and legal
team in the US to aid with managing
the Group’s compliance globally,
working with external legal advisers
in regions as required
• Utilisation of specialist advisers
where appropriate and necessary,
as well as an outsourced internal
audit business assurance function
• Open dialogue with relevant parties
(e.g. tax authorities)
MITIGATION
• Maintain strong relationships
with customers alongside review
and adherence to Service Level
Agreements
• Ongoing rigour and tight controls
in relation to product testing and
compliance
• Maintain a diversified portfolio
of products and customers with
an additional focus on product
innovation
Change:
Change:
Unchanged
Unchanged
Link to previous strategy:
Link to previous strategy:
Key
Working with the winners
Design & innovation
Efficiency & scale
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
55
STRATEGIC REPORT BOARD OF DIRECTORS
The Board is responsible for overseeing the management of
the business and for ensuring high standards of corporate
governance are maintained throughout the Group.
Anders Hedlund
Founder and Non‑Executive
Director
Date of appointment: Anders was
appointed as Nominee Non‑Executive
Director in 2007.
Experience: Anders founded the Group
in 1979 and was joint Chief Executive
Officer of the Group until December 2007.
Skills: Significant industry knowledge.
Stewart Gilliland
Chair
Paul Bal
Chief Executive Officer
Date of appointment: Stewart
joined the Board as a Non‑Executive
Director on 5 July 2021 and
became Non‑Executive Chair on
20 September 2021.
Experience: Stewart has a wealth
of experience in senior and board
roles at fast‑moving consumer goods
businesses, both listed and private.
Both as an executive and non‑executive,
he established a strong track record in
supporting businesses to achieve their
growth ambitions and encouraging
engagement with stakeholders.
External appointments: Stewart is
currently a Non‑Executive Director at
Chapel Down Group plc, Tesco plc and
Natures Way Foods Limited.
Skills: Stewart has over 30 years’
experience and knowledge in international
marketing, logistics and general
management.
Committees:
Date of appointment: Paul joined the
Board on 1 May 2022 as Chief Financial
Officer and was subsequently appointed
Chief Executive Officer on 1 April 2023.
Experience: Paul joined the Board from
Stock Spirits plc, where he was CFO
since 2017. Paul was instrumental in
the turnaround of the then LSE‑listed
group, leveraging his experience in the
management of a complex portfolio
of over 70 brands selling across 50
markets.
Skills: Qualifying as a Chartered
Accountant in England and Wales in
1993 and a Fellow since 2005, Paul has
had an international career. He held
global and regional management roles
within British American Tobacco plc,
Rothmans International Limited and the
Tupperware Brands Corporation, Inc.
before joining Stock Spirits plc.
Audit Committee
Remuneration
Committee
Nomination
Committee
Chair
56
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Mark Tentori
Senior Independent Director
Clare Askem
Non‑Executive Director
Claire Binyon
Non‑Executive Director
Date of appointment: Mark joined
the Board as a Non‑Executive Director
on 1 January 2016. He was appointed
Senior Independent Director on
4 January 2021.
Experience: Mark has held a number
of senior positions, mainly as CFO or
COO, in public and private companies
operating in a wide range of sectors and
geographies.
External appointments: Mark sits on a
number of committees for the Duchy of
Lancaster.
Skills: Extensive experience in business
strategy and finance, M&A and
operational excellence. Mark is also a
Chartered Accountant.
Committees:
Date of appointment: Clare joined the
Board as a Non‑Executive Director on
5 July 2021.
Experience: Clare was managing
director of Habitat at Sainsbury’s plc.
Prior to her role at Habitat, Clare was
Director of Strategic Development at
Home Retail Group plc and previously
held a number of executive positions at
Dixons plc.
External appointments: Clare is a
Non‑Executive Director on the Board
of Portmeirion Group plc and The Law
Debenture Corporation plc.
Skills: Strategy and leadership, digital
transformation and change management.
Committees:
Date of appointment: Claire joined the
Board as a Non‑Executive Director on
1 June 2022.
Experience: Claire has held senior
corporate development and strategic
planning roles with multinational,
manufacturing and consumer goods
businesses, including GE Capital, InBev
SA, Cadbury plc, DS Smith plc and
Fenner plc (a Michelin company).
External appointments: Claire is a
non‑Executive Director for Murray
International Trust plc, JP Morgan
American Investment Trust plc and
NHBS Ltd.
Skills: Corporate development,
strategic planning, corporate finance
and transactions and listed company
governance. Claire is also a Chartered
Accountant.
Committees:
Audit Committee
Remuneration
Committee
Nomination
Committee
Chair
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
57
GOVERNANCE
CORPORATE GOVERNANCE REVIEW
Stewart Gilliland
Chair
Dear Shareholder,
On behalf of the Board I am
pleased to present the Corporate
Governance Review for the year
ended 31 March 2023. This provides
an overview of the Board’s activities
during the year, along with our
governance arrangements.
Last year I remarked on the changes
to the Board membership in FY2022
and how I expected this to bring
fresh insights, a new mix of skills and
experience and a strengthening of
our commitment to good corporate
governance. I am pleased to report that
my expectations were realised and that
will be highlighted in this review.
Key Board Activities
Changes to the Board and
Senior Management
Further changes in Board membership
were seen this year:
Paul Bal successfully moved into the
role of Group CEO, on 1 April 2023,
following a thorough recruitment
process involving both internal and
external candidates.
I reverted to the Non‑Executive Chair
role on 1 April 2023, following 9 months
as Interim Executive Chair in the
absence of a Group CEO.
Lance Burn stepped down from the
Board on 31 March 2023 and will remain
with the business until 31 October 2023
in a project‑based role.
Rohan Cummings has agreed to join
the Board as Group CFO with effect
from 3 July 2023.
As highlighted in last year’s report,
Claire Binyon joined the Board on
1 June 2022.
We have also strengthened some of
our Senior Management Teams across
the Group with both a new CEO and
CFO appointed in DG Americas, new
MDs appointed in DG UK and the
Anchor International business within
DG Europe, and a new FD appointed in
DG Europe.
Although it is early days for these
changes, it has been a pleasure to see
the new appointees settling into their
roles and, as a Board, we are excited
to see how they will shape the future
of the company and deliver long term
value for all of our stakeholders.
Board Visits
This year the Board was keen to visit
some of our businesses and meet
with the senior management teams
face‑to‑face. We had excellent trips to
DG UK in Wales and Newport Pagnell,
the southern parts of our DG Americas
business and DG Europe. In addition to
meeting with the senior management
teams, we toured each site engaging
with employees in the factories
and distribution centres as well as
those based in the offices. We were
particularly impressed with the level of
commitment and support that we saw
from the teams in terms of moving the
Group forward.
We also spent time visiting key
customer retail stores in some of the
locations to increase our understanding
of their needs and challenges which
will inevitably help us in developing the
ongoing strategy for the Group.
We intend to repeat these visits, as a
Board, in FY2024 with the focus on the
DG Americas visit being the operations
in the northern states.
58
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Personally I was able to visit the site in
DG Australia, spending time with both
the senior management team and the
wider workforce, and while I was out
there I visited the DG Americas (legacy
CSS Australia) team. In FY2024 Paul
and Rohan will be aiming to visit a
number of our businesses including the
China teams.
Bank re‑financing
In June 2023 it was good to see
a positive conclusion to the bank
re‑financing and I was encouraged to
see the support of some of our original
banking partners who saw the potential
for the future of the Group and were
keen to be part of the financing for that.
Strategy
The Board, in conjunction with the
Operating Board, undertook a review
of the Group’s strategy. The results can
be seen on pages 14 and 15.
AGM
Finally, I was very pleased to see the
support of our shareholders this year,
as demonstrated in the voting at the
AGM. Votes in favour averaged 99.96%
which were a marked improvement
on the prior year. I trust that we will
continue to see strong shareholder
support as we continue on our journey
of promoting the success of the
company for all our stakeholders.
The remainder of this review sets
out our Governance framework and
adherence to the QCA Corporate
Governance Code.
Stewart Gilliland
Non‑Executive Chair
19 June 2023
Current Board demographics
Role
Gender
Chair | 1
Executive Directors | 1
Non‑Executive Directors | 4
(with one additional Executive Director
joining on 3 July 2023)
Female | 2
Male | 4
Board age
Diversity
Length of tenure
45‑54 years | 1
55‑64 years | 3
65+ years | 2
White | 5
Asian | 1
0‑2 years | 4
5‑10 years | 1
10+ years | 1
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
59
GOVERNANCE CORPORATE GOVERNANCE REVIEW
CONTINUED
Our governance framework
In order to ensure that the Board makes the right decisions for the Company and its stakeholders, it is vital that we have
good corporate governance in place. The Board has adopted the QCA Corporate Governance Code and strives to follow
its guidance and principles, many of which flow throughout our business via our strategy, our business model and our
stakeholder engagement. The table below signposts you to the various sections of this annual report containing the detail.
The QCA ten principles of corporate governance:
Read more
1.
2.
3.
4.
5.
6.
7.
8.
9.
Establish a strategy and business model which promote long‑term value for
shareholders.
See page 08
Seek to understand and meet shareholder needs and expectations.
See pages 48 to 49 and 63
Take into account wider stakeholder and social responsibilities and their
implications for long‑term success.
See pages 30 to 47
Embed effective risk management, considering both opportunities and
threats, throughout the organisation.
See pages 50 to 55
Maintain the Board as a well‑functioning, balanced team led by the Chair.
See pages 56 to 63
Ensure that between them the Directors have the necessary up‑to‑date
experience, skills and capabilities.
See pages 56, 57 and 69
Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement.
See page 63
Promote a corporate culture that is based on ethical values and behaviours.
See pages 08 and 34 to 39
Maintain governance structures and processes that are fit for purpose and
support good decision‑making by the Board.
See pages 50, 61 and 62
10.
Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders.
See pages 48, 49 and 63
60
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Board governance
The Board is responsible for setting
the vision and strategy for the Group,
working closely with the executive
management team to deliver a
successful business model for our
shareholders and other stakeholders.
There is a distinct division of
responsibilities between the Chair
and the CEO. The Chair is primarily
responsible for the effective working
of the Board in conjunction with
management, and the CEO is
responsible for the operational
management of the business and for
the implementation of the strategy
agreed by the Board.
From 1 June 2022 Stewart Gilliland
performed the role of Interim Executive
Chair. He reverted to his role as
Non‑Executive Chair on 1 April 2023
after overseeing the recruitment
process for the new CEO.
The Group Delegation of Authority
policy sets out the matters that are
reserved to the Board for approval.
These include:
• matters relating to the Company’s
legal purpose and position and its
status as a public listed company;
• changes in governance, strategy
and significant changes in internal
controls; and
• significant financial or contractual
commitments and decisions.
For the full policy see the Group’s
website.
Independence
Anders Hedlund, who founded our
Group, is a Nominee Non‑Executive
Director. Anders Hedlund is considered
not to be independent, because as
founder, he has served on the Board
since the Company’s inception and
his family hold significant interests
in the shareholding of the Company.
As reported in the financial statements,
there are also some related party
transactions between certain of the
subsidiaries within our Group and
companies under the ultimate control
of the Hedlund family.
Following a review by the Board, the
other Non‑Executive Directors (other
than Stewart Gilliland whilst he was in
the role of Interim Executive Chair) are
considered to be independent.
Committees
The Board has three committees –
Audit, Nomination and Remuneration.
Each of these committees is comprised
solely of independent Non‑Executive
Directors, with Executive Directors
being invited to meetings as
appropriate. For the membership of
each committee, including its Chair,
see the individual reports on pages
56 and 57.
The Audit Committee satisfies itself
on the integrity of financial information
and ensures the controls and risk
management systems within our
businesses are robust and defensible.
The Committee meets as required
during the year and at least twice with
the Group’s external auditors. Its role is
to review the interim and final financial
statements for approval by the Board,
to ensure that operational and financial
controls are functioning properly, and
to provide the forum through which
the Group’s external auditors report
to the Board. Further details about
the activities undertaken by the Audit
Committee this year can be found on
pages 64 to 67.
The Nomination Committee is
responsible for regularly reviewing
the structure, size and composition
(including the skills, knowledge,
experience and diversity) of the Board
and other senior executives, and
making recommendations to the Board
with regard to any changes. It also
keeps under review the leadership
needs of the organisation, to ensure
succession plans are in place, with a
view to ensuring the continued ability of
the organisation to compete effectively
in the marketplace. Further details
about the activities undertaken by the
Nomination Committee this year can be
found on pages 68 and 69.
The Remuneration Committee assists
the Board in fulfilling its responsibilities
to shareholders to ensure that: (i) the
remuneration policies and practices
of the Company are designed to
promote the long‑term success of the
Company, and are aligned with the
Company’s strategy and values, having
regard to all statutory and regulatory
requirements and to the views of
stakeholders; and (ii) senior executives
are provided with fair and sustainable
remuneration which is linked to
the delivery of strong personal and
corporate performance. Further details
about the activities undertaken by the
Remuneration Committee this year can
be found on pages 70 to 77.
The Terms of Reference for each
committee are reviewed annually and
can be found on the Group’s website.
The Board keeps all aspects of
corporate governance under review,
with the governance framework
developing further as the Group
continues to grow.
The Board is kept regularly updated
by the Company Secretary and the
NOMAD of their legal duties and any
changes to legal and governance
requirements for the Group.
In addition, the Board has access to
the Deloitte Academy, which gives each
Director (Executive and Non‑Executive)
access to a wide‑ranging programme
of technical briefings, education,
bespoke training and peer‑to‑peer
networking opportunities. This is a
useful resource to ensure that they
keep abreast of market trends in Board
governance, legislative reform and
keep their skills up to date.
The Board has access to external,
specialist advice when necessary.
This year, FIT Remuneration
Consultants LLP continued to provide
advice to the Remuneration Committee
on a retained basis and BDO LLP
(‘BDO’) continued to provide business
assurance support to the Audit
Committee.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
61
GOVERNANCE CORPORATE GOVERNANCE REVIEW
CONTINUED
Other key Board activities
During FY2023, the Board (itself or via
the Board committees) worked hard to
strike that essential balance between
achieving the Group’s short‑term
objectives and longer‑term growth and
development. Key activities included:
• monitoring and review of the
financial performance of the Group
on an ongoing basis, including
acquisitions, capital expenditure
and significant projects;
• review of the interim and annual
results including supplementary
papers;
• review of the effectiveness of the
Group’s internal financial controls,
general internal controls and risk
management systems;
• monitoring and review of the
effectiveness of the Business
Assurance function;
• overseeing the relationship with the
external auditors;
• approval of the strategy, plans and
budget;
• review of the Group’s principal risks;
• reviewing the output from the
employee engagement survey;
Memberships and attendance
• approval of changes to key
personnel including their
remuneration;
• approval of the granting of Awards
under the 2022‑2025 LTIP scheme;
• approval of annual bonus targets for
the following financial year;
• approval of a project to assess
climate‑related risks and
opportunities under different climate
scenarios; and
• approval of the Group tax strategy.
Time commitments
The Board is satisfied that the Directors
can devote sufficient time to meet their
Board responsibilities and carry out the
Company’s business.
Board performance
In February 2023 the Board conducted
a self‑evaluation of its performance.
As in previous years, the Directors were
asked to complete a questionnaire
based on the ten principles of the QCA
Corporate Governance Code (Code)
and answer additional questions
allowing Directors to give their views
on the main achievements of the
Board over the past twelve months,
and the Board’s main strengths and
weaknesses.
The results were initially reviewed by
the Chair and Company Secretary and
then shared and discussed with the full
Board.
The results show an improvement
across all the principles of the
Code, other than Principle 1. Such
improvements reflected the Board’s
focus over the prior 12 months on key
areas such as:
• Focusing on shareholder needs and
expectations and communicating
with them well,
• Working well together as a Board,
• Promoting an ethical corporate
culture.
Principle 1 relates to establishing a
strategy and business model. The
Board is fully aware of its obligations
under this Principle and is currently
reviewing the strategy, as highlighted in
the Executive Review on page 18.
In November 2022 and January
2023, the Audit, Nomination and
Remuneration Committees conducted
self‑evaluations of their performance.
Similar questionnaires were used
which incorporated the applicable QCA
guidance with tailoring to the specific
tasks of each committee.
Member
Member since
No. of meetings attended
Maximum possible meetings
Stewart Gilliland
5 July 2021
Anders Hedlund
23 October 1995
Mark Tentori
Clare Askem
Claire Binyon(a)
Paul Bal
Lance Burn
Giles Willits
1 January 2016
5 July 2021
1 June 2022
1 May 2022
17 October 2012
– 31 March 2023
1 January 2018
– 30 June 2022
(a) Claire Binyon was unable to attend the June Board meeting due to an existing board meeting with one of her other boards, which pre‑dated
her appointment.
62
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Topics covered included:
• roles and responsibilities;
• Terms of Reference and planning;
• meetings – content and running of;
• skill set of members; and
• shareholder interaction.
Audit Committee:
The results showed year‑on‑year
improvement across all areas.
It was noted that the FY2022 area
for improvement was in Professional
Development with a focus to appoint
a new member of the Committee who
had the relevant experience. This was
achieved in FY2023.
The two main areas for improvement
this year were in the areas of Risk
and Business Assurance. Paul Bal
was tasked with addressing risk
assessment improvement through the
Operating Board and the Committee
approved the FY2024 Business
Assurance Plan with a further review
of the Business Assurance strategy
planned for later in the year.
Nomination Committee:
This was the first year that the Committee
had reviewed its performance. The
results were good with members
believing that the Committee operated
‘above‑average’ to ‘fully satisfactory’.
Two areas of improvement were
noted: 1) succession planning, and
2) the members required a greater
understanding of skill sets and
recruitment processes in the wider
Business Units (outside of US and UK).
As a result the DG Americas and DG UK
HR directors (HRDs) were tasked with
creating and reviewing succession
plans across the Group and this is now
a bi‑annual review on the Committee’s
agenda. The HRDs will also provide
regular updates on the skill sets and
recruitment processes across the Group.
Remuneration Committee:
The responses showed an improvement
across all the above‑mentioned topics
since FY2022, with a noticeable
improvement in skills and shareholder
engagement. Participants recognised
that the Committee now operated with
more objectivity and independence than
in the past and valued the input received
from FIT Remuneration Consultants LLP.
The need for a greater understanding
of US/Rest of World remuneration
differences was noted, particularly
considering the absence of a Group
HR Director. As a result, the Committee
decided to invite the DG Americas and
DG UK HR directors to regularly attend
meetings, which they have done since
November 2022.
Shareholder engagement calendar 2022/2023
Early on the HRDs were able to
educate the Committee on the
performance reviews which existed in
each BU, whether they were factored
into remuneration and what the future
plans were. They also organised a
Group‑wide employee engagement
survey, the results of which can be
found on page 36.
Evaluation of the Chair and
Non‑Executive Directors
Mark Tentori, Senior Independent
Director, met with the Board members
(excluding Stewart Gilliland) to obtain
feedback on Stewart’s performance
as Chair. The feedback was extremely
positive, with each member confirming
their full support for the Chair.
Stewart met with each Director
individually to discuss their individual
contributions to the Board, assessing
their effectiveness and highlighting any
areas of improvement.
It has been good to see the continued
widening of the overall skill set and
experience on the Board. The Board is
in a strong position to drive the Group
forward and bring about improvements
in its performance.
27 April 2022
3 May – 19 May 2022
28 June – 4 July 2022
Trading update
Investor calls
Full Year results announcement followed by investor meetings and calls
15 August – 16 August 2022
Various investor calls
25 August 2022
22 September 2022
20 October 2022
14 November 2022
Investor call
Annual General Meeting
Trading update
Investor call
30 November – 6 December 2022
Interim results announcement followed by investor meetings and calls
13 December – 20 December 2022
10 January 2023
11 January 2023
13 January 2023
20 February 2023
4 March 2023
16 March 2023
Investor calls
Investor call
Investor visit to DG UK
Investor call
Investor call
Investor call
Investor call
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
63
GOVERNANCE AUDIT COMMITTEE REPORT
Mark Tentori
Chair of the Audit Committee
Dear Shareholder,
On behalf of the Board I am pleased
to present the Audit Committee report
for the year ended 31 March 2023.
This report provides an overview of
the Committee’s activities in the year
and looks ahead to our anticipated
activities in the coming year.
Year in review
The Committee throughout the
year continued to assist the Board
in fulfilling its corporate governance
responsibilities in relation to the
Group’s financial reporting, internal
control and risk management systems
as well as internal and external
audit functions. The Committee also
provided advice to the Board as to
whether the annual report and financial
statements taken as a whole are fair,
balanced and understandable and
provide the necessary information for
shareholders to assess the Company’s
position and performance, business
model and strategy.
The Committee works to a structured
agenda which is closely linked to the
Group’s reporting cycle, and over
the year the Committee met on three
occasions. After each Committee
meeting, I provided an update to the
Board on the key topics discussed
during our meetings. I also met
separately with the external audit
partner and senior management on a
number of occasions during the year.
The Committee is supported by the
Group’s established financial controls
framework and the finance functions
across the business. Employees,
auditors, and consultants around the
Group continue to work both on‑site
and via remote working. While the
historic transition to hybrid working
arrangements presented challenges
in terms of ensuring that businesses
were operating effectively within our
financial controls framework, the
Group’s learnings and adaptations
have ensured that the processes
now run smoothly.
In June 2022, Claire Binyon joined the
Committee. I would like to thank my
colleagues and fellow Board members
for their contribution and counsel
over the past twelve months which
enabled the Committee to fulfil its
role in providing effective challenge
and scrutiny.
This year, against an inflationary
backdrop, the Group has had
to deal with increased material,
labour and overhead costs. This
has required a rigorous approach
to pricing and a sharp focus on
product profitability, as well as
working capital management.
The process simplification and product
rationalisation coming out of our
review of the priorities and plans in
the DG Americas business has further
assisted our financial results for the
year including releasing cash tied up
in working capital.
In the last quarter of the financial
year, weakening consumer demand,
particularly in the UK market, has
lead to a non‑cash write down of
the carrying value of the goodwill
associated with the UK and Asia CGU.
The Committee’s primary focus as
always, is on the integrity of the
financial reporting process. The
Committee had a particular focus
on areas such as going concern,
asset impairment testing, inventory
provisioning and deferred tax asset
recognition. In addition, the Committee
concentrated on the accounting
judgements and disclosures with
regard to adjusting items.
The year ahead
The Group will focus its efforts on
the roll‑out of the new strategy: to
build a more resilient platform for
sustained growth beyond the current
recovery. However, we must also in
the coming financial year, continue
to focus on mitigating the impacts of
the headwinds likely to be faced, as
well as on the ongoing turnaround
in the DG Americas and DG UK
businesses, thereby continuing to
deliver margin improvement and
growing operating profit. In addition,
the gathering momentum of the
Group’s sustainability framework
‘helping design a better future’
and the upcoming TCFD reporting
requirements will lead to a focus in
respect of the Group’s reporting in
this area.
64
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
The Committee plays a key role in
assisting the Board in ensuring the
integrity of the financial statements,
and that the effectiveness of the
Group’s internal financial controls
and risk management framework
are maintained. I am comfortable
that the Committee is well placed to
meet these challenges and to fulfil its
duties over the coming year. I would
like to thank Paul Bal for his financial
management of the Group over the
past year, and I look forward to working
with the incoming Group CFO, Rohan
Cummings, when he arrives in July.
On behalf of the Board.
• assessing whether the financial
statements, taken as a whole, are
fair, balanced and understandable;
• ensuring the Group operates with
an appropriate internal controls
framework and adopts appropriate
risk management systems;
• monitoring and reviewing the
effectiveness of the Group’s
Business Assurance function in the
context of the Group’s overall risk
management framework; and
• overseeing the relationship with
the external auditors, including their
appointment, remuneration, terms of
engagement and annual audit plan.
Mark Tentori
Chair of the Audit Committee
19 June 2023
Role and responsibilities
of the Committee
The core duties of the Committee
include:
• ensuring the Group has suitable
arrangements and policies in place
to prevent fraud, anti‑bribery and
corruption and other compliance
concerns (and to enable employees
to report such matters);
• monitoring the integrity of the
annual and interim financial
statements, with a focus on
reviewing the significant financial
reporting policies and judgements
within them;
The Terms of Reference set out the
duties in more detail and can be
found on our website and incorporate
the relevant elements of the QCA
Corporate Governance Code. This
report highlights the key discussions,
decisions and actions that have taken
place this year.
Membership and attendance
All members of the Committee (other
than Stewart Gilliland whilst he was in
the role of Interim Executive Chair) are,
and were considered by the Board to
be, independent throughout the year
in review. As a qualified Chartered
Accountant, I am considered by the
Board to have recent and relevant
financial experience.
The Committee has access to the
Group’s finance team, to its outsourced
business assurance function and to its
external auditors and can seek further
training and advice, at the Group’s
cost, as appropriate.
The Committee met on three occasions
during the financial year. The quorum
necessary for the transaction of
business by the Committee is
two, each of whom must be a
Non‑Executive Director. Only members
of the Committee have the right to
attend Committee meetings, however
during the year, the Group CEO/CFO,
along with members of the Group
finance team, were invited to attend
the meetings. In addition, our external
auditors, PricewaterhouseCoopers LLP
(‘PwC’), and our business assurance
providers, BDO LLP (‘BDO’), have
also attended Committee meetings
at our invitation.
The Group Company Secretary and
General Counsel is Secretary to the
Committee.
Key activities and actions
over the year
Financial statements
The Audit Committee reviewed and
approved the unaudited interim
financial statements for the period
ending 30 September 2022 and
the full‑year audited statements
for the year ending 31 March 2023.
In reviewing the financial statements,
the Committee considered reports
from the Group finance function as well
as the external auditors.
The key matters reviewed and
evaluated by the Committee are
set out below:
Memberships and attendance
Member
Member since
Mark Tentori
1 January 2016
Stewart Gilliland
Claire Binyon
5 July 2021
1 June 2022
No. of
meetings attended
Maximum
possible meetings
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
65
GOVERNANCE
AUDIT COMMITTEE REPORT
CONTINUED
Key activities and actions
over the year continued
Significant accounting matters
The main areas of judgement within
the financial statements that have
been considered by the Committee
are outlined below. The Committee
has discussed these to ensure
that appropriate rigour has been
applied as well as assessing whether
management has made appropriate
judgements and estimates in line with
the Group’s accounting policies.
Throughout the year, finance teams
around the Group, along with the
Group finance function, have worked
to ensure that the business provides
the required level of disclosure on
significant issues to the Committee
in relation to the financial statements.
All accounting policies can be found
in note 1 to the financial statements.
Each of the areas of judgement has
been identified as an area of focus
and therefore the Committee has also
received detailed reporting on these
matters from PwC.
1. The Committee and the Board
reviewed and challenged the
evidence and assumptions
supporting the adoption of the
going concern basis for the financial
statements for the year ended
31 March 2023. With specific focus
on the Group’s turnaround in the
current financial year, the Committee
paid particular attention to the
forecasts prepared by management,
assessing cash forecasts for the
period ending 30 September 2024,
the ‘going concern assessment
period’, along with profitability
and revenue assumptions for the
period beyond 30 June 2024. In
April 2022, the Committee and the
Board approved the amending
and extending of the Group’s then
financing facilities. The Committee
and Board also approved the terms
of Group’s new re‑financing on the 5
June 2023, thereby securing funding
for the Group over the ‘going
concern assessment period’ and
beyond.
2. The Committee received reports
from management covering the key
judgements, forecasts and valuation
metrics supporting the impairment
reviews of goodwill, specifically
those associated with the UK
and Asia CGU. The Committee
challenged the information and
analysis prepared by executive
management including assumptions
on future cash flows (which were the
same as those used for the going
concern assessment), discount rates
used and long‑term growth rates,
and concurred with management’s
conclusion that an impairment of
the goodwill related to the UK and
Asia CGU should be recorded. The
same cash flows and assumptions
were used in assessing the
underlying investment values in
the PLC Company only accounts
and the Committee concurred with
management’s conclusion that an
impairment of the investment values
in the UK and Asia CGU should be
recorded.
3. The Committee reviewed the
use of alternative performance
measures (APMs) to present
adjusted metrics alongside statutory
counterparts and concurs with
management’s assessment that
the items presented as adjusting
items, represent adjusting items
in accordance with the Group’s
accounting policy. Adjusting items
are reviewed and approved by the
Board. These include costs and
income that are considered by the
Directors to be material or one‑off
in nature, or the amortisation of
acquisition intangibles. In addition,
the Committee is satisfied that the
rationale and explanations behind
the use of APMs is clearly disclosed
and reconciled.
4. The recognition of deferred tax
assets around the Group were
assessed using the same forecasts
that were used for the going
concern and asset impairment
testing, the Committee reviewed
the recognition criteria and agreed
with the continued derecognition
of certain deferred tax assets in
the Group.
5. The Committee reviewed the level
of inventory provisioning around
the Group at year end in respect
of aged inventory, or anything
deemed to be obsolete. In addition,
the reported provision release of
$6.4 million (2022: $6.2 million) and
utilisation of any brought forward
provisions from the prior year end
have been reviewed and challenged,
specifically those related to DG
Americas, and have been deemed to
be appropriate.
Other areas of focus
The Committee also during the year:
• approved the business assurance
plan and agreed the external
auditors’ work plans for the Group;
• considered regular reports from our
outsourced business assurance
function on their findings;
• reviewed the Group’s risk register;
• reviewed the Group’s
governance policies;
• approved the tax strategy
of the Group;
• approved the Group’s
centrally‑driven insurance
arrangements;
• approved the project proposal for
the assessment of climate‑related
risks and opportunities under
different climate scenarios which will
support future TCFD disclosure and
strategy considerations;
• reviewed the external auditors’
independence and objectivity,
the re‑appointment of the external
auditors and approval of the external
auditors’ remuneration; and
• conducted post implementation
reviews of capital expenditure.
66
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Internal controls
and risk management
The Committee oversees the
Group’s risk management framework,
monitoring and reviewing the risk
assessment process and advising the
Board on risk exposures.
The Board has delegated responsibility
for reviewing the effectiveness of the
Group’s systems of internal control to
the Audit Committee, which includes
financial, operational and compliance
controls. The Committee gains
assurance via a number of sources
both internally and externally.
Financial controls
The Committee continually reviews the
effectiveness of the Group’s internal
financial controls. As the Group
operates as a decentralised business,
each business unit has its own finance
function, while recognising the benefits
of leveraging the Group. Each business
unit is responsible for managing the
processes and procedures, including
financial controls and accounting
policies within its jurisdiction.
Importantly, the Group dictates a set
of minimum financial controls that each
business unit is expected to adhere to,
along with Group accounting policies
to which each business unit is aligned.
This forms part of the Group’s financial
control framework.
Each business unit confirms with
every monthly accounts submission
that they are adhering to this minimum
set of controls. Bi‑annually, a more
comprehensive self‑assessment
checklist is required to be completed
by each business unit.
This provides the Group finance
function, and therefore the Committee,
with comfort that appropriate financial
controls are in place around the
Group. As the Committee continuously
seeks to raise the bar around financial
controls, a review of the key financial
controls was performed by the
business assurance provider.
This process has highlighted further
opportunities for the Group to refine the
financial control framework, enhance
training, and provide greater central
oversight over the controls process.
