TheWorks.co.uk Annual Report 2023

FY2023 Annual Report · TheWorks.co.uk

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Inspiring reading,
learning, creativity
and play

Annual Report and Accounts 2023

Our ambition: to become one
of the most loved retailers in the
UK – the go-to place for reading,
learning, creativity and play.

Contents

Strategic report
Highlights
Our strategic roadmap
Our investment case
At a glance
Chair’s statement
Chief Executive’s review
Our marketplace
Our business model
Our strategy and progress
How we measure performance
Financial review
Our stakeholders
Section 172 statement
ESG review
Task Force on Climate-Related
Financial Disclosures (TCFD)
Streamlined Energy and Carbon
Reporting (SECR)
Risk management and
principal risks and uncertainties
Viability statement
Non-financial and sustainability
information statement

01
02
03
04
06
08
12
14
16
18
19
26
28
29

49
54

Corporate governance
58
Chair’s governance introduction
60
Board of Directors
62
Corporate governance report
66
Audit Committee report
70
Nomination Committee report
73
Directors’ remuneration report
78
Annual report on remuneration
Directors’ report
86
Statement of Directors’ responsibilities 89

Financial statements
Independent auditor’s report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated cash flow statement
Notes to the consolidated
financial statements
Company statement
of financial position
Company statement
of changes in equity
Notes to the Company
financial statements
Advisers and contacts

90
98

100

101
102

103

133

134

135
140

Highlights

Financial highlights

Revenue

£280.1m

FY22: £264.6m

Profit before tax

£5.0m

Restated FY22: £14.2m

Like-for-like (LFL) sales growth2

Adjusted PBT

+4.2%

FY22: +10.5%

£10.1m

Restated FY22: £16.5m

Non-IFRS 16 Adjusted EBITDA

£9.0m

FY22: £16.6m

Dividend

1.6p

FY22: 2.4p

1 See note 14 to the financial statements.

Basic EPS

8.4p

Restated1 FY22: 22.3p

Adjusted basic EPS

16.5p

Restated1 FY22: 26.0p

2 LFL sales growth has been calculated with reference to the FY22 comparative sales figures. In FY22’s Annual Report, two-year comparatives were used

because the use of a normal one-year LFL comparative was prevented by the various disruptions to store trading brought about by COVID-19 restrictions
in the FY21 comparative period.

Operational highlights
• Resilient performance delivered in FY23 against challenging
backdrop. Well-positioned to capitalise on opportunities
and deliver growth in FY24.

• Continued to refine our customer proposition to more closely

reflect our purpose - to inspire customers to read, learn, create
and play – making lives more fulfilled. Rolled out evolved brand
to stores and online to start changing legacy perceptions of The
Works and more accurately reflect the business today.

• Refreshed the product offering, launching new own brand

products such as “PlayWorks” toy range. Increased book market
share by stocking more front-list titles from best-selling authors
such as Julia Donaldson and Colleen Hoover.

• Further enhanced the quality of the store estate with 14 new
openings (which are trading ahead of expectations), three
relocations and 13 store closures. Continued to optimise
the existing estate with an investment of c.£1.4m in 34 refits,
improving the customer experience by enhancing layouts,
improving signage and optimising space utilisation.

•

Invested in operational improvements, the significant benefits of
which are expected to be fully realised in FY24 and beyond. This
included restructuring the distribution centre management team,
implementing a new stock allocation system, and introducing
a new automated packing machine at our online fulfilment
provider, iForce.

• Launched a review of the business operating model to drive

effectiveness and efficiencies, improve processes and IT systems,
particularly in relation to the flow of stock through the business.

• Restructured management of the online operation to drive improved

performance. Increased focus on customer experience of the
website and introduced new tools to support analysis and provide
insights into how best to improve performance.

•

Placed 12th in ‘Best Big Companies to Work For’, up from 13th
in each of the past two years, and maintained 2* accreditation
for ‘outstanding’ workplace engagement.

Visit our corporate website
corporate.theworks.co.uk

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportOur strategic roadmap

Creating a better,
not just bigger business

Our purpose and strategy aim to bring our well-loved brand to life
and make The Works ‘better, not just bigger’.

Our purpose
To inspire reading, learning, creativity and play –
making lives more fulfilled.

Our ambition
To become one of the most loved retailers
in the UK.

Our better, not just bigger strategy

Develop our
brand and
increase
customer
engagement

Enhance
our online
proposition

Optimise our
store estate

Drive
operational
improvements

Read more about our strategy on pages 16 and 17

Our strategic enablers

Our colleagues

Our systems and data

Our ESG commitments

Read more about our ESG approach on pages 29 to 35

Underpinned by our values

Category

Trend and highest impact

Potential impact

Risk mitigation

• The Group has committed to

becoming net-zero for Scope 2
by 2030 and Scope 1 by 2035. As
our carbon emissions decrease,
the potential impact of this risk
will reduce.

• Monitor and review our carbon
emissions each year against
a carbon pricing model.

• The Group’s CFO and Company
Secretary oversee regulatory
compliance with support from
external advisers.

• Senior management team
is aware of compliance
requirements under their areas
of responsibility and liaise with
the CFO and external advisers
to identify and manage issues.

• Policies and procedures in

place to ensure the Group has
capacity to support increased
reporting and transparency
(e.g. data collection processes).

• Partner with INESG to support

environmental reporting disclosures.

•

Introduced initiatives to reduce
plastic packaging (see page 31).

Policy and legal

Increase in carbon/GHG pricing.

MEDIUM

Highest impact in the:

• Medium term

• 2-3°C Scenario

Increase in climate change
regulation including increased
emissions-reporting obligations.

Highest impact in the:

• Short to medium term

• <2°C and 2-3°C Scenarios

Mandates on and regulation of
existing products and services.

Highest impact in the:

• Short to medium term

• <2°C Scenario

Potential financial impact
area: Expenditures — increased
direct costs.

The UK has committed to a series
of five-year carbon budgets. If
carbon emissions do not decrease
enough to meet targets, a tax
on carbon emissions may be
introduced. We estimate that this
impact could be highest in the
2-3°C Scenario in the medium
term, when carbon pricing is
projected to peak. Based on
FY22 Scope 1 and 2 emissions
(3,088 tCO2e), an estimated
potential tax of approximately
£0.2m could arise in the medium
term, assuming no reduction to
carbon emissions.

LOW

Potential financial impact
area: Expenditures - Increased
direct costs.

We are required to comply
with environmental reporting
requirements and anticipate that
additional requirements will be
introduced over time as the UK
transitions to a net-zero economy.
If we do not meet developing
reporting requirements there is a
risk of potential sanctions imposed
by regulatory bodies.

Costs will increase if additional
resource is required to meet
increased reporting requirements.

LOW

Potential financial impact area:
Expenditures - Increased direct
and indirect costs.

We and/or our suppliers may be
subject to increased regulation in
relation to plastics and packaging
(e.g. UK Plastic Tax and Extended
Producer Responsibility).
Regulations relating to products
and packaging are likely to
intensify over time. This may
increase the cost of direct taxes
or increase materials costs.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportTask Force on Climate-Related Financial Disclosures (TCFD) continued

Strategy continued
Transition risks continued

Category

Trend and highest impact

Potential impact

Risk mitigation

Policy and
legal continued

Exposure to litigation.

LOW

Highest impact in the:

• Short to medium term

• 2-3°C Scenario

Market

Increased cost of energy
and raw materials.

Highest impact in the:

• Short to medium term

• <2°C and 2-3°C Scenarios

• The Group’s CFO and Company
Secretary oversee regulatory
compliance with support from
external advisers.

• Senior management team is

made aware of key compliance
requirements within their
business areas and liaise with
the CFO and external advisers
to identify and manage issues.

• Maintain focus on cost control.

• Continually review supply base
and diversify and/or change
supply options where needed.

•

Introducing energy efficiency
technology across the
store estate.

• Conduct site surveys to identify
energy saving opportunities.

Potential financial impact
area: Expenditures —increased
direct costs.

Legal standards and reporting
requirements may become more
onerous in the short to medium
term. This could increase the risk
of lawsuits, compliance issues
and fines. Any litigation could
negatively impact our brand
and reputation.

MEDIUM

Potential financial impact area:
Expenditures - increased direct
(operating) costs.

Disruptions in recent years,
including the period of increased
ocean freight rates and reduced
availability of shipping containers,
have already impacted our
business, albeit these impacts
have now abated. Future
increases in costs could adversely
impact the Group’s profitability.

This risk is currently heightened,
due to the generally high levels of
cost inflation being experienced.
Climate change is likely to
exacerbate this, potentially
increasing costs, creating supply
disruptions and delays. Energy
costs, although lower than the
highest peaks reached following
Russia’s invasion of Ukraine, are
nevertheless expected to rise
over time.

Changing customer behaviour.

MEDIUM

Highest impact in the:

• Medium term

• <2°C and 2-3°C Scenarios

Potential financial impact area:
Revenue - decreased revenue
due to reduced demand for
products and services.

With ESG growing in importance,
customers may change their
shopping preferences, which
could potentially impact demand
for the Group’s products. Failure
to effectively predict and respond
to any such changes could affect
the Group’s sales and financial
performance.

•

Implementing a net-zero strategy
and enhancing our reporting
to communicate our actions
to make our proposition more
sustainable to stakeholders,
including customers.

TheWorks.co.uk plc Annual Report and Accounts 2023

Category

Trend and highest impact

Potential impact

Risk mitigation

•

Invested in sustainability
function, recruiting a new
Sustainability Manager in FY23.

• The Group’s CFO and Company
Secretary oversee regulatory
compliance, with support from
external advisers.

• Partnered with INESG to
support us in relation to
environmental matters.

• Adopt internationally aligned
frameworks to ensure our
ESG strategy develops using
best practice.

• Monitor customer trends

to anticipate changes and
react accordingly.

•

Implementing an ESG
programme and developing
our reporting to communicate
this to stakeholders,
including customers.

•

Implementing a
net-zero strategy.

• Work with suppliers to

explore lower-emission
alternative products.

•

Installing energy efficient
technology in stores.

Implementing a net-zero
strategy and understanding
and accounting for the
additional costs.

Reputation

Increased stakeholder concern
regarding environmental issues.

Highest impact in the:

• Short to medium term

• <2°C and 2-3°C Scenarios

MEDIUM

Potential financial impact
area: Capital and Financing –
decreased access to capital.

