P2
P3
P4
P5
P6
P7
P8
P9
P10
P11
P12
P13
P14
P15
P16
P17
P18
P19
P20
P21
P22
P23
P24
P25
P26
P27
P28
P29
P30
P31
P32
P33
P34
P35
P36
P37
P38
P39
Directors’ Remuneration Report (continued)
P40
P41
Directors’ Remuneration Report (continued)
P42
P43
Directors’ Remuneration Report (continued)
P44
P45
Directors’ Remuneration Report (continued)
1
1
P46
P47
P48
P49
P50
P51
P52
P53
P54
P55
Revenue
Cost of sales
Gross profit
Other operating expenses
Operating profit
EBITDA before non-recurring costs, share based payments, depreciation and amortisation
Non-recurring costs
Equity settled share based payments charges
Depreciation and amortisation
Operating profit
Finance income
Finance costs
Profit before taxation
Taxation
Profit after taxation
Other comprehensive income
Note
2,5
6
6
31
11
2017
£000
Restated*
2016
£000
158,552
(107,133)
159,435
(103,826)
51,419
(37,630)
55,609
(36,362)
13,789
19,247
16,770
(830)
(421)
21,602
-
(1,187)
(1,730)
(1,168)
13,789
19,247
35
(10)
98
(11)
13,814
19,334
12
(2,986)
(3,778)
10,828
15,556
-
-
Assets
Intangible assets - Trademarks
Intangible assets - Goodwill
Intangible assets - Software
Property, plant and equipment
Deferred tax asset
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current assets
Total assets
Equity
Called up share capital
Share premium account
Profit and loss account
Common control transaction reserve
Total equity
Liabilities
Trade and other payables
Financial liabilities
Corporation tax liabilities
Deferred tax liability
Provision for liabilities and charges
Note
NoteNote
13
1313
13
1313
13
1313
14
1414
15
1515
16
1616
17
1717
18
1818
19
1919
20
2020
21
2121
22
2222
23
2323
2017
£000
504
20,758
786
14,975
28
2016
£000
504
20,758
415
12,389
180
37,051
34,246
2,032
4,559
10,975
2,176
4,560
13,459
17,566
20,195
54,617
54,441
828
81,845
24,712
(66,527)
828
81,979
22,052
(66,527)
40,858
38,332
10,864
-
776
90
599
11,983
70
1,599
61
701
12,329
14,414
Total comprehensive income for the period attributable to equity shareholders
10,828
15,556
Current liabilities
Earnings Per Share
Basic (pence per share)
Diluted (pence per share)
All operations were continuing throughout all periods.
All accompanying notes form part of the financial statements.
*See note 2
Provision for liabilities and charges
23
2323
1,430
1,695
8
13.1p
13.0p
19.0p
18.9p
Non-current liabilities
Total liabilities
Total equity and liabilities
1,430
1,695
13,759
16,109
54,617
54,441
All accompanying notes form part of the financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 2 March 2018 and
were signed on their behalf by:
2
SJ Birmingham
Chief Executive Officer
P56
P57
Share capital
Share
premium
Profit and
loss account
£000
£000
£000
Common
control
transaction
reserve
£000
Total equity
£000
Balance at 1 January 2016
803
79,440
24,278
(66,527)
37,994
Total comprehensive income for the year
Transactions with owners recorded directly in equity:
Issue of shares
Equity settled share based payment transactions
Deferred tax asset taken to reserves
Dividends
25
-
-
-
2,539
-
-
-
15,556
(2,564)
240
(1,091)
(14,367)
15,556
-
240
(1,091)
(14,367)
-
-
-
-
Balance at 31 December 2016
828
81,979
22,052
(66,527)
38,332
Total comprehensive income for the year
Transactions with owners recorded directly in equity:
Issue of shares (see note 19)
Buy back of shares (see note 19)
Equity settled share based payment transactions
Corporation tax relief taken to reserves
Dividends (see note 7)
2
(2)
-
-
-
256
(390)
-
-
-
10,828
-
-
421
747
(9,336)
10,828
258
(392)
421
747
(9,336)
-
-
-
-
-
Balance at 31 December 2017
828
81,845
24,712
(66,527)
40,858
All accompanying notes form part of the financial statements.