The Committee will oversee the
implementation of these enhancements
during the course of the next financial
year.
The Committee also noted the internal
control findings highlighted in the
external auditors’ reporting to the
Committee and confirmed that it is
satisfied that there is no material
misstatement and that relevant action
is being taken to resolve the control
matters that were raised.
Business Assurance
The Group’s risk management
framework operates within a ‘three
lines of defence’ assurance model.
The first line of defence lies with
the operational owners and are the
teams within the business managing
and mitigating risks as part of their
operational model. The second line of
defence is internal and is corporate
oversight, whereby individuals who
are independent to the day‑to‑day
operations perform a second layer
review or verification of the mitigations
and controls in place.
To gain further comfort, the Group
operates an outsourced business
assurance function as a third line of
defence, which was performed by
BDO during the financial year ended
31 March 2023.
In the prior years, an initial detailed
review of principal risks and associated
risk appetite by the Board, and a
Group‑wide risk assurance mapping
assessment was performed. The
Committee has guided the activities
of BDO in order to address the
gaps between risk appetite and
risk assurance mapping. Following
on from the review performed over
cyber security in the prior year and
the finalisation of the review on
governance and compliance framework
assessment, BDO has undertaken
reviews over key financial controls and
supply chain and sourcing.
External audit
The Committee monitors the
Company’s relationship with the
external auditors to ensure that
external independence and objectivity
are maintained. In March 2023, the
Committee met with PwC to agree the
audit plan for the year, highlighting
the key financial statements and
audit risks, to ensure the audit was
appropriately focused. In June
2023, the Committee received a
report from PwC with their key audit
findings including the significant
accounting matters discussed above,
and also considered the Letter of
Representation that PwC requires
from the Board. The Committee met
with PwC privately on a number of
occasions during the year to discuss
any matters necessary without
management present.
The Committee has recommended to
the Board that PwC are re‑appointed
as external auditors for the forthcoming
financial year. This will be put to
shareholders at the AGM in September.
Non‑audit services
The Group has a policy in place
governing the provision of non‑audit
services by the external auditors in
order to ensure the external auditors’
objectivity and independence is
safeguarded. Under this policy, a ‘white
list’ of permitted services is outlined,
which includes the interim review
undertaken by the external auditors
during the financial year. No non‑audit
service can be provided to the Group
without the express approval of the
Committee.
Evaluation of the Committee
The evaluation of the Committee was
completed during the financial year as
part of the FY2023 Board evaluation
programme. An explanation of the
process and conclusions arising from
it are set out on page 63.
This report was approved by the Board
of Directors on 19 June 2023.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
67
GOVERNANCE NOMINATION COMMITTEE REPORT
Stewart Gilliland
Chair of the Nomination Committee
On behalf of the Board I am
pleased to present the Nomination
Committee report for the year ended
31 March 2023.
Activities during the year
This year the Committee oversaw
several changes in our Board and
senior leadership teams:
Duties
The primary duties of the Committee
are to:
• regularly review the structure, size
and composition (including the
skills, knowledge, experience and
diversity) of the Board and make
recommendations to the Board with
regard to any changes;
• keep under review the leadership
needs of the organisation, and to
ensure succession plans are in
place, with a view to ensuring the
continued ability of the organisation
to compete effectively in the
marketplace;
• evaluate the balance of skills,
knowledge, experience and diversity
on the Board and, in the light of this
evaluation, prepare a description
of the role and capabilities required
for a particular appointment and the
time commitment expected; and
• work and liaise as necessary with
other Board committees, ensuring
the interaction between committees
and with the Board is reviewed
regularly.
Terms of Reference
The full Terms of Reference, which are
reviewed and approved annually, can
be found on our website.
Non‑Executive Directors
As stated in last year’s Annual Report,
on 1 June 2022 Claire Binyon joined the
Board as a Non‑Executive Director.
Also on 1 June 2022, I agreed to take
on additional responsibilities on a
temporary basis in the role of Interim
Executive Chair. This continued until
1 April 2023 when I reverted to my role
as Non‑Executive Chair.
Executive Directors
Giles Willits was an Executive Director
and employee of the Company until
30 June 2022. As announced on
30 March 2022, Paul Bal succeeded
Giles as Group CFO, joining the Board
on 1 May 2022.
Following a thorough internal and
external recruitment process in Q3,
Paul Bal was appointed Group CEO,
effective as of 1 April 2023.
Lance Burn resigned as a Director
on 31 March 2023 but remains with
the Company undertaking a key
project role.
Rohan Cummings has agreed to join
the Board as Group CFO with effect
from 3 July 2023.
The Company used the services of
Warren Partners for all the executive
and non‑executive recruitments.
Wider workforce
We have also strengthened some of
our Senior Management Teams across
the Group with both a new CEO and
CFO appointed in DG Americas, new
MDs appointed in DG UK and the
Anchor International business within
DG Europe, and a new FD appointed in
DG Europe.
The Committee took an active role in
overseeing the above appointments,
taking into consideration the needs of
the business and aligning those with
the skills, knowledge and experience
of both the existing and new Directors.
The Board was kept fully informed at
each step with the ultimate decisions
regarding the Executive Directors being
made by the full Board.
Diversity and inclusion
The Committee is keen to embrace
a diverse culture and wants to see
that reflected in the make up of the
Board. The percentage of women on
the Board is now 33.3% (dropping to
29% when the new CFO joins) which is
a great improvement from a few years
ago. Last year the Board undertook
a skills assessment to identify where
the strengths lay and to identify any
gaps. The recruitment of Claire Binyon,
with additional financial skills, was a
key output of that. This year the skills
matrix has been updated to include the
new directors.
68
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
The skills matrix was comprised of four ‘core’ skills and a number of sector‑specific skills. The results are set out below:
Succession Planning
We have now introduced a formal succession planning and review process. The DG Americas and DG UK HR directors
(HRDs) are tasked with creating and reviewing succession plans across the Group and these are now reviewed bi‑annually
by the Committee.
Board skills matrix
Skill
Number of Directors
Skill
Number of Directors
M&A/Capital Markets
3
International Markets
2
Cyber Security/IT
Manufacturing/Supply Chain
1
2
Health & Safety
2
3
4
6
3
4
Not skilled
Partially skilled
Highly skilled
Environmental/Social
3
Senior Executive
Legal/Public Policy
Financial/Audit & Risk
2
22
2
2
Core Industry
1
4
3
6
6
2
1
Self‑evaluation
In January 2023, in accordance with Principle 7 of the QCA Code, the Nomination Committee conducted its annual
self‑evaluation. This was the first review undertaken by the Committee and more information is provided on page 63.
Memberships and attendance
Member
Member since
No. of meetings attended
Maximum possible meetings
Stewart Gilliland
5 July 2021
Mark Tentori
Clare Askem
1 January 2016
5 July 2021
Executive Directors attend by invitation when appropriate.
Stewart Gilliland
Chair of the Nomination Committee
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
69
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT
Clare Askem
Chair of the Remuneration Committee
Dear Shareholder,
On behalf of the Board, I am pleased
to present to you the Remuneration
Committee’s report for the year ended
31 March 2023. This report is split
into 3 parts: Part 1 my statement and
details of the remuneration committee;
Part 2 the remuneration policy;
and Part 3 the annual report on the
application of the remuneration policy
for the year ended 31 March 2023.
The other members of the Committee
are Mark Tentori, Stewart Gilliland and
Claire Binyon. We met ten times during
the year, five of these were planned and
the remaining ones were scheduled as
required. The full Terms of Reference
for the Committee, which are reviewed
and approved annually, are available on
our website. These were last reviewed
in November 2022.
In a continuing year of change and
challenge across the Group, I’d like
to thank all our colleagues for their
continuing hard work, dedication and
commitment.
Part 1: Chair statement
This year we have continued the
change journey in terms of Board
membership and that of the wider
senior management teams. We have
also taken steps to engage with the
wider workforce across the Group
with the aim of broadening our
understanding of the challenges they
face, their motivations and how we
can support them in building a better
future within Design Group. We have
considered this broader context when
making our remuneration decisions.
In the absence of a Group HR Director,
we asked the DG Americas and DG UK
HR directors (HRDs) to become regular
attendees of the Committee meetings.
This has been a success, giving the
HRDs’ insight into the key external
drivers affecting our remuneration
policies but more importantly it has
also given the Committee members
greater visibility of our colleagues’
perspective of working for the Group.
To further our Board understanding
of our wider workforce, I attended the
Group HR Forum where the HR teams
across the business share updates
and collaborate on best practice.
Stewart Gilliland attended a number of
“skip level” meetings in the UK which
are designed to give employees an
opportunity to raise feedback without
their managers present. We also
initiated the first ever Group‑wide
employee engagement survey this
year: “Your Voice. Our Future.” and
were extremely pleased to achieve a
participation rate of 78% across the
Group. Following the challenges both
internally and externally over the last
couple of years, it was encouraging to
see that 76% of participants said they
would recommend Design Group as a
good employer. Areas of improvement
were also noted and these will be
worked on over the coming year. As a
Board we also visited DG Americas,
DG UK and DG Europe to meet the
senior management teams in person
and build stronger relationships as
a result.
70
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
We are a National Living Wage
employer in the UK. However, we were
very aware of the cost‑of‑living crisis
faced by our employees and wanted
to help in a way that was meaningful
but also affordable. Although it was
widely recognised that cost‑of‑living
issues disproportionately impact lower
paid employees, it was also clear that
each country within which we operate
had its own variations in cost‑of‑living
impacts, and so it was delegated to
the local Managing Directors to make
the decision as to how to best provide
any support. In practice, DG UK, DG
Europe, Anchor and DG Australia
all gave financial support to their
employees below senior management
level by way of one‑off payments or a
time limited monthly payment.
In addition, in July 2022 DG Europe
decided, in consultation with the works
council, to grant an increase of 3%
to those employees subject to the
collective labour agreement (which
was additional to the increase agreed
by the trade unions and industry
delegates under the agreement).
They also increased the shift allowance
by a further 3%, recognising that the
lower paid employees needed a higher
increase.
The following key decisions have been
taken, which are explained in more
detail below:
• shareholder engagement
• key management changes and
implications on remuneration
• salaries and annual bonus
• share schemes
Memberships and attendance
Member
Clare Askem
Mark Tentori
Shareholder engagement
The Committee had historically
engaged with shareholders via the
AGM, responding to correspondence
or at individual meetings with
shareholders when requested.
In addition, in May and September
2022, I wrote to key institutional
investors to update them on
remuneration decisions which had
been taken or were due to be taken
and to give them opportunity to give
feedback on future remuneration plans.
We also introduced an advisory vote
on the Directors’ remuneration report
at the AGM in September 2022. The
result was that 99.98% of votes cast
were in favour of the remuneration
decisions taken by the Committee in
FY2022. This was a significant outcome
for us and, we believe, demonstrated
that we had listened and responded
appropriately to previous shareholder
views and that our shareholders
supported the changes which we
had made and which we were then
communicating.
Key management changes
This year we have announced the
following Board changes:
Executive Directors
• As announced on 30 March 2022,
Paul Bal joined the Board on
1 May 2022 as Group CFO. He was
then successful in the Group CEO
recruitment process and took up the
position formally on 1 April 2023.
• Lance Burn resigned from the Board
on 31 March 2023. He has remained
with the Group, performing a key
project role.
• Giles Willits stepped down as Group
CFO and resigned from the Board
on 30 June 2022.
Non‑Executive Directors
• Claire Binyon joined the Board on
1 June 2022.
• Stewart Gilliland took up the role
of Interim Executive Chair from
1 June 2022 and reverted to his
Non‑Executive Chair role on
1 April 2023.
In addition to the Board changes,
the Committee also reviewed the
remuneration arrangements for the
new DG Americas CEO, the new
DG Americas CFO, new Group
Financial Controller and the senior
management teams across the Group.
Only two meetings were not fully
attended and these were unscheduled
meetings for which the non‑attendees
had prior commitments.
Executive Directors attend by invitation
when appropriate.
Member since
No. of meetings attended
Maximum possible meetings
5 July 2021
1 January 2016
Stewart Gilliland
5 July 2021
Claire Binyon
1 June 2022
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
71
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Part 1: Chair statement
continued
Salaries and annual bonus
FY2023
As noted in last year’s report, other
than Stewart Gilliland’s increase in
fees for taking on the role of Interim
Executive Chair, the Directors did not
receive a salary increase in FY2023.
Anders Hedlund stepped down from
his consultancy role within DG UK on
31 December 2022 and therefore only
received the standard Non‑Executive
Director fee of £45,000 from that date.
Bonus
We used a mix of Group Adjusted
EBITDA (80% weighting) and Net Cash
(20% weighting) targets for our FY2023
annual bonus.
Our performance against both metrics
was strong and significantly ahead
of expectations notwithstanding
challenging market conditions
continuing. We were pleased that
our participating executive directors
earned bonuses of 120% of salary.
The Committee considered these
outcomes to be appropriate having
regard to overall company performance
in the year.
For the EPS measure, we used a
performance range for the Adjusted
EPS metric in absolute value terms,
modelled from the recovery plan
presented at the time of the FY2023
Budget after inclusion of relevant LTIP
charges. Upper and lower limits were
modelled for FY2025 EPS performance
(reflecting a 3‑year performance period
of FY2023, FY2024 and FY2025), with
25% vesting at Threshold of 19 cents
EPS and a straight‑line sliding scale to
Maximum at 27 cents.
An underpin condition was also
applied to the awards that allows the
Committee to reduce vesting levels if
it determines that vesting outcomes
reflect unwarranted windfall gains from
share price movements.
Awards under the Plan were also
granted to 70 key leaders and senior
managers across the Group. We were
pleased to be able to broaden the
participation of the Plan recognising
the importance of aligning senior
manager and shareholder objectives.
Taking into consideration the effect
on the existing share plans’ dilution
authority, the Board requested that the
Employee Benefit Trust purchased up
to one million ordinary shares in the
Company at the best price possible.
The EBT agreed with this request and
in September 2022 purchased one
million shares at a price of 77.5p per
share.
Share incentive schemes
VCS 2020‑2023
As noted in last year’s report, this was
cancelled as of 28 June 2022.
LTIP 2022‑2025
On 11 August 2022, a total of 410,759
conditional awards and 480,536 nil
cost options over ordinary shares
of 5 pence each in the capital of the
Company were awarded to Lance Burn
and Paul Bal respectively, under the
Company’s 2022 Long Term Incentive
Plan (Plan). The reference value of
a share used to set the number of
shares under the Awards was 94.946p
being the average of the volume
weighted average price of shares on
AIM for each of the 30 Dealing Days
immediately preceding the Grant Date
of 11 August 2022.
The awards were weighted two‑thirds
towards a Relative Total Shareholder
Return (TSR) metric and one‑third
Earnings Per Share (EPS) metric as
the performance measures. Following
advice from our remuneration
consultants, it was decided that a
measurement of TSR by the Group
relative to a peer group of the FTSE
SmallCap excluding Investment
Trusts would be an appropriate
performance criterion.
For the Relative TSR measure,
qualifying performance is within the
median quartile on a straight‑line
sliding scale with 25% of entitlement
vesting at a 50th percentile (median)
ranking rising to 100% vesting at a
75th percentile (upper quartile) ranking
performance. There is no vesting below
the median ranking.
72
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Payments made to former
Directors and payments for
loss of office
No payments were made to former
Directors for loss of office.
Other key activities of the
Committee during the year
• Reviewed the Committee’s Terms of
Reference
• Undertook a self‑evaluation of
the Committee. See page 63 for
further detail
• Approved the remuneration section
of the Company’s annual report and
financial statements
• Reviewed the Executive
shareholding policy and the Head
Office expenses policy
• Received presentations from the
HRDs and received feedback on the
Group‑wide employee engagement
survey
• Wrote to institutional shareholders to
update them on recent remuneration
decisions and future plans
• Reviewed pensions across the
group in light of the alignment
of Executive pensions reported
last year
• Received an update on talent
development and performance
management across the Group
to better understand how we are
supporting colleagues
Assistance to the Committee
During the year the Committee
received input from the CFO, the
Company Secretary and the HRDs.
In addition, it continued to receive
advice from FIT Remuneration
Consultants LLP.
Implementation of policy in
FY2024
Salary/fees review
The annual salary review process for
Executive Directors took into account
Paul Bal’s new role as Group CEO
for which he was given a salary of
£470,000 effective on appointment,
with no additional inflationary increase
for FY2024.
Rohan Cummings was appointed as
Group CFO effective from 3 July 2023
and was given a salary of £370,000
with additional benefits in line with the
Remuneration Policy.
The Non‑Executive Directors did not
receive any increase to their fees.
FY2024 incentive plans
The Committee continues to believe
that it is in shareholders’ best interests
that ‘market normal’ incentive plans
are operated in FY2024 to support the
ongoing recovery journey. The current
intention is to:
• operate an annual bonus plan; and
• award an LTIP in summer FY2024
(‘2023‑2026 LTIP’) to a population of
senior executives.
When awarding the LTIP we will
continue to be mindful of the risk of
windfall gains and also the dilution
effects of the scheme.
The table on the next page sets out
further detail of how the remuneration
policy will be applied for FY2024.
Conclusion
I hope that you have found my
introductory statement useful and
the accompanying report informative
and clear. We hope that shareholders
will give their support to the DRR
advisory resolution at the AGM in
September 2023.
Clare Askem
Chair of Remuneration Committee
19 June 2023
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
73
GOVERNANCE DIRECTORS’ REMUNERATION REPORT
CONTINUED
Part 2: Remuneration policy
Executive Directors
The Group’s remuneration policy is to ensure that the remuneration of Executive Directors is sufficiently competitive to
enable the Group to retain and motivate existing Directors and attract high‑quality performers in the future. The Group aims
to incentivise and reward its Executive Directors in a way that is consistent with the Group’s commercial objectives and to
align the interests of the Directors with those of the shareholders. To achieve this, the Executive Directors’ total remuneration
comprises both fixed remuneration and variable reward, the latter reflecting Group performance.
The five main components of the Executive Directors’ remuneration packages can be seen in the table below, with a clear
link to the Group’s business model and strategy:
Element
(and purpose)
Link to business
model and strategy
Operation and
performance
Base salary
To attract and
retain individuals
of the required
calibre to
successfully
deliver the
business strategy.
‘Working with the
winners’ extends to our
employees – recruiting
Executive Directors with
the level of skills, talent
and experience needed to
execute our strategy.
Annual bonus
To align the
interests of
Executive
Directors with
shareholders.
The annual bonus
encourages individuals
to actively support and
engage with the delivery
of the Group strategy,
with payout directly based
on Group performance.
LTIP schemes
To align the
interests of
Executive
Directors with
shareholders and
support retention.
The primary purpose of
the long‑term incentive
schemes is to reward the
individual for delivering
the Group strategy
and, in turn, increasing
shareholder value.
Salaries are based on
a number of factors,
including:
• the skills and experience
of the individual;
• the size, responsibilities
and complexity of the
role;
• external market data; and
• inter‑Group comparisons.
The Remuneration
Committee sets the
performance measures
and targets each year.
Bonuses are paid in
cash once the annual
results have been
audited and are subject
to the approval of the
Committee.
Awards under the
schemes are in the
form of shares and are
subject to performance
conditions.
Maximum
opportunity
Not applicable.
Operation in FY2023
Interim Executive Chair –
£420,000 p.a. paid pro‑rata
while holding this role
CFO – £365,000 p.a.
Interim COO – £425,000 p.a.
paid pro‑rata for the period
in which he holds the Interim
COO role
The maximum
achievable is 120%
of base salary for the
Executive Directors.
Maximum bonuses at 120% of
base salary
Metrics: 80% Group Adjusted
EBITDA; 20% Net cash
265% of base salary,
325% in exceptional
circumstances.
2022‑2025 LTIP
CFO was awarded 125% of
base salary
Interim COO was awarded
125% of his non‑interim
base salary
Three‑year vesting period and
two‑year holding period
Metrics – two‑thirds relative
TSR vs FTSE SmallCap (ex IT)
constituents; one‑third EPS
The Interim COO was on
7.5% which was reduced to
5% at the end of December
2022, ensuring all Executive
Directors receive 5%. This is in
line with the wider workforce.
Pension
To provide market
normal pensions.
To enable Directors
to make long‑term
provisions for their future
retirement at market
competitive rates.
Pensions are provided in
line with market practice
and relevant statutory
requirements.
5%
Other benefits
To provide market
normal benefits.
The provision of
additional benefits assists
in the Group’s recruitment
strategy and gives the
employee comfort and
assistance in carrying out
their roles effectively.
Benefits can include:
life assurance, private
medical insurance and
car allowance.
Not applicable.
No changes
74
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Dilution of share capital by
employee share plans
The Company monitors and has
complied with dilution limits in its share
scheme rules. The Board retains the
flexibility of using Employee Benefit
Trusts to buy ordinary shares to
mitigate future dilution subject to cash
position and banking approvals.
Malus and clawback
The LTIP schemes are subject to malus
and clawback provisions which may be
applied in the following circumstances:
• a material misstatement of the
Company’s audited results;
• a material failure of risk
management, in any Group Member
or a relevant business unit;
• serious reputational damage to the
Company, any other Group Member
or a relevant business unit; or
• any other circumstances which the
Board in its discretion considers
are disadvantageous to the
shareholders and are similarly
serious in nature to those above.
Holding periods
Under the LTIP, the Executive Directors
are subject to a two‑year holding
period, during which time they are
prevented from exercising any shares
which have vested under the scheme.
Shareholding guidelines
The Company operates a shareholding
policy which requires Executive
Directors to build up a holding of
shares equal in value to 100% of their
salary before any shares are sold.
LTIP awards that have vested and
been exercised count towards the
requirement.
Non‑Executive Directors
The Group’s remuneration policy in
respect of Non‑Executive Directors
is to pay annual fees which reflect
the responsibilities and duties placed
upon them, whilst also having regard to
market practice.
The remuneration of the Non‑Executive
Directors is recommended by the
Chair and approved by the Executive
Directors. The Chair’s remuneration
is approved by the Remuneration
Committee. No Director is involved
in any decision relating to their own
remuneration.
Service contracts
The Executive Directors have service
contracts which can be terminated by
the Company with no greater than six
months’ notice.
Non‑Executive Directors do not
have service contracts and their
appointments may be terminated
without compensation at any time.
All Non‑Executive Directors have letters
of appointment and their appointment
and subsequent re‑appointment is
subject to approval by shareholders.
FY2024
No additional significant changes to the
remuneration policy are envisaged for
FY2024; however, the Remuneration
Committee will continue to regularly
review the policy to ensure it remains
appropriate to the business.
Part 3: Annual report on remuneration
Directors’ remuneration
The summary of Directors’ remuneration is as follows (audited):
Salary and bonus
Benefit
Pension contribution
LTIP(a)
Total remuneration(b)
Aggregate for all Directors
Highest paid Director
FY2023
£000
FY2022
£000
FY2023
£000
2,529
1,611
935
43
56
97
79
142
—
15
29
—
2,725
1,832
979
FY2022
£000
500
39
75
—
614
(a) Giles Willits, an Executive Director up until 30 June 2022, exercised on 29 June 2022 previously vested LTIP options over 119,626 Ordinary Shares
at a price of 81.0 pence.
(b) Total remuneration for FY2022 does not include Paul Fineman’s payment for severance of £612,900 and compensation for accrued holiday of
£39,692.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
75
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Part 3: Annual report on remuneration continued
Directors’ remuneration continued
The remuneration in respect of the year ended 31 March 2023 to the Directors, by individual, was as follows (audited):
Year ended 31 March 2023
Executive Directors
Paul Bal(c)
Lance Burn
Stewart Gilliland
Giles Willits(d)
Total Executive
Non‑Executive Directors
Clare Askem
Claire Binyon(e)
Anders Hedlund(f)
Mark Tentori
Total Non‑Executive
Total Directors
Salary/fees
£
Bonus(a)
Benefits (b)
£
£
Pension
£
LTIP
£
Total
£
334,584
401,500
18,894
16,729
425,000
510,000
15,086
29,219
373,333
—
—
—
126,000
117,000
5,730
9,750
—
—
—
—
771,707
979,305
373,333
258,480
1,258,917 1,028,500
39,710
55,698
— 2,382,825
55,000
37,500
89,332
60,000
241,832
—
—
—
—
—
—
—
3,131
—
3,131
—
—
—
—
—
—
—
—
—
—
55,000
37,500
92,463
60,000
244,963
1,500,749 1,028,500
42,841
55,698
— 2,627,788
(a) Bonuses are accrued and will be paid in June 2023.
(b) The benefits relate primarily to private health and car benefits. Anders Hedlund’s entitlement to benefits ended on 31 December 2022.
(c) Appointed 1 May 2022.
(d) Resigned 30 June 2022. Figures above include compensation for accrued holiday entitlement of £28,500. Bonus for FY2023 relates only to period
worked.
(e) Appointed 1 June 2022.
(f) Salary/fees for Anders Hedlund include £45,000 for his Non‑Executive Director role with the balance relating to his consultancy role with the UK
business. His consultancy role ended on 31 December 2022.
The highest paid Director was Lance Burn (2022: Paul Fineman).
The Group provides death in service life assurance to the value of four times pensionable salary.
The remuneration in respect of the year ended 31 March 2022 to the Directors, by individual, was as follows (audited):
Year ended 31 March 2022
Executive Directors
Lance Burn
Giles Willits
Total Executive
Non‑Executive Directors
Clare Askem(b)
Stewart Gilliland(c)
Anders Hedlund(d)
Mark Tentori
Total Non‑Executive
Total Directors
Salary/fees
£
Bonus
£
Benefits(a)
£
Pension
£
LTIP
£
Total
£
318,910
375,000
693,910
36,250
105,000
101,837
60,000
303,087
1,490,997
—
—
—
—
—
—
—
—
—
15,163
29,543
14,799
37,500
29,962
67,043
—
—
4,249
—
4,249
—
—
—
—
—
—
—
—
—
—
—
—
—
363,616
427,299
790,915
36,250
105,000
106,086
60,000
307,336
72,715
142,043
— 1,711,755
(a) The benefits relate primarily to private health and car benefits.
(b) Appointed 5 July 2021.
(c) Appointed 5 July 2021.
(d) Salary/fees for Anders Hedlund include £45,000 for his Non‑Executive Director role with the balance relating to his consultancy role with the UK
business.
76
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Long Term Incentive Plan(a)
Share options held by Executive Directors who served during the year are as follows:
Paul Bal
Lance Burn
Giles Willits(b)
LTIP vested
2017‑2020
LTIP vested
2018‑2021
LTIP not
yet vested
2022‑2025
—
—
480,536
48,025
55,915
410,759
—
—
—
(a) Audited.
(b) Giles Willits exercised 119,626 share options on 29 June 2022. No other options were exercised in the financial year by Executive Directors.
Further information can be found in note 23 to the consolidated financial statements.
Directors’ interests(a)
The Directors who held office during the year had the following direct interests in the ordinary shares of the Company:
Interest in ordinary shares at the end of the year
Clare Askem
Paul Bal
Claire Binyon
Lance Burn
Stewart Gilliland
Anders Hedlund(b)
Mark Tentori
FY2023
FY2022
24,096
—
110,000
83,300
13,605
25,679
57,500
100,448
39,665
—
—
7,500
448
11,111
(a) Audited
(b) In addition to the above holdings: (a) 16,642,640 (2022: 16,642,640) and 5,275,116 (2022: 5,275,116) ordinary shares of 5p each are respectively
registered in the name of AC Artistic Limited (‘Artistic’) and Malios Limited, companies incorporated in the British Virgin Islands, and under the
ultimate control of the Hedlund family. In addition to the Hedlund family’s beneficial interest set out above, the Hedlund family is also interested in
a further 900,790 ordinary shares. These ordinary shares are held by West Coast Trust, a trust for the benefit of Anders Hedlund’s adult children.
In total, the Hedlund family has interests in 22,918,994 ordinary shares, representing 23.39% of the current issued share capital of Company.
Cumulative total shareholder return (dividend reinvested) vs. selected indices
The graph below shows the percentage change in total shareholder return for the last ten years compared to the FTSE Small
Cap, FTSE AIM All‑share and the FTSE AIM UK 50.
1,800%
1,500%
1,200%
900%
600%
300%
0
0
1
o
t
d
e
s
a
b
e
r
n
r
u
t
e
r
l
r
e
d
o
h
e
r
a
h
s
l
a
t
o
T
0%
Mar 13
Mar 14
Mar 15
Mar 16
Mar 17
Mar 18
Mar 19
Mar 20
Mar 21
Mar 22
Mar 23
IG Design Group
FTSE Small Cap
FTSE AIM All-share
FTSE AIM UK 50
+307.3%
+113.3%
+24.7%
+42.4%
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
77
GOVERNANCE
DIRECTORS’ REPORT
The Directors present their annual
report on the affairs of the Group and
the Company, together with the audited
financial statements and independent
auditors’ report for the year ended
31 March 2023.
Directors
The Directors who were in office during
the year were:
• Clare Askem
• Paul Bal (appointed on 1 May 2022)
• Claire Binyon (appointed on
1 June 2022)
• Lance Burn (resigned on
31 March 2023)
• Stewart Gilliland
• Anders Hedlund
• Mark Tentori
• Giles Willits (resigned with effect
from 30 June 2022)
Results and dividends
Results for the year ended
31 March 2023 are set out in the
consolidated income statement
on page 90. The Directors are not
recommending a final dividend for
FY2023.
Articles of association
A copy of the full articles of
association is available on request
from the Company Secretary and
is also available on the Group’s
website www.thedesigngroup.com.
Any amendments to the articles of
association can only be made by a
special resolution of the shareholders.
Share capital and substantial
shareholders
Details of the issued share capital,
together with details of the movements
during the year, are shown in note 20 to
the consolidated financial statements.
The Company has one class of
ordinary share which carries no right
to fixed income. Each ordinary share
carries the right to one vote at general
meetings of the Company.
There are no specific restrictions on
the size of a holding nor on the transfer
of shares, which are both governed by
the general provisions of the articles of
association and prevailing legislation.
Details of share‑based payments
are set out in note 23 to the financial
statements and the Directors’
remuneration report. No person has
any special rights or control over the
Company’s share capital and all issued
shares are fully paid.
At 31 March 2023, the Company
has been notified of the following
substantial shareholders of the issued
ordinary share capital of the Company:
Largest shareholders(a)
% of issued share capital
Hedlund Family
23.39%
Canaccord Genuity
Wealth Management (Inst)
Octopus Investments
Fidelity International
Rowan Dartington,
stockbrokers
13.64%
11.28%
9.40%
3.99%
(a) Information taken from Equiniti Share
Register Analysis 31 March 2023.
Acquisition of the Company’s
own shares
At the AGM held on 22 September
2022, the Company was authorised in
accordance with Section 701 of the Act
to make market purchases (within the
meaning of Section 693(4) of the Act) of
up to 9,788,781 ordinary shares (being
approximately 10% of the share capital)
on such terms and in such manner as
the Directors of the Company may from
time to time determine.
This authority was not used during
the year or up to the date of this
report. Shareholders will be asked to
renew these authorities at the AGM as
detailed in the next AGM notice.
Directors’ indemnities and
Directors’ and officers’ liability
insurance
The Directors have the benefit of
an indemnity provision contained
in the Articles of Association which
is a qualifying third‑party indemnity
(as defined by section 234 of the
Companies Act 2006).