ESG is becoming increasingly
important to stakeholders.
Interest in, and scrutiny of, our ESG
credentials is likely to increase.

Reputational damage could
affect the financial performance
of the business.

Stigmatisation of the sector.

LOW

Highest impact in the:

• Medium term

• <2°C and 2-3°C Scenarios

Technology

Substitute existing products
with lower-emissions alternates.

Highest impact in the:

• Short to long term

• <2°C and 2-3°C Scenarios

Costs to transition to lower-
emissions technology.

Highest impact in the:

• Short to long term

• <2°C and 2-3°C Scenarios

Potential financial impact area:
Revenue - Decreased revenue
due to reduced demand for
products and services.

If value retail companies are
unable to demonstrate their
commitment to environmental
sustainability and wider ESG
aspects, customers may reduce
their purchasing, adversely
impacting sales.

MEDIUM

Potential financial impact
area: Expenditures — increased
capital expenditures.

As customers become more
environmentally conscious, the
costs to ensure our products
are sustainable could increase.
This reflects costs associated
with sustainable and recycled
materials, which are likely to
increase as demand increases.

MEDIUM

Potential financial impact
area: Expenditures — increased
capital expenditures.

To reduce our Scope 1 and Scope
2 carbon emissions and meet our
net-zero targets for Scope 2 by
2030 and Scope 1 by 2035, we will
need to invest in lower emission
technology. Decarbonisation
actions identified to date
including LED lighting installation,
Company energy policy
implementation, installation of
lighting sensors and a behavioural
change programme will require an
estimated £0.7m investment over
the next six years.

Cost savings will likely mitigate
the investment outflow through
reduced energy costs.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportTask Force on Climate-Related Financial Disclosures (TCFD) continued

Strategy continued
Physical risks
We have identified several physical risks requiring appropriate levels of management, to ensure that any potential disruption to our
operations is minimised. These physical risks primarily materialise in the above 3°C scenario in the long term, where numerous climate
tipping points would be reached due to the unchecked increase in carbon emissions. We anticipate that the likelihood of extreme
weather events occurring will increase as global temperatures rise, with phenomena such as flooding posing a potential threat to
several of our sites. We will continually monitor physical risks by running annual climate scenario analysis, and expand the scope of
this to include our key suppliers and supply routes in subsequent years of reporting.

Category

Trend and highest impact

Potential impact

Risk mitigation

Acute

Increased severity of flooding.

MEDIUM

Highest impact in the:

• Long term

• >3°C Scenario

Potential financial impact area:
increased direct and indirect
costs and decreased revenue.

If flooding in the UK occurs with
more severity and frequency
it could impact our sites and
operations, through direct
damage to buildings and assets.
Disruptions may impact transport
networks, which could increase
costs and cause delays. We may
experience an increase in property
insurance premiums.

As a substantial part of the
Group’s profit is currently
generated during the Christmas
peak sales period, extreme
weather events during this time
could have an adverse short-term
effect by disrupting shopping
behaviour, stock flow, deliveries
of products to our stores and
the fulfilment of online orders.

Heatwaves/Extreme heat.

LOW

Highest impact in the:

• Short to long term

• 2-3°C and >3°C Scenarios

Potential financial impact area:
increased direct and indirect
costs and decreased revenue.

In the event of heatwaves and/or
periods of extreme heat occurring
more frequently, there will be an
increased demand for cooling.
This will increase energy costs,
and impact our efforts to reduce
Scope 2 emissions. There is an
increased risk of power outages
becoming more frequent due to
greater demand on the grid. Staff
health, wellbeing, comfort and
productivity may be impacted.

Extreme weather events could also
have an adverse short-term effect
by disrupting shopping behaviour
as local footfall decreases, stock
flow, deliveries of products to
our stores and the fulfilment of
online orders.

• Disaster recovery plan

is in place.

• Maintain appropriate business
interruption insurance cover.

• Scenario analysis of the store
estate will be undertaken
annually to monitor high risk sites
for potential long-term impacts.

• Online fulfilment capability

could support some ongoing
operations, if many sites were
closed simultaneously due
to physical damage.

•

Introducing energy saving
initiatives and technology to
reduce the impact of increased
energy usage.

• Develop and implement

appropriate response strategies
including supplying plenty
of drinking water, to keep
staff hydrated.

• An emergency generator is

installed at the support centre/
DC to mitigate the impact of
power cuts.

• Monitor health and wellbeing

of colleagues.

TheWorks.co.uk plc Annual Report and Accounts 2023

Category

Trend and highest impact

Potential impact

Risk mitigation

Acute continued

Increased frequency of wildfires.

LOW

Highest impact in the:

• Long term

• >3°C Scenario

Potential financial impact
area: increased direct and
indirect costs.

Even though this is not traditionally
considered as a material risk for
UK operations, the frequency and
severity of wildfires may increase
over time if extreme weather
events become more common.

Chronic

Water stress.

LOW

Highest impact in the:

• Medium to long term

• >3°C Scenario

Potential financial impact
area: increased direct and
indirect costs.

We may be impacted by restricted
water usage as well as additional
regulation to report on water
consumption and usage. Access
to and use of water supplies
may become prohibited, as
demand outweighs the supply
of freshwater. Water may require
greater treatment which could
increase water costs.

Sea level rise.

LOW

Highest impact in the:

• Long term

• >3°C Scenario

Potential financial impact
area: increased direct and
indirect costs.

As sea level rises, rates of erosion
and the likelihood of storm surges
occurring increase. This can lead
to sites in coastal zones being
damaged, eventually leading to
closures and increased insurance
premiums. These impacts could
also manifest themselves in our
supply chain, if key shipping ports
are affected.

• A disaster recovery plan

is in place.

• Maintain appropriate business
interruption insurance cover.

• Monitor events which may

impact the health and safety
of our employees, customers
and wider communities.

• Developing plan to measure

water consumption to
understand usage.

• Expanding scope of climate

scenario analysis to understand
impact of water stress
on business.

• Conduct annual scenario
analysis of store estate, to
monitor high-risk sites for
long-term impacts.

• When leases are up for

renewal, take climate scenario
analysis into account and
consider relocating away
from high-risk sites.

Climate-related opportunities

Category

Trend and highest impact

Potential impact

Opportunity management

Products
and services

Development of new products.

MEDIUM

Highest impact in the:

• Medium term

• <2°C Scenario

Potential financial impact area:
Revenue — increased revenue
from an increased demand
for sustainable products
and services.

As customers become more
concerned about ESG, their
shopping behaviours may change,
if they wish to purchase more
sustainable products.

We may be able to capitalise on
this, if it is possible to develop more
sustainable alternative products
at prices which customers are
willing to pay.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportTask Force on Climate-Related Financial Disclosures (TCFD) continued

Strategy continued
Climate-related opportunities continued

Category

Trend and highest impact

Potential impact

Opportunity management

Energy resources

Use of lower-emission sources
of energy.

Highest impact in the:

• Short to medium term

• <2°C Scenario

• Conduct energy site surveys
to identify energy saving
opportunities bespoke
to our operations.

•

Implementing net-zero strategy
and understanding and
accounting for the additional
cost to the business.

MEDIUM

Potential financial impact
area: Expenditures — reduction
in operating expenses from
increased efficiency (for example,
decreased energy costs).

The introduction of lower-emission
sources of energy across our estate
would contribute to reduced energy
consumption and associated
costs over time. It would also help
reduce our carbon emissions and
contribute to our carbon-reduction
and net-zero targets.

The continued rollout of LED
lighting, Company energy policy
implementation, installation of
lighting sensors and a behavioural
change programme will result in
an estimated carbon saving of
686 tCO2e.

Impact of climate-related risks and opportunities on business,
strategy and financial planning
We have assessed the impact of climate-related risks and
opportunities on our business, strategy and financial planning.
Based on our assessment, our business is more likely to be
impacted by transition risks. As the global economy begins
to decarbonise, we anticipate that the potential impacts
from transition risks will increase as more efforts are made by
governments and businesses to reduce emissions. We are likely to
face increased operating costs as we invest in resources required
to navigate enhanced reporting requirements as well as adapting
to increased costs of energy and raw materials in our supply chain.
As outlined in the Viability statement in this Annual Report, the
Group operates a three-year financial planning cycle. Currently
identified and quantifiable transition costs (such as the costs of
retaining expert consultants INESG, and the cost of employing
the recently appointed Sustainability Manager) have been
incorporated into the Group’s financial plans.

Further, as customers and wider stakeholders become more
interested in our sustainability credentials over time we may see a
reduced demand for products, as well as a potential decreased
access to capital. However, the Group has not allowed for any
of these and other potential costs relating to other transitional
or physical climate risks in its current planning horizon, as these
are presently too remote to be included. The process of periodic
reviews of the risks and the operation of the planning cycle
will ensure that if it becomes evident that costs (or revenues)
associated with the climate risks will affect the business, they
will be reflected in financial plans in due course.

A substantial part of the Group’s profit is currently generated
during the Christmas peak sales period, therefore extreme weather
events during this time could have an adverse short-term effect by
disrupting shopping behaviour, stock flow, deliveries of products
to our stores and the fulfilment of online orders. We anticipate that
the likelihood of extreme weather events occurring will increase as
global temperatures rise, with phenomena such as flooding posing
a potential threat to several of our sites. Detail of the impact of
climate-related risks and opportunities facing our business can
be found in the tables above.

TheWorks.co.uk plc Annual Report and Accounts 2023

The Sustainability Manager works closely with the ESG Steering
Committee, members of the Operations Board and Heads of
Departments to ensure sustainability and climate change criteria
are integrated into decision making when fulfilling their roles across
the business. Focusing on immediate priorities for the business,
an Environmental Action Group has been established and meets
monthly to consider plans to operate more sustainably which are
presented to the Board on an ad hoc basis.

To reduce our Scope 1 and 2 carbon emissions and meet our
net-zero targets for Scope 2 by 2030 and Scope 1 by 2035, we will
need to introduce lower emission technology, as well as engage
additional resources. During the year the Board approved a rollout
of LED lighting in stores to improve the Group’s energy efficiency,
and the appointment of a Sustainability Manager to lead the
development of the Group’s sustainability strategy and support
its implementation. Moving forward, decarbonisation actions
such as further LED lighting installation, Company energy policy
implementation, installation of lighting controls and a behavioural
change programme will require investment.