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation of plant, property and equipment
Amortisation of intangible fixed assets
Finance income
Finance expense
Loss on sale of plant, property and equipment
Equity settled share based payments
Tax expense
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Hire purchase interest paid
Taxation paid
Net cash from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Interest received
Proceeds from issue of property, plant and equipment
Acquisition of intangible fixed assets
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from the issue of ordinary shares
Purchase and cancellation of ordinary shares
Payment of hire purchase and finance leases
Dividends paid
Net cash outflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
All accompanying notes form part of the financial statements.
2017
£000
2016
£000
10,828
15,556
1,489
241
(35)
10
-
421
2,986
15,940
144
1
(1,120)
(367)
(1,342)
(10)
(10)
(2,880)
954
214
(98)
11
7
240
3,778
20,662
(676)
(702)
1,824
26
472
(11)
(11)
(3,893)
11,708
17,230
(4,075)
35
-
(612)
(5,901)
98
42
(20)
(4,652)
(5,781)
258
(392)
(70)
(9,336)
-
-
(108)
(14,367)
(9,540)
(14,475)
(2,484)
13,459
(3,026)
16,485
10,975
13,459
P58
P59
P60
P61
P62
P63
P64
P65
6 Expenses and auditor's remuneration
Included in profit are the following:
Depreciation of plant, property and equipment:
Owned assets
Leased assets
Amortisation of intangibles assets
Loss on disposal of plant, property and equipment
Operating lease rentals:
Hire of plant and machinery
Rent payable on land and buildings
Auditor's remuneration:
Audit of financial statements relating to subsidiaries
Audit of financial statements relating to parent
Other services relating to taxation
Non-recurring costs:
Restructuring costs
Operational
Other
2017
£000
1,397
-
241
-
3,255
1,336
42
44
10
580
184
66
830
2016
£000
992
57
119
7
3,023
1,227
44
36
10
-
-
-
-
The operating lease rentals disclosed above for plant and machinery relate to daily contract hire and therefore there is no
corresponding lease commitment.
7 Dividends
The aggregate amount of dividends paid comprises:
2017
£000
2016
£000
Final dividend paid of £0.075 (2016: £0.075) per ordinary share
6,224
5,631
Special dividend (2016: £0.075 per ordinary share)
-
5,631
Interim dividend paid of £0.0375 (2016: £0.0375) per ordinary share
3,112
3,105
A final dividend of 7.5p per ordinary share are proposed by the Board
subject to approval at the AGM.
9,336
14,367
P66
P67
8 Earnings per share
Basic earnings per ordinary share (pence)
Diluted earnings per ordinary share (pence)
9 Key management remuneration
2017
13.1
13.0
2016
19.0
18.9
Key management personnel, as disclosed under IAS 24 (Related Party Disclosures), have been identified as the Board of Directors
and other senior operational management.
a) Basic earnings per share
The calculation of basic earnings per share has been based on the following profit attributable to ordinary shareholders and
weighted-average number of shares outstanding.
i)
Profit attributable to ordinary shareholders (basic)
Profit attributable to ordinary shareholders
2017
£000
10,828
2016
£000
15,556
A summary of key management remuneration is as follows:
Salary, bonus and other benefits
Pensions
Share based payments and associated costs
Settlement payments
Total remuneration
ii)
Weighted-average number of ordinary shares (basic)
Details of long term incentive plans can be found in note 30.
2017
£000
1,292
82
246
354
2016
£000
1,745
66
996
-
1,974
2,807
No of shares
‘000
82,883
No of shares
‘000
82,006
Detailed disclosures of individual remuneration, pension entitlements and share options, for the Directors who served during the
year are as follows:
In issue during the year
b) Diluted earnings per share
The calculation of diluted earnings per share has been based on the following profit attributable to ordinary shareholders and
weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.
i) Profit attributable to ordinary shareholders (diluted)
Profit attributable to ordinary shareholders
ii) Weighted-average number of ordinary shares (diluted)
Weighted-average number of ordinary shares (basic)
Effect of conversion of share options
2017
£000
10,828
2016
£000
15,556
No of shares
‘000
82,883
396
No of shares
‘000
82,006
341
83,279
82,347
The average market value of the Company's shares for the purpose of calculating the dilutive effect of share options was based
on quoted market prices for the period during which the options were outstanding.