The Company has purchased
Directors’ and officers’ liability
insurance during the year as allowed by
the Company’s articles and is in place
at the point of signing the financial
statements.
Financial risk management
Details of the Directors’ assessment
of the principal risks and uncertainties
which could impact the business
are outlined in the principal risks
and uncertainties section on pages
50 to 55 along with financial risk in
note 24 to the consolidated financial
statements. The Board manages
internal risk through the ongoing
review of the Group’s risk register
and the Board manages external risk
through monitoring of the economic
and regulatory environment and market
conditions.
78
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Approval of the strategic report
and Directors’ report
The strategic report and Directors’
report were approved by the Board on
13 June 2023.
Environmental reporting
During FY2023 we reviewed the UK
businesses’ total energy use and
associated greenhouse gas emissions
in accordance with the government’s
guidance on Streamlined Energy and
Carbon Reporting. The result of this
review, focusing on the combustion
of gas, the consumption of fuel for
transport, and electricity use, is set out
in the strategic report on page 47.
Future developments
The Board aims to pursue its corporate
strategies as detailed in the strategic
report on pages 10 to 15.
By order of the Board
Joy Laws
Company Secretary
19 June 2023
Going concern
The Directors continue to adopt the
going concern basis in preparing the
annual report and financial statements.
Further details are set out in note 1 to
the consolidated financial statements
and page 28 of the strategic report.
Post balance sheet events
See note 30 for details.
Political donations
No political donations were made
during the year under review.
Employees
The Group recognises the benefits
of keeping employees informed on
matters affecting them as employees
and on the various factors affecting
the performance of the Group. This is
achieved through employee briefings
that are held in most businesses at
least twice a year and regular team
briefings. For further information please
refer to the Section 172 (1) statement
on pages 48 and 49.
The Group conforms to current
employment laws on the employment
of disabled persons ensuring (i) full
and fair consideration to applications
for employment; (ii) the continued
employment of, and appropriate
training for, employees of the company
who have become disabled persons
during the period when they were
employed by the company, and (iii) the
ongoing training, career development
and promotion of disabled persons
employed by the company.
Stakeholder engagement
Please refer to the Section 172 (1)
statement on pages 48 and 49.
Health and safety
The Group is committed to maintaining
high standards of health and safety in
every area of the business.
Following the end of each quarter,
the Board receives a report setting
out the number and type of accidents
which have occurred in the quarter.
The quantitative data is tracked in
order to provide a comparison against
prior years; to identify trends in types
of accidents; and to ensure corrective
actions can be implemented and best
practice identified. It is the aim of the
Group to exceed the requirements of
health and safety legislation and we
have established a health and safety
co‑ordinator to ensure continuous
improvement of health and safety
across the Group.
Disclosure of information
to the auditors
In the case of each Director in office
at the date the Directors’ report is
approved, the following applies:
• the Director knows of no
information, which would be relevant
to the auditors for the purpose
of their audit report, of which the
auditors are not aware; and
• the Director has taken all steps that
he/she ought to have taken as a
Director to make him/herself aware
of any such information and to
establish that the auditors are aware
of it.
A resolution to re‑appoint
PricewaterhouseCoopers LLP as
auditors of the Group will be put to the
Annual General Meeting.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
79
GOVERNANCE STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for
preparing the Annual report and the
financial statements in accordance with
applicable law and regulation.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law
the directors have prepared the group
financial statements in accordance with
UK‑adopted international accounting
standards and the company financial
statements in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, comprising FRS
102 “The Financial Reporting Standard
applicable in the UK and Republic of
Ireland”, and applicable law).
Under company law, 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 the
financial statements, the directors are
required to:
• select suitable accounting policies
and then apply them consistently;
• state whether applicable
UK‑adopted international
accounting standards have been
followed for the group financial
statements and United Kingdom
Accounting Standards, comprising
FRS 102 have been followed for
the company financial statements,
subject to any material departures
disclosed and explained in the
financial statements;
• make judgements and accounting
estimates that are reasonable and
prudent; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
group and company will continue in
business.
The directors are responsible for
safeguarding the assets of the group
and company and hence for taking
reasonable steps for the prevention
and detection of fraud and other
irregularities.
The directors are also 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 group and
company and enable them to ensure
that the financial statements comply
with the Companies Act 2006.
The directors are responsible for
the maintenance and integrity of the
company’s website. Legislation in
the United Kingdom governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
In the case of each director in office
at the date the directors’ report is
approved:
• so far as the director is aware, there
is no relevant audit information of
which the group’s and company’s
auditors are unaware; and
• they have taken all the steps that
they ought to have taken as a
director in order to make themselves
aware of any relevant audit
information and to establish that the
group’s and company’s auditors are
aware of that information.
On behalf of the Board.
Paul Bal
Chief Executive Officer
19 June 2023
80
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF IG DESIGN GROUP PLC
Report on the audit of the
financial statements
Opinion
In our opinion:
•
IG Design Group plc’s group
financial statements and company
financial statements (the “financial
statements”) give a true and fair
view of the state of the group’s
and of the company’s affairs as at
31 March 2023 and of the group’s
loss and the group’s cash flows for
the year then ended;
• the group financial statements
have been properly prepared in
accordance with UK-adopted
international accounting standards
as applied in accordance with the
provisions of the Companies Act
2006;
• the company financial statements
have been properly prepared in
accordance with United Kingdom
Generally Accepted Accounting
Practice (United Kingdom
Accounting Standards, including
FRS 102 “The Financial Reporting
Standard applicable in the UK and
Republic of Ireland”, and applicable
law); and
• the financial statements have been
prepared in accordance with the
requirements of the Companies
Act 2006.
We have audited the financial
statements, included within the Annual
Report and Financial Statements (the
“Annual Report”), which comprise:
the consolidated balance sheet and
the company balance sheet as at
31 March 2023; the consolidated
income statement, the consolidated
statement of comprehensive income,
the consolidated cash flow statement,
the consolidated statement of changes
in equity and the company statement
of changes in equity for the year then
ended; and the notes to the financial
statements, which include a description
of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance
with International Standards on
Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities
under ISAs (UK) are further described
in the Auditors’ responsibilities for
the audit of the financial statements
section of our report. We believe that
the audit evidence we have obtained is
sufficient and appropriate to provide a
basis for our opinion.
Independence
We remained independent of the
group in accordance with the ethical
requirements that are relevant to our
audit of the financial statements in the
UK, which includes the FRC’s Ethical
Standard, as applicable to other listed
entities of public interest, and we have
fulfilled our other ethical responsibilities
in accordance with these requirements.
To the best of our knowledge and
belief, we declare that non-audit
services prohibited by the FRC’s
Ethical Standard were not provided.
Other than those disclosed in note 3
to the financial statements, we have
provided no non-audit services to the
company or its controlled undertakings
in the period under audit.
Our audit approach
Overview
Audit scope
• We conducted an audit of one
financially significant component,
which is a sub-consolidation of 12
individual reporting entities, as well
as five other reporting components.
• Four of the other reporting
components were audited by the
group engagement team with the
financially significant component
and one other reporting component
audited by PwC network firms.
• Specified audit procedures
were performed by the group
engagement team over specific
balance sheet line items in two
non-significant components.
• The group engagement team
audited the group consolidation
and related areas of judgement,
including the valuation of goodwill
and the refinancing of debt facilities.
• Our scoping resulted in audit
coverage of 75% of revenue.
Key audit matters
• Refinancing of debt facilities (group
and parent)
• Valuation of goodwill – UK & Asia
CGU (group)
• Valuation of DG Americas inventory
provisions (group)
• Valuation of investments and
intercompany receivables (parent)
Materiality
• Overall group materiality:
$4,435,000 based on 0.5% of total
revenues (FY2022: $3,000,000
based on professional judgement
and with reference to key financial
metrics).
• Overall company materiality:
£2,397,000 (FY2022: £2,300,000)
based on 1% of net assets.
• Performance materiality: $3,326,000
(FY2022: $2,250,000) (group) and
£1,798,000 (FY2022: £1,725,000)
(company).
The scope of our audit
As part of designing our audit, we
determined materiality and assessed
the risks of material misstatement in
the financial statements.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
81
FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
TO THE MEMBERS OF IG DESIGN GROUP PLC
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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) identified by the auditors, including 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, and any
comments we make on the results of our procedures thereon, 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.
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Refinancing of debt facilities (group and
parent)
See the section “Conclusions relating to going concern” below for how we
addressed this key audit matter.
Refer to note 1 (Accounting policies) to
the consolidated and company financial
statements.
The financing facilities in place at 31 March
2023 were due to expire within the going
concern period. New facilities have been
entered into subsequent to this date, which
are different to those they replaced, which
has required the Directors to perform new
and different methods of analysis as part of
the liquidity modelling and going concern
assessment. This assessment has included
the period to 30 September 2024 and has
considered the level of liquidity available
through the new financing facility in both a
base case and a severe but plausible downside
scenario.
The Directors concluded that it was appropriate
to prepare the financial statements on a going
concern basis and that no material uncertainty
exists with regards to going concern.
We focused on the refinancing of debt facilities
given the previous facilities were expiring within
the going concern assessment period and
the new and different financing facilities have
been put in place subsequent to the year end.
The new facilities are an asset backed loan,
where the level of borrowing capacity at any
point in time is derived from the group’s trade
receivables balance in its US business, and an
uncommitted overdraft.
82
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Key audit matter
How our audit addressed the key audit matter
Valuation of goodwill – UK & Asia CGU
(group)
At the planning stage of the audit, we assessed the design and implementation of
controls over the impairment review process.
Refer to note 1 (Accounting policies) and note 9
(Intangible assets) of the consolidated financial
statements.
In accordance with IAS 36 (Impairment of
assets), goodwill must be tested for impairment
on at least an annual basis. The determination
of recoverable amount, being the higher
of value-in-use and fair value less costs of
disposal, requires estimations on the part
of management in both identifying and then
valuing the relevant cash-generating units
(“CGU”).
Management has charged an impairment of
$29.1 million to goodwill in the year to the
UK & Asia CGU, which is due to the increase
in discount rates and the decline in trading
conditions in the UK & Asia CGU specifically.
There remains $2.6 million of goodwill allocated
to this CGU. The impairment charge has been
reported as an adjusting item in note 3.
We focused on the risk of impairment within
the UK & Asia CGU as the impairment test
involves a number of subjective judgements and
estimates by management, many of which are
forward looking. These estimates include key
assumptions in relation to the future cash flows
of the CGU including considering the impact of
climate change, the long term growth rates and
appropriate discount rates.
As part of our audit of management’s impairment assessment and underlying
discounted cash flow model:
• We obtained the impairment model prepared by management which calculates
the value-in-use based on three year forecast cash flows. We verified these cash
flows to underlying support. These cash flows are then used in the calculation of
the terminal value.
• We tested the mathematical accuracy and methodology of the impairment model
to validate that it was prepared in line with the guidance provided in IAS 36.
• We identified the key assumptions within the cash flow forecast for the next
three years and focused our work on these. We challenged the basis of the
forecasts to validate that all key assumptions were supportable and that the
cash flows reflected the CGUs current strategic plan, including the restructuring
as referenced in note 3. In performing this assessment we also challenged
management on the potential impact of climate change to the cash flow forecast,
including the potential impact of carbon offset costs.
• We used our internal valuation experts to determine that management’s discount
rate was within an acceptable range through reference to suitable third party
comparator information.
• We used our internal valuation experts to determine that the long-term growth
rate used in the impairment model was consistent with external sources of
evidence.
• We reperformed management’s sensitivity analysis by reducing cash inflows
through lower growth, and separately sensitised the discount rate and long-term
growth rates to understand the impact that possible changes could have on the
impairment charge.
• We obtained management’s assessment of the fair value less costs of disposal
of the CGU and evaluated the reasonableness of the assumptions applied,
specifically the estimated costs of disposal.
We evaluated the disclosures included in the financial statements, including the
sensitivity analysis, to validate that these were in compliance with IAS 36.
We concluded that the impairment charge of $29.1 million is appropriate based
on the testing and sensitivities applied and that the disclosures included in the
financial statements are appropriate.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
83
FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
TO THE MEMBERS OF IG DESIGN GROUP PLC
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters continued
Key audit matter
How our audit addressed the key audit matter
Valuation of DG Americas inventory
provisions (group)
At the planning stage of the audit, we assessed the design and implementation of
controls over the inventory provisioning process.
As part of our audit of the provision methodology and evaluation of how the
estimate was made by management:
• We tested the integrity of the NRV provision calculation to validate that it was
using the underlying data accurately and calculating the provision amounts in
accordance with the provision policy.
• We assessed the sufficiency of the provisioning policy through retrospective
reviews of previous provisions made under the same policy.
• We agreed the key inputs to the provision calculation, being the value and ageing
of inventory, to external purchase documentation or evidence of production date.
• We challenged any incremental provisions made by management and validated
these to corroborating evidence that supports the additional provisioning
requirement at a SKU level.
• We challenged management on the fact that the current year results include
a $6.4 million provision release group wide, the only material element of
which relates to DG Americas. We understood the causes of the release and
substantively tested these transactions back to source evidence.
We concluded that the overall inventory provision was sufficient, supportable and
consistent with the evidence obtained.
Refer to note 1 (Accounting policies) and
note 12 (Inventory) of the consolidated financial
statements.
Inventory represents a significant asset of the
group and is carried at the lower of cost and net
realisable value (“NRV”) in accordance with IAS 2
(Inventories), with the year-end inventory value
being $206.4 million (FY2022: $230.9 million).
Management’s approach to estimating inventory
provisions is to apply a standard methodology
based on inventory ageing and inventory
category. Additional provisions are made by
management where the standard methodology
basis is not considered to generate sufficient
provision for specific stock keeping units
("SKUs"). Management validates their total
provision to be appropriate based on the results
of retrospective reviews.
A significant proportion of the group’s inventory
and provision is recorded within the DG
Americas business, which is where the majority
of our audit effort has been directed. We
focus on this as the level of provision held is
judgmental and involves a number of estimates,
involving a number of different data sources
being utilised in generating the total provision.
Valuation of investments and intercompany
receivables (parent)
At the planning stage of the audit, we assessed the design and implementation of
controls over the impairment review process.
As part of our audit of management’s impairment assessment:
• We obtained a schedule of investments and intercompany balances which we
validated to supporting evidence.
• We used the work performed as described in the Key Audit Matter – “Valuation
of goodwill – UK & Asia CGU” above, to assess the valuation of the related
investments and therefore the impairment charge, and to assess that impairment
indicators did not exist outside of the investments relating to UK and Asia
subsidiaries.
• Our testing validated that sufficient headroom exists on the remainder of
investments and intercompany balances in other subsidiaries when comparing
the carrying value to the recoverable value. This also included after the
assessment of management’s sensitivities.
We concluded the impairment charge of £6.5 million is appropriate based on the
testing and sensitivities applied and that the disclosures included in the financial
statements are appropriate.
Refer to note 4 (Investments), note 7 (Debtors
– due after more than one year) and note 15
(Accounting estimates and judgements) of the
company financial statements.
The company has Investments in subsidiaries
of £208.7 million, which reflects the company’s
interest (directly and indirectly) in all of the
group’s trading businesses. The company also
has amounts owed by group undertakings of
£26.8 million.
Management has charged an impairment
of £6.5 million to investments in the year,
specifically in relation to the investment in
the UK & Asia subsidiaries. This is due to the
increase in discount rates and the decline in
trading conditions in the UK & Asia CGU (see
Key Audit Matter – “Valuation of goodwill –
UK & Asia CGU”).
We focused on the risk of impairment as the
impairment charge to goodwill in the consolidated
financial statements was a trigger to potential
impairment in the investments and intercompany
receivables balances held by the company.
84
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
How we tailored the audit scope
We tailored the scope of our audit to
ensure that we performed enough work
to be able to give an opinion on the
financial statements as a whole, taking
into account the structure of the group
and the company, the accounting
processes and controls, and the
industry in which they operate.
The group is structured into a number
of reporting entities, including one for
each trading subsidiary and the parent
company together with consolidation
entities. We defined a component to
be the reporting entity level at which
management prepares and reviews the
financial information, which in certain
territories is at a sub-consolidation level.
We identified one financially
significant component, which is a
sub-consolidation of 12 individual
reporting entities within the DG
Americas business, based on its
contribution to the group’s revenue.
A full scope audit was performed
over this component, as well as over
the company and four other trading
components; two in the UK, and one in
both the Netherlands and in Australia,
giving a total of six components
subject to full scope audits of their
financial information.
Four of these components were audited
by the group engagement team with the
financially significant component and
one other reporting component audited
by other PwC network firms.
Specified audit procedures were
performed over specific balance sheet
line items in two additional non-
significant components by the group
engagement team in order to ensure
sufficient coverage at the financial
statement line item level.
The overseas component audit teams
worked under the instruction of the
group engagement team and were
in regular contact with the group
engagement team throughout the
audit cycle. This started at planning,
including a site visit to the DG Americas
business by the Group Engagement
Partner, through to completion utilising
video conferencing at multiple intervals
and other frequent communication. In
addition, the group engagement team
performed workpaper reviews of both
overseas components.
The group engagement team audited
the group consolidation, including
its consolidation adjustments and
related areas of judgement, including
the valuation of goodwill and the
refinancing of debt facilities.
Analytical procedures were performed
by the group engagement team on all
components not subject to a full scope
audit.
The approach outlined above provides
audit coverage over 75% of revenue.
The company consists of one reporting
unit which was subject to a full scope
audit by the group engagement team
for the purpose of the company
financial statements.
The impact of climate risk on
our audit
As part of our audit we made enquiries
of management to understand the
extent of the potential impact of climate
risk on the group’s and company’s
financial statements, and we remained
alert when performing our audit
procedures for any indicators of the
impact of climate risk. Our procedures
did not identify any material impact as
a result of climate risk on the group’s
and company’s financial statements.
This is further discussed in our Key
Audit Matter in relation to the Valuation
of goodwill – UK & Asia CGU.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
$4,435,000 (FY2022: $3,000,000).
£2,397,000 (FY2022: £2,300,000).
Financial statements – group
Financial statements – company
How we determined it
0.5% of total revenues (FY2022: Based on auditor
judgment with reference to key financial metrics)
1% of net assets
Rationale for benchmark
applied
Revenue is a key metric used by management and
external stakeholders in assessing the ongoing
performance of the group that appropriately
reflects the size and scale of the group. It is also
a generally accepted auditing benchmark. When
considering the relevant percentage of total
revenue to apply, we have considered a range of
potential other benchmarks, which is comparable
to the approach taken in FY2022.
We believe that net assets is the
primary measure used by the
shareholders in assessing the
performance of the entity given it is a
holding company for the group.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
85
FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
TO THE MEMBERS OF IG DESIGN GROUP PLC
Report on the audit of the
financial statements
continued
Our audit approach continued
Materiality continued
For each component in the scope
of our group audit, we allocated
a materiality that is less than our
overall group materiality. The range
of materiality allocated across
components was between $1,500,000
and $4,000,000.
We use performance materiality to
reduce to an appropriately low level
the probability that the aggregate
of uncorrected and undetected
misstatements exceeds overall
materiality. Specifically, we use
performance materiality in determining
the scope of our audit and the nature
and extent of our testing of account
balances, classes of transactions and
disclosures, for example in determining
sample sizes. Our performance
materiality was 75% (FY2022: 75%)
of overall materiality, amounting to
$3,326,000 (FY2022: $2,250,000) for
the group financial statements and
£1,798,000 (FY2022: £1,725,000) for the
company financial statements.
In determining the performance
materiality, we considered a number of
factors – the history of misstatements,
risk assessment and aggregation risk
and the effectiveness of controls –
and concluded that an amount at the
upper end of our normal range was
appropriate.
We agreed with those charged with
governance that we would report to
them misstatements identified during
our audit above $220,000 (group audit)
(FY2022: $150,000) and £120,000
(company audit) (FY2022: £115,000)
as well as misstatements below those
amounts that, in our view, warranted
reporting for qualitative reasons.
Conclusions relating to going
concern
Our evaluation of the directors’
assessment of the group's and the
company’s ability to continue to adopt
the going concern basis of accounting
included:
• Validated that the forecasts were
consistent with the latest Board
approved budgets.
• Performed detailed enquiries
and challenged the Board and
management on the reasonableness
of the assumptions made in the
preparation of these forecasts. This
included drawing comparisons to
actual results achieved in the year,
including challenging any significant
one-off items or changes in revenue
or cash conversion metrics.
• We assessed management’s
calculations in arriving at the
liquidity and covenant headroom in
their severe but plausible scenario.
• At the planning stage of the
• We reviewed management’s
audit, we assessed the design
and implementation of controls
over management’s budgeting
process which forms part of the
going concern assessment. We
have also assessed the design
and implementation of control
procedures that relate to the
preparation, review and approval of
the going concern assessment and
related modelling.
• We obtained and reviewed the
renewed bank facilities agreement
dated 5 June 2023 and validated
that the facility terms were
consistent with those management
had modelled in the liquidity
assessment.
• Reviewed the mathematical
accuracy of the Directors’ going
concern assessment, forecasts
and updated covenant compliance
for a period of at least 12 months
from the date of approval of the
financial statements. This included
understanding headroom against
the relevant covenant.
assessment of actions available
to preserve cash in the event of
their severe but plausible scenario
in the going concern period and
challenged management on the
ease with which these mitigations
could be accessed.
• We stress tested the model by
taking management’s severe but
plausible scenario and applying
more severe changes to trading,
removing certain of the cash
preservation actions which we
consider more difficult to access
and removing the benefit of the
uncommitted overdraft from the
liquidity assessment.
• We assessed the historical
forecasting accuracy and future
assumptions by comparing these
to the underlying support and third
party data.
• We also considered the adequacy
of the disclosures in the financial
statements against the requirements
of the accounting standards and
consistency of the disclosure
against the forecasts and severe but
plausible test assessment.
86
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
If we identify an apparent material
inconsistency or material misstatement,
we are required to perform procedures
to conclude whether there is a
material misstatement of 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 based on these
responsibilities.
With respect to the Strategic report and
Directors' report, we also considered
whether the disclosures required by
the UK Companies Act 2006 have been
included.
Based on our work undertaken in the
course of the audit, the Companies Act
2006 requires us also to report certain
opinions and matters as described
below.
Strategic report and
Directors' report
In our opinion, based on the work
undertaken in the course of the audit,
the information given in the Strategic
report and Directors' report for the year
ended 31 March 2023 is consistent
with the financial statements and has
been prepared in accordance with
applicable legal requirements.
In light of the knowledge and
understanding of the group and
company and their environment
obtained in the course of the audit,
we did not identify any material
misstatements in the Strategic report
and Directors' report.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually or
collectively, may cast significant doubt
on the group's and the company’s
ability to continue as a going concern
for a period of at least twelve months
from when the financial statements are
authorised for issue.
In auditing the financial statements,
we have concluded that the directors’
use of the going concern basis of
accounting in the preparation of the
financial statements is appropriate.
However, because not all future events
or conditions can be predicted, this
conclusion is not a guarantee as to the
group's and the company's ability to
continue as a going concern.
Our responsibilities and the
responsibilities of the directors with
respect to going concern are described
in the relevant sections of this report.
Reporting on other information
The other information comprises all of
the information in the Annual Report
other than the financial statements
and our auditors’ report thereon.
The directors are responsible for the
other information. Our opinion on the
financial statements does not cover
the other information and, accordingly,
we do not express an audit opinion or,
except to the extent otherwise explicitly
stated in this report, any form of
assurance thereon.
In connection with our audit of the
financial statements, our responsibility
is to read the other information and, in
doing so, consider whether the other
information is materially inconsistent
with the financial statements or our
knowledge obtained in the audit, or
otherwise appears to be materially
misstated.
Responsibilities for the financial
statements and the audit
Responsibilities of the directors
for the financial statements
As explained more fully in
the Statement of Directors'
Responsibilities, the directors are
responsible for the preparation of the
financial statements in accordance with
the applicable framework and for being
satisfied that they give a true and fair
view. The directors are also responsible
for such internal control as they
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
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 company or to
cease operations, or have no realistic
alternative but to do so.
Auditors’ 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 auditors’
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.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
87
FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT CONTINUED
TO THE MEMBERS OF IG DESIGN GROUP PLC
Responsibilities for the financial
statements and the audit
continued
Auditors’ responsibilities for the
audit of the financial statements
continued
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.
Based on our understanding of the
group and industry, we identified that
the principal risks of non-compliance
with laws and regulations related
to employment regulation and the
AIM rules for companies, and we
considered the extent to which non-
compliance might have a material
effect on the financial statements.
We also considered those laws and
regulations that have a direct impact
on the financial statements such as
the Companies Act 2006, Pension
Schemes Act and tax legislation. We
evaluated management’s incentives
and opportunities for fraudulent
manipulation of the financial
statements (including the risk of
override of controls), and determined
that the principal risks were related to
the posting of inappropriate journal
entries to manipulate revenue and/
or profits and management bias in
significant accounting estimates and
judgements. The group engagement
team shared this risk assessment
with the component auditors so that
they could include appropriate audit
procedures in response to such risks in
their work.
Audit procedures performed by the
group engagement team and/or
component auditors included:
• Discussions with management, the
Company Secretary and the Audit
Committee, including consideration
of known or suspected instances
of non-compliance with laws and
regulation or fraud;
• Assessment of matters reported on
the group’s whistleblowing helpline,
and the results of management’s
investigation of such matters;
• Review minutes of meetings of those
•
charged with governance;
Identification and testing journal
entries, in particular any journal
entries posted with unusual account
combinations;
• Challenging assumptions and
judgements made by management
in their significant accounting
estimates and judgements,
in particular in relation to the
valuation of DG Americas inventory
provisions, valuation of goodwill
in the UK & Asia CGU and the
valuation of investments and
intercompany receivables (see
related Key Audit Matters above).
There are inherent limitations in the
audit procedures described above.
We are less likely to become aware of
instances of non-compliance with laws
and regulations that are not closely
related to events and transactions
reflected in the financial statements.
Also, the risk of not detecting a
material misstatement due to fraud is
higher than the risk of not detecting
one resulting from error, as fraud may
involve deliberate concealment by,
for example, forgery or intentional
misrepresentations, or through
collusion.
Our audit testing might include testing
complete populations of certain
transactions and balances, possibly
using data auditing techniques.
However, it typically involves selecting
a limited number of items for
testing, rather than testing complete
populations. We will often seek to
target particular items for testing based
on their size or risk characteristics. In
other cases, we will use audit sampling
to enable us to draw a conclusion
about the population from which the
sample is selected.
A further description of our
responsibilities for the audit of the
financial statements is located on
the FRC’s website at: www.frc.org.
uk/auditorsresponsibilities. This
description forms part of our auditors’
report.
Use of this report
This report, including the opinions,
has been prepared for and only for
the company’s members as a body in
accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no
other purpose. We do not, in giving
these opinions, accept or assume
responsibility for any other purpose or
to any other person to whom this report
is shown or into whose hands it may
come save where expressly agreed by
our prior consent in writing.
88
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Other required reporting
Companies Act 2006 exception
reporting
Under the Companies Act 2006 we
are required to report to you if, in our
opinion:
• we have not obtained all the
information and explanations we
require for our audit; or
• adequate accounting records have
not been kept by the company, or
returns adequate for our audit have
not been received from branches
not visited by us; or
• certain disclosures of directors’
remuneration specified by law are
not made; or
• the company financial statements
are not in agreement with the
accounting records and returns.
We have no exceptions to report arising
from this responsibility.
Daniel Brew
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory
Auditors Milton Keynes
19 June 2023
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
89
FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 MARCH 2023
Revenue
Cost of sales
Gross profit
Selling expenses
Administration expenses – costs
Administration expenses – impairment of goodwill
Other operating income
Profit/(loss) on disposal of property, plant and equipment
Operating (loss)/profit
Finance expenses
(Loss)/profit before tax
Income tax charge
Loss for the year
Attributable to:
Owners of the Parent Company
Non-controlling interests
Loss per ordinary share
Basic
Diluted
Note
2023
$000
2022
$000
2
890,309
965,093
(758,569)
(842,926)
131,740
122,167
(47,097)
(48,305)
(75,112)
(66,604)
3
5
3
3
6
7
(29,100)
2,951
4,595
(12,023)
(6,873)
(18,896)
(7,563)
(26,459)
—
870
(436)
7,692
(5,491)
2,201
(2,517)
(316)
(27,987)
1,528
(3,277)
2,961
Note
21
21
2023
(28.6c)
(28.6c)
2022
(3.3c)
(3.3c)
90
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 MARCH 2023
Loss for the year
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss
2023
$000
(26,459)
2022
$000
(316)
Re-measurement of defined benefit pension and health benefit schemes
(37)
(715)
Items that may be reclassified subsequently to profit or loss
Exchange difference on translation of foreign operations
Transfer to profit and loss on maturing cash flow hedges
Net unrealised gain on cash flow hedges
Income tax relating to these items
Other comprehensive income for the year, net of tax
Total comprehensive income for the year, net of tax
Attributable to:
Owners of the Parent Company
Non-controlling interests
10,621
8,686
(683)
419
—
10,357
10,320
(16,139)
(17,024)
885
(16,139)
(301)
686
—
9,071
8,356
8,040
5,173
2,867
8,040
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
91
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 MARCH 2023
Attributable to the owners of the Parent Company
Share
premium
and capital
redemption
reserve
$000
Share
capital
$000
Merger
reserve
$000
Hedging
reserve
$000
Translation
reserve
$000
Non-
Retained Shareholders’ controlling
interests
earnings
$000
$000
equity
$000
Total
$000
6,373 228,143
42,549
299
(12,459) 96,806
361,711 7,999 369,710
—
—
—
(27,987)
(27,987) 1,528
(26,459)
—
(261)
11,261
(37)
10,963
(643)
10,320
—
(261)
11,261
(28,024)
(17,024)
885
(16,139)
At 1 April 2022
Loss for the year
Other comprehensive
income/(expense)
Total comprehensive
(expense)/income for the year
Change in ownership interest
Option over non-controlling
interest (note 18)
Acquisition of non-controlling
interest (note 28)
Transactions with owners
in their capacity as owners
Equity-settled share-based
payments (note 23)
Purchase of own shares (note 29)
Options exercised (note 20)
Equity dividends paid (note 27)
Exchange differences
on opening balances
—
—
—
—
—
—
—
51
—
—
—
—
—
—
—
—
—
—
At 31 March 2023
6,059 214,845 40,069
(365)
(13,298)
(2,480)
—
—
—
—
—
—
—
—
—
—
—
—
—
38
—
3,069
3,069
3,069
—
(3,558)
(3,558)
607
(2,951)
—
—
—
—
—
656
(865)
(51)
—
656
(865)
—
—
—
—
656
(865)
—
— (2,961)
(2,961)
—
(16,143)
—
(16,143)
(1,198) 68,033
327,846 6,530 334,376
In line with the Group’s accounting policies, share capital, share premium, capital redemption reserve, merger reserve
and hedging reserve are translated into US dollars at the rates of exchange at each balance sheet date and the resulting
cumulative exchange differences are included in translation reserve.
Merger reserve
The merger reserve comprises premium on shares issued in relation to business combinations.