Resilience of strategy taking into consideration different climate-
related scenarios, including a 2°C or lower scenario
While climate change does not pose a significant direct threat
to our business, we have identified a number of risks and
opportunities that could impact the business over the longer term
and assessed their impact.

As described above, we considered climate-related risks and
opportunities under three different warming scenarios, varying from
a best-case scenario (below 2°C) to a worst-case scenario (above
3°C). As the types of risks that present themselves will vary under
different warming scenarios, to effectively assess the resilience of
our strategy, analysing climate-related risks and opportunities
against these different warming scenarios is necessary. Our analysis
suggests that the transition risks are most significant in the ‘below
2°C’ scenario and ‘between 2-3°C’ scenario, as more change will be
required to adapt to increasingly aggressive policies and legislation
implemented by governments and regulatory authorities. As we
work to decarbonise our business to be net zero in relation to Scope
1 and Scope 2 emissions, the risk posed by emerging policy and

legislation, such as carbon taxing and increases to greenhouse
gas pricing, will be mitigated and the benefits from achieving our
net-zero targets will outweigh the upfront costs of doing so.

Building resilience into our supply chain by developing deeper
relationships with key suppliers and also diversifying our supplier
base, will help minimise the potential risks posed by climate
change in relation to changing markets.

We have identified several physical risks requiring appropriate
levels of management, to ensure that any potential disruption
to our operations is minimised. These physical risks primarily
materialise in the ‘above 3°C’ scenario in the long term, where
numerous climate tipping points would be reached due to the
unchecked increase in carbon emissions. We will continue to
monitor physical risks through our annual climate scenario analysis,
which we will expand to include further analysis across our key
suppliers and critical supply chain routes to identify opportunities
to improve the measures we are implementing to mitigate potential
climate-related risks within the supply chain.

The information detailed above in relation to transition and
physical risks also provides an insight into the resilient nature of
our business model and, in particular, the processes and steps
we are taking to mitigate the impact of climate-related risks.

Risk management
We have an established framework used by the Group for
managing general risks which incorporates processes to make
decisions to manage or accept those risks, and to monitor steps
taken to achieve risk mitigation. The management of climate-
related risks falls within this umbrella, and uses an analogous
framework process. As this is our first climate-related risk and
opportunity assessment, the initial analysis was limited to our direct
operations. As we evolve our assessment annually and begin to
include our suppliers we will get a better understanding of the
potential size and scope of the identified climate-related risks
and opportunities over the short, medium and long term.

The processes for identifying and assessing
climate-related risks
To support management in its identification and assessment of
climate-related risks, we conducted climate scenario analysis
across all our operations in FY22 and FY23 for the first time.
Alongside this process, we launched an internal due diligence
process, to review existing business functions through a climate
lens. In conjunction with mapping of our existing business risks
and operations against those outlined by the TCFD guidance,
this informed the identification of the climate-related risks and
opportunities applicable to our locations and operations.

We have assessed the impact of each climate-related risk and
opportunity across all three scenarios (a below 2°C, a 2-3°C and an
above 3°C scenario), and three time horizons (short, medium and
long term), to understand the scenario and timeframe within which
our business is most vulnerable to each risk, or best positioned
to capitalise on each opportunity. A climate risk management
workshop was held during FY23 with members of the Operations
Board, followed by subsequent one-to-one discovery sessions,
to collect supporting data, to inform the assessment of each risk
and opportunity, including high-level financial modelling which
ascribes a financial threshold to each risk category. The risks and
opportunities marked medium are deemed to be material to our
operations. All climate-related risks and opportunities identified
through our scenario analysis are detailed in the tables on pages
39 to 44. For each risk we have highlighted in which scenario there
will be the greatest impact, and the measures we are implementing
to increase resilience.

The process for managing climate-related risks
Through the internal stakeholder engagement process, we
identified existing mitigation processes, which could be developed
or adopted to mitigate the impact of climate change. Details of
existing mitigation actions can be found on page 31. As explained
on page 37 the Operations Board is responsible for managing the
Group’s climate-risks and opportunities supported by the ESG
steering group and the Sustainability Manager. In addition senior
managers are assigned specific responsibilities to ensure climate-
related risks and opportunities are accurately assessed and
effectively managed. The climate scenario analysis undertaken in
FY23 will be repeated annually.

The Sustainability Manager works closely with the ESG Steering
Committee, members of the Operations Board and Heads of
Departments to ensure sustainability and climate change criteria is
integrated into decision making when fulfilling their roles across the
business. These sessions, along with monthly Environmental Action
Group meetings, are used to identify opportunities to manage risks.

Integration of processes for identifying, assessing
and managing climate-related risks into overall
risk management
Following a detailed operational risk review completed by our
Head of Finance, an environmental (including climate change) risk
was highlighted and included in the updated risk register in FY22.
The review included individual meetings with each Operations
Board member covering current and emerging risks affecting their
respective areas of responsibility and broader corporate risks in
other parts of the business.

We have considered our existing risk process and structure of
our risk register, when creating a climate risk register, to ensure
climate-related risks and opportunities are easily integrated into
existing business functions, where appropriate. We mapped our
existing business risks against those outlined by the TCFD guidance
to identify risk owners.

Following our FY23 climate risk management workshop, we held
one-to-one discovery sessions with members of the Operations
Board to further inform the assessment of climate-related risks
and opportunities and establish risk mitigation actions across
the business. This process will be repeated annually.

The Board and Audit Committee will continue to review the
business’ principal risks, including climate change risk, twice
per year.

With support from the Sustainability Manager, the CFO will be
responsible for the climate risk register, to ensure climate-related
risks and opportunities are reported annually. The climate risk
register contains all transition and physical risks highlighted and
informs the annual assessment of the environmental (including
climate change) risk.

Metrics and targets
Metrics used to assess climate-related risks
and opportunities in line with strategy and risk
management processes
We use a range of metrics to assess and manage our climate-
related risks and opportunities, including carbon emissions (see
pages 45 and 46), energy consumption (see page 47), waste and
recycling (see page 31) and products and packaging (see page 31).
We have considered cross-industry metrics including transition and
physical risks, climate-related opportunities, capital deployment,
carbon pricing and executive remuneration when reviewing the
impact of climate change on our business. Reporting against these
metrics can be found from pages 46 and 47. Each year we aim to
develop these metrics while enhancing our TCFD reporting.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportTask Force on Climate-Related Financial Disclosures (TCFD) continued

Metrics and targets continued
Metrics used to assess climate-related risks and
opportunities in line with strategy and risk management
processes continued
Every year we will set short-term annual targets which will help us
achieve our longer term environmental ambitions (see page 30). We
will also review industry remuneration best practice and guidance
and consider linking executive remuneration with the delivery and
performance of our net-zero strategy and related targets.

Scope 1, Scope 2 and Scope 3 GHG emissions and
related risks
We have been calculating our Scope 1 and 2 carbon emissions,
in line with the Streamlined Energy and Carbon Reporting initiative
(SECR) since 2019 (page 47). This year, as part of the work we
undertook to develop our carbon balance sheet, we calculated our
Scope 3 carbon emissions for the first time. To establish a baseline
for reporting we have used FY22 financial data to estimate our
prior year Scope 3 emissions. We will use this baseline to measure
progress against our emissions reductions targets. In FY24, our
efforts will focus on aligning our Scope 3 data collection with our
Scope 1 and 2 collection processes.

Our Scope 1, Scope 2 and Scope 3 emissions in relation to FY23
are set out below.

Carbon emissions (tCO2e) (tonnes)
Scope

Scope 1

Scope 2

Scope 3

Total

FY23

199

2,576

2,805

FY22

219

2,869

3,107

Calculations have used the methodology based on the
Greenhouse Gas Protocol (GHG Protocol) Corporate Value
Chain standards. Within Scope 3, there are 15 categories, with
12 applicable to our operations. Over time we aim to improve our
data collection processes to increase the accuracy of our Scope 3
emissions data.

Targets used to manage climate-related risks and
opportunities and performance against targets
We are committed to becoming net-zero for Scope 2 emissions by
2030, Scope 1 emissions by 2035, and Scope 3 emissions by 2045,
with an ambition to be net-zero in our Scope 3 emissions by 2040.
Our Scope 1 and 2 targets, with our Scope 3 ambition, align with
the British Retail Consortium’s Climate Action Roadmap.

We are in the process of developing our transition plan and setting
near-term targets. More information on how we are reducing
our environmental impact can be found on pages 30 and 31.

Target

Net-zero Scope 1
emissions by 2035

Net-zero Scope 2
emissions by 2030

Progress so far

We continue to build our roadmap for achieving net-zero in Scope 1, and are currently reviewing
our car fleet options to determine when we will transition to a hybrid and/or electric fleet.

We have installed LED lighting and energy efficient equipment in all new stores to help reduce
our in-store energy consumption. We are also retrofitting our existing estate with LED lighting
to continue the decarbonisation of our Scope 1 and 2 emissions.

We conducted ESOS surveys across a number of our key sites to identify energy-savings
opportunities. We will utilise the outputs of the surveys to implement energy efficiency measures
across our estate.

Net-zero Scope 3
emissions by 20451

We have calculated our Scope 3 emissions for the first time for the FY21/22 reporting period. This
has provided us with a Scope 3 baseline from which we can understand emissions across our value
chain, and begin formalising a decarbonisation strategy to meet our net-zero target. A number
of Scope 3 categories will be targeted for data methodology improvements, where we will look
to transition from average and spend-based data to activity-based data.

1 With an ambition to achieve net zero by 2040.

TheWorks.co.uk plc Annual Report and Accounts 2023

Streamlined Energy and Carbon Reporting (SECR)

In accordance with the SECR requirements the information below
summarises our energy usage, associated emissions, energy
efficiency actions and energy performance.

Regional data
Total reportable energy supplies consumption (kWh)
for UK operations

This year, for the first time, the disclosure covers all our operations
including the Republic of Ireland.

Carbon emissions are categorised as follows:

Utility and scope

Scope 1: Gaseous and other fuels

Scope 1: Transport (company fleet)

FY23

FY22

155,792

727,618

185,387

798,916

• Scope 1: Consumption and emissions related to direct

Scope 2: Electricity

12,855,807

13,513,022

combustion of natural gas and fuels utilised for transportation
operations, such as company vehicle fleets.

• Scope 2: Consumption and emissions related to indirect

emissions relating to the consumption of purchased electricity
in day-to-day business operations.