Remuneration
2017
Executive directors
S J Birmingham
M J Robinson
1
G Richell
Non Executive
C J Davies
R S Halbert
P Richardson
2016
Executive directors
S J Birmingham
M J Robinson
Non Executive
C J Davies
R S Halbert
P Richardson
2
Salary
and fees
£000
Benefits
£000
Annual
bonus
£000
LTIP
Pension
£000
£000
184
159
141
48
74
43
649
20
12
11
-
-
-
43
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
13
11
-
-
-
39
Salary
and fees
£000
Benefits
£000
Annual
bonus
£000
LTIP
Pension
£000
£000
179
156
47
73
19
474
18
10
-
-
-
165
152
-
-
-
28
317
-
-
-
-
-
-
14
12
-
-
-
26
Total
£000
219
184
163
48
74
43
731
Total
£000
376
330
47
73
19
845
1
G Richell was appointed to the Board on 13 February 2017 and his fees therefore reflect a part year.
2
P Richardson was appointed to the Board on 18 July 2016 and his fees in the prior year reflect a part year.
P68
P69
Share options and long term incentive plans
12 Taxation
S J Birmingham
M J Robinson
G Richell
Plan
Options held
at start of
period
Options
granted in
period
Options
exercised in
period
Options
lapsed in
period
Options held
at end of
period
LTIP 2015
LTIP 2016
LTIP 2017
LTIP 2015
LTIP 2016
LTIP 2017
LTIP 2017
97,902
66,585
-
85,594
58,220
-
-
-
-
47,935
-
-
41,913
41,913
308,301
131,761
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
97,902
66,585
47,935
85,594
58,220
41,913
41,913
440,062
10 Staff numbers and costs
The average monthly number of persons (including directors) employed by the Group during the year analysed by category, were
as follows:
Manufacturing
Sales and distribution
Administration
The aggregate payroll costs
Wages and salaries
Social security costs
Other pension costs (see note 26)
Share based payments expenses (see note 30)
The analysis of the Directors' remuneration is shown in the Directors’ Report on page 3 .8
No Directors were accruing benefits under money purchase pension schemes (2016: nil).
11 Finance costs
On finance leases and hire purchase contracts
2017
Number
361
118
332
811
2017
£000
20,044
1,943
589
421
2016
Number
363
40
312
715
2016
£000
18,613
1,653
482
1,187
22,997
21,935
2017
£000
10
10
2016
£000
11
11
Recognised in the statement of comprehensive income
Current tax
Current tax on income for the period
Adjustments in respect of prior periods
Total current tax
Deferred tax
Origination and reversal of timing differences
Effect of change in tax rate
Adjustments in respect of prior periods
Total deferred tax (see note 15)
Total tax expense
The current year tax charge is split into the following:
Tax charge
Total tax expense
Reconciliation of effective tax rate
Current tax reconciliation
Profit for the year
Total tax expense
Profit excluding tax
Expected tax charge based on the standard rate of corporation tax in
the UK of 19.25% (2016: 20.00%)
Effects of:
Expenses not deductible for tax purposes
Adjustments to tax charge in respect of prior periods
Effect of change in tax rate
Total tax expense
2017
£000
2016
£000
2,805
-
3,958
(211)
2,805
3,747
180
(11)
12
181
22
9
-
31
2,986
3,778
2,986
3,778
2,986
3,778
2017
£000
10,828
2,986
2016
£000
15,556
3,778
13,814
19,334
2,659
3,867
326
12
(11)
113
(211)
9
2,986
3,778
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2
July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively
enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6
September 2017. This will reduce the Group's future current tax charge accordingly. The deferred tax asset at 31 December
2017 has been calculated based on these rates.