Capital redemption reserve
The capital redemption reserve comprises amounts transferred from retained earnings in relation to the redemption of
preference shares. For ease of presentation, the amount of $1.7 million relating to the capital redemption reserve has been
included within the column of share premium and capital redemption reserve in the balances at the end of the year (2022:
$1.8 million). The only movement in this balance relates to foreign exchange.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that qualify for hedge accounting and have not yet matured.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of
foreign operations.
Shareholders’ equity
Shareholders’ equity represents total equity attributable to owners of the Parent Company.
92
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Attributable to the owners of the Parent Company
Share
premium
and capital
redemption
reserve
$000
Share
capital
$000
Merger
reserve
$000
Hedging
reserve
$000
Translation
reserve
$000
Non-
Retained Shareholders’ controlling
interests
earnings
$000
$000
equity
$000
Total
$000
At 1 April 2021
6,667 239,142 44,600
(86)
(21,239) 114,438
383,522 8,497 392,019
(Loss)/profit for the year
Other comprehensive
income/(expense)
Total comprehensive
income/(expense) for the year
Transactions with owners
in their capacity as owners
Option over non-controlling
interest (note 18)
Equity-settled share-based
payments (note 23)
—
—
—
—
—
Derecognition of deferred tax asset
– share-based payments (note 11) —
Derecognition of deferred tax asset
– IFRS 16 (note 11)
Options exercised (note 20)
Equity dividends paid (note 22)
—
13
—
—
—
—
—
—
—
—
—
—
—
—
—
(3,277)
(3,277) 2,961
(316)
—
385
8,780
(715)
8,450
(94)
8,356
—
385
8,780
(3,992)
5,173 2,867
8,040
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(3,069)
(3,069)
—
(3,069)
—
241
241
—
241
—
(1,179)
(1,179)
—
(1,179)
—
—
—
—
(346)
(13)
(346)
—
—
—
(346)
—
(9,274)
(9,274) (3,365)
(12,639)
—
(13,357)
—
(13,357)
Exchange differences
on opening balances
(307)
(10,999)
(2,051)
At 31 March 2022
6,373 228,143 42,549
299
(12,459) 96,806
361,711 7,999 369,710
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
93
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2023
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Long-term assets
Deferred tax assets
Total non-current assets
Current assets
Asset held for sale
Inventory
Trade and other receivables
Income tax receivable
Derivative financial assets
Cash and cash equivalents
Total current assets
Total assets
Non-current liabilities
Loans and borrowings
Lease liabilities
Deferred income
Provisions
Other financial liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Bank overdraft
Loans and borrowings
Lease liabilities
Deferred income
Provisions
Income tax payable
Trade and other payables
Other financial liabilities
Total current liabilities
Total liabilities
Net Assets
Note
2023
$000
2022
$000
8
9
10
13
11
8
12
13
24
14
70,306
78,911
71,325
107,398
69,332
86,731
5,647
5,105
15,401
16,317
232,011
294,462
—
2,150
206,426
230,885
92,402
127,850
2,428
340
1,234
316
85,213
50,179
386,809
412,614
2
618,820
707,076
15
10
16
17
18
11
14
15
10
16
17
19
18
—
(20)
62,717
80,215
2,038
5,474
523
5,016
19,071
21,557
221
381
89,521
107,672
34,979
20,380
(250)
(340)
17,470
19,628
263
1,339
6,918
465
1,342
7,359
92,977
143,318
41,227
37,542
194,923
229,694
2
284,444
337,366
334,376
369,710
94
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Equity
Share capital
Share premium
Capital redemption reserve
Merger reserve
Hedging reserve
Translation reserve
Retained earnings
Equity attributable to owners of the Parent Company
Non-controlling interests
Total equity
Note
2023
$000
2022
$000
20
6,059
6,373
213,187
226,382
1,658
1,761
40,069
42,549
38
299
(1,198)
(12,459)
68,033
96,806
327,846
361,711
6,530
7,999
334,376
369,710
The consolidated financial statements on pages 90 to 137 were approved by the Board of Directors on 19 June 2023 and
were signed on its behalf by:
Paul Bal
Director
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
95
FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 MARCH 2023
Cash flows from operating activities
Loss for the year
Adjustments for:
Depreciation and impairment/(reversal of impairment) of property, plant and equipment
Depreciation and impairment/(reversal of impairment) of right-of-use assets
Amortisation of intangible assets
Goodwill impairment
Finance expenses
Income tax charge
(Profit)/loss on disposal of property, plant and equipment
Equity-settled share-based payments – expense/(income)
Add back income from insurance settlement
Operating profit after adjustments for non-cash items
Change in trade and other receivables
Change in inventory
Change in trade and other payables, provisions and deferred income
Cash generated from operations
Tax paid
Interest and similar charges paid
Net cash inflow/(outflow) from operating activities
Cash flow from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of intangible assets
Acquisition of property, plant and equipment
Proceeds from insurance settlement
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Acquisition of non-controlling interest
Purchase of own shares
Lease liabilities principal repayments
Loan arrangement fees
Equity dividends paid
Dividends paid to non-controlling interests
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Note
2023
$000
2022
$000
(26,459)
(316)
8
10
9
9
6
7
23
3
9
8
3
28
29
10
14
22
12,532
18,471
4,817
29,100
6,873
7,563
(4,595)
805
(1,500)
47,607
36,929
13,378
15,284
5,817
—
5,491
2,517
436
(848)
—
41,759
(994)
17,790
(58,096)
(43,352)
21,237
58,974
(7,307)
(5,270)
46,397
3,906
(5,205)
(4,626)
(5,925)
6,809
(368)
131
(381)
(5,459)
(8,140)
1,500
2,482
—
(8,390)
(2,951)
(865)
—
—
(20,428)
(20,717)
(1,079)
—
(2,961)
(494)
(9,274)
(3,365)
(28,284)
(33,850)
20,595
(48,165)
Cash and cash equivalents and bank overdrafts at beginning of the year
14
29,799
75,727
Effect of exchange rate fluctuations on cash held
(160)
2,237
Cash and cash equivalents and bank overdrafts at end of the year
14
50,234
29,799
96
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2023
1 Accounting policies
a. Basis of preparation
On 31 December 2020, IFRS as
adopted by the European Union at
that date was brought into UK law and
became UK-adopted International
Accounting Standards (‘UK IFRS’),
with future changes being subject to
endorsement by the UK Endorsement
Board. The Group transitioned to
UK IFRS in its consolidated financial
statements on 1 April 2021. The
consolidated financial statements have
been prepared in accordance with
UK-adopted international accounting
standards with the requirements of
the Companies Act 2006 as applicable
to companies reporting under those
standards.
The preparation of financial statements
that conform with adopted UK IFRS
requires the use of estimates and
assumptions that affect the reported
amounts of assets and liabilities at the
date of the financial statements and
the reported amounts of income and
expense during the reporting period.
Although these estimates are based
on management’s best knowledge of
the amount, event or actions, actual
results may ultimately differ from
those estimates. The estimates and
underlying assumptions are reviewed
on an ongoing basis (see Critical
accounting judgements and estimates
section below). Revisions to accounting
estimates are recognised in the period
in which the estimate is revised and
future periods if relevant.
For the purposes of these financial
statements ‘Design Group’ or ‘the
Group’ means IG Design Group plc
(‘the Company’) and its subsidiaries.
The Company’s ordinary shares are
listed on the Alternative Investment
Market (AIM).
The financial statements are prepared
under the historical cost convention
except for derivative financial
instruments which are measured at
fair value and defined benefit pension
plans where plan assets are measure
at fair value and obligations are valued
in accordance with IAS 19 Employee
Benefits.
The accounting policies used in
the preparation of these financial
statements are detailed below. These
policies have been consistently applied
to all financial years presented.
Presentation currency
The presentation currency of the Group
is US dollars.
The functional currency of the Parent
Company remains as pound sterling
as it is located in the United Kingdom
and substantially all of its cash flows,
assets and liabilities are denominated
in pound sterling, as well as its share
capital. As such, the Parent Company’s
functional and presentational currency
differs to that of the Group’s reporting
currency.
Seasonality of the business
The business of the Group is seasonal
and although revenues accrue relatively
evenly in both halves of the year,
working capital requirements including
inventory levels increase steadily in the
first half from July and peak in October
as manufacturing and distribution of
Christmas products builds ahead of
distribution. The second half of the
year sees the borrowing of the Group
decline and move to typically a cash
positive position as the Group collects
its receivables through January to
March.
Going concern
The Group financial statements
have been prepared on a going
concern basis as the Directors have a
reasonable expectation that the Group
has adequate resources to continue
trading for a period of at least twelve
months from the date of this report,
based on an assessment of the overall
position and future forecasts for the
going concern period. This assessment
has also considered the overall level
of Group borrowings and covenant
requirements, the flexibility of the
Group to react to changing market
conditions and ability to appropriately
manage any business risks.
On 5 June 2023, the business entered
into a new banking facility with
HSBC and NatWest bank as part of
a three-year deal to meet the funding
requirements of the Group. This facility
comprises an Asset Backed Lending
(ABL) arrangement with a maximum
facility amount of $125.0 million. Cash
balances, borrowing and the financial
covenants applicable to the facility are
detailed in notes 14 and 15.
In addition to the above facility,
the Group has also increased
its unsecured overdraft facility
provided by HSBC to £16.5 million,
which reduces to £8.5 million from
August 2023. As such, after making
appropriate enquires, the Directors
do not see any practical, regulatory or
legal restrictions which would limit their
ability to fund the different regions of
the business as required as the Group
has sufficient resources.
We also have access to supplier
financing arrangements from certain
customers which we utilise at certain
times of the year. The largest of these
supplier financing arrangements are
subject to the continuing support of
the customers’ banking partners and
therefore could be withdrawn at short
notice. As the new ABL arrangement is
linked to trade debtors, any withdrawal
of these facilities would be largely
offset as the borrowing base under the
facility would increase.
The Directors have assessed
detailed plans and forecasts up to
30 September 2024. These forecasts
reflect the fact that the Group has
now returned to profitability and
continues the journey to more robust
performance, growing profitability
and margins as a result. They also
reflect the seasonal operating cycle
of the business and further recovery
associated with the DG Americas plan.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
97
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
1 Accounting policies continued
a. Basis of preparation continued
Going concern continued
These forecasts have been sensitised
to reflect severe but plausible adverse
downturns in the current assumptions.
Specifically, the severe but plausible
downside scenario has taken account
of the following risks:
• the potential impact of a significant
disruption in one of our major
customer’s business, reflected in a
c$20-$25 million reduction in sales
performance and related cash and
working capital impacts; and
• the potential impact over peak
periods by of the effects of inflation
on disposable incomes and demand
for products in the DG International
and DG Americas business
segments, reflected in a c$40 million
reduction of sales.
In the severe but plausible scenario
modelled, there remains sufficient
headroom in our forecast liquidity,
and sufficient headroom under the
covenant requirements.
Based on this assessment, the
Directors have formed a judgement
that there is a reasonable expectation
the Group will have adequate resources
to continue in operational existence for
the foreseeable future.
Changes in accounting policies
There have been no changes to
accounting policies during the year.
Other standards and
interpretations
The Group also adopted the following
new pronouncements at the start of the
year, which did not have any material
impact on the Group’s financial
statements:
• Property, Plant and Equipment:
Proceeds before Intended Use –
Amendments to IAS 16
• Onerous contracts – Costs of
Fulfilling a Contract – Amendments
to IAS 37
• Annual Improvements to IFRS
Standards 2018-2020
• Reference to the Conceptional;
Framework – Amendments to IFRS 3
Certain new accounting standards and
interpretations have been published
that are not yet effective and have
not been early adopted by the Group.
These standards are not expected to
have a material impact on the entity in
the current or future reporting periods
and on foreseeable future transactions.
b. Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by
the Group. Control exists when the
Group is exposed, or has rights, to
variable returns from its involvement
with the investee and has the ability
to affect those returns through its
power over the investee. Specifically,
the Group controls an investee if, and
only if, the Group has power over
the investee (i.e. existing rights that
give it the current ability to direct the
relevant activities of the investee),
exposure, or rights, to variable returns
from its involvement with the investee
and the ability to use its power over
the investee to affect its returns. The
financial statements of subsidiaries
which we consider the Group to have
control are included in the consolidated
financial statements from the date that
control commences until the date that
control ceases.
(ii) Transactions eliminated on
consolidation
Intragroup balances and any unrealised
gains and losses or income and
expense arising from intragroup
transactions are eliminated in preparing
the consolidated financial statements.
(iii) Business combinations
Business combinations are accounted
for using the acquisition method as at
the date on which control is transferred
to the Group.
The Group measures goodwill at the
acquisition date as:
• the fair value of the consideration
transferred; plus
• the recognised amount of any
non-controlling interests in the
acquiree; plus
if the business combination is
achieved in stages, the fair value
of the existing equity interest in the
acquiree; less
•
• the net recognised amount
(generally fair value) of the
identifiable assets acquired and
liabilities assumed.
When the result is negative, a
‘bargain purchase’ gain is recognised
immediately in the income statement.
Provisional fair values allocated at
a reporting date are finalised within
twelve months of the acquisition date.
c. Foreign currency
Items included in the financial
statements of the Group’s subsidiaries
are measured using the currency of
the primary economic environment
in which the subsidiary operates
(‘functional currency’).
The consolidated financial statements
are presented in US dollars.
(i) Foreign currency transactions
Transactions in foreign currencies are
recorded at the rate of exchange at
the date of the transaction. Monetary
assets and liabilities denominated in
foreign currencies at the balance sheet
date are translated into the functional
currency of the entity at the exchange
rate prevailing at that date and
recognised in the income statement
unless hedge accounting criteria apply
(see policy for financial instruments).
(ii) Financial statements of
foreign operations
The assets and liabilities of foreign
operations, including goodwill and
fair value adjustments arising on
consolidation, are translated into
US dollars at the exchange rate
prevailing at the balance sheet date.
The revenues and expenses of foreign
operations are translated at an average
rate for the period where this rate
approximates to the foreign exchange
rates prevailing at the dates of the
transactions.
Share capital, share premium, capital
redemption reserve, merger reserve are
denominated in pounds sterling, the
Parent Company’s functional currency.
They are translated into US dollars at
the rates of exchange at each balance
sheet date and the resulting cumulative
exchange differences are included in
translation reserve.
98
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
(iii) Net investment in foreign
operations
Exchange differences on retranslation
at the closing rate of the opening
balances of overseas entities are taken
to other comprehensive income, as are
exchange differences arising on related
foreign currency borrowings and
derivatives designated as qualifying
hedges, to the extent that they are
effective. They are released into the
income statement upon disposal or
loss of control and on maturity or
disposal of the hedge respectively.
Exchange differences arising from
a monetary item receivable from or
payable to a foreign operation, the
settlement of which is neither planned
nor likely in the foreseeable future,
are considered to form part of a net
investment in a foreign operation and
are recognised in other comprehensive
income in the translation reserve. The
cumulative translation differences
previously recognised in other
comprehensive income (or where
the foreign operation is part of a
subsidiary, the parent’s interest in the
cumulative translation differences) are
released into the income statement
upon disposal of the foreign operation
or on loss of control of the subsidiary
that includes the foreign operation.
Other exchange differences are taken
to the income statement.
e. Cash and cash equivalents
Cash and cash equivalents comprise
cash balances. Bank overdrafts that
are repayable on demand and form
an integral part of the Group’s cash
management are included as part
of cash and cash equivalents in the
statement of cash flows.
f. Loans and borrowings
Loans and borrowings are initially
measured at cost (which is equal
to fair value at inception) and are
subsequently measured at amortised
cost using the effective interest
method.
g. Trade and other receivables
Trade receivables are initially
recognised at fair value and
subsequently measured at amortised
cost, which is generally equivalent
to recognition at nominal value less
impairment loss calculated using the
expected loss model.
The Group applies a simplified model
to recognise lifetime expected credit
losses for its trade receivables and
other receivables, including those
due in greater than twelve months,
by making an accounting policy
election. For any receivables not
expected to be paid, an expected
credit loss of 100% is recognised at
the point this expectation arises. For
all other receivables, the expected
loss is calculated based on reasonable
and supportable information that is
relevant and available without undue
cost or effort. This includes both
quantitative and qualitative information
and analysis, based on the Group’s
historical experience and informed
credit assessment and including
forward-looking information.
h. Trade and other payables
Trade payables are non-interest
bearing and are recognised initially
at fair value and subsequently at
amortised cost.
d. Financial instruments
Interest-bearing loans and borrowings
and other financial liabilities (excluding
derivatives and put options over
non-controlling interests) are held
at amortised cost, unless they are
included in a hedge accounting
relationship.
Derivatives are measured initially at
fair value. Subsequent measurement
in the financial statements depends on
the classification of the derivative as
follows:
(i) Fair value hedges
Where a derivative is used to hedge
the foreign exchange exposure of a
monetary asset or liability, any gain or
loss on the derivative is recognised in
the income statement.
(ii) Cash flow hedges
Where a derivative is designated
as a hedging instrument in a
cash flow hedge, the change in
fair value is recognised in other
comprehensive income to the extent
that it is effective and any ineffective
portion is recognised in the income
statement. Where the underlying
transaction results in a financial asset,
accumulated gains and losses are
recognised in the income statement in
the same period as the hedged item
affects profit or loss.
Where the hedged item results in a
non-financial asset the accumulated
gains and losses previously recognised
in other comprehensive income are
included in the initial carrying value of
the asset.
(iii) Unhedged derivatives
The movements in the fair value of
unhedged derivatives are charged/
credited to the income statement.
The potential cash payments relating to
put options issued by the Group over
the non-controlling interest of subsidiary
companies acquired are measured at
estimated fair value and accounted
for as financial liabilities. Subsequent
to initial recognition, any changes to
the carrying amount of non-controlling
interest put option liabilities are
recognised through equity.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
99
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
1 Accounting policies continued
i. Property, plant and equipment
Property, plant and equipment are
stated at cost less accumulated
depreciation and impairment losses.
Where parts of an item of property,
plant and equipment or other assets
have different useful lives, they are
accounted for as separate items.
The carrying values of property,
plant and equipment and other
assets are periodically reviewed
for impairment when events or
changes in circumstances indicate
that the carrying values may not be
recoverable.
Property, plant and equipment are
depreciated over their estimated
remaining useful lives on a straight-line
basis using the following estimated
useful lives:
Land and buildings
– Freehold land
– Buildings
Not
depreciated
25-30 years or
life of lease
Plant and equipment
4-25 years
Fixtures and fittings
3-5 years
Motor vehicles
4 years
The assets’ useful lives and residual
values are reviewed, and adjusted if
appropriate, at each balance sheet
date. Included within plant and
equipment are assets with a range of
depreciation rates. These rates are
tailored to the nature of the assets to
reflect their estimated useful lives.
Where the Group identifies assets held
for sale, they are held at the lower of
current value and fair value less costs
to sell.
j. Lease liabilities and lease
right-of-use assets
The Group leases various offices,
warehouses, equipment and motor
vehicles. Rental contracts are typically
made for fixed periods of one to 20
years but may have extension options
as described below. Lease terms are
negotiated on an individual basis and
contain a wide range of different terms
and conditions. The lease agreements
do not impose any covenants, but
leased assets may not be used as
security for borrowing purposes.
Leases greater than twelve months
in length, and those not of low value,
are recognised as a lease right-of-use
asset with the associated future lease
payment terms recognised as a lease
liability. The right-of-use assets and
the associated lease liabilities are
recognised by unwinding the future
lease payments at the rate implicit to
the lease or, if the rate implicit to the
lease cannot be readily determined,
at the relevant incremental borrowing
rate.
Lease liabilities include the net present
value of the following lease payments:
• fixed payments (including in
substance fixed payments), less any
lease incentives receivable;
• amounts expected to be payable
by the lessee under residual value
guarantees;
• the exercise price of a purchase
option if the lessee is reasonably
certain to exercise that option; and
• payments of penalties for
terminating the lease, if the lease
term reflects the lessee exercising
that option.
The lease right-of-use assets are
amortised over their useful economic
lives or the lease term, whichever
is shorter. The lease liabilities are
derecognised by applying the future
lease payments.
Extension and termination options
are included in a number of property
and equipment leases across the
Group. These terms are used to
maximise operational flexibility in
terms of managing contracts. The
majority of extension and termination
options held are exercisable only by
the Group and not by the respective
lessor. In determining the lease term,
management considers all facts and
circumstances that create an economic
incentive to exercise an extension
option, or not exercise a termination
option. Extension options (or periods
after termination options) are only
included in the lease term if the lease
is reasonably certain to be extended
(or not terminated). The assessment
is reviewed if a significant event or a
significant change in circumstances
occurs which affects this assessment
and that is within the control of the
lessee.
Rentals associated with leases that
are of low value or less than twelve
months in length are expensed to the
income statement on a straight-line
basis. The associated lease incentives
are amortised in the income statement
over the life of the lease.
On acquisition, right-of-use assets
and lease liabilities are recognised in
accordance with IFRS 16. The acquired
lease liability is measured as if the
lease contract was a new lease at the
acquisition date. The right-of-use asset
is measured at an amount equal to the
recognised lease liability.
The right-of-use asset is adjusted to
reflect any favourable or unfavourable
terms of the lease relative to market
terms.
Right-of-use assets are impaired in line
with the impairment accounting policy
below.
100
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
k. Intangible assets
(i) Goodwill
Goodwill is stated at cost less any
impairment losses.
Acquisitions are accounted for using
the purchase method. For acquisitions
that have occurred since 1 January
2004, goodwill represents the
difference between the fair value of
the assets given in consideration and
the fair value of identifiable assets,
liabilities and contingent liabilities of
the acquiree. For acquisitions made
before 1 January 2004, goodwill is
included on the basis of its deemed
cost, which represents the amount
previously recorded under UK GAAP.
The Group has expensed costs
attributable to acquisitions in the
income statement. Given their one-off
nature, these costs are generally
presented within adjusting items.
(ii) Acquired intangible assets
An intangible asset acquired in a
business combination is recognised
at fair value to the extent it is probable
that the expected future economic
benefits attributable to the asset will
flow to the Group and that its cost
can be measured reliably. Intangible
assets principally relate to customer
relationships, which are valued using
discounted cash flows based on
historical customer attrition rates, and
trade names/brand, which are valued
using an income approach. The cost of
intangible assets is amortised through
the income statement on a straight-line
basis over their estimated useful
economic life and as these are assets
directly attributed to the acquisition of
a business, the amortisation costs are
also presented within adjusting items.
(iii) Other intangible assets
Other intangible assets which are
not acquired through a business
combination are recognised at cost
to the extent it is probable that the
expected future economic benefits
attributable to the asset will flow to
the Group and that its cost can be
measured reliably, and amortised on a
straight-line basis over their estimated
useful economic life.
Intangibles are amortised over their
estimated remaining useful lives on a
straight-line basis as follows:
Goodwill
Computer software
Trade names
Not
amortised
3-5 years
3-5 years
Customer relationships
3-15 years
Other intangibles
3-5 years
Customer relationships are wide
ranging in useful economic lives,
from shorter relationships derived
from smaller acquisitions to the long
relationship with Walmart acquired
as part of the acquisition of Impact
Innovations, Inc. (‘Impact’) in August
2018.
i. Impairment
All assets are reviewed regularly
to determine whether there is any
indication of impairment. Goodwill is
tested for impairment annually.
An impairment loss is recognised
whenever the carrying amount
of a non-financial asset or the
cash-generating unit (CGU) to which
it belongs exceeds its recoverable
amount, being the greater of value in
use and fair value less costs to sell, and
is recognised in the income statement.
Value in use is estimated based on
future cash flows discounted using
a pre-tax discount rate based upon
the Group’s weighted average cost of
capital.
Financial assets are assessed for
impairment using the expected credit
loss model which requires expected
credit losses and changes to expected
credit losses at each reporting date
to reflect changes in credit risk since
initial recognition.
The reversal of an impairment loss
should be recognised if there has
been a change in the estimates used
to determine the asset’s recoverable
amount since the last impairment test
was carried out. Impairment losses
relating to goodwill are not permitted to
be reversed.
m. Inventories
Inventories are valued at the lower
of cost (on a weighted average
basis) and net realisable value. For
work-in-progress and finished goods,
cost includes an appropriate proportion
of labour cost and overheads based
on normal operating capacity. For
acquisitions, inventory acquired will be
assessed for fair value in accordance
with IFRS 3 and if applicable an uplift
applied to inventory on hand relating
to sales orders already attached to the
acquired inventory. The unwind of the
uplift in value is treated as an adjusting
item.
n. Income tax
Income tax in the income statement
comprises current and deferred tax.
Income tax is recognised in the income
statement except to the extent that it
relates to items recognised in equity or
other comprehensive income.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
101
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
1 Accounting policies continued
n. Income tax continued
Current tax is the expected tax payable
on the taxable income for the year
using the applicable tax rates enacted
or substantively enacted at the balance
sheet date and any adjustment to
tax payable in prior years. Deferred
tax is provided, using the balance
sheet liability method, on temporary
differences arising between the tax
bases and the carrying amounts of
assets and liabilities in the financial
statements. The following temporary
differences are not provided for: initial
recognition of goodwill not deductible
for tax purposes, the initial recognition
of assets or liabilities that affect neither
accounting nor taxable profit or loss
other than in a business combination,
and differences relating to investments
in subsidiaries to the extent that they
will not reverse in the foreseeable
future.
Deferred tax is determined using tax
rates that are expected to apply when
the related deferred tax asset or liability
is settled, using the applicable tax
rates enacted or substantively enacted
at the balance sheet date.
A deferred tax asset is recognised only
to the extent that it is probable that
future taxable profit will be available
against which the asset can be utilised.
Deferred tax assets are impaired to the
extent that it is no longer probable that
the related tax benefits will be realised.
Deferred tax assets and liabilities
are offset when there is a legally
enforceable right to set off current
tax assets against liabilities and when
they relate to income taxes levied by
the same tax authority and the Group
intends to settle its current tax assets
and liabilities on a net basis.
o. Revenue
Revenue from the sale of goods is
recognised in the income statement
net of expected discounts, rebates,
refunds, credits, price concessions
or other similar items, when the
associated performance obligation
has been satisfied, and control of the
goods has been transferred to the
customer.
The Group recognises revenue on sales
of Celebrations, Craft & creative play,
Stationery, Gifting and ‘Not-for-resale’
consumable products across two
reporting segments. Typically the
products that we supply form the
only performance obligations within a
customer agreement, and although the
Group can provide ancillary services
such as merchandising, these are not
separately identifiable obligations.
Each customer arrangement/contract
is assessed to identify the performance
obligations being provided to the
customer. Where distinct performance
obligations are deemed to exist, an
element of revenue is apportioned to
that obligation.
Revenue from sales is recognised
based on the price specified in the
contract, net of any estimated volume
discounts, rebates and sell-through
provisions. Accumulated experience
is used to estimate and provide for
these discounts, using the expected
value method, and revenue is only
recognised to the extent that it is highly
probable that a significant reversal will
not occur. A refund liability (included in
trade and other payables) is recognised
for these items payable to customers
based on sales made in the period.
No significant element of financing
is deemed present as the majority of
sales are made with credit terms of
30-120 days, which is consistent with
market practice.
A significant part of the Group’s
businesses sell goods on a
‘free-on-board’ (FOB) basis, where the
Group as the seller makes its goods
ready for collection at its premises on
an agreed upon sales date and the
buyer incurs all transportation and
handling costs and bears the risks for
bringing the goods to their chosen
destination. In this situation, revenue
is recognised on collection by the
customer.
Where the Group operates non-FOB
terms with customers, revenue is
recognised when the control of
the goods has been transferred to
the customer. These terms include
consignment stock agreements,
where revenue is recognised upon
the customer removing goods from
consignment stock.
p. Finance income and expense
Finance income and expense is
recognised in the income statement as
it accrues. Finance expenses comprise
interest payable, finance charges
on finance leases, interest on lease
liabilities, amortisation of capitalised
fees, and unwinding of discounts on
provisions. Net movements in the fair
value of derivatives which have not
been designated as an effective hedge,
and any ineffective portion of fair value
movement on derivatives designated
as a hedge, are also included within
finance income or expense.
q. Supplier financing
The Group is party to supplier
financing arrangements with one of
its key customers. This arrangement
is considered non-recourse factoring
and on receipt of payment from the
banks the associated trade receivable
is derecognised in accordance with
IFRS 9.
102
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
r. Segment reporting
A segment is identified on the basis
of internal reports that are regularly
reviewed by the Board in order to
allocate resources to the segment and
assess its performance.
s. Pensions
(i) Defined contribution schemes
Obligations for contributions to defined
contribution pension schemes are
expensed to the income statement as
incurred.
(ii) Defined benefit schemes
Two pension schemes, one of which is
in the Netherlands and the other in the
UK, are defined benefit schemes.
The Netherlands subsidiary operates
an industrial defined benefit fund,
based on average wages, that has
an agreed maximum contribution.
The pension fund is a multi-employer
fund and there is no contractual or
constructive obligation for charging
the net defined benefit cost of the plan
to participating entities other than
an agreed maximum contribution for
the period, that is shared between
employer (4/7) and employees (3/7).
The Dutch Government is not
planning to make employers fund any
deficits in industrial pension funds;
accordingly, the Group treats the
scheme as a defined contribution
scheme for disclosure purposes. The
Group recognises a cost equal to its
contributions payable for the period.
Following the acquisition of CSS,
on 3 March 2020, the Group also
administers a defined benefit scheme
in the UK.
The net obligation for this scheme is
calculated by estimating the amount of
the future benefit that employees have
earned in return for their service in the
current and prior periods; that benefit
is discounted to determine its present
value, and the fair value of the scheme
assets is deducted. The calculation is
performed by a qualified independent
actuary.
t. Share-based payments
The cost of equity-settled transactions
with employees is measured by
reference to the fair value of the options
at the date on which they are granted.
The fair value is determined by using
an appropriate pricing model. The fair
value cost is then recognised over the
vesting period, ending on the date on
which the relevant employees become
fully entitled to the award.
u. Investment in own shares
The shares held in the Group’s
Employee Benefit Trust (IG Employee
Share Trustee Limited) for the purpose
of fulfilling obligations in respect of
share option plans are treated as
belonging to the Company and are
deducted from its retained earnings.
The cost of shares held directly
(treasury shares) is also deducted from
retained earnings.
The quantum of awards expected to
vest and the relevant cost charged is
reviewed annually such that at each
balance sheet date the cumulative
expense is the relevant share of the
expected total cost, pro-rated across
the vesting period.
No expense is recognised for awards
that are not expected to ultimately
vest, for example due to an employee
leaving or business performance
targets not being met. The annual
expense for equity-settled transactions
is recognised in the income statement
with a corresponding entry in equity.
In the event that any scheme is
cancelled, the Group recognises
immediately the amount that otherwise
would have been recognised for
services received over the remainder
of the vesting period. The Group
calculates this charge based on the
number of the awards expected to
achieve the performance conditions
immediately before the award was
cancelled.
Employer social security charges are
accrued, where applicable, at a rate
which management expects to be
the prevailing rate when share-based
incentives are exercised and is based
on the latest market value of options
expected to vest or those already
vested.
Deferred tax assets are recognised
in respect of share-based payment
schemes when deferred tax assets are
recognised in that territory.
v. Provisions
A provision is recognised when there
is a probable legal or constructive
obligation as a result of a past event
and a reliable estimate can be made
of the outflow of resources that will
be required to settle the obligation.