• Scope 3: Consumption and emissions related to emissions resulting
from sources not directly owned by us. These relate to grey fleet
(business travel undertaken in employee-owned vehicles) only.

Group data
Total Group reportable energy supplies consumption (kWh):

Scope 3: Transport (grey fleet)

127,216

81,962

Total

13,866,433

14,579,287

Total emissions (tCO2e) for UK operations
Utility and scope

Scope 1: Gaseous and other fuels

FY23

28.44

FY22

33.96

Scope 1: Transport (company fleet)

169.23

185.25

Scope 2: Electricity

2,514.97

2,869.22

Scope 3: Transport (grey fleet)

29.42

19.01

Utility and scope

Scope 1: Gaseous and other fuels

Scope 1: Transport (company fleet)

FY23

155,792

733,868

FY22

Total

2,742.06

3,107.44

185,387

798,916

Intensity metric for UK operations

Scope 2: Electricity

13,040,136

13,513,022

Scope 3: Transport (grey fleet)

129,005

81,962

Intensity metric
tCO2e/£m revenue

FY23

9.79

FY22

11.75

Total

14,058,801

14,579,287

Total reportable energy supplies consumption (kWh) for Republic
of Ireland operations1

Total Group emissions (tCO2e)
Utility and scope

Scope 1: Gaseous and other fuels

Scope 1: Transport (company fleet)

Scope 2: Electricity

Scope 3: Transport (grey fleet)

Total

Utility and scope

FY23

28.44

170.67

FY22

Scope 1: Gaseous and other fuels

33.96

185.25

Scope 1: Transport (company fleet)

Scope 2: Electricity

2,575.87

2,869.22

Scope 3: Transport (grey fleet)

29.87

19.01

Total

2,804.85

3,107.44

FY23

—

6,250

184,328

1,789

192,367

Group intensity metric
An intensity metric of tCO2e per £m revenue has been applied
to our annual total emissions and is detailed in the table below.

Intensity metric
tCO2e/£m revenue

FY23

10.01

FY22

11.75

Total emissions (tCO2e) for Republic of Ireland operations
Utility and scope

Scope 1: Gaseous and other fuels

Scope 1: Transport (company fleet)

Scope 2: Electricity

Scope 3: Transport (grey fleet)

Total

Intensity metric for Republic of Ireland operations

Intensity metric
tCO2e/£m revenue

FY23

—

1.44

60.90

0.41

62.75

FY23

13.36

As highlighted above this is the first year our Republic of Ireland
operations have been included in our disclosure; therefore, no prior year
data is available.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportStreamlined Energy and Carbon Reporting (SECR) continued

Energy efficiency improvements
We are committed to improving energy efficiency across our
operations, which is paramount if we are to achieve our Scope
1 and Scope 2 net-zero targets. In FY23, we implemented
several energy efficiency measures to reduce our overall energy
consumption including:

• Continuing the rollout of LED lighting across our store estate. As at
year end 67% of our store estate now operates with LED lighting.

• Began undertaking Energy Savings Opportunity Scheme (ESOS)

surveys to identify energy efficiency opportunities. The findings of
these surveys have informed our Scope 1 and 2 net-zero roadmaps.

We are planning further efficiency improvements in the coming
year including:

• Continuing to rollout LED lighting across our store estate.

• Establishing a new and remodelled store energy efficiency policy.

• Developing an energy efficiency behaviour change programme
for our colleagues across our stores, Distribution Centre and
Support Centre.

• Engaging with our landlords to identify and implement energy

efficiency opportunities across our store estate.

Reporting methodology
The above information (including the Scope 1, 2 and 3 consumption
and CO2e emissions data) has been developed and calculated
using the GHG Protocol – A Corporate Accounting and Reporting
Standard (World Business Council for Sustainable Development
and World Resources Institute, 2004); Greenhouse Gas Protocol –
Scope 2 Guidance (World Resources Institute, 2015); ISO 14064-1
and ISO 14064-2 (ISO, 2018; ISO, 2019); Environmental Reporting
Guidelines: Including Streamlined Energy and Carbon Reporting
Guidance (HM Government, 2019).

For our UK operations, UK Government Emissions Factor Database
2022 version 1 has been used, utilising the published kWh gross
calorific value (CV) and kgCO2e emissions factors relevant for
reporting period 01/05/2022–30/04/2023. For our Republic of
Ireland operations, Sustainable Energy Authority of Ireland (SEAI)
2022 conversion factors have been used, utilising the kgCO2e
emission factors for relevant reporting period 1 May 2022 to 30
April 2023.

Estimations were undertaken to cover missing billing periods for
properties directly invoiced to The Works. These were calculated
on a kWh/day pro-rata basis at the meter level.

Intensity metrics have been calculated using total tCO2e figures.
Total turnover used for the performance indicator for FY23 was
£280.1m (FY22: £264.6m).

TheWorks.co.uk plc Annual Report and Accounts 2023

Risk management and principal risks and uncertainties

Effective risk management helps
us identify, evaluate and manage
the risks which could impact
the business

Risk management framework
The Board is responsible for ensuring that appropriate risk
management processes and controls are in place. The Board
has delegated responsibility for overseeing risk management
processes and controls to the Audit Committee. Day-to-day
risk management is the responsibility of the senior management
team. Further details of the governance structure are set out in
the Corporate governance report on page 62.

Risks are identified and assessed using a bottom-up review
process. Senior management determines the potential risks that
could affect their areas of responsibility and the likelihood and
impact. This information is used to create the Group’s primary
risk register and capture principal risks which are subsequently
considered by the Audit Committee and the Board.

Risk appetite
The Board determines the Group’s risk appetite. Where a conflict
exists between risk management and strategic ambitions, the
Board seeks to achieve a balance which facilitates the long-term
success of the Group.

Principal and emerging risks and changes in
principal risks
The Board conducts a robust assessment of the principal risks facing
the Group and emerging risks, including those that could threaten the
operation of its business, future performance or solvency. The Board
formally reviews the Group’s principal risks at least twice a year.

A detailed operational risk review was undertaken by the Head of
Finance during November 2022. This review included discussions
with members of the Operations Board covering current, principal
and emerging risks affecting their respective areas of responsibility
and broader corporate risks. Following this review, the Group’s
primary risk register and its principal risks and mitigation plans were
updated, and considered by the Audit Committee and the Board in
January 2023, March 2023 and July 2023.

A climate risk workshop, facilitated by INESG, the Group’s specialist
third-party ESG consultancy, was held in August 2022. Members of
the Operations Board participated in the workshop which covered:
an introduction to climate change and climate scenarios; risk
classification; transition and physical risks identified; and how to
approach climate change as a material risk to the business. Using
the outputs from the workshop the Group’s first climate risk register
was developed and subsequently reviewed and approved by
the Board in January 2023. Further information in relation to the
Group’s climate risks is included on pages 37 to 46.

The principal risks and uncertainties facing the Group as at the
date of this Annual Report are set out in order of priority on pages
50 to 53, together with details of how these are currently mitigated.
The adjacent heatmap illustrates the Board’s assessment of the
likelihood of the principal risks occurring and the resulting impact,
after taking into account mitigating actions.

During the year the main changes to the principal risks were as follows:

• Removal of COVID-19 risk: Given the significantly reduced impact
of risks associated with COVID-19 this risk is no longer considered
to be a principal risk.

• Renaming of ‘Market’ risk: The ‘Market’ risk has been renamed
‘Design and execution of strategy’, and has been refined to
reflect the importance of the Group’s strategy and the direct
correlation between successful strategic execution and market
performance. This risk has also been assessed as having a high
priority and ranked accordingly.

During the year a geopolitical emerging risk was identified.
Approximately two thirds of the Group’s stock is sourced from
China and if drastic economic sanctions were to be imposed on
China this could have a material impact on the Group’s ability to
obtain stock. Moving the product mix away from goods sourced
from China could mitigate this risk; however, a significant lead time
would be required to do this. Currently the probability of this risk
crystallising is considered to be very low. Accordingly this emerging
risk will be maintained on our secondary risk register and we will
continue to monitor it.

The Group may be exposed to other risks and uncertainties
not presently known to management, or currently deemed
less material, that may subsequently have an adverse effect
on the business. Further, the exposure to each risk will evolve
as mitigating actions are taken or as new risks emerge or the
nature of risks change.

Risk heatmap

h
g
H

t
c
a
p
m

w
o
L

Low

Likelihood

High

Change from prior year

Increased

Decreased

Unchanged

Principal risks
1

Design and execution of
strategy (previously ‘Market’ risk)
Economy
Supply chain
IT systems and cyber security

2
3
4
5 Brand and reputation
6

Seasonality of sales

7
8

People
Environmental (including
climate change)

9 Regulation/compliance
10
11 Business continuity

Liquidity

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic report
Risk management and principal risks and uncertainties continued

Principal and emerging risks and changes in principal risks continued

Risk, profile change and link to strategy

Mitigation

Increased strategic focus on developing the brand and
increasing customer engagement to further differentiate
the Group from competitors.

• Emerging trends monitored by a recently strengthened
trading team that has a track record of responding to
changing consumer tastes.

• Monitor competitors’ propositions and discuss key developments
at weekly trading meetings and at Board level on a regular basis.

• Monitor and review customer feedback.

• Use sales data and online feedback channels to inform

purchasing and marketing decisions.

• Flexible lease terms allow the Group to adapt its store

portfolio (which continues to be highly relevant to customers)
to suit evolving shopping habits.

• Ongoing investment in the Group’s online capability ensures
complementary digital and store propositions, as customers
increasingly engage with both channels.

• Significant investments have been made to date and further

investment is planned in FY24 to drive operational improvements.

• Take account of expected impact in the strategic planning

process, budgets and forecasts.

• Control costs while making carefully considered investments

in certain areas to support growth.

•

Increase direct sourcing to improve gross margin. While this
initiative was delayed by COVID-19 in China, momentum
should increase in FY24.

• Operate stores on flexible short-term leases to benefit from

reductions in rents through the rolling renegotiation of leases.
Store estate can be adapted relatively quickly in the event
of material local changes in demand.

1. Design and execution of strategy (previously ‘Market’ risk)
The Group generates its revenue from the sale of books, toys
and games, arts and crafts and stationery.

•

Although it has a track record of understanding customers’ needs
for these products, the market is competitive. Customers’ tastes
and shopping habits can change quickly. Failure to effectively
predict or respond to changes could affect the Group’s sales
and financial performance.