P70
P71
13 Intangible assets
14 Plant, property and equipment
Goodwill
Trademark
Software
£000
£000
£000
Assets under
the course of
construction
£000
Total
£000
Cost
At 1 January 2017
20,758
504
1,436
-
22,698
Additions
Disposals
Transfer
-
-
-
-
-
-
449
(168)
-
At 31 December 2017
20,758
504
1,717
Amortisation
At 1 January 2017
Charge for the year
Disposals
At 31 December 2017
NBV at 31 December 2016
NBV at 31 December 2017
-
-
-
-
20,758
20,758
-
-
-
-
504
504
1,021
241
(168)
1,094
415
623
163
-
-
163
-
-
-
-
-
612
(168)
-
23,142
1,021
241
(168)
1,094
21,677
Freehold
property
Leasehold
improvement
Plant and
machinery
Office and
computer
equipment
Motor
vehicles
Assets under
the course of
construction
Total
£000
£000
£000
£000
£000
£000
£000
Cost
At 1 January 2017
Additions
Transfers
Disposals
4,029
1,302
3,950
-
59
278
-
-
6,594
1,282
2,020
1,533
-
410
-
(252)
At 31 December 2017
9,281
337
10,147
1,440
Depreciation
At 1 January 2017
Charge for the year
Disposals
At 31 December 2017
243
170
-
413
3,893
901
23
35
-
58
36
1,070
-
4,963
2,701
214
(252)
863
381
577
8
-
-
-
8
6
-
-
6
2
2
5,483
17,455
65
(5,483)
-
4,075
-
(252)
65
21,278
-
-
-
-
5,066
1,489
(252)
6,303
5,483
12,389
65
14,975
163
22,048
NBV at 31 December 2016
3,786
NBV at 31 December 2017
8,868
279
5,184
The goodwill is allocated to one cash generating unit (“CGU”) being Style Group Holdings Ltd. Management have performed impairment
reviews on the carrying value of the goodwill at 31 December 2017 and 31 December 2016. The recoverable amount of the CGU has
been determined from value in use calculations based on cash flow projections covering a three year period to 31 December 2018 which
are then taken into perpetuity. The assessment was performed on a value in use basis using a 12% discount rate (2016: 12%) and the
following year's budget as approved by the Board and extrapolated forwards using steady growth rate of 5% (2016: 5%) for the following
2 years. The key assumptions underpinning these forecasts are based on historic growth rates, prices and costs adjusted for up to date
information. Management does not currently believe that any reasonably possible change in the key assumptions on which assessments of
recoverable amounts have been based would cause the carrying amount of goodwill to exceed its recoverable amount.
The trademark represents the Safestyle trademark which was acquired in 2010. The trademark is considered to have an indefinite useful
life because there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the business. The
trademark is not amortised but is tested annually to determine whether there is any indication of impairment and is included in the review
above.
The Group currently has no assets under finance leases and hire purchase contracts. Included within the net book value are assets which last
year were under finance leases and hire purchase contracts as follows:
Plant & machinery
Motor vehicles
The depreciation charged on these assets in 2016 was £62,000.
2017
£000
-
-
-
2016
£000
170
-
170
P72
P73
15 Deferred taxation asset
Included in the analysis of receivables are the following amounts:
Balance at beginning of period
Debit to the statement of comprehensive income for the period
Share based payments to reserves
Balance at end of period
The deferred tax asset provided in the financial statements at 17% (2016: 17%)
is as follows:
Share based payments
16 Inventories
Raw materials and consumables
Work in progress
Finished goods
The above amounts are stated net of inventory provisions.
17 Trade and other receivables
Trade receivables (net of provisions)
Prepayments and accrued income
2017
£000
180
(152)
-
2016
£000
1,241
(31)
(1,030)
28
180
28
28
2017
£000
1,644
44
344
180
180
2016
£000
1,622
67
487
2,032
2,176
2017
£000
1,713
2,846
2016
£000
2,279
2,281
4,559
4,560
Contractual payment terms with the Group's customers are typically zero days. Payment is due upon installation and in the event
of a customer default, a trade receivable arises. The above receivables are shown net of the following provisions for doubtful
debts.
Opening provision against trade receivables
Provision utilised in year
Expensed in year
Closing provision for trade receivables
2017
£000
842
(532)
735
1,045
2016
£000
167
(209)
884
842
Past due receivables
< 1 month overdue
1-2 months overdue
2-3 months overdue
3-12 months overdue
> 1 year overdue
Gross
2017
£000
608
338
212
861
739
Provision
2017
£000
(8)
(23)
(46)
(229)
(739)
Net
2017
£000
600
315
166
632
-
Gross
2016
£000
1,155
393
456
429
688
Provision
2016
£000
-
-
-
(154)
(688)
Net
2016
£000
1,155
393
456
275
-
Total overdue receivables
2,758
(1,045)
1,713
3,121
(842)
2,279
18 Cash and cash equivalents
Cash and cash equivalents
Balance at end of period
2017
£000
2016
£000
10,975
13,459
10,975
13,459
All of the Group's cash and cash equivalents are at floating interest rates and is denominated in UK Sterling (£). The Directors
consider that the carrying value of cash and cash equivalents approximates to their fair value. For details of the Group's credit
risk management policies, refer to note 24.