If the effect is material, provisions
are determined by discounting the
expected future cash flows at a pre-tax
rate that reflects current market
assessments of the time value of
money and, where appropriate, the
risks specific to the liability.
Where discounting is used, the
increase in the provision due to the
passage of time is recognised as
borrowing costs.
w. Government grants
Government grants are recognised
when it is reasonable to expect that
the grants will be received and that
all related conditions will be met,
usually on submission of a valid claim
for payment. Government grants in
respect of capital expenditure are
included within deferred income on
the balance sheet and are released to
the income statement on a straight-
line basis over the expected useful
lives of the relevant assets. Grants
of a revenue nature, other than those
associated with Covid-19, are credited
to the income statement so as to match
them with the expenditure to which
they relate. Covid-19 related grants
are recognised gross in either other
operating income or cost of sales.
x. Dividends
Dividends are recognised as a
liability in the period in which they
are approved by the shareholders of
the Company (final dividend) or paid
(interim dividend).
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
103
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
1 Accounting policies continued
y. Borrowing costs
Borrowing costs directly attributable
to the acquisition, construction or
production of an asset that necessarily
takes a substantial period of time to
get ready for its intended use or sale
are capitalised as part of the cost of
the respective asset. Costs directly
attributable to the arrangement of new
borrowing facilities are included within
the fair value of proceeds received and
amortised over the life of the relevant
facilities. Other borrowing costs, which
can include costs associated with
the extension of existing facilities, are
expensed in the period they occur.
Borrowing costs consist of interest
and other costs that an entity incurs
in connection with the borrowing of
funds.
z. Use of non-GAAP measures
These financial statements include
alternative performance measures
(APMs) that are presented in addition to
the standard GAAP metrics.
The Directors believe that these
APMs provide important additional
information regarding the underlying
performance of the business including
trends, performance and position of
the Group. APMs are used to enhance
the comparability of information
between reporting periods and
segmental business units by adjusting
for factors which affect IFRS measures,
to aid the understanding of the Group’s
performance. Consequently, APMs are
used by the Directors and management
for strategic and performance analysis,
planning, reporting and reward
setting. The APMs are Adjusted
EBITDA, Adjusted operating profit/
(loss), Adjusted profit/(loss) before
tax, Adjusted profit/(loss) after tax and
Adjusted earnings/(loss) per share.
Adjusting items are items that are
material and/or, in the judgement
of the Directors, of an unusual or
non-recurring nature. These items are
adjusted to present the performance
of the business in a consistent manner
and in line with how the business
is managed and measured on a
day-to-day basis. They are gains or
costs associated with events that are
not considered to form part of the core
operations, or are considered to be
a non-recurring event (although they
may span several accounting periods)
including fair value adjustments to
acquisitions.
Further detail of adjusting items can
be seen in note 3 to the financial
statements.
aa. Like-for-like comparators
Figures quoted at like-for-like exchange
rates are calculated by retranslating the
prior year figures at the current year
exchange rates.
Critical accounting judgements
and estimates
The following provides information
on those policies that management
considers critical because of the level
of judgement and estimation required
which often involves assumptions
regarding future events which can vary
from what is anticipated. The Directors
believe that the financial statements
reflect appropriate judgements and
estimates and provide a true and fair
view of the Group’s performance and
financial position.
The following are the critical
judgements, apart from those involving
estimations (which are dealt with
separately below), that the Directors
have made in the process of applying
the Group’s accounting policies and
that have the most significant effect on
the amounts recognised in the financial
statements.
Accounting judgements
(i) Adjusting items
Judgement is required to determine
whether items are appropriately
classified as adjusting items and that
the values assigned are appropriate.
Adjusting items relate to impairments
of assets, costs associated with
acquisitions or disposals, and
significant items by virtue of their
size or incidence. Adjusting items are
approved by the Board. Further details
on the rationale for classification are
disclosed in note 3.
(ii) Goodwill impairment
assessment
In reaching the conclusion that the
Fair Value less Costs to Sell (FVLCTS)
model does not yield a higher
recoverable amount than the Value
in Use (VIU) model, management
considered various factors, including
current market conditions, observable
market prices, and assumptions related
to potential buyers’ perspectives. The
judgment was applied in assessing
the relevance and reliability of the
market-based approach, immediate
sale perspective, and market
participant assumptions within
the FVLCTS model. Additionally,
management considered the
associated costs and time required
for the sale process, considering a
conservative and realistic assumption.
The conclusion was reached based
on management’s experience, market
knowledge, and the assessment
of available data and information.
While the judgments exercised by
management were made in good faith
and believed to be reasonable, actual
results may differ from these judgments
due to inherent uncertainties and
external factors affecting market
conditions.
The assessment of the future impacts
of climate change is undoubtedly
another area where judgement must
be applied. The evolving and dynamic
nature of climate change, along with
the uncertainties surrounding future
regulatory frameworks, technological
advancements, and market dynamics,
make it difficult to precisely predict
the medium and long-term effects on
our financial performance, assets, and
liabilities.
While the judgments exercised by
management were made in good faith
and believed to be reasonable, actual
results may differ from these judgments
due to inherent uncertainties and
external factors affecting climate change.
The disclosures in note 9 provide
further details regarding the key
assumptions and judgments made
by management in determining the
recoverable amount of goodwill related
to the CGUs of the Group.
104
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Accounting estimates
(i) Intangible assets – Goodwill
Goodwill is not amortised but is tested
annually for impairment, along with
the finite-lived intangible assets and
other assets of the Group’s CGUs.
An estimate is required in identifying
the events which indicate potential
impairment, and in assessing fair value
of individual assets when allocating an
impairment loss in a CGU or groups
of CGUs. Tests for impairment are
based on discounted cash flows and
assumptions (including discount rates
and growth prospects) which are
inherently subjective. They involve a
degree of uncertainty, and changes in
these estimates could have a material
impact on the financial statements in
future periods. The Group performs
various sensitivity analyses in respect
of the tests for impairment, as detailed
in note 9.
(ii) Taxation
Estimates are required in determining
the Group’s tax assets and liabilities.
Deferred tax assets have been
recognised to the extent that
management believe that they are
recoverable based on profit projections
for future years. These forecasts are
consistent with those used elsewhere
in the financial statements (including
impairment). Note 11 provides
information on the gross temporary
differences and unused tax losses on
which deferred tax assets have not
been recognised.
Included within current tax liabilities
are estimations related to uncertain
tax positions. These calculations
are based on management’s best
estimates of potential tax liabilities
that could arise in the future. These
estimates are reassessed when facts
and circumstances change.
(iii) Lease asset impairments
The Group has impaired the
right-of-use assets in respect of several
properties that the Group has exited
as part of the ongoing DG Americas
integration. This is based on the
properties themselves being a CGU
in line with IAS 36 as they are being
actively marketed for sub-tenants.
The impairments are assessed at
each reporting date and if necessary
reversed should there be available
sub-tenants for the properties, or early
termination agreed with the landlord.
The decision was made to exit Clara
City, Minnesota in the year, resulting
in a lease impairment of $757,000. In
the year to 31 March 2022, there was
a $2.5 million impairment reversal. As
at 31 March 2023, for the remaining
impaired properties, the Group had no
offers from potential sub-tenants and
given that this position is expected to
continue for the foreseeable future,
these leased properties remain
impaired in full. As at 31 March 2023,
if there was a reversal of the remaining
impaired right-of-use assets, the
right-of-use assets would increase by
$4.7 million (2022: $6.5 million).
(iv) Provision for slow-moving inventory
The Group has guidelines for providing
for inventory which may be sold below
cost due to its age or condition.
The Directors assess the inventory
at each location and in some cases
decide that there are specific reasons
to provide more than the guideline
levels, or less if there are specific
action plans in place which mean the
guideline provision level is not required.
Determining the level of inventory
provision requires an estimation of
likely future realisable value of the
inventory in various time frames and
comparing with the cost of holding
inventory for those time frames.
This is not a precise estimate and
is based on best data at the time of
recognition. Regular monitoring of
inventory levels, the ageing of inventory
and the level of the provision is carried
out by the Directors to reassess this
estimate. The assumptions made
in relation to the current period are
consistent with those in the prior
year. As at 31 March 2023, inventory
provisions were $36.5 million against a
gross inventory value of $243.2 million
(2022: $38.4 million provision, $269.3
million gross inventory value).
This provision estimate is subject to
potential material change, for example
if market conditions change because
expected customer demand fluctuates,
or shipping delays reduce our ability to
deliver on time and in full.
2 Segmental information
The Group has one material business
activity, being the design, manufacture
and distribution of Celebrations, Craft
& creative play, Stationery, Gifting and
‘Not-for-resale’ consumable products.
The business operates under two
reporting segments which are reported
to, and evaluated by, the Chief
Operating Decision Makers for the
Group. The DG Americas segment
includes overseas operations in Asia,
Australia, UK, India and Mexico, being
the overseas entities of US companies.
The DG International segment
comprises the consolidation of the
separately owned businesses in the
UK, Asia, Europe and Australia.
Inter-segment pricing is determined on
an arm’s length basis. Segment results
include items directly attributable to a
segment as well as those that can be
allocated on a reasonable basis.
Financial performance of each segment
is measured on adjusted operating
profit before management recharges.
Interest and tax are managed on a
Group basis and not split between
reportable segments. However, the
related financial liability and cash has
been allocated out into the reportable
segments as this is how they are
managed by the Group.
Segment assets are all non-current and
current assets, excluding deferred tax
and income tax, which are shown in
the eliminations column. Inter-segment
receivables and payables are not
included within segmental assets
and liabilities as they eliminate on
consolidation.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
105
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
2 Segmental information continued
Year ended 31 March 2023
Revenue – external
– inter-segment
Total segment revenue
Segment profit/(loss) before adjusting items
Adjusting items (note 3)
Operating (loss)/profit
Finance expenses
Income tax
Loss for the year ended 31 March 2023
Balances at 31 March 2023
Segment assets
Segment liabilities
Capital expenditure additions
– property, plant and equipment
– intangible assets
– right-of-use assets
Depreciation – property, plant and equipment
Amortisation – intangible assets
Impairment – intangible assets
Depreciation – right-of-use assets
Impairment – right-of-use assets
Profit on disposal of property, plant and equipment(b)
DG
Americas (a)
$000
DG
International
$000
Central and
eliminations
$000
Group
$000
592,954
297,355
—
890,309
—
2,283
(2,283)
—
592,954
299,638
(2,283)
890,309
2,918
19,827
(6,696)
16,049
1,701
4,619
(29,773)
—
(28,072)
(9,946)
(6,696)
(12,023)
(6,873)
(7,563)
(26,459)
370,276
201,650
46,894
618,820
(156,053)
(96,588)
(31,803)
(284,444)
2,452
2,941
331
727
7,291
4,673
37
4,094
5,226
144
—
29,100
12,615
5,090
757
4,493
—
102
66
—
24
15
—
—
9
—
—
5,459
368
4,845
12,532
4,817
29,100
17,714
757
4,595
(a) Including overseas entities for the Americas operating segment.
(b) Includes $4.6 million relating to the profit on sale of a property owned by the Group in Manhattan, Kansas; see note 3.
106
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Year ended 31 March 2022
Revenue – external
– inter-segment
Total segment revenue
Segment (loss)/profit before adjusting items
Adjusting items (note 3)
Operating (loss)/profit
Finance expenses
Finance expenses treated as an adjusting item (note 3)
Income tax
Loss for the year ended 31 March 2022
Balances at 31 March 2022
Segment assets
Segment liabilities
Capital expenditure additions
– property, plant and equipment
– intangible assets
– right-of-use assets
Depreciation – property, plant and equipment
Reversal of impairment – property, plant and equipment
Amortisation – intangible assets
Depreciation – right-of-use assets
Impairment – right-of-use assets
Reversal of impairment – right-of-use assets
(a) Including overseas entities for the Americas operating segment.
DG
Americas(a)
$000
DG
International
$000
Central and
eliminations
$000
Group
$000
658,953
306,140
—
965,093
16
1,725
(1,741)
—
658,969
307,865
(1,741)
965,093
(11,738)
20,836
5,667
1,570
(5,290)
(3,353)
(6,071)
22,406
(8,643)
3,808
3,884
7,692
(5,105)
(386)
(2,517)
(316)
451,270
237,625
18,181
707,076
(212,083)
(100,500)
(24,783)
(337,366)
5,237
223
4,331
7,803
—
5,634
12,406
—
(2,514)
2,860
158
4,850
5,891
(327)
183
5,352
—
—
43
—
—
11
—
—
18
22
—
8,140
381
9,181
13,705
(327)
5,817
17,776
22
(2,514)
• The Group has one customer that accounts for 24% (2022: 23%) of the total Group revenues. In the year ended 31 March
2023 total sales to that customer were $215.2 million (2022: $223.9 million). This customer falls solely within the DG
Americas operating segment above. No other single customer accounts for over 10% of total sales.
• The assets and liabilities that have not been allocated to segments include deferred tax assets of $15.4 million (2022:
$16.3 million), income tax receivable of $2.4 million (2022: $1.2 million), income tax payable of $6.9 million (2022:
$7.4 million) and deferred tax liabilities of $221,000 (2022: $381,000).
The Group’s information about its segmental assets (non-current assets excluding deferred tax assets and other long-term
assets) and revenue by customer destination are detailed below:
DG Americas(a)
DG International
Non-current assets
2023
$000
2022
$000
144,651
166,823
66,312
106,217
210,963
273,040
(a) These figures include overseas entities relating to the DG Americas operating segment. The overseas entities element is not material, and this
information is not readily available.
DG International is made up as follows:
UK
Netherlands
Other
Non-current assets
2023
$000
2022
$000
29,030
65,103
25,086
24,642
12,196
16,472
66,312
106,217
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
107
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
2 Segmental information continued
Revenue by customer destination
Americas(a)
UK
Rest of the world
2023
$000
2022
$000
607,470
665,059
94,524
112,539
188,315
187,495
2023
%
68
11
21
2022
%
69
12
19
890,309
965,093
100
100
(a) Included within Americas is $577.2 million (2022: $637.7 million) relating to the country, USA.
All revenue arose from the sale of goods.
3 Operating expenses and adjusting items
Included in the income statement are the following charges/(credits):
Depreciation of tangible fixed assets
Reversal of impairment of tangible fixed assets
Depreciation of right-of-use assets
Impairment/(reversal of impairment) of right-of-use assets
(Profit)/loss on disposal of property, plant and equipment and intangible assets
Release of deferred grant income
Goodwill impairment
Amortisation of intangible assets – software
Amortisation of intangible assets – other
Sub-lease rental income
Write down of inventories to net realisable value
Reversal of previous write downs of inventory
Loss on foreign exchange
Note
8
8
10
10
5
9
9
9
5
12
12
2023
$000
2022
$000
12,532
13,705
—
17,714
757
(4,595)
(111)
29,100
2,066
2,751
(1,253)
(327)
17,776
(2,492)
436
17
—
2,980
2,837
(752)
19,295
18,285
(6,436)
(6,219)
719
602
Total administration expenses of $104.2 million (2022: $66.6 million) includes $29.1 million (2022: $nil) goodwill impairment as
noted above.
Operating profit analysed as:
Adjusted operating profit
Adjusting items
Operating (loss)/profit
2023
$000
2022
$000
16,049
(28,072)
(12,023)
3,808
3,884
7,692
108
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Adjusting items
Year ended 31 March 2023
Goodwill impairment(1)
Losses/(gains) and transaction
costs relating to acquisitions
and disposals of businesses(2)
Acquisition integration and
restructuring (income)/costs(3)
Reversal of impairment of assets(4)
IT security incident income(5)
Amortisation of acquired intangibles(6)
Adjusting items
Year ended 31 March 2022
Losses/(gains) and transaction
costs relating to acquisitions
and disposals of businesses(2)
Acquisition integration and restructuring
(income)/costs(3)
(Reversal of impairment)/
impairment of assets(4)
Cost of
sales
$000
Selling
expenses
$000
Admin
expenses
– costs
$000
Other
operating
income
$000
Profit on
disposal of
property,
plant and
equipment
$000
Admin
expenses –
impairment of
goodwill
$000
Total
$000
—
—
—
—
—
29,100
29,100
—
1,479
(154)
—
—
1,325
—
—
—
—
—
—
—
(1,500)
—
—
(1,500)
1,031
—
(142)
2,751
3,640
—
—
—
—
(4,493)
—
—
—
—
—
—
—
(1,983)
(154)
(142)
2,751
(1,500)
(4,493)
29,100
28,072
Cost of
sales
$000
Selling
expenses
$000
Admin
Expenses
– costs
$000
Other
operating
income
$000
Loss on
disposal
of plant
$000
Other
finance
expenses
$000
Total
$000
—
—
3,710
—
—
(15)
3,695
(980)
—
(1,336)
(124)
348
401
(1,691)
IT security incident (income)/costs(5)
Amortisation of acquired intangibles(6)
—
—
—
—
Adjusting items
(2,524)
(1,112)
(1,544)
(1,112)
—
(5,683)
2,837
(472)
—
—
—
—
—
—
—
—
—
(124)
348
386
(2,656)
(5,683)
2,837
(3,498)
Adjusting items are separately presented by virtue of their nature, size and/or incidence (per each operating segment).
These items are material or of an unusual or non-recurring nature which represent gains or losses and are presented to
allow for the review of the performance of the business in a consistent manner and in line with how the business is managed
and measured on a day-to-day basis and allow the reader to obtain a clearer understanding of the underlying results of the
ongoing Group’s operations. They are typically gains or costs associated with events that are not considered to form part of
the core operations, or are considered to be a ‘non-recurring’ event (although they may span several accounting periods).
These (gains)/losses relating to the year ended 31 March 2023 are broken down as follows:
(1) Goodwill impairment
In the year an impairment of $29.1 million has been recorded to write down the goodwill from historical acquisitions in the UK and Asia
Cash-Generating Unit (CGU).
Following the deterioration of the result experienced in UK and Asia CGU, especially in the second half of FY2023, the longer-term impacts
on the forecasts for future cash flows have resulted in an impairment. The calculation was further exacerbated by the significant increase in
the discount rate, mainly as a result of higher interest rates. See note 9 for further details.
(2) Losses/(gains) and transaction costs relating to acquisitions and disposals of businesses
Costs directly associated with acquisitions, including legal and advisory fees on deals, form part of our reported results on an IFRS basis.
These costs, however, in the Board’s view, form part of the capital transaction, and as they are not attributed to investment value under IFRS
3, they are included as an adjusting item. Similarly, where acquisitions have employee related payments (exclusive of Long Term Incentive
Plans) which lock in and incentivise legacy talent, we also include these costs as adjusting items. Furthermore, gains or losses on the
disposal of businesses, including any transaction costs associated with the disposal, are treated as adjusting items.
In the year, $1.5 million of insurance income was received relating to the Impact Innovations, Inc (Impact) Representations and Warranties
insurance settlement in connection with accounting and tax issues present at acquisition in August 2018.
In the year to 31 March 2022, the Group incurred expenditure relating to acquisitions totalling $3.7 million, of which $113,000 related
to previous successful acquisitions and the balance related to aborted acquisitions. In addition, the final tranche of acquisition related
employee payments which lock in and incentivise legacy talent relating to the Impact acquisition in August 2018 was incurred ($278,000).
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
109
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
3 Operating expenses and adjusting items continued
Adjusting items continued
(3) Acquisition integration and restructuring (income)/costs
In order to realise synergies from acquisitions, or existing businesses, integration and restructuring projects are respectively undertaken that
aim to deliver future savings and efficiencies for the Group. These are projects outside of the normal operations of the business and typically
incur one-time costs to ensure successful implementation. As such it is appropriate that costs associated with projects of this nature be
included as adjusting items. The costs incurred in the year relate to the reorganisation, business simplification and impairment expenses in
DG Americas and the reorganisation of the DG UK businesses as follows:
Profit on sale of property, plant and equipment – In April 2022, the Kansas, Manhattan property was sold for proceeds of $6.7 million
resulting in a profit on disposal of $4.6 million recognised as an adjusting item. In addition to this there was a loss on sale of equipment of
$100,000 in relation to assets disposed of during the exit of a site in Clara City, Minnesota.
Site closure costs – In March 2023, a decision was made to exit a site in Clara City, Minnesota. This resulted in an impairment of the
right-of-use asset associated with the underlying lease of $757,000. Additional costs of $273,000 were incurred in relation to the relocation
and closure of this site, the Kansas, Manhattan site, as well as the consolidation of other US sites.
DG Americas and DG UK business reorganisation – In the year further integration costs, relating to people, of $782,000 have been
recognised in DG Americas following the announcement of further business reorganisation. Similarly, in March 2023 the UK business
internally announced a business simplification in light of the downturn of the UK outlook, resulting in the recognition of one-off people
costs of $713,000.
In the year to 31 March 2022, adjusting items relate to the integration of CSS into the enlarged DG Americas business. Two previously
impaired properties were sub-let, resulting in a reversal of the impairment, net of associated provisions for costs to run the exited sites,
of $2.8 million. In the year to 31 March 2022, ongoing net costs relating to these impaired and sub-leased properties were treated as
adjusting items, however given the immaterial and recurring nature of these ongoing net costs the Group will no longer include these as
adjusting items.
In the year to 31 March 2022, costs associated with the ongoing consolidation of operations around the Group were incurred. These
included the enlarged printing and converting business moving from Memphis to a larger facility in Byhalia, Mississippi that also houses
distribution. In addition, costs associated with the exit of the owned property in Manhattan, Kansas to consolidate our pattern printing
facilities into one site were incurred. The total costs associated with this integration were $1.1 million. The remaining costs incurred in the
prior year relate to severance costs associated with the wider DG Americas restructure programme.
(4) Reversal of impairment of assets
At the onset of the Covid-19 pandemic a review of inventory, trade receivables and fixed assets was undertaken. Inventories were assessed
at 31 March 2020 for the net realisable value and an impairment of $7.4 million was recognised. Trade receivables were assessed for their
expected credit loss in line with IFRS 9 and an impairment of $3.8 million was recognised. The UK’s bag line machines were impaired by
$348,000 based on expected future cash flows associated with the ‘Not-for-resale’ consumables business.
In the year a credit of $154,000 has been recognised relating to reversal of impairments no longer required. During the year to 31 March 2022
there were reversals of impairment amounting to a $2.7 million credit. There are no remaining provisions relating to these costs.
(5) IT security incident income
The IT security incident which occurred in DG Americas in October/November 2020 resulted in one-off costs of $2.2 million being incurred
during the year ended 31 March 2021. This did not include the lost profits incurred as a result of downtime in the business for which an
insurance claim was made. In the year further insurance income was received of $142,000 (FY2022: $5.7 million) in relation to this incident.
The treatment of this income as adjusting, follows the previous treatment of the one-off costs as adjusting.
(6) Amortisation of acquired intangibles
Under IFRS, as part of the acquisition of a company, it is necessary to identify intangible assets such as customer lists and trade names
which form part of the intangible value of the acquired business but are not part of the acquired balance sheet. These intangible assets
are then amortised to the income statement over their useful economic lives. These are not operational costs relating to the running of the
acquired business and are directly related to the accounting for the acquisition. These include trade names and brands acquired as part
of the acquisition of Impact and CSS in the USA. As such, we include these as adjusting items.
110
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
The cash flow effect of adjusting items
There was a $6.9 million net inflow in the current period’s cash flow (FY2022: $6.2 million outflow) relating to adjusting items
which included $1.1m (FY2022: $3.3 million) deferred from prior years. $1.4 million outflow is included within cash generated
from operations (2022: $1.9 million) and $8.3 million inflow is included within investing and financing activities (2022:
$4.3 million outflow).
Auditors’ remuneration:
Amounts receivable by auditor and its associates in respect of:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
– Overseas subsidiaries
– UK subsidiaries
Other audit related services – review of interim report
2023
$000
2022
$000
1,192
1,021
145
—
85
87
103
80
4 Staff numbers and costs
The average monthly number of persons employed by the Group (including Directors) during the year, analysed by category,
was as follows:
Selling and administration
Production and distribution
Temporary and agency staff
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Share-based payments
Social security costs
Other pension costs
Temporary employee costs
Number of employees
2023
1,215
1,877
624
3,716
2022
1,264
2,051
747
4,062
Note
23
2023
$000
2022
$000
151,284
159,197
805
12,993
3,176
(848)
14,123
3,300
15,023
20,057
183,281
195,829
For information on Directors’ remuneration please refer to the section titled ‘Directors’ remuneration’ within the Directors’
remuneration report (pages 75 to 77), which forms part of these audited financial statements.
5 Other operating income
Grant income
Sub-lease rental income
Government assistance
Other
Other operating income before adjusting items
Adjusting items (note 3)
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
2023
$000
111
1,253
—
87
1,451
1,500
2,951
2022
$000
(17)
628
125
10
746
124
870
111
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
6 Finance expenses
Interest payable on bank loans and overdrafts
Other similar charges
Lease liability interest
Unwinding of fair value discounts
Interest payable under the effective interest method
Derivative financial instruments at fair value through the income statement
Finance expenses before adjusting items
Adjusting items (note 3)
7 Income tax charge
Recognised in the income statement
Current tax charge/(credit)
Current year
Adjustments in respect of previous years
Deferred tax charge/(credit)
Derecognition of deferred tax assets
Origination and reversal of temporary differences
Adjustments in respect of previous periods
Total tax in income statement
Total tax charge on adjusting items
Total tax on profit before adjusting items
Total tax on adjusting items
Total tax charge in income statement
Reconciliation of effective tax rate
(Loss)/profit before tax
Profit before tax multiplied by the standard rate of corporation tax of 19% in the UK (2022: 19%)
Effects of:
Income not taxable
Expenses not deductible for tax purposes – impairment
Expenses not deductible for tax purposes – other
Derecognition of deferred tax assets
Effect of tax rate changes
Differences between UK and overseas tax rates
Movement in uncertain tax provisions
Other items
Adjustments in respect of previous periods
Current year losses for which no deferred tax asset is recognised
Total tax charge in income statement
See note 11 for further details.
2023
$000
1,992
1,854
2,903
106
6,855
18
6,873
—
6,873
2022
$000
598
1,352
3,078
80
5,108
(3)
5,105
386
5,491
2023
$000
2022
$000
6,910
3,898
65
(12)
6,975
3,886
—
(1)
589
588
7,563
7,806
(243)
7,563
2023
$000
(18,896)
(3,590)
(50)
5,529
629
—
—
1,701
716
(210)
654
2,184
7,563
2,308
(3,664)
(13)
(1,369)
2,517
3,333
(816)
2,517
2022
$000
2,201
418
(320)
—
94
2,308
(170)
946
(1,531)
(182)
(25)
979
2,517
112
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
8 Property, plant and equipment
Cost
Balance at 1 April 2021
Additions
Transfer to assets held for sale
Transfer to intangible fixed assets
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2022
Additions
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2023
Depreciation and impairment
Balance at 1 April 2021
Depreciation charge for the year
Reversal of impairment in the year
Reclassification between categories
Transfers from intangible fixed assets
Disposals
Transfer to assets held for sale
Effect of movements in foreign exchange
Land and buildings
Freehold
$000
Leasehold
$000
Plant and
equipment
$000
Fixtures and
fittings
$000
Motor
vehicles
$000
Total
$000
48,514
5,571
114,193
9,889
2,395
180,562
625
(2,150)
—
(54)
(1,357)
45,578
285
—
(986)
842
—
—
(764)
43
5,719
(664)
—
(3,878)
(2,544)
5,692
112,826
271
(195)
(302)
3,888
(55)
(3,502)
844
—
(156)
(3,097)
(134)
7,346
710
(972)
(365)
110
—
—
(53)
(61)
8,140
(2,814)
(156)
(7,846)
(4,053)
2,391
173,833
305
(219)
(139)
5,459
(1,441)
(5,294)
44,877
5,466
113,157
6,719
2,338
172,557
(18,189)
(2,027)
(3,712)
(61,666)
(990)
(9,068)
—
(327)
—
53
—
818
—
—
—
739
—
(57)
327
136
—
3,411
664
1,785
(7,206)
(1,377)
—
265
(30)
3,182
—
188
(1,586)
(92,359)
(243)
(13,705)
—
(74)
—
20
—
42
327
—
(30)
7,405
664
2,776
Balance at 31 March 2022
(19,672)
(4,020)
(64,411)
(4,978)
(1,841)
(94,922)
Depreciation charge for the year
(1,930)
(892)
(8,569)
Disposals
Effect of movements in foreign exchange
—
728
186
200
37
2,556
(934)
940
232
(207)
(12,532)
214
110
1,377
3,826
Balance at 31 March 2023
(20,874)
(4,526)
(70,387)
(4,740)
(1,724)
(102,251)
Net book value
At 31 March 2023
At 31 March 2022
24,003
25,906
940
42,770
1,672
48,415
1,979
2,368
614
550
70,306
78,911
During the prior year a property in Manhattan, Kansas with a net book value of $2.2 million was reclassified to assets held for
sale. The sale completed on 28 April 2022 (see note 3 for further details).
Depreciation is charged to cost of sales, selling costs or administration costs within the income statement depending on the
department to which the assets relate.
Security
Certain freehold properties with a cost of $13.2 million in the UK were subject to a fixed charge in support of the RCF
banking facility.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
113
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
9 Intangible assets
Cost
Balance at 1 April 2021
Additions
Transfer from fixed assets
Disposals
Goodwill
$000
Computer
software
$000
Trade
names
$000
Customer
relationships
$000
Other
intangibles
$000
Total
$000
102,284
14,541
5,262
24,101
178
146,366
—
—
—
381
156
(484)
(101)
—
—
—
(4)
—
—
—
(15)
—
—
—
(7)
381
156
(484)
(2,343)
Effect of movements in foreign exchange
(2,216)
Balance at 31 March 2022
100,068
14,493
5,258
24,086
171
144,076
Additions
Disposals
—
—
Effect of movements in foreign exchange
(2,662)
272
(224)
(186)
—
—
(27)
—
—
(99)
96
—
(6)
368
(224)
(2,980)
Balance at 31 March 2023
Amortisation and impairment
Balance at 1 April 2021
Amortisation charge for the year
Transfer to fixed assets
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2022
Amortisation charge for the year
Impairments
Disposals
Effect of movements in foreign exchange
97,406
14,355
5,231
23,987
261
141,240
(13,319)
—
—
—
168
(8,290)
(2,980)
(3,281)
(1,034)
(6,453)
(1,803)
30
317
89
—
—
5
(13,151)
(10,834)
(4,310)
—
(2,066)
(948)
(29,100)
—
165
—
224
163
—
—
27
—
—
15
(8,241)
(1,803)
—
—
99
(149)
(31,492)
—
—
—
7
(5,817)
30
317
284
(142)
(36,678)
—
—
—
2
(4,817)
(29,100)
224
456
Balance at 31 March 2023
(42,086)
(12,513)
(5,231)
(9,945)
(140)
(69,915)
Net book value
At 31 March 2023
At 31 March 2022
55,320
86,917
1,842
3,659
—
948
14,042
15,845
121
71,325
29
107,398
Computer software relates to purchased software and people costs associated with the implementation of software.