Failure to effectively execute the ‘better, not just bigger’ strategy (e.g. due
to insufficient capacity or inadequate capability) would have an adverse
impact on the Group’s ability to grow, particularly if the envisaged sales
growth drivers fail to increase sales. Furthermore achieving increased
sales growth could be more challenging if consumer confidence is
impacted by deteriorating economic conditions.

Change from prior year
Increased risk level. The Board believes that the previous risk rating
needs to increase to reflect the significant impact this risk could have
on the profitability of the Group and therefore increased the risk rating.

Link to strategy

2. Economy
A deterioration in macroeconomic conditions or a reduction in
consumer confidence could impact customer spending and
reduce the Group’s revenue and profitability.

Change from prior year
Increased risk level. Inflation remains high and the cost-of-living
challenge looks likely to persist for some time. Although we have not
yet observed any quantifiable effect on our business, this could impact
consumer spending and, as a result, the Group’s sales. The current
economic environment, including the following issues, is also causing
costs to be higher which could impact profitability:

• Raw materials and energy costs. Our energy rates are hedged in the
short term, but at higher rates than those which prevailed historically.

• Continued increases in National Living and Minimum Wages affects the
business because most of the Group’s colleagues are paid the National
Minimum or Living Wage.

• Geopolitical issues, including the Russian invasion of Ukraine, which

has had direct inflationary effects.

• FX rates. The pound is now stronger compared with the dollar than

during certain points in FY23. There is reduced risk in FY24 due to the
Group’s hedging policies, although we remain indirectly exposed to
FX rates, through indirect sourcing which represents approximately
60% of purchases for resale.

• Freight rates, which have significantly affected our costs in recent

years, are now at pre-COVID levels, and are not expected
to represent a threat for the foreseeable future.

Link to strategy

Develop our brand and increase
customer engagement

Enhance our
online proposition

Optimise our
store estate

Drive operational
improvements

TheWorks.co.uk plc Annual Report and Accounts 2023

Risk, profile change and link to strategy

Mitigation

3. Supply chain
The Group uses third parties, including many in Asia, for the supply
of products. Risks include the potential for supplier failures, risks
associated with manufacturing and importing goods from overseas,
potential disruption at various stages of the supply chain and suppliers
failing to act or operate ethically.

Failure to execute the restructuring of the supply chain team
successfully to implement necessary changes to the stock process
could prevent the right stock getting to the right stores at the right time
and materially impact sales growth.

Supply chain disruption due to COVID-19 restrictions potentially being
maintained in certain parts of the world, particularly China, could
cause disruption to stock availability and cost inflation. Any significant
increase in geopolitical tensions between the West and China could
affect the ability to purchase stock.

Due to the Group’s low level of exposure to sales outside the UK risks
connected with Brexit are low.

Change from prior year
Unchanged level of risk.

Link to strategy

• Strengthened buying and supply chain teams and further

investment is ongoing in FY24.

• Ongoing review of supplier base and diversification and

change implemented as appropriate to provide flexibility
and reduce reliance on individual suppliers.

•

Independent monitoring of suppliers undertaken by
third-party auditors with local country knowledge and
an understanding of social and ethical requirements.

In-house product quality assurance team undertakes product
testing as part of a product surveillance test programme.

Implement policies that reinforce the Group’s values and
its commitment to conduct business fairly, ethically and
with respect to human rights which suppliers are required
to adhere to.

• Proactive management of supply chain to ensure stock levels

are appropriate.

• Continue to review freight costs (including measures
to mitigate them) and monitor alternative sourcing
arrangements where practicable.

4. IT systems and cyber security
The Group relies on key IT systems. Failure to develop and maintain
these, or any prolonged system performance problems or lack of
service, could affect the Group’s ability to trade and/or could lead
to significant fines and reputational damage.

Reliable systems and data integrity are key to the execution of the
strategy. Ensuring systems and processes are fit for purpose will enable
the delivery of improvements to the proposition.

Change from prior year
Reduced risk. The Group experienced a cyber security incident at the
end of March 2022. Actions taken in response to the incident have
significantly reduced the risk of the business suffering major loss or
disruption in the event of subsequent attacks.

Link to strategy

• Modern two-factor authentication for access, combined

with up-to-date end point detection capabilities (to monitor
devices and assess unexpected/risky activity) and network
segmentation, lowers the probability of malicious entry
and speed of movement of malware across the business.

• 24/7/365 Security Operations Centre, established in FY23,
monitors and responds to any unusual activities in systems
or networks.

• Enhanced working from home capabilities established
in response to the pandemic have reduced the level of
dependence on a single-site head office.

• Regular IT investment strategy review undertaken by the
Operations Board, including security and infrastructure
investment programmes.

• Further strengthened in-house IT capabilities during FY23.

5. Brand and reputation
The Group’s brand is vital to its success. Failure to protect the brand,
in particular product quality and safety, could result in the Group’s
reputation, sales and future prospects being adversely affected.

• Communicate to colleagues our clarified purpose and values.

• Provide intellectual property guidance and education to

design and sourcing teams.

Diversity and inclusion issues have become more prominent in customer
preferences; failure to stock a diverse range of products and ensure
inclusivity could create reputational damage.

• Monitor customer product reviews and take appropriate

action to remove products from sale and take other actions
as appropriate where quality issues are identified.

Change from prior year
Unchanged level of risk. Developing our brand and increasing customer
engagement is a strategic aim. In autumn 2022 we launched an
updated brand to ensure that the visual representation and tone
of voice of The Works aligns with its purpose and reflects the more
modern, fun and engaging business we are today.

Link to strategy

•

In-house product quality assurance team works with suppliers
to ensure product quality, safety and ethical production.

• Conduct third-party technical and ethical audits.

• Monitor the Group’s ESG responsibilities and implement

processes to ensure the Group operates in a responsible
way (see pages 29 to 35).

• Recruiting a D&I manger to lead our D&I strategy including

reviewing our product range to ensure inclusivity.

• Operate brand tracking that provides feedback from

customers and highlights potential brand damaging issues.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportRisk management and principal risks and uncertainties continued

Principal and emerging risks and changes in principal risks continued

Risk, profile change and link to strategy

Mitigation

6. Seasonality of sales
The Group generally makes substantially all of its profit in the second
half of the financial year during the peak Christmas trading period.
Interruptions to supply, adverse weather or a significant downturn in
consumer confidence or a failure to successfully execute strategy in this
period could have a significant impact on the short-term profitability of
the Group.

Change from prior year
Unchanged level of risk.

Link to strategy

• Continue to develop the year-round appeal of

the proposition.

• Hold weekly trading meetings to ensure that immediate
action is taken to maximise sales based on current and
expected trading conditions.

• Plan rigorously for product proposition, supply chain and

retail operations to ensure the success of the peak Christmas
trading period.

7. People
The Group’s success is strongly influenced by the quality of the Board,
senior management team and staff generally. A lack of effective
succession planning and development of key colleagues could harm
future prospects.

Change from prior year
Unchanged level of risk.

Link to strategy

8. Environmental (including climate change)
There is an increased focus on sustainable business from consumers
and regulators. In our business this applies to products and packaging
in particular. Failure to respond to these demands could affect the
Group’s reputation, sales and financial performance.

Supply chain disruptions due to more extreme weather events created
as a result of global warming could damage operations, in particular
the flow of stock which could adversely impact sales.

There are increased reporting and disclosure requirements relating
to climate change and environmental impact including new taxes,
regulation and compliance risks as noted in risk 9 below.

Change from prior year
Increased level of risk. Reporting and disclosure requirements are
continuing to increase and achievement of the Group’s longer-term
environmental ambitions are dependent on effective implementation
of the Group’s sustainability strategy and suppliers taking steps to
reduce their environmental footprint (see pages 30 and 31).

Link to strategy

• Discuss and review succession plans at Nomination

Committee meetings.

• Establish development programmes to support

future leaders.

• Operate the ‘Can Do Academy’ to facilitate training

and development.

• Launched a new employee communications and
engagement platform MyWorks (see page 32).

• Well-managed search and recruitment processes, together
with appealing proposition and welcoming culture, enables
recruitment of high-calibre executives.

•

Implement a Remuneration Policy designed to ensure
management incentives support the Group’s long-term
success for the benefit of all stakeholders, including a
Long-Term Incentive Plan for Executive Directors and
restricted share awards for Operations Board members.
For further details see pages 76 to 77.

• An ESG steering group meets quarterly and reports to the

Board and the Operations Board on a regular basis.

•

Implementing initiatives to reduce our impact on the
environment (see pages 30 and 31).

• Retain specialist third-party ESG consultancy, Inspired

Energy, to assist in the further development of the
Group’s environmental strategy and ensure compliance
with TCFD requirements.

• Appointed a Sustainability Manager in January 2023
to lead the development and implementation of our
environmental strategy.

• Working with third-party logistics providers to explore and
invest in energy efficient solutions within the supply chain.

• Developed a climate risk register (see pages 38 to 45).

Develop our brand and increase
customer engagement

Enhance our
online proposition

Optimise our
store estate

Drive operational
improvements

TheWorks.co.uk plc Annual Report and Accounts 2023

Risk, profile change and link to strategy

Mitigation

9. Regulation/compliance
The Group is exposed to an increasing number of legal and regulatory
compliance requirements including the Bribery Act, the Modern Slavery
Act, the General Data Protection Regulation (GDPR) and the Listing
Rules. Failure to comply with these laws and regulations could lead to
financial claims, penalties, awards of damages, fines or reputational
damage which could significantly impact the financial performance
of the business.

There are extensive and increasingly onerous laws and regulations
(including reporting and disclosure requirements) surrounding
climate change and environmental reporting. Failure to comply with
these could result in financial penalties, legal consequences and/or
reputational damage.

Change from prior year
Unchanged level of risk.

Link to strategy

• Oversight of regulatory compliance by Group CFO and
Company Secretary with support from external advisers.

•

Implement policies and procedures in relation to both
mandatory requirements and measures the Group has
adopted voluntarily (e.g. anti-bribery and corruption,
adherence to National Living Wage requirements).

• Operate a Whistleblowing Policy and procedure which

enable colleagues to confidentially report any concerns
or inappropriate behaviour.

• Operate a GDPR Policy which is overseen by a suitably

experienced data supervisor and monitored by members
of a GDPR governance monitoring group who meet regularly
and report key issues to the senior management team.