19 Share capital
Authorised
77,777,777 Ordinary Shares @ 1p each
97,223 Ordinary Shares @ 1p each on 17 July 2015
2,367,143 Ordinary Shares @ 1p each on 22 October 2015
2,564,427 Ordinary Shares @ 1p each on 22 April 2016
177,513 Ordinary Shares @ 1p each on 02 May 2017
2,201 Ordinary Shares @ 1p each on 09 May 2017
3,302 Ordinary Shares @ 1p each on 01 June 2017
4,128 Ordinary Shares @ 1p each on 01 June 2017
90,000 Ordinary shares @ 1p each cancelled on 03 October 2017
90,000 Ordinary shares @ 1p each cancelled on 04 October 2017
15,000 Ordinary shares @ 1p each cancelled on 05 October 2017
10,182 Ordinary Shares @ 1p each on 20 November 2017
2017
£000
2016
£000
778
1
24
25
2
-
-
-
(1)
(1)
-
-
828
778
1
24
25
-
-
-
-
-
-
-
-
828
P74
P75
Allotted, issued and fully paid
77,777,777 Ordinary Shares @ 1p each
97,223 Ordinary Shares @ 1p each on 17 July 2015
2,367,143 Ordinary Shares @ 1p each on 22 October 2015
2,564,427 Ordinary Shares @ 1p each on 22 April 2016
177,513 Ordinary Shares @ 1p each on 02 May 2017
2,201 Ordinary Shares @ 1p each on 09 May 2017
3,302 Ordinary Shares @ 1p each on 01 June 2017
4,128 Ordinary Shares @ 1p each on 01 June 2017
90,000 Ordinary shares @ 1p each cancelled on 03 October 2017
90,000 Ordinary shares @ 1p each cancelled on 04 October 2017
15,000 Ordinary shares @ 1p each cancelled on 05 October 2017
4,128 Ordinary Shares @ 1p each on 20 November 2017
2017
£000
2016
£000
Future minimum lease payments under finance leases and hire purchase contracts are as follows:
778
1
24
25
2
-
-
-
(1)
(1)
-
-
828
778
1
24
25
-
-
-
-
-
-
-
-
828
Future minimum
lease payment
Interest payable
on leases
Present value of
minimum lease
payments
2017
£000
2016
£000
2017
£000
2016
£000
2017
£000
2016
£000
Due within one year
Due between one and two years
Due between two and five years
-
-
-
-
80
-
-
80
-
-
-
-
10
-
-
10
-
-
-
-
70
-
-
70
The effective interest rate on finance leases is nil% (2016: 3.20%).
The Group has no finance leases or hire purchase contracts in existence at 31 December 2017 with the last asset finance by a
finance lease being becoming owned within the year.
During the year 197,236 ordinary shares of £0.01 each were issued relating to the SAYE 2013 LTIP scheme at an exercise price
of £1.308 per share, settled in cash. £1,972 was credited to share capital and £256,012 was credited to the share premium
account. The scheme is now closed and no further shares will be issued from the scheme. In October 2017 the Company
purchased and cancelled 195,000 shares in a share buy back scheme for a purchase price of £2.00 per share. £1,950 and
£388,050 was debited to the share capital and share premium accounts respectively. Costs incurred in the purchase of shares of
£1,953 were debited from the share premium accounts.
20 Trade and other payables
Trade payables
Other taxation and social security costs
Other payables
Accruals and deferred income
21 Financial liabilities
Current liabilities
Obligations under finance lease and hire purchase contracts
Non-current liabilities
Obligations under finance lease and hire purchase contracts
Total secured financial liabilities
Obligations under finance leases and hire purchase are secured on the related assets.