The aggregate carrying amounts of goodwill allocated to each CGU are as follows:
UK and Asia
Europe
USA
Australia
All goodwill balances have arisen as a result of acquisitions and are not internally generated.
2023
$000
2,561
6,543
2022
$000
33,618
6,688
42,872
42,872
3,344
3,739
55,320
86,917
114
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Impairment
The Group tests goodwill each year for impairment, or more frequently if there are indications that goodwill might be
impaired.
For the purposes of impairment testing, goodwill has been allocated to the business unit, or group of business units, that
are expected to benefit from the synergies of the combination, which represents the lowest level within the Group at which
the goodwill is monitored for internal management purposes and is referred to below as a CGU. The recoverable amounts of
CGUs are determined from the higher of value in use and fair value less costs to sell.
The Group has prepared budgets and forecasts for each CGU for the next three years and these have been reviewed
and approved by management and the Board as appropriate. The key assumptions in those forecasts are sales, margins
achievable and overhead costs, which are based on past experience, more recent performance and future expectations.
Climate change poses various challenges and opportunities that could affect the future cash flows and value in use of
our assets, including goodwill. The potential impacts of climate change will, by their very nature, continue to evolve and
develop. At this stage of our climate change journey, our modelling primarily focuses on capturing the immediate and more
readily quantifiable impacts of climate change on our operations and financial performance. We recognise that there may be
additional medium to long-term effects that are not explicitly accounted for in our current models. This assessment involves
inherent uncertainties, and we will continue to monitor, reassess and report on the possible impact of climate change on
the Group in future reporting periods. The assessment of climate change risks and their financial implications is an evolving
area, and conclusions may be subject to change as new information becomes available.
The key assumptions in deriving value in use from cash flow projections are the sales growth, EBITDA margins, discount
rate applied and the long-term expected growth rates for the business. Long-term growth rates are set no higher than
the long-term economic growth projections of the countries in which the businesses operate. Management apply pre-tax
discount rates in value in use estimation that reflect current market assessments of the time value of money and the risks
specific to the CGUs and businesses under review.
The Group’s post-tax weighted average cost of capital (WACC) is 11.1% (2022: 7.6%). This has been compared to other
similar companies and is believed by the Directors to be appropriate. The CGUs use the following pre-tax discount rates
which are derived from an estimate of the Group’s post-tax WACC adjusted for the relevant tax rate for each CGU.
Pre-tax discount rates used were:
UK and Asia
Europe
USA
Australia
Long-term growth rates used were:
UK and Asia
Europe
USA
Australia
2023
14.6%
14.9%
14.7%
15.8%
2023
2.0%
2.1%
2.2%
2.3%
2022
9.5%
10.0%
10.1%
10.8%
2022
2.0%
1.5%
1.6%
2.2%
An impairment charge of $29.1 million has been recognised against the goodwill allocated to the UK and Asia CGU (FY2022:
$nil). The combination of lower forecast expectation of the UK and Asia CGU, following the deterioration of the results in this
CGU in the second half of the year, and the significant increase in the discount rate is driving an impairment of the goodwill
related to the CGU.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
115
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
9 Intangible assets continued
Impairment continued
The following reasonably possible changes in key estimation assumptions used in the VIU model would impact the
impairment charge related to the UK and Asia CGU as follows:
• A 200bps increase in the pre-tax discount rate would increase the impairment by $4.5 million, a 200bps decrease in the
pre-tax discount rate would decrease the impairment by $6.2 million
• A reduction in the growth rate to 0.5%, applied into perpetuity, would increase the impairment by $2.7 million
• A 7.5% reduction/increase in forecast cash flows would increase/reduce the impairment by $2.5 million
In all other CGUs, the carrying value of the goodwill was supported by the recoverable amount and the Directors do not
believe a reasonably possible change to the assumptions would give rise to an impairment. The Directors have considered a
200bps movement in the discount rate, a 0.5% growth rate applied to the terminal value, and a 7.5% movement in forecast
cash flows. With these changes in assumptions there is significant headroom in the remaining CGUs and no indication of
impairment.
The cash flows in the base case forecast of the other CGUs would need to be significantly lower throughout the forecasted
period to trigger an impairment, with all other assumptions being the same.
The Group has evaluated the application of a FVLCTS model in relation to the UK and Asia CGU and concluded that this
model would not yield a higher recoverable amount compared to the VIU model. While there were no recent observable
comparable market prices, management believe that under the current market and economic conditions a potential buyer
through arms-length negotiation would apply much more prudence in their risk perceptions and much lower expectations of
future opportunities in evaluating the fair value of the CGU. This coupled with associated costs to sell provides the basis for
conclusion.
10 Right-of-use assets and lease liabilities
Right-of-use assets
Net book value at 1 April 2021
Additions
Disposals
Transfers between categories
Depreciation charge
Reversal of impairment
Effect of movements in foreign exchange
Net book value at 31 March 2022
Additions
Disposals
Depreciation charge
Impairment
Transfer between categories
Effect of movements in foreign exchange
Net book value at 31 March 2023
Land and
buildings
$000
92,888
8,510
(1,231)
(109)
(16,718)
2,492
(1,263)
84,569
4,329
(1,922)
Plant and
machinery
$000
1,296
256
—
1
(498)
—
(63)
992
241
—
Motor
vehicles
$000
Office
equipment
$000
Total
$000
95,380
9,181
(1,231)
—
816
131
—
119
(270)
(17,776)
—
(14)
2,492
(1,315)
782
86,731
78
—
4,845
(1,922)
380
284
—
(11)
(290)
—
25
388
197
—
(16,820)
(436)
(233)
(225)
(17,714)
(757)
215
(1,783)
67,831
—
—
(34)
763
—
22
(19)
355
—
(237)
(15)
383
(757)
—
(1,851)
69,332
Additions include lease modifications and extensions of $822,000 (2022: $5.4 million).
116
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Income statement
The income statement shows the following charges/(credits) relating to leases:
Interest expense (included in finance expenses)
Depreciation charge
Impairment/(reversal of impairment)
Expense relating to short-term leases
2023
$000
2,903
17,714
757
121
2022
$000
3,479
17,776
(2,492)
126
Of the interest expense detailed above, $nil (2022: $401,000) has been treated as an adjusting item as it relates to exited
properties from the DG Americas integration.
Low-value lease costs were negligible in the year.
At 31 March 2023, the Group had estimated lease commitments for leases not yet commenced of $nil (2022: $nil).
Movement in lease liabilities
Balance at 1 April
Cash flow – financing activities
Additions
Disposals
Effect of movements in foreign exchange
Balance at 31 March
Non-current liabilities
Current liabilities
Total cash outflow in relation to leases is as follows:
Included in financing activities – payment of lease liabilities
Included in interest and similar charges paid
Short-term leases
2023
$000
2022
$000
99,843
113,922
(20,428)
(20,717)
4,845
(2,011)
(2,062)
9,353
(1,280)
(1,435)
80,187
99,843
2023
$000
62,717
17,470
80,187
2022
$000
80,215
19,628
99,843
2023
$000
2022
$000
20,428
20,717
2,903
121
3,479
126
23,452
24,322
Commitments for minimum lease payments in relation to non-cancellable low-value or short-term leases are payable as
follows:
Less than one year
Between one and five years
More than five years
2023
$000
30
—
—
30
2022
$000
126
—
—
126
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
117
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
10 Right-of-use assets and lease liabilities continued
Income from sub-leasing right-of-use assets continued
During the year sub-lease income from right-of-use assets was as follows:
Sub-lease income in the year from sub-leasing right-of-use assets
2023
$000
1,253
2022
$000
752
Of the sub-lease income detailed above, $nil (2022: $124,000) has been treated as an adjusting item as relates to exited
properties from the DG Americas integration.
Non-cancellable operating lease rentals are receivable as follows:
Less than one year
Between one and five years
11 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
2023
$000
655
1,148
1,803
2022
$000
422
1,542
1,964
Doubtful
debts
$000
1,354
(1,348)
—
6
—
6
6
Other timing
differences(a)
$000
Total
$000
(562)
16,242
5,409
(235)
1,369
(1,675)
4,612
15,936
(90)
4,702
4,612
(425)
16,361
15,936
Property, plant
and equipment
and intangible
assets
$000
5,375
(1,659)
33
Tax losses
carried
forward
$000
Share-based
payments
$000
8,391
1,684
(77)
(745)
(956)
(728)
—
—
—
—
3,749
7,569
(335)
4,084
3,749
—
7,569
7,569
Property, plant
and equipment
and intangible
assets
$000
3,749
251
9
Tax losses
carried
forward
$000
7,569
(224)
—
4,009
7,345
(277)
4,286
4,009
—
7,345
7,345
Share-based
payments
$000
Doubtful
debts
$000
Other timing
differences(a)
$000
Total
$000
—
—
—
—
—
—
—
6
—
(1)
5
—
5
5
4,612
15,936
(615)
(176)
(588)
(168)
3,821
15,180
(3)
(280)
3,824
3,821
15,460
15,180
At 1 April 2021
Credit/(charge) to income statement
(Charge)/credit to equity
At 31 March 2022
Deferred tax liabilities
Deferred tax assets
At 1 April 2022
(Charge)/credit to income statement
(Charge)/credit to equity
At 31 March 2023
Deferred tax liabilities
Deferred tax assets
(a) Other timing differences include a deferred tax asset closing balance of $0.6 million (2022: $0.6 million) in respect of provision for inventory and
$2.6 million (2022: $3.4 million) in respect of leases.
Deferred tax is presented net on the balance sheet in so far as a right of offset exists.
Net deferred tax asset
Net deferred tax liability
2023
$000
2022
$000
15,401
16,317
(221)
(381)
15,180
15,936
Deferred tax assets and liabilities are treated as non-current as it is expected that they will be recovered or settled more than
twelve months after the reporting date.
118
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
The deferred tax asset in respect of tax losses carried forward at 31 March 2023 of $7.3 million (2022: $7.6 million) comprises
deferred tax assets in relation to US tax losses of $7.0 million (2022: $7.2 million) and Asia tax losses of $345,000 (2022:
$337,000). All of these recognised tax losses may be carried forward indefinitely. The deferred tax assets have been
recognised in the territories where the Board considers there is sufficient evidence that taxable profits will be available
against which the tax losses can be utilised. The Group has prepared budgets and forecasts for the next three years.
The key assumptions in those forecasts are sales, margins achievable and overhead costs, which are based on past
experience, more recent performance and future expectations. The Group then extrapolates profits for the future years
based on the long-term growth rates applicable to the relevant territories.
In the prior year, all previously recognised deferred tax assets in the UK were derecognised as a result of the assessment
of future taxable profits against which the asset could unwind. This position continues in the current year in the UK and so
deferred tax assets have not been recognised on current year tax losses.
In the UK there are gross temporary differences of $990,000 (2022: $100,000) and unused tax losses, with no expiry date,
of $28.6 million (2022: $20.8 million) on which deferred tax assets have not been recognised.
In the DG Americas segment there are gross temporary differences of $63.3 million (2022: $59.6 million) and unused tax
losses, with no expiry date, of $20.0 million (2022: $25.0 million) on which deferred tax assets have not been recognised.
This is as a result of restrictions under the US change in ownership rules following the acquisition of CSS in 2020. Deferred
tax assets are recognised in respect of unrestricted temporary differences and tax losses and are supported by forecast
future taxable profits.
No deferred tax liability (2022: $88,000) has been recognised in relation to the tax cost of remitting earnings (forecast
dividends) from China to the UK. No other deferred tax liability has been recognised on unremitted earnings of the overseas
subsidiaries as, if all unremitted earnings were repatriated with immediate effect, no other tax charge would be payable.
The standard rate of corporation tax in the UK has risen to 25% effective from 1 April 2023. Given that no deferred tax is
recognised in the UK, this does not impact the deferred tax measurement at the balance sheet date.
Included within current tax liabilities is $5.2 million (2022: $4.5 million) in respect of uncertain tax positions. These risks arise
because the Group operates in a complex multinational tax environment. The amount consists of various tax risks which
individually are not material. The position is reviewed on an ongoing basis and generally these tax positions are released at
the end of the relevant territories’ statute of limitations. During the year, there has been a net increase in the Group’s total
provision of $0.7 million.
No deferred tax charge was recognised through the statement of changes in equity. In the prior year a deferred tax charge of
$1.5 million was recognised through the statement of changes in equity as a result of the derecognition of deferred tax asset
balances in relation to share-based payments and IFRS 16 adoption which were initially recognised through the statement of
changes in equity in previous years. There are no deferred tax balances with respect to cash flow hedges.
12 Inventory
Raw materials and consumables
Work in progress
Finished goods
2023
$000
36,139
32,676
2022
$000
37,586
28,925
137,611
164,374
206,426
230,885
During the year, materials, consumables, changes in finished goods and work in progress of $649.7 million (2022: $701.1
million) were recognised as an expense and included in cost of sales.
Inventories have been assessed as at 31 March 2023 and overall an expense of $12.9 million has been recognised in the year
(2022: $12.1 million). This consists of the addition of new provisions for slow moving and obsolete inventory of $19.3 million
(2022: $18.3 million), offset by the reversal of previous Covid-19 inventory provisions of $0.1 million (2022: $1.2 million), and
the release of previous slow moving and obsolete inventory provisions amounting to $6.3 million (2022: $5.0 million) due to
inventory either being used or sold.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
119
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
13 Long-term assets and trade and other receivables
Long term assets are as follows:
Acquisition indemnities
Security deposits
Insurance related assets
2023
$000
1,622
1,632
2,393
5,647
2022
$000
990
1,607
2,508
5,105
Acquisition indemnities relate to previous acquisitions made by CSS and indemnities provided by the seller. Security
deposits relate to leased properties and insurance related assets including a corporate owned life insurance policy.
Trade and other receivables are as follows:
Trade receivables
Prepayments, other receivables and accrued income
VAT receivable
2023
$000
2022
$000
80,973
115,317
10,212
11,627
1,217
906
92,402
127,850
The Group has receivable financing arrangements in Hong Kong. None of this facility was drawn at 31 March 2023 (2022:
$nil).
The Group is party to supplier financing arrangements with one of its key customers and the associated balances are
recognised as trade receivables until receipt of the payment from the bank, at which point the receivable is derecognised.
At 31 March 2023, $7.0 million had been drawn down on this arrangement (2022: $6.0 million).
Please see note 15 for more details of the banking facilities.
There are no trade receivables in the current year (2022: $nil) expected to be recovered in more than twelve months.
The Group’s exposure to credit and currency risks and provisions for doubtful debts related to trade and other receivables is
disclosed in note 24.
14 Cash and cash equivalents/bank overdrafts
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents and bank overdrafts per cash flow statement
Net cash
Cash and cash equivalents
Loan arrangement fees
Net cash as used in the financial review cash flow statement
2023
$000
2022
$000
85,213
50,179
(34,979)
(20,380)
50,234
29,799
2023
$000
2022
$000
50,234
29,799
250
360
50,484
30,159
The Group’s exposure to interest rate risk and sensitivity analysis for financial assets and liabilities are disclosed in note 24.
The bank loans and overdrafts are secured by a fixed charge on certain of the Group’s land and buildings, a fixed charge on
certain of the Group’s book debts and a floating charge on certain of the Group’s other assets. See note 15 for further details
of the Group’s loans and overdrafts.
120
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Changes in net cash
Balance at 1 April 2021
Cash flows
Effect of other items
Amortisation of loan arrangement fees
Effect of movements in foreign exchange
Balance at 31 March 2022
Cash flows
Effect of other items
Amortisation of loan arrangement fees
Effect of movements in foreign exchange
Balance at 31 March 2023
Loan
arrangement
fees
$000
Other assets
cash/bank
overdrafts
$000
723
494
75,727
(48,165)
(824)
(33)
360
—
2,237
29,799
1,079
20,595
Total
$000
76,450
(47,671)
(824)
2,204
30,159
21,674
(1,143)
(46)
250
—
(160)
(1,143)
(206)
50,234
50,484
15 Loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more
information about the Group’s exposure to interest rate and foreign currency risk, see note 24.
Non-current liabilities
Secured bank loans
Loan arrangement fees
Current liabilities
Current portion of secured bank loans
Loan arrangement fees
2023
$000
—
—
—
—
(250)
(250)
2022
$000
—
(20)
(20)
—
(340)
(340)
Secured bank loans
The Group entered into a new banking facility on 5 June 2023, this facility comprises an Asset Backed Lending (“ABL”)
arrangement with a maximum facility amount of $125.0 million. The facility with HSBC and Nat West banks has an original term
of three years, with the option of submitting two extension notices to extend the facility twice, each by a period of one year.
The Group has also increased its unsecured overdraft facility provided by HSBC to £16.5 million, which reduces to £8.5
million from August 2023.
Interest charged on the new Asset Backed lending facility is based, at the option of the Group, on one of two methods:
• A margin of between 1.75% and 2.25%, based on average excess availability, plus a 0.1% credit spread adjustment, plus
the US Secured Overnight Financing Rate (“SOFR”); or
• A margin of between 0.75% and 1.25% based on average excess availability, plus a rate based on the higher of: the HSBC
prime rate, the Federal Funds rate plus 0.5%, or SOFR plus 1%.
A further commitment/non-utilisation fee is charged at 0.25% where facility usage is greater than 50% of the maximum
credit line, and 0.375% where facility usage is less than 50% of the maximum credit line.
The financial covenant within the facility agreement, which is a minimum fixed charge coverage ratio of 1.0 times, is only
triggered if the remaining availability of the facility is less than the higher of $12.5 million or 12.5% of the borrowing base.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
121
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
15 Loans and borrowings continued
Secured bank loans continued
The ABL is secured with an all-assets lien on all existing and future assets of the loan parties. The loan parties are Anker
Play Products, LLC, Berwick Offray, LLC, BOC Distribution, Inc., C. R. Gibson, LLC, CSS Industries, Inc., IG Design Group
(Lang), Inc., IG Design Group Americas, Inc., IG Design Group plc, IG Design Group UK Limited, Impact Innovations, Inc.,
Lion Ribbon Company, LLC, Paper Magic Group, Inc., Philadelphia Industries, Inc., Simplicity Creative Corp., The Lang
Companies, Inc., The McCall Pattern Company, Inc.
Invoice financing arrangements are secured over the trade receivables that they are drawn on (see note 13). The Group also
has an invoice financing arrangement in Hong Kong with a maximum limit of $18.0 million, dependent on level of eligible
receivables. This facility is being cancelled in line with the terms of the new financing arrangement.
On 1 June 2022, the Company had extended and amended the terms of its existing banking agreement to 31 March 2024.
These facilities were cancelled on 5 June 2023. These facilities were maintained through a club of five banks: HSBC,
NatWest, Citigroup (who replaced BNP Paribas), Truist Bank (as successor by merger to SunTrust Bank) and PNC. As part of
the June 2022 extension, covenants were revised for the period to 31 March 2023 and the amended facilities comprised:
• a revolving credit facility (‘RCF A’) reduced from $95.0 million to $90.0 million; and
• a further flexible revolving credit facility (‘RCF B’) with availability varying from month to month of up to a maximum
level of £92.0 million (reduced from a maximum level of £130 million). This RCF was flexed to meet our working capital
requirements during those months when inventory was being built within our annual business cycle and was £nil when not
required, minimising carrying costs.
The RCFs were secured with a fixed and floating charge over the assets of the Group. Amounts drawn under RCFs were
classified as current liabilities as the Group expected to settle these amounts within twelve months.
The covenants under the extended and amended RCF facility, which operated to 31 March 2023, were as follows:
• minimum adjusted earnings before interest, depreciation and amortisation (Adjusted EBITDA), as defined by the banking
facility, measured quarterly at the end of June, September, December and March, which required the Group to be within
$10.0 million of its Adjusted EBITDA budget at each quarter end, based on the last twelve-month Adjusted EBITDA
performance at each measurement point; and
• minimum liquidity level, which required the Group to maintain a minimum of $35.0 million of headroom to the maximum
available facility on a monthly basis.
From April 2023 the Group reverted to the previous RCF covenants. Given the cancellation of the RCF on 5 June 2023,
these covenants are no longer applicable.
There was a further RCF covenant tested monthly in respect of the working capital RCF by which available asset cover must
not fall below agreed levels relative to amounts drawn.
All covenants under the RCF were measured on pre-IFRS 16 accounting definitions.
The cancelled facility agreement had also stipulated that any dividends to be paid by the Group during the remaining term of
the agreement would require majority lender approval.
The Group has remained comfortably in compliance with all of these covenants up its cancellation.
16 Deferred income
Included within non-current liabilities
Deferred grant income
Included within current liabilities
Deferred grant income
Other deferred income
2023
$000
2022
$000
2,038
523
211
52
263
414
51
465
The deferred grant income is in respect of government grants relating to the development of the Penallta site in Wales and
the Byhalia site in Mississippi. The conditions for the Wales grant were all fully met in January 2019 and for the Byhalia site in
January 2023. Deferred income is being released in line with the depreciation of the assets for which the grant is related to.
122
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
17 Provisions
Balance at 1 April 2022
Provisions made in the year
Provisions released during the year
Unwinding of fair value discounts
Provisions utilised during the year
Effect of movements in foreign exchange
Balance at 31 March 2023
Non-current
Current
Property
$000
6,247
723
(287)
106
(200)
(70)
Other
$000
111
282
(99)
—
(5)
5
Total
$000
6,358
1,005
(386)
106
(205)
(65)
6,519
294
6,813
2023
$000
5,474
1,339
6,813
2022
$000
5,016
1,342
6,358
The property provision represents the estimated reinstatement cost of 14 of the Group’s leasehold properties under fully
repairing leases (2022: 14). Of the non-current balance, $2.2 million (2022: $1.4 million) relates to a lease expiring in 2036;
the remainder relates to provisions unwinding between one and five years.
18 Other financial liabilities
Included within non-current liabilities
Other creditors and accruals
Included within current liabilities
Other creditors and accruals
Liability to acquire non-controlling interest
Forward exchange contracts carried
at fair value through the income statement
Forward exchange contracts carried
at fair value through the hedging reserve
2023
$000
2022
$000
19,071
21,557
40,912
34,455
—
3,069
28
287
—
18
41,227
37,542
At 31 March 2022, a $3.1 million liability to acquire a non-controlling interest had been recognised in relation to a put
option that existed over the 49% of the share capital of Anker Play Products LLC (‘APP’) not owned by the Group; this was
extinguished when the remaining 49% share of APP was purchased see note 28 for further details.
19 Trade and other payables
Trade payables
Other payables including social security
VAT payable
2023
$000
2022
$000
89,754
138,902
2,719
504
3,821
595
92,977
143,318
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
123
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
20 Share capital
Authorised share capital at 31 March 2023 and 2022 was £6.0 million, 121.0 million ordinary shares of 5p each.
In thousands of shares
In issue at 1 April
Options exercised during the year
In issue at 31 March – fully paid
Allotted, called up and fully paid
Ordinary shares of £0.05 each
Ordinary shares
2023
2022
97,062
96,858
932
204
97,994
97,062
2023
$000
2022
$000
6,059
6,373
Of the 98.0 million shares in the Company, 1.0 million (2022: 31,000) are held by IG Employee Share Trustee Limited
(the ‘Employee Benefit Trust’).
Long Term Incentive Plan (LTIP) options exercised during the year resulted in 932,000 ordinary shares issued at nil cost
(2022: 204,000 ordinary shares issued at nil cost).
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the Company.
21 Loss per share
Earnings/(loss)
Loss attributable to equity holders of the Company
Adjustments
Adjusting items (net of non-controlling interest effect)
Tax relief on adjustments (net of non-controlling interest effect)
Adjusted loss attributable to equity holders of the Company
In thousands of shares
Issued ordinary shares at 1 April
Shares relating to share options
Less: shares held by Employee Benefit Trust
Weighted average number of shares for the purposes of calculating basic EPS
Effect of dilutive potential shares – share awards
Weighted average number of shares for the purposes of calculating diluted EPS
2023
$000
2022
$000
(27,987)
(3,277)
28,072
(3,498)
(243)
(158)
(816)
(7,591)
2023
2022
97,062
96,858
1,242
(536)
1,260
—
97,768
98,118
—
—
97,768
98,118
There are 209,000 (2022: 119,000) share options which are not included in the calculation of diluted earnings per share
because they are antidilutive.
Loss per share
Basic loss per share
Impact of adjusting items (net of tax)
Basic adjusted loss per share
Diluted loss per share
Diluted adjusted loss per share
Adjusted loss per share are provided to reflect the underlying earnings performance of the Group.
2023
Cents
2022
Cents
(28.6)
28.4
(0.2)
(28.6)
(0.2)
(3.3)
(4.4)
(7.7)
(3.3)
(7.7)
124
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Basic earnings/(loss) per share
Basic EPS is calculated by dividing the profit for the year attributable to ordinary shareholders by the weighted average
number of shares outstanding during the period, excluding own shares held by the Employee Benefit Trust.
Diluted earnings/(loss) per share
Diluted EPS is calculated by dividing the profit for the year attributable to ordinary shareholders by the weighted average
number of shares outstanding during the period, plus the weighted average number of ordinary shares that would be issued
on the conversion of the potentially dilutive shares.
22 Dividends paid and proposed
No dividends were paid in the current year and the Directors are not recommending the payment of a final dividend in
respect of the year ended 31 March 2023.
Final equity dividend for prior year
Interim equity dividend for current year
Dividends paid in the year
2023
Pence
per share
Cents
per share
—
—
—
—
2023
Proposed for approval at Annual General Meeting
Pence
per share
Cents
per share
Final equity dividend for the current year
—
—
Pence
per share
5.75
1.25
2022
Cents
per share
7.92
1.68
Pence
per share
2022
Cents
per share
—
—
$000
—
—
—
$000
—
$000
7,630
1,644
9,274
$000
—
23 Employee benefits
Post-employment benefits
The Group administers a defined benefit pension plan that was inherited through the acquisition of CSS and covers certain
employees of a UK subsidiary. The scheme closed to future accrual on 31 December 2012. This is a separate trustee
administered fund holding the pension scheme assets to meet long-term pension liabilities. The plan assets held in trust are
governed by UK regulations and responsibility for governance of the plan, including investment decisions and contribution
schedules, lies with the group of trustees. The assets of the scheme are invested in the SPI With-Profits Fund, which is
provided by Phoenix Life Limited.
An actuarial valuation was updated on an approximate basis at 31 March 2023, by a qualified actuary, independent of the
scheme’s sponsoring employer.
The major assumptions used by the actuary are shown below.
Present values of defined benefit obligation, fair value of assets and defined benefit asset/(liability)
Fair value plan of assets
Present value of defined benefit obligation
Surplus in plan
Surplus not recognised
Net defined benefit asset to be recognised
2023
$000
3,269
(1,245)
2,024
(2,024)
—
2022
$000
3,241
(1,858)
1,383
(1,383)
—
In accordance with IAS 19, the surplus on the plan has not been recognised on the basis it is not expected to be recovered,
as the Group does not have an unconditional right to any refund, with the previously recognised asset being derecognised in
the prior year.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
125
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
2023
$000
2022
$000
(1,858)
(2,528)
(48)
—
10
645
(113)
119
(50)
384
52
205
(18)
97
(1,245)
(1,858)
2023
$000
2022
$000
3,241
3,615
85
74
61
—
(7)
(185)
3,269
75
33
68
(384)
(7)
(159)
3,241
2022
—
—
3.80%
2.75%
2.50%
2.80%
3.65%
2.75%
23 Employee benefits continued
Post-employment benefits continued
Reconciliation of opening and closing balances of the defined benefit obligation
Defined benefit obligation as at 1 April
Interest expense
Benefits payments from plan assets
Actuarial gains due to changes in demographic assumptions
Actuarial gains due to changes in financial assumptions
Effect of experience adjustments
Effect of movement in foreign exchange
Defined benefit obligation as at 31 March
Reconciliation of opening and closing balances of the fair value of plan assets
Fair value of plan assets as at 1 April
Interest income
Return on plan assets
Contributions by the Company
Benefits payments from plan assets
Admin expenses paid from plan assets
Effect of movement in foreign exchange
Fair value of plan assets as at 31 March
A total of $30,000 (2022: $18,000) has been credited to Group operating profit during the year, including $7,000 (2022:
$7,000) of expense netting against net interest income of $37,000 (2022: $25,000).
The principal assumptions used by the independent qualified actuary for the purposes of IAS 19 are as follows:
Increase in salaries
Increase in pensions
– at RPI capped at 5%
– at CPI capped at 5%
– at CPI capped at 2.5%
Discount rate
Inflation rate – RPI
Inflation rate – CPI
2023
—
—
3.70%
2.40%
2.40%
4.80%
3.30%
2.40%
Due to the timescale covered, the assumptions may not be borne out in practice.
The life expectancy assumptions (in number of years) used to estimate defined benefit obligations at the year end are as
follows:
Male retiring today at age 60
Female retiring today at age 60
Male retiring in 20 years at age 60
Female retiring in 20 years at age 60
2023
26.1
28.0
27.6
29.6
2022
26.4
28.5
27.9
30.1
126
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
In addition to the defined benefit pension scheme there is also a small post-retirement healthcare scheme operated in the
US, which was also inherited through the acquisition of CSS. In total, the amounts taken through the Group’s statement of
comprehensive income can be seen below:
UK pension scheme
Actuarial losses on defined benefit pension scheme
Derecognition of defined benefit pension scheme surplus
US health scheme
2023
$000
2022
$000
(53)
—
16
(37)
(73)
(664)
22
(715)
Long Term Incentive Plans
The Group operates a Long Term Incentive Plan (LTIP). Under the LTIP, nil cost options and conditional awards over ordinary
shares of 5 pence each (‘ordinary shares’) in the capital of the Company are awarded to Executive Board Directors of the
Company and other selected senior management team members within the Group. During the year, awards were granted
under the 2022-2025 LTIP scheme.
The performance period for each award under the LTIP is three years. The cost to employees of ordinary shares issued
under the LTIP if the LTIP vests is nil. In principle, the number of ordinary shares to be granted to each employee under
the LTIP will not be more than 265% (and 325% in exceptional cases) of the relevant employee’s base annual salary.
The maximum opportunity available under the 2022-2025 scheme is up to 125% of base salary for the CFO and Interim COO.
The Value Creation Scheme (VCS) that was introduced in February 2021, was cancelled effective 28 June 2022.
On 29 September 2022, the trustee of the IG Design Group Plc Employee Benefit Trust (the ‘EBT’), purchased 1 million
ordinary shares of 5 pence each at an average price of 77.50 pence per ordinary share. These ordinary shares are to be held
in the EBT and are intended to be used to satisfy the exercise of share options by employees.
Vested LTIP schemes – outstanding options
2017-2020 LTIP scheme
2018-2021 LTIP scheme
Number of
ordinary shares
48,025
262,071
310,096
Exercise
price
pence
nil
nil
Exercise dates
July 2020 – August 2027
June 2021 – November 2028
All performance criteria have been met for the above schemes.
Outstanding at 1 April
Options vesting during the year
Exercised during the year
Outstanding at 31 March
Exercisable at 31 March
2023
2022
Weighted
average
exercise price
pence
Weighted
average
exercise price
pence
Number of
options
nil 1,088,123
nil
nil
nil
nil
154,139
(932,166)
310,096
310,096
nil
nil
nil
nil
nil
Number of
options
1,291,728
—
(203,605)
1,088,123
1,088,123
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
127
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
23 Employee benefits continued
Scheme details for plans in vesting periods during the year
During the financial year to 31 March 2023 there were two LTIP awards still within their vesting period (2022: two).