• Retain experienced advisers where necessary to cover gaps

in expertise in the in-house team.

10. Liquidity
Insufficient liquidity available and/or insufficient headroom in banking
facilities. Potential for breach of banking covenants if financial
performance is significantly worse than forecast.

Availability of credit insurance to suppliers may be reduced or removed
resulting in an increased cash requirement.

Change from prior year
Unchanged level of risk.

Link to strategy

• Financial forecasts and covenant headroom monitored

and reported to the Board and the bank monthly.

• Strategy focuses on driving like-for-like sales and improving
efficiency, rather than previous store rollout plan, which is a
less capital intensive strategy.

• The Group’s bank facility at year end FY23 comprised a

committed RCF of £30m with an expiry date of 30 November
2025. Since the Period end, the Group has implemented
a reduction in the size of the facility, which was undrawn
throughout most of FY23, to £20.0m, and simultaneously
extended its term such that it now expires on 30
November 2026.

• Careful management of banking relationship increases the

likelihood of a supportive response in the event that it should
be needed.

11. Business continuity
Significant disruption to the operation, in particular internal IT systems,
Support Centre or Distribution Centre, could severely impact the
Group’s ability to supply stores or fulfil online sales resulting in financial
or reputational damage.

•

IT recovery plans fully tested in the response to the March
2022 cyber security incident.

Implemented new cloud back-ups which improve the
flexibility of any disaster recovery plan response.

Change from prior year
Unchanged level of risk.

Link to strategy

• Enhanced business continuity plan in place including

system recovery.

• Subscribe to a cloud-based technology recovery centre

to improve speed and execution of a recovery.

• Undertake disaster recovery dry run exercises. Emergency

generator installed at the Group’s Support Centre to insulate
the business from the impact of power cuts.

• Maintain appropriate business interruption insurance cover.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportFinancial position and bank facilities
At the end of FY23 the Group held net cash at bank of £10.2m
(FY22: of £16.3m).

After the Period end, the Group extended the term of its bank
facility by one year and it now expires on 30 November 2026,
thereby covering the entirety of the viability period. At the same
time, following a review of the historic utilisation of the facility, the
Group’s anticipated future cash requirements, and the costs of
maintaining the facility, the Group requested that HSBC reduce the
size of the facility from £30m to £20m.

The facility includes two financial covenants which are tested quarterly:

The ‘Leverage Ratio’ or level of net debt to LTM (last 12 months’)
EBITDA must not exceed 2.5 times during the life of the facility.

The ‘Fixed Charge Cover’ or ratio of LTM EBITDA prior to
deducting rent and interest, to LTM rent and interest. This
covenant increases in steps to reflect the expectation of
progressively improving financial performance during the life
of the facility, as follows: until October 2023, the ratio must
be at least 1.20 times; for the following 12 months the ratio
must be at least 1.25 times, and thereafter at least 1.30 times.

The Group expects to be able to operate and have sufficient
headroom within these covenants.

Potential impact of risks on financial scenarios
It is considered unlikely that all the risks described in the Strategic
report would manifest themselves to adversely affect the business
at the same time. The Base Case scenario/the Group’s three-
year financial plan, implicitly already takes into account the risks
described, and assumes that they manifest themselves in a way or
to an extent that might be considered ‘neutral’.

The Downside Case scenario assumes that there are more severely
negative effects than in the Base Case. In particular, the Downside
Case assumptions are that macroeconomic conditions are
significantly worse, resulting in reduced consumer spending and
lower sales. It should be noted that the Base Case already takes
into account the current subdued consumer market conditions.
The Downside Case assumes that conditions become worse
still from the second half of the FY24 financial year.

Viability statement

In accordance with Provision 31 of the UK Corporate Governance Code
(the Code), the Directors have assessed the prospects and viability
of the Group taking into account the Group’s current position and
the potential impact of the principal risks documented in this report.

The Directors have used a period of three years to make this
assessment, a period which they consider to be appropriate
for the following reasons:

• Retail market trends evolve rapidly, including the way customers

shop and the impact of new technologies. The potential
uncertainty as to how the market may have evolved more than
three years into the future is considered too great to enable
plans extending beyond this period to be meaningful.

• Uncertainty exists in relation to the wider economy and its

potential impact on consumer demand and shopping habits.

• The average remaining term of the Group’s property portfolio

leases is approximately three years.

The text which follows closely reflects the text in Note (1) (b) (i) of the
financial statements, relating to the preparation of the accounts
on a going concern basis. The accounts have been prepared on
a going concern basis, but Note (1) (b) (i) refers to the existence
of a material uncertainty regarding the availability of borrowing
facilities in the event that they may be needed under a sensitised
“severe but plausible” downside case.

The Group has prepared cash flow forecasts for FY24 to FY26,
referred to as its ‘Base Case’ scenario. In addition, a ‘severe but
plausible’ ‘Downside Case’ sensitivity has been prepared to
support the Board’s conclusion regarding viability, by stress testing
the Base Case to indicate the financial headroom resulting from
applying more pessimistic assumptions.

In assessing the Group’s viability the Directors have considered:

• The external environment.

• The Group’s financial position including the quantum and
expectations regarding the availability of bank facilities.

• The potential impact on financial performance of the risks

described in the Strategic report.

• The output of the Base Case scenario, which represents the Group’s
view of the most likely financial performance over the viability period.

• Measures to maintain or increase liquidity in the event of a

significant downturn in trading.

• The resilience of the Group to these risks having a more severe

impact, evaluated via the Downside Case which shows the impact
on the Group’s cash flows, bank facility headroom and covenants.

These factors are described below.

External environment
The risks which are considered the most significant relate to the
economy and the market, specifically their effect on the strength of
trading conditions, and the Group’s ability to successfully execute
its strategy. The risk of weaker consumer demand is considered to
be the greater of these risks currently, due to the continued high
level of inflation and its potential effect on economic growth and
consumer spending.

An emerging risk has been noted in relation to the possible effects
of climate change, but this is not expected to have a material
financial impact on the Group during the viability period.

TheWorks.co.uk plc Annual Report and Accounts 2023

Base Case scenario
The Base Case scenario assumptions reflect the following factors:

• Store sales (which represent over 85% of total sales) during the
first part of FY24 are above the Base Case requirement but
online sales are below it. The Group is implementing plans to
improve its online profitability in the medium term; in the short
term, costs relating to the online business are being tightly
controlled to ensure that they reflect the reduced sales level.

• The Base Case gross margin percentage reflects the expected

full year effect in FY24 of targeted price increases applied
since the beginning of 2023 and also significantly lower ocean
container freight costs. These favourable factors are partially
offset by a less favourable hedged FX rate than in FY23.

• Anticipated further inflationary effects, in particular the increase
in the National Living Wage. In respect of other costs, notably
property occupancy costs, it is not expected that there will be
further significant inflationary effects during FY24 and FY25,
following the significant increases (for example in electricity
costs) already experienced during FY23.

• Capital expenditure levels are in line with the Group’s strategic

plan. A significant proportion of the Group’s capital expenditure
is discretionary, particularly over a short-term time period. As a
result, if required, it can therefore be reduced substantially, for
example, in the event the Group needs to preserve cash.

• The anticipated costs of the Group’s net zero climate change
commitments have been incorporated within the Base Case
model within the next three years. As set out in the climate
related disclosures on pages 36 to 46, the impact on the Group’s
financial performance and position is not expected to be
material in the short term.

• The plan makes provision for dividend payments.

Under the Base Case scenario, the Group expects to make routine
operational use of its bank facility each year as stock levels are
increased in September-October, prior to peak sales occurring.
This is consistent with the normal pattern experienced prior to
COVID-19.

The output of the Base Case model scenario indicates that the
Group has sufficient financial resources to remain viable over the
three-year period.

Severe but plausible Downside Case scenario
The Downside Case makes the following assumptions to reflect
more adverse macroeconomic conditions compared to the
Base Case:

• Store LFL sales are assumed to be 5% lower than in the Base

Case from October 2023 until January 2025.

•

In this scenario online sales are assumed to be lower than in the
Base Case during FY24 despite the Group’s attempts to increase
them, but show recovery in FY25.

• The product gross margin assumptions are the same as in

the Base Case other than in January 2024 when it is lower, to
allow for the clearance of stock which is assumed would have
accumulated due to the inability to reduce stock purchases
immediately in response to the lower sales level.

• Expected FX requirements are hedged until mid-FY25, and

freight rates are hedged until the end of 2023. Beyond that time,
it is not anticipated that there will be any interruption to global
freight systems as was experienced as a result of the COVID-19
pandemic, which were a consequence of unique circumstances.
Other gross margin inputs are relatively controllable, including
via the setting of selling prices to reflect any systematic changes
in the cost price of goods bought for resale.

• Volume related costs in the Downside Case are lowered where
they logically alter in a direct relationship with sales levels,
for example, forecast online fulfilment and marketing costs.
The model also reflects certain steps which could be taken to
mitigate the effect of lower sales, depending on management’s
assessment of the situation at the time. These include
adjustments to stock purchases, reducing capital expenditure,
reductions in labour usage, a reduction in discounts allowed
as part of the Group’s loyalty scheme and the suspension of
dividend payments.

• The combined financial effect of the modified assumptions in

this scenario compared with the Base Case, during the viability
assessment period FY24 to FY26, including implementing some
of the mitigating activities available, would result in:

• A reduction in store net sales of approximately £63m.

• A reduction in online net sales of approximately £1m.

• A reduction to EBITDA of approximately £15m.

Measures to maintain or increase liquidity in
circumstances such as are described below
If necessary, mitigating actions can and would be taken in
response to a significant downturn in trading, such as is described
below, which would increase liquidity.

Under this scenario the Group will draw on its bank facility prior to
Christmas 2023 but, as a result of the mitigating actions that would
be taken in H2 FY24 in response to a downturn in sales, particularly
in reducing the value of stock bought for resale, it would not make
subsequent use of the bank facility.

These include, for example, delaying and reducing stock
purchases, stock liquidation, reductions in capital expenditure, the
review of payment terms and the review of dividend levels. Some of
these potential mitigations have been built into the Downside Case
model, and some are additional measures that would be available
in the event of that scenario, or worse, actually occurring.

The bank facility financial covenants are complied with during
the pre-Christmas 2023 period when the facility is being used, but
the forecast indicates that the Fixed Charge covenant will not be
complied with throughout FY25, although at this time the facility is
not expected to be in use under this scenario.