2017
£000
3,571
2,423
3,022
1,848
2016
£000
4,600
1,098
3,064
3,221
10,864
11,983
2017
£000
2016
£000
-
-
-
-
-
70
70
-
-
70
22 Deferred Tax Liability
Balance at beginning of period
Debit to the statement of comprehensive income for the period
Balance at end of year
The deferred tax asset provided in the financial statements at 17%
(2016: 17%) is as follows:
Capital allowances in excess of depreciation
23 Provisions for liabilities and charges
Warranty provision
Balance at beginning of year
Utilised in year
Provided in year
Balance at end of year
Current
Non current
Balance at end of year
2017
£000
2016
£000
61
29
90
90
90
37
24
61
61
61
2017
£000
2,396
(1,180)
813
2016
£000
2,370
(1,221)
1,247
2,029
2,396
599
1,430
701
1,695
2,029
2,396
The Group gives guarantees against all its products, which in the majority of cases covers a period of 10 years. Provision is made for
the expected future costs of rectifying faults arising within the guarantee period and then discounted at 7% to a net present value.
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24 Financial instruments
Financial liabilities
The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and
processes of the Group for managing those risks and the methods used to measure them. Further quantitative information in
respect of these risks is presented throughout these financial statements.
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
stakeholders. The Group is funded principally by equity although loans have been utilised during the review period of these
financial statements. As at 31 December 2017, no loans were outstanding (2016: £nil). The capital structure of the Group
consists of equity, comprising issued share capital. The Group has no externally imposed capital requirements.
In order to maintain or adjust the capital structure, the Group may return capital to shareholders or issue new shares.
Principal nancial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises are as follows:
· Trade and other receivables
· Trade and other payables
· Cash and cash equivalents
The carrying value of these financial instruments is considered to approximate to their fair value.
Financial assets
At the reporting date, the Group held the following financial assets:
Trade receivables
Cash and cash equivalents
2017
£000
2016
£000
1,713
10,975
2,279
13,459
12,688
15,738
At the reporting date, the Group held the following financial liabilities, all of which were classified as other financial liabilities:
Trade payables
Other payables
Market risk
2017
£000
3,571
3,022
2016
£000
4,600
3,064
6,593
7,664
The Group is not materially exposed to changes in foreign currency exchange rates or interest rate movements. Trade receivables
totalling £545k (2016: £529k) are secured by charges against the debtors' property.
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group.
Credit risk arises principally from the Group's cash balances and trade and other receivables. The concentration of the Group's
credit risk is considered by counterparty.
The Group gives careful consideration to which organisation it uses for its banking services in order to minimise credit risk. The
Group has a significant concentration of cash held in accounts with one large bank in the UK, an institution with an A credit
rating (long term, as assessed by Moody's). The amounts of cash held on deposit with that bank at each reporting date can be
seen in the financial assets table above. All of the cash and cash equivalents held with that bank at each reporting date were
denominated in UK Sterling.
The nature of the Group's business and current stage of its development are such that individual customers can comprise a
significant proportion of its trade and other receivables at any point in time. The Group mitigates the associated risk by close
monitoring of the debtor ledger.
At 31 December 2017, the Group's trade receivables balance was £1,713k (2016: £2,279k). The carrying amount of financial
assets recorded in the financial statements represents the Group's maximum exposure to credit risk without taking account of the
value of any collateral obtained. In the Directors' opinion, there has been some impairment of trade receivables during the year in
the trade receivable provisions table in note 17.
An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of
a reduction in the recoverability of the cash flows. The Board of Directors considers the above measures to be sufficient to control
the credit risk exposure.
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Liquidity risk management
26 Pension costs
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Ultimate
responsibility for liquidity risk management rests with the Board of Directors. The Board manages liquidity risk by regularly
reviewing the Group's cash requirements by reference to short term cash flow forecasts and medium term working capital
projections.
At 31 December 2017, the Group had £10,975k (31 December 2016: £13,459k) of cash reserves.
Foreign currency risk management
Historically, the Group's exposure to foreign currency risk has been limited, all of its invoicing and the majority of its payments are
in UK Sterling. There are no balances held in foreign currencies at each reporting date and it has made no payments in foreign
currencies other than US dollar and Euro. Accordingly, the Board has not presented any sensitivity analysis in this area as it is
immaterial.