Awards
Grant date
Fair value per share (£)
Number of participants
Initial award
Dividend shares
Lapses and forfeitures
Exercises and releases
Potential to vest as at 31 March 2023
Potential to vest as at 31 March 2022
Weighted average remaining contractual life of options outstanding at the end of the year
2020-2022
2022-2025
Sep 2020 Aug 2023,
and Dec 2023,
Feb 2023
Jan 2021
5.57
2
1.00
67
150,000 2,567,747
4,139
—
—
(47,043)
(154,139)
—
— 2,520,704
151,465
—
Nil 3.17 years
The grant date fair value of the LTIP awards granted in the year, assuming they are to vest in full, is $3.0 million.
The grant date fair values of the 2022-2025 scheme were determined using the following factors:
Share price (£)
Exercise price
Expected term
Risk-free interest rate
Expected dividend yield
1.14
Nil
3 years (additional 2 years for holding period)
1.84% (1.98% for awards with holding period)
0%
LTIP performance targets
The 2020-2022 scheme, granted to two individuals, had only a service condition, being 1 April 2020 to 30 June 2022.
It vested on 30 June 2022.
Individuals were granted performance share awards under the 2022-2025 scheme. Some individuals were also awarded
restricted share awards which are not subject to any performance condition (other than an underpin condition) and the
vesting is dependent on a continued service requirement. The vesting of performance share awards are subject to a
continued service requirement. The extent of vesting is subject to performance against performance conditions.
The performance share awards are weighted two-thirds towards a Relative Total Shareholder Return (‘TSR’) metric and
one-third Earnings Per Share metric as the performance measures. The TSR metric is a measurement of TSR by the Group
relative to a peer group of the FTSE SmallCap excluding Investment Trusts.
For the Relative TSR measure, qualifying performance is within the median quartile on a straight-line sliding scale with 25%
of entitlement vesting at a 50th percentile (median) ranking rising to 100% vesting at a 75th percentile (upper quartile) ranking
performance.
For the EPS measure, there is a performance range for the Adjusted EPS metric in absolute value terms, modelled from the
recovery plan presented at the time of the FY2023 Budget after inclusion of relevant LTIP charges. Upper and lower limits
were modelled for FY25 EPS performance (reflecting a 3-year performance period of FY2023, FY2024 and FY2025), with
25% vesting at Threshold of 19 cents EPS and a straight-line sliding scale to Maximum at 27 cents.
An underpin condition was also applied to the awards that allows the Committee to reduce vesting levels if it determines that
vesting outcomes reflect unwarranted windfall gains from share price movements.
128
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Share-based payments charges/(credits)
The total expense/(credit) recognised for the year arising from equity-settled share-based payments is as follows:
Charge in relation to the 2020-2022 LTIP scheme
Credit in relation to the VCS
Charge in relation to the 2022-2025 LTIP scheme
Equity-settled share-based payments charge/(credit)
Social security charge/(credit)
Total equity-settled share-based payments charge/(credit)
2023
$000
166
—
490
656
149
805
2022
$000
723
(482)
—
241
(1,089)
(848)
Deferred tax assets are recognised on share-based payment schemes when deferred tax assets are recognised in that
territory (see note 11).
Social security charges/(credits) on share-based payments
Social security is accrued, where applicable, at a rate which management expects to be the prevailing rate when
share-based incentives are exercised and is based on the latest market value of options expected to vest or having already
vested.
The total social security accrual outstanding at the year end in respect of share-based payment transactions was $160,000
(2022: $137,000).
24 Financial instruments
Derivative financial assets
a) Fair values of financial instruments
The carrying values for each class of financial assets and financial liabilities in the balance sheet are not considered to be
materially different to their fair values.
As at 31 March 2023, the Group had derivative contracts, which were measured at Level 2 fair value subsequent to initial
recognition, to the value of an asset of $340,000 (2022: $316,000) and a liability of $315,000 (2022: $18,000).
Derivative financial instruments
The fair value of forward exchange contracts is assessed using valuation models taking into account market inputs such as
foreign exchange spot and forward rates, yield curves and forward interest rates.
Fair value hierarchy
Financial instruments which are recognised at fair value subsequent to initial recognition are grouped into Levels 1 to 3
based on the degree to which the fair value is observable. The three levels are defined as follows:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable,
either directly or indirectly; and
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
129
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
24 Financial instruments continued
Derivative financial assets continued
b) Credit risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from the Group’s receivables from customers and investment securities.
The Group’s exposure to credit risk is managed by dealing only with banks and financial institutions with strong credit
ratings. The Group’s financial credit risk is primarily attributable to its trade receivables.
The main customers of the Group are large and mid-sized retailers, other manufacturers and wholesalers of greetings
products, service merchandisers and trading companies. The Group has established procedures to minimise the risk of
default of trade receivables including detailed credit checks undertaken before new customers are accepted and rigorous
credit control procedures after sale. These processes have proved effective in minimising the level of provisions for doubtful
debts required.
The amounts presented in the balance sheet are net of allowances for doubtful receivables estimated by the Group’s
management, based on prior experience and their assessment of the current economic environment.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure to
credit risk at the balance sheet date was $172.2 million (2022: $170.9 million) being the total of the carrying amount of
financial assets.
The maximum exposure to credit risk for trade receivables at the balance sheet date by reporting segment was:
DG Americas
International
Credit quality of financial assets and impairment losses
The ageing of trade receivables at the balance sheet date was:
2023
$000
2022
$000
53,569
84,966
27,404
30,351
80,973
115,317
Not past due
Past due 0-60 days
61-90 days
More than 90 days
2023
2022
Expected
loss rate
%
Provisions for
Gross doubtful debts
$000
$000
Expected
loss rate
%
Provisions for
Gross doubtful debts
$000
$000
0.5
0.5
4.3
15.5
55,263
14,177
5,645
7,625
2.1
82,710
(250)
(65)
(243)
(1,179)
(1,737)
—
—
2.0
4.5
0.5
71,429
26,889
9,721
7,825
115,864
—
—
(195)
(352)
(547)
There were no unimpaired balances outstanding at 31 March 2023 (2022: $nil) where the Group had renegotiated the terms
of the trade receivable. The increase in provision year-on-year is reflective of the current macroeconomic circumstances.
130
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Expected credit loss assessment
For the Group’s trade receivables, expected credit losses are measured using a provisioning matrix based on the reason
the trade receivable is past due. The provision matrix rates are based on actual credit loss experience over the past three
years and adjusted, when required, to take into account current macro-economic factors. The Group applies experienced
credit judgement that is determined to be predictive of the risk of loss to assess the expected credit loss, taking into account
external ratings, financial statements and other available information. The Group’s trade receivables are unlikely to extend
past twelve months and, as such, for the purposes of expected credit loss modelling, the lifetime expected credit loss
impairments recognised are the same as a twelve-month expected credit loss.
There have been no significant credit risk movements since initial recognition of impairments.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 April
Charge for the year
Unused amounts reversed
Amounts utilised
Effects of movement in foreign exchange
Balance at 31 March
2023
$000
547
1,705
(59)
(469)
13
1,737
2022
$000
3,420
277
(1,511)
(1,627)
(12)
547
The allowance account for trade receivables is used to record provisions for doubtful debts unless the Group is satisfied that
no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the
trade receivables directly.
c) Liquidity risk
Financial risk management
Liquidity risk is the risk that the Group, although solvent, will encounter difficulties in meeting obligations associated with the
financial liabilities that are settled by delivering cash or another financial asset. The Group’s policy with regard to liquidity
ensures adequate access to funds by maintaining an appropriate mix of short-term and longer-term facilities, which are
reviewed on a regular basis. The maturity profile and details of debt outstanding at 31 March 2023 are set out in note 15.
The following are the contractual maturities of financial liabilities, including estimated interest payments:
31 March 2023
Non-derivative financial liabilities
Other financial liabilities
Lease liabilities
Trade payables
Derivative financial liabilities
Forward foreign exchange contracts carried
at fair value through the income statement(a)
Forward foreign exchange contracts carried
at fair value through the hedging reserve(a)
Note
18
10
19
18
18
(a) Measured at Level 2.
Carrying
amount
$000
Contractual
cash flows
$000
One year
or less
$000
One to two
years
$000
Two to five
years
$000
More than
five years
$000
59,983
(59,983)
(40,912)
(19,032)
(36)
(3)
80,187
(84,532)
(18,596)
(15,258)
(26,239)
(24,439)
89,754
(89,754)
(89,754)
—
—
28
(11)
(11)
287
(17,768)
(17,768)
—
—
—
—
—
—
—
230,239
(252,048)
(167,041)
(34,290)
(26,275)
(24,442)
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
131
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
24 Financial instruments continued
Derivative financial assets continued
c) Liquidity risk continued
Financial risk management continued
31 March 2022
Non-derivative financial liabilities
Other financial liabilities
Lease liabilities
Trade payables
Note
18
10
19
Derivative financial liabilities
Forward foreign exchange contracts carried
at fair value through the hedging reserve(a)
18
Restated(b)
Carrying
amount
$000
Restated(c)
Contractual
cash flows
$000
Restated(c)
One year
or less
$000
One to two
years
$000
Two to five
years
$000
More than
five years
$000
59,081
(59,081)
(37,524)
(21,523)
(32)
(2)
99,843
(112,186)
(22,538)
(20,669)
(37,244)
(31,735)
138,902
(138,902)
(138,902)
—
—
—
18
(11,759)
(11,759)
—
—
—
297,844
(321,928)
(210,723)
(42,192)
(37,276)
(31,737)
(a) Measured at Level 2.
(b) Other payables of $4.4 million have been removed from the above table as they had been misclassified as financial instruments.
(c) The contractual cash flows relating to the forward foreign exchange contracts carried at fair value through the hedging reserve have been restated
due to $11.2 million of USD purchases being excluded in error.
The following table shows the facilities for bank loans, overdrafts, asset-backed loans and revolving credit facilities:
Corporate revolving
credit facilities
Bank overdraft
31 March 2023
31 March 2022
Carrying
amount
$000
Facility used
contractual
cash flows
$000
Facility
unused
$000
Total
facility
$000
Carrying
amount
$000
Facility used
contractual
cash flows
$000
Facility
unused
$000
Total
facility
$000
—
—
—
—
—
—
(92,039)
(92,039)
(4,502)
(4,502)
(96,541)
(96,541)
—
—
—
—
—
—
(97,208)
(97,208)
(4,909)
(4,909)
(102,117)
(102,117)
The receivables financing facilities are dependent upon the levels of the relevant receivables.
The major bank facilities vary in the year depending on forecast debt requirements. The maximum limit across all facilities
was $221.8 million (2022: $283.7 million).
At 31 March 2023 the facility amounted to $92.0 million (2022: $97.2 million).
Additional facilities were available at other banks of $4.5 million (2022: $4.9 million).
On 5 June 2023 the Group banking negotiated new banking facilities: see note 15 for more information.
The following table shows other facilities that are treated as contingent liabilities:
UK Guarantee
UK Import line
Foreign Bills
USA Guarantee
Netherlands Guarantee (Trade and Import line)
31 March 2023
31 March 2022
Facility
$000
2,164
1,237
6,184
5,500
653
Utilised
$000
1,880
—
—
2,980
248
Facility
$000
2,101
1,313
6,566
5,500
667
15,738
5,108
16,147
Utilised
$000
1,996
—
—
2,980
121
5,097
132
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
d) Cash flow hedges
The following derivative financial instruments were designated as cash flow hedges:
Forward exchange contracts carrying amount
Derivative financial assets
Derivative financial liabilities
2023
$000
340
(315)
2022
$000
316
(18)
The Group has forward currency hedging contracts outstanding at 31 March 2023 designated as hedges of expected
future purchases in US dollars for which the Group has firm commitments, as the derivatives are based on forecasts and an
economic relationship exists at the time the derivative contracts are taken out.
The terms of the forward currency hedging contracts have been negotiated to match the terms of the commitments.
All contracts outstanding at the year end crystallise within 24 months of the balance sheet date at average prices of 1.08 for
US dollar contracts (2022: 1.14), 6.96 for Chinese renminbi contracts (2022: not applicable) and not applicable for Japanese
yen contracts (2022: 152.8). At the year end the Group held $17.6 million (2022: $11.2 million), RMB 108.9 million (2022: RMB
nil) and JPY nil (2022: JPY 60.8 million) in hedge relationships.
When assessing the effectiveness of any derivative contracts, the Group assesses sources of ineffectiveness which include
movements in volumes or timings of the hedged cash flows.
The cash flow hedges of the expected future purchases in the year were assessed to be highly effective and as at
31 March 2023, a net unrealised profit of $419,000 (2022: $686,000) with related deferred tax credit of $nil (2022: $nil) was
included in other comprehensive income in respect of these hedging contracts. Amounts relating to ineffectiveness recorded
in the income statement in the year were $nil (2022: $nil).
e) Market risk
Financial risk management
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices,
will affect the Group’s income or the value of its holdings of financial instruments.
The Group hedges a proportion, as deemed appropriate by management, of its sales and purchases of inventory
denominated in foreign currency by entering into foreign exchange contracts. Such foreign exchange contracts typically
have maturities of less than one year.
The Group rarely hedges profit translation exposure, since such hedges provide only a temporary deferral of the effects of
movement in foreign exchange rates. Similarly, the Group does not hedge its long-term investments in overseas assets.
However, the Group holds loans that are denominated in the functional currency of certain overseas entities.
The Group’s exposure to foreign currency risk is as follows. This is based on the carrying amount for monetary financial
instruments, except derivatives, when it is based on notional amounts.
31 March 2023
Long-term assets
Cash and cash equivalents
Trade receivables
Derivative financial assets
Bank overdrafts
Loan arrangement fees
Trade payables
Other payables
Balance sheet exposure
Note
13
14
13
14
15
19
19
US dollar
$000
5,647
Sterling
$000
—
Euro
$000
—
32,504
17,940
25,443
54,528
8,924
12,802
—
340
—
(17,141)
(5,419)
(12,419)
—
250
—
Other
$000
—
9,326
4,719
—
—
—
Total
$000
5,647
85,213
80,973
340
(34,979)
250
(61,323)
(14,650)
(9,388)
(4,393)
(89,754)
(1,631)
(776)
(579)
(237)
(3,223)
12,584
6,609
15,859
9,415
44,467
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
133
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
24 Financial instruments continued
Derivative financial assets continued
e) Market risk continued
Financial risk management continued
31 March 2022
Long-term assets
Cash and cash equivalents
Trade receivables
Derivative financial assets
Bank overdrafts
Loan arrangement fees
Trade payables
Other payables
Balance sheet exposure
Note
13
14
13
14
15
19
19
US dollar
$000
5,105
32,910
87,431
—
Sterling
$000
—
7,447
12,281
316
Euro
$000
—
2,388
11,014
—
(295)
(14,464)
(5,621)
—
360
—
Other
$000
Total
$000
—
5,105
7,434
50,179
4,591
115,317
—
—
—
316
(20,380)
360
(105,299)
(16,638)
(14,320)
(2,645)
(138,902)
(2,418)
(1,130)
17,434
(11,828)
(623)
(7,162)
(245)
9,135
(4,416)
7,579
The following significant exchange rates applied to US dollar during the year:
Euro
Pound sterling
Average rate
31 March spot rate
2023
0.96
0.83
2022
0.86
0.73
2023
0.92
0.81
2022
0.90
0.76
Sensitivity analysis
A 10% weakening of the following currencies against US dollar at 31 March 2023 would have affected equity and profit or
loss by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had
been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant. The
analysis was performed on the same basis for 31 March 2022.
Euro
Pound sterling
Equity
Loss
2023
$000
1,442
2022
$000
(651)
601
(1,075)
2023
$000
(296)
(251)
On the basis of the same assumptions, a 10% strengthening of the currencies against US dollar at 31 March 2023 would
have affected equity and profit or loss by the following amounts:
Euro
Pound sterling
Equity
Loss
2023
$000
(1,762)
(734)
2022
$000
796
1,314
2023
$000
362
307
Profile
At the balance sheet date the interest rate profile of the Group’s interest-bearing financial instruments was:
2022
$000
(551)
(3)
2022
$000
674
3
Variable rate instruments
Financial assets
Financial liabilities
Net cash
Note
2023
$000
2022
$000
85,213
50,179
(34,979)
(20,380)
14
50,234
29,799
A change of 50 basis points (0.5%) in interest rates in respect of financial assets and liabilities at the balance sheet date
would have affected equity and profit or loss by the amounts shown below. This calculation assumes that the change
occurred at the balance sheet date and had been applied to risk exposures existing at that date.
134
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect
on financial instruments with variable interest rates and financial instruments at fair value through profit or loss. The analysis
is performed on the same basis for 31 March 2022.
Sensitivity analysis
Equity
Increase
Decrease
Profit or loss
Increase
Decrease
2023
$000
251
—
251
—
2022
$000
149
—
149
—
f) Capital management
The Board’s policy is to hold a strong capital base so as to maintain investor, creditor, customer and market confidence and
to sustain future development of the business. The Group is dependent on the continuing support of its bankers for working
capital facilities and so the Board’s major objective is to keep borrowings within these facilities.
The Board manages as capital its trading capital, which it defines as its net assets plus net debt. Net debt is calculated
as total debt (bank overdrafts, loans and borrowings as shown in the balance sheet), less cash and cash equivalents. The
banking facilities with the Group’s principal bank have amended covenants relating to earnings and liquidity cover and
previous covenants relating to interest cover, cash flow cover and leverage, and our articles currently permit borrowings
(including letter of credit facilities) to a maximum of four times equity.
Net equity attributable to owners of the Parent Company
Net cash
Trading capital
Equity
2023
$000
2022
$000
Note
327,846
361,711
14
(50,484)
(30,159)
277,362
331,552
The main areas of capital management relate to the management of the components of working capital including monitoring
inventory turn, age of inventory, age of trade receivables, balance sheet reforecasting, monthly profit and loss, weekly
cash flow forecasts and daily cash balances. Major investment decisions are based on reviewing the expected future cash
flows and all major capital expenditure requires sign off by the Chief Financial Officer, Chief Executive Officer and Interim
Executive Chair, or, above certain limits, by the Board. There were no major changes in the Group’s approach to capital
management during the year. A particular focus of the Group is average leverage, measured as the ratio of average monthly
net debt before lease liabilities to adjusted EBITDA reduced for lease payments.
25 Capital commitments
At 31 March 2023, the Group had outstanding authorised capital commitments to purchase plant and equipment for
$3.9 million (2022: $1.5 million).
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
135
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
26 Related parties
Sale of goods:
Hedlunds Pappers Industri AB
Festive Productions Ltd
SA Greetings (Pty) Ltd
Receivables:
Hedlunds Pappers Industri AB
2023
$000
199
3
—
202
—
—
2022
$000
566
—
93
659
23
23
Identity of related parties and trading
Hedlund Import AB is under the ultimate control of the Hedlund family, who are a major shareholder in the Company. Anders
Hedlund is a director of Hedlunds Pappers Industri AB which is under the ultimate control of the Hedlund family, who are a
major shareholder in the Company. Festive Productions Ltd is a subsidiary undertaking of Malios Holding AG, a company
under the ultimate control of the Hedlund family.
SA Greetings (Pty) Ltd (South African Greetings) was a related party by virtue of John Charlton being the Chairman. It is no
longer a related party since the resignation of John Charlton from the Board on 20 September 2021.
The above trading takes place in the ordinary course of business.
Other related party transactions
Directors of the Company and their immediate relatives have an interest in 24% (2022: 24%) of the voting shares of the
Company. The shareholdings of Directors and changes during the year are shown in the Directors’ report on page 78.
Directors’ remuneration
Short-term employee benefits
Termination benefits
Share-based payments charge/(credit)
2023
$000
3,158
—
224
3,382
2022
$000
2,496
890
(1,256)
2,130
See the Directors’ remuneration report on pages 70 to 77 for more detail.
27 Non-controlling interests (NCI)
The Group purchased the remaining 49% share of Anker Play Products LLC (‘APP’) effective date 1 April 2022 (see note 28
for further details). Set out below is summarised financial information for each subsidiary that has non-controlling interests
that are material to the Group. These subsidiaries are IG Design Group Australia Pty Ltd (‘Australia’) and APP (up to date of
purchase).
Non-controlling interest –
balance sheet as at 31 March
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Non-controlling interest –
comprehensive income for the year ended 31 March
Revenue
Profit after tax
Total comprehensive income
Australia
$000
7,283
16,007
(7,959)
(2,271)
Australia
$000
49,666
3,055
1,770
2023
APP
$000
—
—
—
—
2022
Total
$000
Australia
$000
APP
$000
7,283
9,625
1,253
16,007
16,497
15,639
Total
$000
10,878
32,136
(7,959)
(2,271)
(9,082)
(4,355)
(10,706)
(19,788)
(894)
(5,249)
2023
2022
APP
$000
—
—
—
Total
$000
Australia
$000
APP
$000
Total
$000
49,666
51,296
38,309
89,605
3,055
1,770
3,756
3,568
2,211
2,211
5,967
5,779
136
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Non-controlling interest –
cash flow for the year ended 31 March
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Australia
$000
3,978
(131)
(2,986)
Net (decrease)/increase in cash and cash equivalents
861
Non-controlling interest –
cash flow for the year ended 31 March
Balance as at 1 April
Share of profits for the year
Other comprehensive expense
Australia
$000
6,343
1,528
(3)
2023
APP
$000
—
—
—
—
2023
APP
$000
1,656
—
—
Total
$000
3,978
(131)
(2,986)
861
Total
$000
7,999
1,528
(3)
Australia
$000
3,101
(357)
(8,348)
(5,604)
Australia
$000
7,924
1,878
—
Dividend paid to non-controlling interest
(698)
(2,263)
(2,961)
(3,365)
Acquisition of non-controlling interest
Currency translation
Balance as at 31 March
—
(640)
6,530
607
—
—
607
(640)
—
(94)
2022
APP
$000
602
(224)
(63)
315
2022
APP
$000
573
1,083
—
—
—
—
Total
$000
3,703
(581)
(8,411)
(5,289)
Total
$000
8,497
2,961
—
(3,365)
—
(94)
6,530
6,343
1,656
7,999
28 Acquisitions
On 23 May 2022, the Group purchased the remaining 49% interest in APP, bringing its total ownership to 100%. This was
completed pursuant to the exercise of a put option by Maxwell Summers, Inc., the holder of the remaining 49% interest,
which the Group was legally obliged to purchase with the exercise of the put option under the APP Limited Liability Company
agreement dated 30 March 2017. Consequently the $3.1 million current financial liability in respect of the put option in place
over the non-controlling interest was extinguished and the related liability de-recognised, with a corresponding movement
within retained earnings.
The transaction was contractually committed on 23 May 2022, with an effective date of 1 April 2022. The transaction, made
through the Group’s American subsidiary IG Design Group Americas, Inc., was satisfied with a cash payment of $3.0 million.
The consideration was satisfied from the existing Group banking facilities.
Immediately prior to the purchase, the carrying amount of the existing 49% non-controlling interest was $607,000.
The Group recognised a decrease in non-controlling interest of $607,000. The effect on the equity of the owners of the
Group was as follows:
Carrying amount of non-controlling interest acquired
Cash consideration paid
Excess of consideration paid recognised in the transaction
with the non-controlling interests reserve within equity
2023
$000
607
2,951
3,558
29 Purchase of own shares
On 29 September 2022, the trustee of the IG Design Group Plc Employee Benefit Trust (the “EBT”), purchased 1 million
ordinary shares of 5 pence each in the Company (“ordinary shares”) at an average price of 77.50 pence per ordinary share.
These ordinary shares are to be held in the EBT and are intended to be used to satisfy the exercise of share options by
employees. The EBT is a discretionary trust for the benefit of the Company’s employees, including the Directors of the
Company. The purchase of ordinary shares by the EBT has been funded by a loan provided by the Company from its existing
financing facilities. The EBT has waived its rights to dividend payments.
30 Non-adjusting post balance sheet events
On 5 June 2023, the $90.0 million and £92.0 million revolving credit facilities were replaced by a $125.0 million asset backed
lending arrangement. This facility has an original term of three years with the option of submitting two extension notices to
extend the facility twice, each by a period of one year. For more details see note 15.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
137
FINANCIAL STATEMENTS
COMPANY BALANCE SHEET
AS AT 31 MARCH 2023
Fixed assets
Intangible assets
Tangible assets
Investments
Deferred tax
Total non-current assets
Current assets
Debtors – due within one year
Debtors – due after more than one year
Cash at bank and in hand
Total current assets
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Merger reserve
Hedging reserve
Profit and loss account
Total equity
Note
2
3
4
5
6
7
8
9
2023
£000
—
132
2022
£000
—
90
208,724
214,443
—
—
208,856
214,533
2,658
1,372
26,849
26,864
22,746
—
52,253
28,236
(21,351)
(14,386)
30,902
13,850
239,758
228,383
239,758
228,383
10
4,900
4,853
172,383
172,383
1,340
1,340
32,399
32,399
(226)
227
28,962
17,181
239,758
228,383
IG Design Group plc is registered in England and Wales, number 1401155.
The Company made a profit in the year of £11.3 million (2022: £2.4 million).
The financial statements on pages 138 to 152 were approved by the Board of Directors on 19 June 2023 and were signed on
its behalf by:
Paul Bal
Director
138
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
COMPANY STATEMENT OF CHANGES IN EQUITY
AS AT 31 MARCH 2023
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Merger
reserve
£000
Cash flow
hedging
reserve
£000
Profit and
loss account
£000
Total
equity
£000
At 1 April 2021
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their
capacity as owners
Equity-settled share-based payments
Derecognition of deferred tax – share-based
payments (note 5)
Share options charge relating to subsidiary
employees (note 4)
Options exercised
Equity dividend paid (note 16)
At 31 March 2022
Profit for the year
Other comprehensive expense
Total comprehensive income
Transactions with owners in their
capacity as owners
Equity-settled share-based payments
Share options charge relating to subsidiary
employees (note 4)
Options exercised
At 31 March 2023
4,843
172,383
1,340
32,399
—
—
—
—
—
—
10
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,853
172,383
1,340
32,399
—
—
—
—
—
47
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
9
—
218
218
—
—
—
—
—
227
—
(453)
(453)
—
—
—
22,305
233,279
2,412
—
2,412
2,412
218
2,630
(143)
(143)
(912)
(912)
319
(10)
319
—
(6,790)
(6,790)
17,181
228,383
11,276
11,276
—
(453)
11,276
10,823
144
144
408
(47)
408
—
4,900
172,383
1,340
32,399
(226)
28,962
239,758
Within the profit and loss account is a cumulative credit amount of £4.8 million (2022: £4.4 million) which is unrealised
in respect of share options granted to subsidiary employees. See the consolidated statement of changes in equity for
descriptions of reserves.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
139
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2023
1 Accounting policies –
Company
a. Basis of preparation
IG Design Group plc (the ‘Company’)
is a company limited by shares and
incorporated and domiciled in England
and Wales, UK.
The Company financial statements
present the information about the
Company as a separate entity.
These financial statements have been
prepared in compliance with United
Kingdom Accounting Standards,
including Financial Reporting Standard
102, ‘The Financial Reporting Standard
applicable in the United Kingdom
and the Republic of Ireland’ (‘FRS
102’) and the Companies Act 2006.
The Company is applying Sections
11 and 12 of FRS 102 in respect of
recognition and measurement of
financial instruments. The presentation
and functional currency of these
financial statements is pound sterling.
All amounts in the financial statements
have been rounded to the nearest
£1,000.
The accounting policies set out
below have, unless otherwise stated,
been applied consistently to all
periods presented in these financial
statements.
Judgements made by the Directors
in the application of these accounting
policies that have a significant effect
on the financial statements and
estimates with a significant risk of
material adjustment in the next year are
discussed in note 15.
Under Section 408 of the Companies
Act 2006 the Company is exempt from
the requirement to present its own
profit and loss account on the grounds
that a parent undertaking includes
the Company in its own published
consolidated financial statements.
The Company has taken advantage
of the following exemptions in its
individual financial statements:
• from preparing a statement of
cash flows, on the basis that
it is a qualifying entity under
paragraph 1.12(b) of FRS102 and
the consolidated statement of cash
flows, included in these financial
statements, includes the Company’s
cash flows.
• from disclosing share-based
payment arrangements, required
under FRS 102 paragraphs
26.18(b), 26.19 to 26.21 and
26.23, concerning its own equity
instruments, as the company
financial statements are presented
with the consolidated financial
statements and the relevant
disclosures are included therein.
Measurement convention
The financial statements are prepared
on the historical cost basis except
for the recognition of certain financial
assets and liabilities measured at fair
value.
Going concern
See note 1 to the Group accounting
policies on pages 97 to 105. Based
on the financial performance of the
Group, the Directors have a reasonable
expectation that the Company has
adequate resources to continue its
operational existence for at least
twelve months from the date of signing
these financial statements. For this
reason they continue to adopt the
going concern basis of accounting
in preparing the annual financial
statements.
b. Foreign currency
transactions
Transactions in foreign currencies are
recorded at the rate of exchange at
the date of the transaction. Monetary
assets and liabilities denominated in
foreign currencies at the balance sheet
date are translated into pound sterling
at the exchange rate prevailing at that
date and recognised in the income
statement unless hedge accounting
criteria apply (see policy for financial
instruments).
c. Basic financial instruments
Trade and other debtors
Trade and other debtors are recognised
initially at transaction price less
attributable transaction costs. Trade
and other debtors are subsequently
reviewed for recoverability and
impairment with any losses taken
to profit and loss immediately. If the
arrangement constitutes a financing
transaction, for example if payment
is deferred beyond normal business
terms, then it is measured at the
present value of future payments
discounted at a market rate for a similar
debt instrument.
Trade and other payables
Trade and other payables are stated at
their nominal value which is considered
to be their fair value. Subsequent to
initial recognition they are measured
at amortised cost using the effective
interest method.
Interest-bearing borrowings
classified as basic financial
instruments
Interest-bearing borrowings are
recognised initially at the present
value of future payments discounted
at a market rate of interest, less direct
arrangement costs. Subsequent to
initial recognition, interest-bearing
borrowings are stated at amortised
cost using the effective interest
method, less any impairment losses.
140
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Derivative financial instruments
and hedging
Derivative financial instruments are
recognised at fair value. The gain or
loss on re-measurement of fair value
is recognised immediately in profit or
loss, except where it qualifies for hedge
accounting.
g. Cash flow hedges
Where a derivative financial instrument
is designated as a hedge of the
variability in cash flows of a recognised
asset or liability, or a highly probable
forecast transaction, the effective part
of any gain or loss on the derivative
financial instrument is recognised
directly in other comprehensive
income. Any ineffective portion of the
hedge is recognised immediately in
profit or loss.
When a hedging instrument expires or
is sold, terminated or exercised, or the
Company discontinues designation of
the hedge relationship but the hedged
forecast transaction is still expected
to occur, the cumulative gain or loss
at that point remains in equity and is
recognised in accordance with the
above policy when the transaction
occurs.
If the hedged transaction is no longer
expected to take place, the cumulative
unrealised gain or loss recognised
in equity is recognised in the income
statement immediately.
d. Investments in subsidiaries
Investments in subsidiaries are
carried at cost less any provision for
impairment.