On the basis of this Downside Case scenario with the ‘severe but
plausible’ set of assumptions as described, the business would continue
to have adequate resources to continue in operation on a viable basis.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportConclusion regarding viability
Having considered the possibilities modelled under the scenarios
described above, including the Board’s assessment of the
likelihood that each scenario transpires, and the likelihood that
the Group would be able to take actions to successfully mitigate
the effects should such events occur, the Board is satisfied that
the Group can maintain its financial commitments. The Directors
therefore confirm they have a reasonable expectation that the
Group will be able to continue in operation and meet its liabilities
as they fall due over the three-year viability assessment period.

Viability statement continued

Severe but plausible Downside Case scenario continued
However, the cash headroom at certain quarterly covenant
testing points in FY25 and FY26 is limited, and there are reasonably
plausible scenarios in which this headroom could be eroded and
create a borrowing requirement. For example, if sales decreased
by a further 1% during the going concern period (which covers the
earlier part of the viability assessment period) compared with the
Downside Case, a small borrowing requirement could arise.

The Group has a strong relationship with its bank, HSBC, and has
a recent track record of working collaboratively with the bank
to resolve potential covenant issues, for example, a waiver was
agreed by HSBC in 2021 as noted in the Group’s FY21 Annual Report.
Despite this strong relationship with the bank and the recent evidence
of successfully managing comparable situations, if a borrowing
requirement arose when the financial covenants are not complied
with, there is a risk that the Group would not be able to utilise its
borrowing facilities if required.

The Directors believe that, should such a situation arise in practice,
it would have time before a potential breach to mitigate further,
and potentially to make arrangements with the bank, as has occurred
previously, to adjust the covenant levels to prevent a breach.
Furthermore, the Group has successfully managed through
challenging conditions during the recent COVID-19 pandemic,
and the Directors believe it unlikely that comparably challenging
conditions will be experienced during the forecast period, despite
the concerns regarding the current macroeconomic conditions.
Nevertheless, despite the Directors’ confidence in relation to these
matters, there is no certainty as to whether the mitigating actions
would provide the level of liquidity required in the time available to
implement them, nor whether the bank would make adjustments to
the financial covenants.

TheWorks.co.uk plc Annual Report and Accounts 2023

Non-financial and sustainability information statement

In accordance with Sections 414CA and 414CB of the
Companies Act 2006 the information below is provided to
help our stakeholders understand our position in relation
to key non-financial and sustainability matters. The further
information highlighted below is incorporated by cross-reference.

Key matter

Policies and standards that govern
our approach

Further information

Environment and
climate-related
financial disclosures

•

Sustainability strategy.

Employees

• Health & Safety Policy.

• ESG review: pages 29 to 35.

• TCFD statement: pages 36 to 46.

• Our stakeholders: page 26.

• ESG review: pages 32 to 34.

• Dignity & Respect Policy.

• Our stakeholders: pages 26 and 27.

• Equality, Diversity & Inclusion Policy.

• Remuneration report: pages 73 to 85.

• Whistleblowing Policy.

• Colleague handbook.

• Social Media Policy.

• Disciplinary & Grievance Policies.

• Data protection.

• Corporate governance report: pages 62 to 65.

Respect for
human rights

• Modern Slavery Statement.

• ESG review: page 35.

• Ethical Trading Code of Conduct.

• Corporate governance report: pages 62 to 65.

• Whistleblowing Policy.

Social

• Sustainability strategy.

• Data protection.

• Bribery Policy.

• Whistleblowing Policy.

Anti-corruption and
anti-bribery

Additional disclosures

• ESG review: pages 30 to 34.

• Our stakeholders: pages 26 and 27.

• ESG review: page 35.

• Corporate governance report: page 63.

• Business model: pages 14 and 15.

• Key performance indicators: page 18.

• Principal risks: pages 49 to 53.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportChair’s governance introduction

The Board is fully committed to
implementing the highest standards
of corporate governance.

Dear shareholder
I am delighted to present our Corporate governance report for
the year ended 30 April 2023, which sets out how our governance
framework has operated and developed during the course
of the year.

The Board remains fully committed to implementing the highest
standards of corporate governance, and I am pleased to report
that it has applied the principles of the 2018 UK Corporate
Governance Code in so far as it applies to smaller listed companies
(below the FTSE 350).

The Company’s performance in FY23 has continued to be impacted
by the uncertain economic environment, and in particular concerns
around the cost of living, as well as ongoing (but reducing) effects
of supply chain disruption due to the Covid-19 pandemic. The
lingering effects of the cyber security incident towards the end
of FY22 also affected the business’ operations.

During the year the Company’s leadership team and structure
have continued to evolve and we have continued to make
operational improvements to ensure that the business is run in the
most efficient and cost-effective way, including through proposed
changes to the store labour model which were reviewed by the
Board during the year.

As a Board, we have also devoted time to monitoring initiatives
to support our people and culture. This has included updates on
our employee engagement survey, and progress against actions
arising from it, as well as receiving a detailed talent review covering
various workstreams to support the development of our colleagues.

Our governance framework has also been further strengthened.
In particular, in line with our commitment to reduce our impact on
the environment and implement the TCFD recommendations, we
have increased our focus on environmental and climate-related
matters. In setting our emission reduction targets to achieve our
net-zero ambitions (which are described in more detail on page
30) the Board has spent a significant amount of time discussing,
challenging management on, and ultimately approving the
approach adopted.

TheWorks.co.uk plc Annual Report and Accounts 2023

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Drive operational
improvements

Site visit to iForce
Managing a cost-effective and efficient fulfilment process
is vital to the delivery of the Group’s ability to maintain a
competitive value offering online. Given the importance of
this process, in early October 2022 the Board held its meeting
at the iForce distribution centre in Rugby (the site from which
the majority of the Group’s online channel sales are fulfilled).

The visit included a tour of the iForce operation, and the
opportunity to see in action the Company’s investment in
an automated packing machine and robots to improve the
efficiency of the stock picking operation. Board members
were also able to engage directly with the Company’s key
contacts at iForce, enabling them to assess the strength of
the supplier relationship and understand the challenges and
improvement opportunities to support the efficient delivery
of online purchases to customers.

Read more about our strategy on pages 16 and 17

Image TBC

Our programme of Operations Board member presented ‘deep
dives’ at our scheduled Board meetings continues to work well
in both ensuring that the Board is kept well informed of progress
against key strategic and operational projects, as well as providing
opportunities to engage directly with senior management and their
direct reports. During FY23, ‘deep-dives’ have focused in particular
on IT projects and security (with the Board keen to oversee
progress to enhance our IT security infrastructure following the
cyber attack last year), and ESG and net zero (as noted above). We
have also devoted significant time to projects aimed at improving
stock management processes, including the review of the Group’s
operational structure, enhancement of its merchandising functions,
and proposals to enhance underlying systems.

I led an internal Board evaluation process during the year which
is summarised on page 64. I am delighted to report that the
unanimous conclusion was that the Board dynamics are working
well, and that the Board, its Committees and individual Directors
are operating effectively. We have identified some actions to
take forward in FY24 to ensure that we continue to support
management and the business in the best way possible. These
include allocating additional time for store visits and strategy
review, improving the visibility and understanding of the Board
across the business, and continuing to review the information
included in monthly reporting to the Board.

I have also enjoyed increased levels of direct engagement with
our shareholders during the year including participating in a
number of face-to-face meetings. These interactions are extremely
beneficial; they provide a deeper understanding of what really
matters to our shareholders, and this invaluable information better
equips the Board when considering the shareholder context in its
discussions and debates.

I look forward to meeting shareholders at our forthcoming Annual
General Meeting (AGM), which will be held on 4 October 2023.

Carolyn Bradley
Chair
30 August 2023

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic report

Board of Directors

An experienced team

Carolyn Bradley
Chair and Non-Executive Director

Harry Morley
Senior Independent Non-Executive Director

Catherine Glickman
Independent Non-Executive Director

Date of appointment
September 2021

Committee membership
Chair of the Nomination Committee and
member of the Remuneration Committee.

Relevant skills and experience
• Extensive retail, marketing and

commercial experience in executive and
non-executive roles including 25 years at
Tesco plc where her roles included Group
Brand Director, UK Marketing Director and
Chief Operating Officer for Tesco.com.

• Significant consumer experience

including leading Tesco’s Clubcard
loyalty scheme, the ‘Every Little Helps’
service campaign and the grocery home
delivery business.

Current external appointments
Senior Independent Director and Chair of
the Remuneration Committee of SSP Group
plc and Non-Executive Director of Majid
Al Futtain Retail LLC and The Mentoring
Foundation.

Date of appointment
July 2018

Committee membership
Chair of the Audit Committee
and member of the Nomination
and Remuneration Committees.

Relevant skills and experience
• Extensive retail and consumer

experience, including as co-founder
of Tragus Holdings Ltd, owner of Café
Rouge and Bella Italia restaurant
chains and a Non-Executive Director
of Bibendum Wine Holdings Ltd.

• Significant financial and commercial
expertise as Chief Financial Officer of
Tragus Holdings Ltd and CEO of Armajaro
Asset Management LLP. He also held
senior management roles at P&O.

• Chartered accountant.

Current external appointments
Non-Executive Director and Chair of the
Audit Committee at JD Wetherspoon plc,
a Trustee of the Ascot Authority and from 1
September 2023, a Non-Executive Director
of Schroder UK Mid Cap Fund plc. Director
of Cadogan Group Limited and two related
subsidiary companies.

Date of appointment
July 2018

Committee membership
Chair of the Remuneration
Committee and member of the
Audit and Nomination Committees.

Relevant skills and experience
• Significant retail experience as Group HR
Director of Genus plc, having previously
held the same role at Tesco plc where she
led retail management development and
customer service training during a period
of significant expansion in the UK and
overseas. Prior to this she held positions
at Somerfield and Boots.

• Extensive people and reward expertise

having developed reward structures that
align leadership motivation with strategy
at both Genus plc and Tesco plc.

Current external appointments
Non-Executive Director and Chair of the
Remuneration Committee at Renishaw plc.