Maturity of financial assets and liabilities
All of the Group's non derivative financial liabilities and its financial assets at each reporting date are either payable or receivable
within one year.
25 Commitments
The Group had annual commitment under non-cancellable operating leases as follows:
Motor vehicles:
Expiring within one year
Expiring between two and five years
Expiring after five years
Plant and machinery:
Expiring within one year
Expiring between two and five years
Expiring after five years
Land and buildings:
Expiring within one year
Expiring between two and five years
Expiring after five years
2017
£000
2,765
3,457
-
127
115
-
1,495
4,982
2,971
2016
£000
1,690
1,615
-
121
165
-
1,306
4,167
2,564
15,912
11,628
During the period ended 31 December 2017, the Group entered into contracts to purchase property, plant and equipment for
£nil (2016: £1,302k).
The charge for the period amounts to £589,000 (2016: £482,000) and relates to contributions paid into a money purchase
scheme in the period.
27 Group companies
Safestyle UK plc holds more than 20% of the share capital of the following companies:
Registered
Address
Principal
Activity
Country of
incorporation
Class of
shares
% held by
parent
Style Group Holdings Limited
Style Group Limited*
HPAS Limited*
14 Eldon Place, Bradford, BD1 3AZ
14 Eldon Place, Bradford, BD1 3AZ
14 Eldon Place, Bradford, BD1 3AZ
Windowstyle UK Limited*
Safestyle UK Limited*
Style Group Europe Limited*
14 Eldon Place, Bradford, BD1 3AZ
14 Eldon Place, Bradford, BD1 3AZ
14 Eldon Place, Bradford, BD1 3AZ
*Owned Indirectly
28 Related party transactions
Holding company
Holding company
Home improvements
and double glazing
contractors
Dormant
Dormant
Dormant
England and Wales
England and Wales
England and Wales
Ordinary
Ordinary
Ordinary
100
100
100
England and Wales
England and Wales
England and Wales
Ordinary
Ordinary
Ordinary
100
100
100
During the year ended 31 December 2017 there were no related party transactions, other than transactions with subsidiaries.
During the year, Safestyle UK plc charged management charges to subsidiaries of £2.4m (2016: £1.8m) and received dividends
of £9.4m (2016: £17.4m). At the year-end total amounts receivable from subsidiaries were £1.4m (2016: £3.2m).
Transactions with key management personnel are shown in note 9.
29 Ultimate controlling party
Safestyle UK plc is quoted on the stock exchange (AIM) and ultimate control is exercised by the shareholders.
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30 Share Based Payments
At 31 December 2017 the Group had the following share based payment arrangements:
LTIPS
On 10 April 2017, a further 348,210 options were granted (“LTIP 2017”). The LTIP 2015, 2016 and 2017 schemes require a
combination of specific performance based criteria and remaining an employee for a minimum period.
The numbers of share options in existence during the year were as follows:
2017
2016
Number of share
options
Weighted average
exercise price
Number of share
options
Weighted average
exercise price
Outstanding at start of period
Granted during the year
Issued in the year
Cancelled in the year
Lapsed in the year
Outstanding at end of period
Exercisable at end of period
1,030,134
348,210
-
-
(470,985)
907,359
-
£2.18
-
-
-
£1.86
£1.51
-
4,581,976
448,533
(2,564,427)
(1,421,683)
(14,265)
1,030,134
-
£1.10
£2.68
£1.00
£1.00
£1.79
£2.18
-
Options are valued using the Black-Scholes option pricing model. The following information is relevant in the determination of
the fair value of the options granted during the period.
Grant date
Vesting date
Lapsing date
LTIP 2017
10/04/2017
10/04/2020
10/04/2027
LTIP 2016
29/04/2016
29/04/2019
01/04/2026
LTIP 2015
01/04/2015
01/04/2018
01/04/2025
Risk free interest rate
Expected volatility
Expected option life (in years)
Weighted average share price after adjusting for PV of dividends
Weighted average exercise price
Weighted average fair value of options granted
Dividend yield
Remaining contractual life
0.15%
33.60%
6.50
£3.04
£0.00
256.00p
5.71%
9.78
1.22%
36.93%
6.50
£2.67
£2.68
65.79p
3.60%
8.76
1.28%
43.13%
6.50
£1.80
£1.79
44.78p
5.20%
7.76
At the grant date there was limited share price history for the company on which to calculate volatility. Volatility was therefore
estimated using both Safestyle and companies classified in the 'Home Improvement Retailers' subsector on the London Stock
Exchange.