The Company assesses these
investments for impairment wherever
events or changes in circumstances
indicate that the carrying value of an
investment may not be recoverable.
If any such indication of impairment
exists, the Company makes an
estimate of the recoverable amount. If
the recoverable amount is less than the
value of the investment, the investment
is considered to be impaired and is
written down to its recoverable amount.
An impairment loss is recognised
immediately in the income statement.
e. Cash and cash equivalents
Cash and cash equivalents comprise
cash balances. Bank overdrafts that
are repayable on demand and form
an integral part of the Company’s
cash management are included
as a component of cash and cash
equivalents in the cash flow statement.
f. Other financial instruments
Financial instruments not considered
to be basic financial instruments (other
financial instruments)
Other financial instruments not
meeting the definition of basic financial
instruments are recognised initially
at fair value. Subsequent to initial
recognition, other financial instruments
are measured at fair value with
changes recognised in profit or loss
except that hedging instruments in a
designated hedging relationship shall
be recognised as set out below.
h. Intangible fixed assets
Intangible assets are stated at cost
less accumulated amortisation and
accumulated impairment losses.
Amortisation is calculated, using the
straight-line method, to allocate the
depreciable amount of the assets
to their residual values over their
estimated useful lives, as follows:
• Software
3-5 years
i. Tangible fixed assets
Tangible fixed assets are stated at cost
less accumulated depreciation and
accumulated impairment losses.
Depreciation is calculated, using the
straight-line method, to allocate the
depreciable amount to their residual
values over their estimated useful lives,
as follows:
• Fixtures and fittings
3-16 years
j. Provisions
A provision is recognised in the
balance sheet when the Company
has a present legal or constructive
obligation as a result of a past event,
that can be reliably measured and it is
probable that an outflow of economic
benefits will be required to settle the
obligation. Provisions are recognised
at the best estimate of the amount
required to settle the obligation at the
reporting date.
Where the Company enters into
financial guarantee contracts to
guarantee the indebtedness of other
companies within the Group, the
Company treats the guarantee contract
as a contingent liability until such
time as it becomes probable that the
Company will be required to make a
payment under the guarantee.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
141
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
1 Accounting policies –
Company continued
k. Leases
Where the Company enters into a
lease which does not entail taking
substantially all the risks and rewards
of ownership of an asset, the lease is
accounted for as an ‘operating lease’
and the rentals payable are charged
to the profit and loss account on a
straight-line basis over the life of the
lease.
l. Share-based payments
The cost of equity-settled transactions
with employees is measured by
reference to the fair value of the options
at the date on which they are granted.
The fair value is determined by using
an appropriate pricing model. The fair
value cost is then recognised over the
vesting period, ending on the date on
which the relevant employees become
fully entitled to the award. The quantum
of awards expected to vest and the
relevant cost charged is reviewed
annually such that at each balance
sheet date the cumulative expense
is the relevant share of the expected
total cost, pro-rated across the vesting
period.
No expense is recognised for awards
that are not expected to ultimately
vest, for example due to an employee
leaving or business performance
targets not being met. The annual
expense for equity-settled transactions
is recognised in the income statement
with a corresponding entry in equity.
Employer social security charges are
accrued, where applicable, at a rate
which management expects to be
the prevailing rate when share-based
incentives are exercised and is based
on the latest market value of options
expected to vest or those already
vested.
Where the Company grants options
over its own shares to the employees
of its subsidiaries, it recognises an
increase in the cost of investment
in its subsidiaries equivalent to the
equity-settled share-based payment
charge recognised in its subsidiaries’
financial statements with the
corresponding credit being recognised
directly in equity. Amounts recharged
to the subsidiary are recognised as a
reduction in the cost of investment in
the subsidiary. If the amount recharged
exceeds the increase in the cost of
investment, the excess is recognised
as a dividend to the extent that it
reflects post-acquisition profits of the
subsidiary.
m. Own shares held by
Employee Benefit Trust
Transactions of the Group-sponsored
Employee Benefit Trust are included
in the Group financial statements. In
particular, the trust’s purchases and
sales of shares in the Company are
debited and credited directly to equity.
n. Dividends on shares
presented within shareholders’
funds
Dividends unpaid at the balance
sheet date are only recognised as a
liability at that date to the extent that
they are appropriately authorised and
are no longer at the discretion of the
Company. Unpaid dividends that do
not meet these criteria are disclosed in
the notes to the financial statements.
o. Taxation
Tax on the profit or loss for the year
comprises current and deferred tax.
Tax is recognised in the profit and loss
account except to the extent that it
relates to items recognised directly in
equity or other comprehensive income,
in which case it is recognised directly
in equity or other comprehensive
income accordingly.
Current tax is the expected tax payable
or receivable on the taxable income
or loss for the year, using tax rates
enacted or substantively enacted
at the balance sheet date, and any
adjustment to tax payable in respect of
previous years.
Deferred tax is provided on timing
differences which arise from the
inclusion of income and expenses
in tax assessments in periods
different from those in which they are
recognised in the financial statements.
Deferred tax is not recognised on
permanent differences arising because
certain types of income or expense
are non-taxable or are disallowable for
tax or because certain tax charges or
allowances are greater or smaller than
the corresponding income or expense.
Deferred tax is provided in respect
of the additional tax that will be paid
or avoided on differences between
the amount at which an asset (other
than goodwill) or liability is recognised
in a business combination and the
corresponding amount that can be
deducted or assessed for tax. Goodwill
is adjusted by the amount of such
deferred tax.
Deferred tax is measured at the tax rate
that is expected to apply to the reversal
of the related difference, using tax
rates enacted or substantively enacted
at the balance sheet date. Deferred tax
balances are not discounted.
Unrelieved tax losses and other
deferred tax assets are recognised
only to the extent that is it probable
that they will be recovered against the
reversal of deferred tax liabilities or
other future taxable profits.
p. Employee benefits
Pensions
The Company operates a defined
contribution personal pension scheme.
The assets of this scheme are held
separately from those of the Company
in an independently administered
fund. The pension charge represents
contributions payable by the Company
to the fund.
142
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
2 Intangible assets
Software
Cost
Balance at 1 April
Disposal
Balance at 31 March
Accumulated amortisation and impairment
Balance at 1 April
Amortisation charge for the year
Disposal
Balance at 31 March
Net book value at 31 March
3 Tangible assets
Fixtures and fittings
Cost
Balance at 1 April
Additions
Disposals
Balance at 31 March
Accumulated depreciation and impairment
Balance at 1 April
Depreciation charge for the year
Disposals
Balance at 31 March
Net book value at 31 March
4 Investments
2023
£000
2022
£000
86
(86)
—
(86)
—
86
—
—
2023
£000
277
55
(157)
175
(187)
(13)
157
(43)
132
Shares in
Group
undertakings
£000
Loans
to Group
undertakings
£000
86
—
86
(86)
—
—
(86)
—
2022
£000
247
30
—
277
(179)
(8)
—
(187)
90
Total
£000
Cost
At 1 April 2021
Additions – share option charge relating to subsidiary employees
Adjustment relating to historic disposal
Effects of movement in foreign exchange
At 31 March 2022
Additions – share option charge relating to subsidiary employees
Effects of movement in foreign exchange
At 31 March 2023
Provisions
At 31 March 2021 and 2022
Impairment
At 31 March 2023
Net book value
At 31 March 2023
At 31 March 2022
210,998
5,520
216,518
319
(1,211)
—
—
—
266
319
(1,211)
266
210,106
5,786
215,892
408
—
—
358
408
358
210,514
6,144
216,658
(1,449)
(1,096)
(2,545)
—
(5,389)
(5,389)
(1,449)
(6,485)
(7,934)
207,969
208,657
755
208,724
5,786
214,443
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
143
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
4 Investments continued
Impairment
An impairment of £6.5 million has been recognised against the investments in IG Design Group UK Limited (£1.1 million)
and International Greetings Asia Limited (£5.4 million). The combination of lower forecast expectation of the UK and Asia,
following the weakening in the UK market in the last quarter of the year, and the significant increase in the discount rate
is driving an impairment of the UK and Asia investments. Given the intrinsic link between the UK and Asia entities, the
weakening of the UK market impacts the investments in both markets.
In assessing the recoverable amounts of the investments, the approved budgets and forecasts of the Group have been used.
The same discount rates and long-term growth rates as referenced in note 9 of the Group’s financial statements were used.
The following reasonably possible changes in key estimation assumptions used in the forecast cash would impact the
impairment charge related to the investments within the UK and Asia as follows:
• A 200bps increase in the pre-tax discount rate would increase the impairment by £3.6 million, a 200bps decrease in the
pre-tax discount rate would decrease the impairment by £5.0 million
• A reduction in the growth rate to 0.5%, applied into perpetuity, would increase the impairment by £2.2 million
• A 7.5% reduction/increase in forecast cash flows would increase/reduce the impairment by £2.0 million
For all other investments, the carrying value of the investment was supported by the forecast cash flows. The Directors
do not believe a reasonably possible change to the assumptions would give rise to an impairment. The Directors have
considered a 200bps movement in the discount rate, 0.5% growth rate assumption (applied to the terminal value), and a
7.5% movement in the forecast cash flows. With these changes in assumptions there is still headroom and no indication of
impairment.
The Company has the following investments in subsidiaries:
Trading companies
Anchor International BV
Registered office: Voltastraat 12, 3281 NG Numansdorp, The Netherlands
Anker Play Products, LLC
Registered office: 5555 Glenridge Connector, Suite 300, Atlanta, GA 30342, USA
Berwick Management LLC
Registered office: Bomboy Lane & Ninth Street, Berwick, PA 18603, USA
Berwick Offray Hong Kong Limited
Registered office: 31/F., 148 Electric Road, North Point, Hong Kong
Berwick Offray LLC
Registered office: 2015 West Front Street, Berwick, Pennsylvania 18603, USA
BOC Distribution Inc
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
C.R. Gibson, LLC
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
British Trimmings Limited
Registered office: 1 Coronation Point, Coronation Street,
South Reddish, Stockport, Cheshire, SK5 7PL, UK
C.R. Gibson Pacific Rim Limited
Registered office: 31/F., 148 Electric Road, North Point, Hong Kong
CRG Distribution, Inc
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
Greetings Ningbo Business Consulting Limited
Registered office: 13-8, Building 003, No 3, 5 and 6 of Century
Oriental Business Plaza, Yinzhou, Ningbo, China
Country of
incorporation
Percentage
of ordinary
shares held
2023
Percentage
of ordinary
shares held
2022
Netherlands
100(a)
100(a)
USA
100(a)
51(a)
USA
100(a)
100(a)
Hong Kong
100(a)
100(a)
USA
100(a)
100(a)
USA
100(a)
100(a)
USA
100(a)
100(a)
Great Britain
100(a)
100(a)
Hong Kong
100(a)
100(a)
USA
100(a)
100(a)
China
100(a)
100(a)
144
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Trading companies
CSS Industries, Inc
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
CSS Pacific Rim Limited
Registered office: 31/F., 148 Electric Road, North Point, Hong Kong
IG Design Group Americas, Inc
Registered office: 5555 Glenridge Connector, Suite 300, Atlanta, GA 30342, USA
IG Design Group Australia Pty Limited
Registered office: 121 Rayhur Street, Clayton, South Victoria 3169, Australia
IG Design Group BV
Registered office: Industrieweg 62, 7903 AK Hoogeveen, The Netherlands
Country of
incorporation
Percentage
of ordinary
shares held
2023
Percentage
of ordinary
shares held
2022
USA
100(a)
100(a)
Hong Kong
100(a)
100(a)
USA
100
Australia
50
100
50
Netherlands
100(a)
100(a)
IG Design Group UK Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Great Britain
100(b)
100(b)
IG Design Group S.p.z.o.o
Registered office: Jędrzychowice 116A, 59-900 Zgorzelec, Poland
India Trimmings Private Limited
Registered office: Tamil Nadu, Coimbatore, India
Poland
100(a)
100(a)
India
100(a)
100(a)
International Greetings Asia Limited
Registered office: 20/F, Times Media Centre, No. 133 Wanchai Road, Hong Kong
Hong Kong
100
100
Impact Innovations, Inc
Registered office: 233 SE 1st Avenue, Clara City, Minnesota 5622, USA
USA
100(a)
100(a)
Impact Innovations Asia Limited
Registered office: Flat 11A, Eldex Industrial Building,
21 Ma Tam Wai Road, To Kwa Wan Kowloon, Hong Kong
Lion Ribbon Company, LLC
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
McCall Distribution, Inc
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
McCall Pattern Company Limited
Registered office: 1 Coronation Point, Coronation Street,
Stockport, Cheshire, SK5 7PL , UK
Paper Magic Group, Inc
Registered office: 54 Glenmaura National Blvd.,
Suite 200, Moosic, Pennsylvania 18507, USA
Paper Magic Distribution, Inc
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
Paper Magic Group (Hong Kong) Limited
Registered office: 31/F., 148 Electric Road, North Point, Hong Kong
Simplicity Creative Corp
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
Simplicity Limited
Registered office: PO Box 367, Coronation Street,
Stockport, Cheshire, SK5 7WZ, UK
Simplicity Pty Limited
Registered office: Derham Houston Lawyers, Suite 12 Level 12,
37 Bligh Street, Sydney NSW 2000, Australia
Hong Kong
100(a)
100(a)
USA
100(a)
100(a)
USA
100(a)
100(a)
Great Britain
100(a)
100(a)
USA
100(a)
100(a)
USA
100(a)
100(a)
Hong Kong
100(a)
100(a)
USA
100(a)
100(a)
Great Britain
100(a)
100(a)
Australia
100(a)
100(a)
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
145
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
4 Investments continued
Trading companies
The Huizhou Gift International Greetings Company Limited
Registered office: Fuda Industrial Zone, Futian Town,
Boluo, Huizhou City, Guangdong, China
The Lang Companies, Inc
Registered office: 5555 Glenridge Connector, Suite 300, Atlanta, GA 30342, USA
The McCall Pattern Company Inc
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
Wrights Commercial (Shanghai) Co Limited
Registered office: Unit E, 12th Floor, Building 1 N, 107,
South Zhongshan Er Road, Xuhui District, Shanghai, China
Country of
incorporation
Percentage
of ordinary
shares held
2023
Percentage
of ordinary
shares held
2022
China
100(a)
100(a)
USA
100(a)
100(a)
USA
100(a)
100(a)
China
100(a)
100(a)
Country of
incorporation
Percentage
of ordinary
shares held
2023
Percentage
of ordinary
shares held
2022
Non-trading and dormant companies
Anker International plc
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Great Britain
100(a)
100(a)
Belgrave Graphics Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Great Britain
—(c)
Britesparks Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Great Britain
100
100
100
British Trimmings (1997) Limited
Registered office: 1 Coronation Point, Coronation Street,
South Reddish, Stockport, Cheshire, SK5 7PL, UK
British Trimmings (Leek) Limited
Registered office: 1 Coronation Point, Coronation Street,
South Reddish, Stockport, Cheshire, SK5 7PL, UK
British Trimmings (Reddish) Limited
Registered office: 1 Coronation Point, Coronation Street,
South Reddish, Stockport, Cheshire, SK5 7PL, UK
Concorde Industries Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Copywrite Designs Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Credit Collection Consultants Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Dominion Simplicity Patterns Limited
5240 Finch Avenue East, Scarborough, Ontario M1S5A2, Canada
Hoopack Hoogeveen BV
Registered office: Industrieweg 62, 7903 AK Hoogeveen, The Netherlands
Howard Industries Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
IG Design Group (Lang), Inc
Registered office: 5555 Glenridge Connector, Suite 300, Atlanta, GA 30342, USA
IG Design Group Europe BV
Registered office: Industrieweg 62, 7903 AK Hoogeveen, The Netherlands
Great Britain
100(a)
100(a)
Great Britain
100(a)
100(a)
Great Britain
100(a)
100(a)
Great Britain
100(a)
100(a)
Great Britain
100
100
Great Britain
100(a)
100(a)
Canada
100(a)
100(a)
Netherlands
100(a)
100(a)
Great Britain
100(a)
100(a)
USA
100(a)
100(a)
Netherlands
100
100
IG Employee Share Trustee Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Great Britain
100(b)
100(b)
146
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
Non-trading and dormant companies
Impact Paper Products, LLC
Registered office: 233 SE 1st Avenue, Clara City, Minnesota 5622, USA
Impact Paper Hong Kong Limited
Registered office: Flat 11A, Eldex Industrial Building,
21 Ma Tam Wai Road, To Kwa Wan Kowloon, Hong Kong
Country of
incorporation
Percentage
of ordinary
shares held
2023
Percentage
of ordinary
shares held
2022
USA
100(a)
100(a)
Hong Kong
100(a)
100(a)
LR Texas Corp
Registered office: 350 North St. Paul Street, Suite 2900, Dallas, Texas 75201, USA
USA
100(a)
100(a)
McCall Pattern Service NZ Limited
Registered office: Simpson Grierson, 88 Shortland Street,
Auckland Central, New Zealand
McCall Pattern Service Pty Limited
Registered office: Derham Houston Lawyers, Suite 12 Level 12, 37 Bligh Street,
Sydney NSW 2000, Australia
Paper Magic de Mexico, SA de CV
No registered address
Polaris Plastics Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Philadelphia Industries, Inc
Registered office: 1105 North Market Street, Wilmington, Delaware 19801, USA
School Supplyline Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Scoop Designs Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Simplicity Creative Group Limited
Registered office: 1 Coronation Point, Coronation Street,
South Reddish, Stockport, Cheshire, SK5 7PL, UK
Tom Smith Christmas Crackers Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Tom Smith Crackers Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Tom Smith Group Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Tom Smith Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Tom Smith Online Limited
Registered office: Howard House, Howard Way, Newport Pagnell, MK16 9PX, UK
Variety Accessories, LLC
Registered office: 233 SE 1st Avenue, Clara City, Minnesota 5622, USA
Weltec BV
Registered office: Industrieweg 62, 7903 AK Hoogeveen, The Netherlands
Wendy A. Cushing Limited
Registered office: 1 Coronation Point, Coronation Street,
South Reddish, Stockport, Cheshire, SK5 7PL, UK
Wendy Cushing Trimmings Limited
Registered office: 1 Coronation Point, Coronation Street,
South Reddish, Stockport, Cheshire, SK5 7PL, UK
W.J.S. Furniture, Inc
Registered office: Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801, USA
(a) Indirect holding.
(b) 50% direct/50% indirect holding.
(c) Belgrave Graphics Limited was struck off 3 January 2023
New Zealand
100(a)
100(a)
Australia
100(a)
100(a)
Mexico
100(a)
100(a)
Great Britain
100(a)
100(a)
USA
100(a)
100(a)
Great Britain
100(a)
100(a)
Great Britain
100(a)
100(a)
Great Britain
100(a)
100(a)
Great Britain
100(a)
100(a)
Great Britain
100
100
Great Britain
100(b)
100(b)
Great Britain
100
100
Great Britain
100(a)
100(a)
USA
100(a)
100(a)
Netherlands
100(a)
100(a)
Great Britain
100(a)
100(a)
Great Britain
100(a)
100(a)
USA
100(a)
100(a)
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
147
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
4 Investments continued
Class of shares held are ordinary shares for companies incorporated in Great Britain or the equivalent for the overseas
subsidiaries.
Concorde Industries Limited and Credit Collection Consultants Limited are dormant companies that have never traded and
both have net assets of £2.
For the year ended 31 March 2023, the Company was entitled to exemption from audit under Section 479A of the Companies
Act relating to qualifying subsidiaries. IG Design Group UK Limited, British Trimmings Limited, McCall Pattern Company
Limited and Simplicity Limited have not required the Company to obtain an audit of their accounts for the year in question
in accordance with Section 476. The Directors acknowledge their responsibilities for complying with the requirements of the
Act with respect to accounting records and the preparation of financial statements.
5 Deferred tax
In the prior year, all previously recognised deferred tax assets in the UK were derecognised. The derecognition has
occurred as a result of the assessment of future taxable profits (which is as a result of the growing costs in the Company)
against which the asset could unwind. This position continues in the current year and so deferred tax assets have not been
recognised on current year tax losses.
There are gross temporary differences of £129,000 (2022: £930,000) and unused tax losses, with no expiry date, of
£15.5 million (2022: £12.9 million) on which deferred tax assets have not been recognised.
The standard rate of corporation tax has risen to 25% from 1 April 2023. Given that no deferred tax is recognised in the UK,
this does not impact the deferred tax measured at the balance sheet date.
A deferred tax charge of £nil (2022: £2.1 million) has been recognised through the income statement and £nil (2022:
£912,000) recognised through the statement of changes in equity. The prior year charges relate to the derecognition of
previously recognised deferred tax assets. There are no deferred tax balances with respect to cash flow hedges.
6 Debtors – due within one year
Trade receivables
Amounts owed by Group undertakings(a)
Financial assets designated at fair value through hedging reserve
Loan arrangement fees
Prepayments and accrued income
(a) The amounts owed by Group undertakings are subject to terms between 7 and 30 days.
7 Debtors – due after more than one year
Amounts owed by Group undertakings(a)
Loan arrangement fees
2023
£000
—
2,085
15
202
356
2022
£000
11
715
241
259
146
2,658
1,372
2023
£000
2022
£000
26,849
26,849
—
15
26,849
26,864
(a) The intercompany loan is with IG Design Group UK Limited and it attracts interest at market rate and is repayable on 31 July 2024.
8 Cash at bank and in hand
Cash at bank and in hand
Bank overdrafts
Net cash/(bank overdrafts)
2023
£000
22,746
2022
£000
—
(17,705)
(11,166)
5,041
(11,166)
148
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
9 Creditors: amounts falling due within one year
Bank loans and overdrafts
Trade creditors
Amounts owed to Group undertakings(a)
Other taxation and social security
Accruals and deferred income
Note
8
2023
£000
2022
£000
17,705
11,166
1,099
201
93
395
628
165
2,253
2,032
21,351
14,386
(a) The amounts owed to Group undertakings are subject to terms between 7 and 30 days.
Refer to note 15 of the Group’s financial statements for more details of the terms of the bank borrowings.
10 Called up share capital
Allotted, called up and fully paid
97,993,406 (2022: 97,061,240) ordinary shares of 5p each
2023
£000
2022
£000
4,900
4,853
Of the 98.0 million (2022: 97.1 million) shares in the Company, 1.0 million (2022: 31,000) are held by the Employee Benefit
Trust.
Refer to note 20 of the Group’s financial statements for details of movements in share capital.
11 Share-based payments
Refer to note 23 of the Group’s financial statements for details of share-based payments.
12 Financial instruments
(a) Carrying amount of financial instruments
The carrying amounts of the financial assets and liabilities include:
Assets measured at fair value through the hedging reserve
Assets measured at amortised cost
Liabilities measured at fair value through the hedging reserve
Liabilities measured at amortised cost
2023
£000
15
2022
£000
241
51,680
27,575
(250)
(19,005)
32,440
(14)
(12,189)
15,613
(b) Financial instruments measured at fair value
Derivative financial instruments
The fair value of forward exchange contracts is assessed using valuation models taking into account market inputs such as
foreign exchange spot and forward rates, yield curves and forward interest rates.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
149
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
12 Financial instruments continued
(c) Hedge accounting
The following table indicates the periods in which the cash flows associated with cash flow hedging instruments are
expected to occur as required by FRS 102.29(a) for the cash flow hedge accounting models, which is in line with when they
are expected to affect profit and loss.
Forward exchange contracts:
Assets – forward exchange contracts carried
a t fair value through the income statement
Assets – forward exchange contracts carried
at fair value through the hedging reserve
Liabilities – forward exchange contracts carried
at fair value through the income statement
Liabilities – forward exchange contracts carried
at fair value through the hedging reserve
Carrying
amount
£000
2023
Expected
cash flows
£000
One year
or less
£000
Carrying
amount
£000
2022
Expected
cash flows
£000
One year
or less
£000
14
(347)
(347)
—
—
—
1
400
400
241
7,927
7,927
(23)
356
356
—
—
—
(227)
(235)
13,967
13,967
14,376
14,376
(14)
227
783
8,710
783
8,710
The Company uses cash flow hedge accounting in line with FRS 102.12, by entering into forward exchange contracts to
hedge foreign exchange exposure. Fair value at 31 March 2023 was £226,000 net expense (2022: £227,000 net credit)
recognised in other comprehensive income.
The amount recognised in the profit and loss account for the year was £9,000 (2022: £nil).
(d) Fair values
The amounts for all financial assets and financial liabilities carried at fair value are as follows:
Forward exchange contracts:
Assets
Liabilities
Fair value
2023
£000
Fair value
2022
£000
15
(250)
(235)
241
(14)
227
13 Contingencies
On 5 June 2023 the Group entered into new banking facilities. The new ABL is secured with an all-assets lien on all existing
and future assets for the loan parties. See note 15 of the Group’s financial statements for further details of the new facility
and the loan parties.
Under the previous banking facility the Company had given, together with certain of its subsidiary undertakings, an unlimited
composite joint and several guarantee in respect of the Group facility provided by HSBC, NatWest, Citigroup, Truist (formerly
Sun Trust) and PNC of itself and its subsidiaries. At 31 March 2023, the Company had cash of £22.7 million (2022: £nil
million); there were net borrowings elsewhere in the Group of £28.3 million (2022: £15.5 million). Therefore, the total of this
guarantee at the year end, in relation to the Company only, was £28.3 million (2022: £15.5 million).
The Company has given HSBC Bank (China) Company Ltd a guarantee of RMB 15.4 million (£1.8 million) (2022: RMB
15.4 million) and $3.8 million (£3.1 million) (2022: $3.8 million) on behalf of its subsidiary The Huizhou Gift International
Greetings Company Limited.
As part of the Group refinancing the Company maintained guarantees to HSBC banks in the Netherlands of €1.2 million
(£1.1 million) (2022: €1.2 million), the USA $5.9 million (£4.8 million) (2022: $5.9 million) and in Hong Kong $18.5 million
(£15.0 million) (2022: $18.5 million) on behalf of the Group’s trading subsidiaries in those countries.
150
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
14 Related parties
Identity of related parties with which the Company has transacted:
Group undertakings:
IG Design Group UK Limited;
IG Design Group Americas, Inc;
Impact Innovations Asia Limited;
•
•
•
• Simplicity Limited;
• Simplicity Pty Limited;
•
•
• The Huizhou Gift International Greetings Company Limited;
•
IG Design Group BV;
• Anchor International BV;
•
•
IG Design Group S.p.z.o.o; and
IG Design Group Australia Pty Limited.
India Trimmings Private Limited;
International Greetings Asia Limited;
Related party transactions – transactions with key management
Short-term employee benefits
Termination benefits
Share-based charge/(credit)
Related party transactions – transactions with Group undertakings
Management rec harges
Receivables outstanding (notes 6 and 7)
Creditors outstanding (note 9)
2023
£000
2022
£000
2,628
1,832
—
186
653
(920)
2,814
1,565
2023
£000
2,374
2022
£000
2,181
28,934
27,564
(201)
(628)
15 Accounting estimates and judgements
Management does not consider that there are any significant accounting judgements. Accounting estimates include:
(i) Taxation
There are many transactions and calculations for which the ultimate tax determination is uncertain. Estimates are required in
determining the Group’s tax assets and liabilities. Deferred tax assets are recognised to the extent that they are recoverable
based on profit projections for future years. Management make a judgement in respect of the length of future cash flows
against which to assess the future taxable profits and this aligns to other assessments that use similar forecasts including
impairment. Income tax liabilities for anticipated issues have been recognised based on estimates of whether additional tax
will be due.
(ii) Investments
The Company evaluated whether there were any indicators of a potential impairment or impairment reversal as at
31 March 2023. The combination of lower forecast expectation of the UK and Asia, following the weakening in the UK
market in the last quarter of the year, and the significant increase in the discount rate is driving an impairment of the UK
and Asia investments. Given the intrinsic link between the UK and Asia entities, the weakening of the UK market impacts the
investments in both markets.
The recoverable amounts of the investments are determined based on the higher of net realisable value and value in use
calculations, which requires the use of estimates. The key estimates that can impact the value in use calculations are
changes in the growth rates applied into perpetuity, or a movement in the discount rate applied to the future cash flows.
These are key estimates as they are subjective in nature and a significant assumption is required and any changes to
assumptions may lead to changes in the outcome of impairment assessments performed.
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
151
FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
YEAR ENDED 31 MARCH 2023
16 Dividends paid and proposed
The Directors are not recommending the payment of a final dividend in respect of the year ended 31 March 2023 (2022: £nil).
Dividends paid in the year
Final equity dividend for prior year
Interim equity dividend for current year
Dividends paid in the year
Proposed for approval at Annual General Meeting
Final equity dividend for current year
2023
2022
Pence
per share
—
—
Pence
per share
5.75
1.25
£000
—
—
—
2023
2022
Pence
per share
—
£000
—
Pence
per share
—
£000
5,577
1,213
6,790
£000
—
17 Staff numbers and costs
The average monthly number of persons employed by the Company (including Directors) during the year was 15 (2022: 18),
all relating to management and administration.
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Share-based payments
Social security costs
Other pension costs
2023
£000
2022
£000
2,564
3,036
245
362
99
(911)
299
96
3,270
2,520
For information on Directors’ remuneration please refer to the section titled ‘Directors’ remuneration’ within the Directors’
remuneration report (pages 75 to 77), which forms part of these audited financial statements.
18 Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
Operating lease expense in the income statement
2023
£000
6
7
13
8
2022
£000
2
—
2
15
19 Non-adjusting post balance sheet event
On 5 June 2023, The Group banking facilities ($90.0 million and £92.0 million revolving credit facilities) were replaced
by a $125.0 million asset backed lending arrangement. This facility has an original term of three years with the option of
submitting two extension notices to extend the facility twice, each by a period of one year. See note 15 of the Group’s
financial statements for details of new bank financing arrangements.
152
IG DESIGN GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2023
ADVISERS
Registered offi ce
Howard House
Howard Way
Interchange Park
Newport Pagnell
MK16 9PX
IG Design Group plc is registered in
England and Wales, number 1401155
Visit us online at thedesigngroup.com
Financial and nominated
adviser and broker
Canaccord Genuity Limited
88 Wood Street
London EC2V 7QR
Independent auditors
PricewaterhouseCoopers LLP
Exchange House
Central Business Exchange
Midsummer Boulevard
Central Milton Keynes
MK9 2DF
Public relations
Alma PR
71-73 Carter Lane
London EC4V 5EQ
Share registrar
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
By phone:
UK – 0371 664 0300
Calls are charged at the standard
geographic rate and will vary by
provider. Calls outside the United
Kingdom will be charged at the
applicable international rate.
Lines are open between 09:00 – 17:30,
Monday to Friday excluding public
holidays in England and Wales.
By email: enquiries@linkgroup.co.uk
This report is printed on Symbol Satin, manufactured using FSC® certifi ed
and other controlled material with a high content of recycled material (minimum
quantity guaranteed 40%). Carbon Balanced with the World Land Trust, an
international conservation charity, who offset emissions through the purchase
and preservation of high conservation value land.
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quality and energy management.
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IG Design Group plc
Howard House
Howard Way
Interchange Park
Newport Pagnell MK16 9PX
T +44 (0)1525 887 310
thedesigngroup.com