SAYE
The numbers of share options in existence during the year were as follows:
2017
2016
Number of share
options
Weighted average
exercise price
Number of share
options
Weighted average
exercise price
Outstanding at start of period
Granted during the year
Issued in year
Lapsed during the period
Outstanding at end of period
Exercisable at end of period
423,382
128,205
(197,236)
(150,226)
204,125
-
£1.49
£2.40
£1.31
£1.68
£2.10
-
452,460
87,485
-
(116,563)
423,382
-
£1.37
£2.25
-
£1.57
£1.49
-
Options are valued using the Black-Scholes option pricing model. The following information is relevant in the determination of the
fair value of the options granted during the year.
Grant date
Vesting date
Lapsing date
SAYE 2017
24/04/2017
01/06/2020
01/12/2020
SAYE 2016
01/04/2016
01/05/2019
01/11/2019
SAYE 2015
01/04/2015
01/05/2018
01/11/2018
Risk free interest rate
Expected volatility
Expected option life (in years)
Weighted average share price after adjusting for PV of dividends
Weighted average exercise price
Weighted average fair value of options granted
Dividend yield
Remaining contractual life
0.21%
34.20%
3.35
£3.14
£2.51
69.00p
5.53%
3.42
0.56%
32.88%
3.35
£2.81
£2.25
71.93p
3.40%
2.34
0.76%
33.54%
3.35
£1.80
£1.43
41.52p
5.20%
1.34
At the grant date there was limited share price history for the Company on which to calculate volatility. Volatility was therefore
estimated using both Safestyle and companies classified in the 'Home Improvement Retailers' subsector on the London Stock
Exchange.
The total share based expense comprises:
Equity settled - LTIP
Equity settled - SAYE
31 Equity settled share based payments charges
2017
£000
351
70
421
2017
£000
351
70
-
421
2016
£000
153
87
240
2016
£000
153
87
947
1,187
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On 1 April 2017 the Company launched a new share save (SAYE) scheme (“SAYE 2017”) in addition to the existing schemes
(“SAYE 2015 and “SAYE 2016”) for employees. The SAYE 2013 vested within the year with 197,236 shares being issued at an
issue price of 130.8 pence per share. The scheme has now closed and no further shares will be issued.
All schemes allow employees to acquire a certain number of shares at a discount of 20% of the share price prior to the invitation
to join the scheme, using amounts saved under a 'Save As You Earn' savings contract.
Equity settled - LTIP
Equity settled - SAYE
Employers national insurance on issue of LTIP with associated charges
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32 Contingent liability
During the year there were two incidents during installations which led to reportable injuries. The Health & Safety Executive
(“HSE”) has carried out investigations into both of these cases. Whilst it continues to investigate, the HSE has advised the Group,
subsequent to the year end, that it intends to prosecute Safestyle in relation to one of the incidents, in which a contractor suffered
a knee injury. The Group has taken legal advice and it is expected that a fine will be imposed. The pro-forma range of the
potential fine is believed to be £550k to £2.9m. This range may be reduced as the matter is progressed and the precise quantum
depends on a number of factors including the level of culpability, the harm category and what mitigating factors may be taken
into account, such as full cooperation with the HSE's investigation and the Group's good health and safety record. Consequently
management has not recognised a provision in these financial statements.
33 Reconciliation of profit before taxation to underlying
profit before taxation
Profit before taxation
add back
Non-recurring costs
Equity settled share based payments charges
2017
£000
13,814
830
421
2016
£000
19,344
-
1,187
Underlying profit before taxation
15,065
20,521
34 Reconciliation of profit before taxation to underlying
EBITDA
Profit before taxation
add back
Finance income
Finance costs
Depreciation and amortisation
EBITDA
add back
Non-recurring costs
Equity settled share based payments charges
Underlying profit before taxation
2017
£000
13,814
(35)
10
1,730
2016
£000
19,344
(98)
11
1,168
15,519
20,415
830
421
-
1,178
16,770
21,602
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