TheWorks.co.uk plc Annual Report and Accounts 2023

Committee membership
Audit Committee

Nomination Committee

Remuneration Committee

Chair of Committee

Experience

Retail

Consumer

Finance

PLC

100%

60%

Tenure

1–3 years

3–6 years

4040+
40%6060+

Gender

Female

Male

60%

40%

60%

Gavin Peck
Chief Executive Officer

Date of appointment
January 2020

Steve Alldridge
Chief Financial Officer

Date of appointment
May 2021

Committee membership
None

Relevant skills and experience
• Significant financial, retail and

commercial expertise, including as Chief
Financial Officer of The Works, and, prior
to that, as Commercial Director at Card
Factory plc where he was responsible for
the commercial function (buying, space
and merchandising) and leadership of
the commercial finance team. He played
a key role in the successful IPO of Card
Factory in 2014 and its subsequent
growth and evolution as a listed business.

• Chartered Accountant, having started
his career at PwC where he spent eight
years working in the audit and corporate
finance departments.

• Joined The Works as CFO in April 2018,
overseeing the IPO and serving as an
Executive Director of TheWorks.co.uk plc
since the IPO in July 2018.

Current external appointments
None

Relevant skills and experience
• Significant financial and retail expertise
having initially joined The Works on an
interim basis as CFO in June 2020. Prior
to that, over 20 years’ experience of
working in retail, most recently as CFO
of Bonmarché Holdings plc, where he
led a highly effective finance function,
and completed several significant
transactions, including a private equity
backed management buyout, and
two stock market listings. Previously he
worked at Peacocks, the discount retailer,
and chartered accountants EY.

• Chartered accountant.

Current external appointments
None

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic report+
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Corporate governance report

UK Corporate Governance Code – compliance statement
The Company has applied all of the principles of the UK Corporate Governance Code (the Code) as they apply to it as a ‘smaller company’
(below FTSE 350) and has complied with all relevant provisions of the Code during the year. Full details of the Code are available at
www.frc.org.uk. Details explaining how the Company has applied the principles of the Code can be found throughout this Annual Report.

Governance structure

Board

• Overall leadership of the Group.

• Sets strategy, purpose, values and culture.

• Oversees and embeds sound principles of corporate

• Approves major contracts.

governance.

• Ensures appropriate policies, procedures and controls are in

place to support effective risk management and performance
against agreed financial and operational metrics.

• Approves business plan and budget.

• Sets and oversees environment and climate strategy and targets.

Certain matters are reserved to the Board and formally documented in a Schedule of Matters Reserved to the Board.
The Board has delegated a number of its responsibilities to the Audit Committee, Nomination Committee and Remuneration
Committee. The Schedule of Matters Reserved to the Board and each Committee’s terms of reference are available at
https://corporate.theworks.co.uk/who-we-are/corporate-governance.

Audit Committee

Nomination Committee

Remuneration Committee

• Reviews annual and interim financial

statements.

•

Identifies and nominates appointments
to the Board.

• Reviews accounting policies and

• Reviews Non-Executive Directors’ time

financial reporting and regulatory
compliance.

• Reviews internal control system.

commitments.

• Oversees succession planning.

• Sets Remuneration Policy.

• Determines Executive Director and
senior management remuneration.

• Approves annual bonus plan and
Long-Term Incentive Plan targets.

• Reviews size and composition

• Reviews workforce remuneration policies

• Monitors processes for internal audit,
risk management and external audit.

of the Board.

• Promotes diversity.

• Monitors independence

of external auditor.

• Oversees relationship with

external auditor.

• Undertakes annual performance

evaluation of the Board, its Committees
and individual Directors.

and practices.

• Ensures that provisions regarding

disclosure of remuneration are fulfilled.

Read more on pages 73 to 85

• Reporting to the CEO, responsible for the day-to-day trading activities of the Group and implementing the strategy agreed

by the Board.

• Monitors performance against financial and operational targets and manages risk.

Information about the Operations Board is available at https://corporate.theworks.co.uk/who-we-are/our-leadership.

Operations Board

How the Board operates
The Board meets at least ten times per year, and its activity at
each meeting is planned in accordance with a formal schedule of
activity which is updated on a rolling basis and is approved by the
Board. This ensures that it receives appropriate information at the
appropriate time, and that all key operational, financial reporting
and governance matters are discussed during the year. In addition
to standing items, agendas incorporate sufficient flexibility to allow
specific areas of focus to be considered as and when required, and
for store or Distribution Centre visits to be incorporated into the
annual meeting activity. The schedule includes regular ‘deep-dive’
presentations from Operations Board members on specific areas
of their responsibility, which increase the Non-Executive Directors’
understanding of key operational initiatives and challenges and
provide the opportunity for senior executives to meet and discuss
their areas of responsibility with the Board.

upcoming announcements, share dealing requests and statutory
or regulatory filings, and regulatory or legislative developments
which may impact the Company. Separate papers are prepared to
support any specific matters requiring Board decision or approval,
or to provide updates on actions raised at previous meetings.

The Non-Executive Directors provide ongoing feedback to the
CEO and CFO on the content of papers to ensure they continue to
support effective debate and decision making by the Board.

All Directors have direct access to the Operations Board members
and other senior managers should they require additional
information on any of the items to be discussed at Board meetings.
The Board and the Audit Committee also receive regular and
specific reports to enable monitoring of the effectiveness of the
Company’s systems of internal control.

To support consistency of information, a Board pack is circulated
in advance of each meeting. It includes summary reports from the
CEO, the CFO and each of the other Operations Board members,
as well as underlying supporting data and metrics. The Company
Secretary also prepares a standard format report for each
meeting to ensure the Board is kept up to date on recent and

Minutes of all Board and Committee meetings are taken by the
Company Secretary and circulated to Directors for approval as soon
as practicable following the meetings. Specific actions arising from
meetings are recorded both in the minutes and on separate action
logs, thereby facilitating the effective communication of actions to
those responsible and allowing the Board to monitor progress.

TheWorks.co.uk plc Annual Report and Accounts 2023

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Composition, independence and attendance
There were no changes to the Board during FY23, and it therefore
continues to be comprised of five Directors (including the Chair).
The Board (on the recommendation of the Nomination Committee)
continues to determine that both of the Non-Executive Directors
(Catherine Glickman and Harry Morley) are independent, and
therefore, excluding the Chair, half of the Board comprises
independent Directors in compliance with provision 11 of the Code.

Individual Director attendance at scheduled Board and Committee
meetings (where they are a member) is set out in the table below:

The key matters the Board focused on during the year are detailed in
the table below. In addition the standing agenda for each scheduled
Board meeting includes discussion of the information contained
within the Board pack circulated in advance of each meeting (see
previous page).

Topic

Activity

Strategy

• Mid-year progress review against strategic objectives.

• Approved investment in stock transformation
(including review of operational structure and
enhancement of the merchandising function).

Board
meetings
held/
attended

Audit
Committee
meetings
held/
attended

Remuneration
Committee
meetings
held/
attended

Nomination
Committee
meetings
held/
attended

11/11

N/A

4/4

N/A

4/4

2/2

N/A

2/2

Director

Carolyn Bradley

Gavin Peck

Steve Alldridge

Catherine Glickman

Harry Morley

All Directors are expected to attend all meetings of the Board and
any Committees of which they are members, and to devote sufficient
time to the Company’s affairs to fulfil their duties as Directors. The
Non-Executive Directors’ letters of appointment anticipate that
each Non-Executive Director will need to commit a minimum of two
days per month to the Company but clarify that more time may be
required. In addition, the Non-Executive Directors are expected to
commit appropriate preparation time ahead of each meeting.

Where Directors are unable to attend a meeting, they are
encouraged to submit any comments on papers or matters to
be discussed to the Chair in advance to ensure that their views
are recorded and taken into account during the meeting.

Roles and division of responsibilities
There have been no changes to the roles and responsibilities of
the members of the Board during the year. As previously reported,
there is a clear division of responsibilities between the Chair and
the CEO (with the Chair’s primary role being to lead the Board and
ensure its independence and effectiveness, and the CEO’s primary
role being the day-to-day management and leadership of the
Company). Harry Morley is the Senior Independent Director, and his
duties in that role include acting as a sounding board for the Chair,
being available as an additional point of contact for shareholders,
and leading the evaluation of the Chair’s performance.

The Company Secretary supports the Board and each of the three
Board Committees, and attends all meetings. The Company Secretary
is available to all the Directors to advise on company law, governance
and best practice, whilst assisting the Board in ensuring that the
correct policies, processes and information are tabled for discussion,
noting or approval at the correct point in time throughout the year.

Board activities during the year
The Board met formally on 11 scheduled occasions during the year. It
also undertook three site visits. In October 2022 the Directors visited
the Group’s third-party fulfilment partner’s (iForce) distribution centre
in Rugby (see page 59) and in November 2022 its Watford Atria
store. In April 2023 the Board also undertook a tour of the Group’s
Distribution Centre (co-located within its head office at Boldmere
House) to see the new pick matrix that has been introduced to
improve the efficiency of the store replenishment process.

In addition to scheduled meetings, the Board also met on two
separate occasions by video conference at short notice to review
trading performance and to deal with final approval of the FY22
results announcement and Annual Report.

Financial and
reporting

• Reviewed and approved the FY24 budget.

• Reviewed and approved the half-year and

full-year financial statements.

• Approved the Group tax strategy.

People
and culture

• Received an update on Company culture and
reviewed a summary of key workforce policies
and procedures.

• Reviewed employee engagement survey.

• Received detailed talent review, and update on
workstreams to support colleague development
and internal succession.

• Reviewed proposed changes to store

labour model.

Shareholder
engagement

• Received regular updates from CEO and
CFO on their engagement with analysts
and institutional investors.

ESG

Risk
management

• Discussed feedback from the Chair’s meeting

with investors during the year.

• Approved appointment of Singer Capital

as corporate broker.

• Reviewed the Group’s carbon balance sheet
and approved methodology for assessing
Scope 3 emissions.

• Agreed net-zero strategy and targets.

• Reviewed climate-related risks and opportunities

facing the business.

• Received updates on development of the

diversity and inclusion strategy, and approved
the updated Board Diversity Policy.

• Reviewed the Group’s risk register and internal

controls structure.

• Received regular updates on internal financial

control improvements.

• Reviewed detailed progress reports on steps

being taken to enhance IT security infrastructure
following last year’s cyber security incident.

• Reviewed and proposed amendments to the

Group’s policy relating to bribery and corruption.

Governance • Reviewed the results of the Board evaluation,

and agreed an action plan for FY24.

• Reviewed various governance policies, including

the Disclosure Policy, Whistleblowing Policy,
Share Dealing Code and Board Diversity Policy.

• Reviewed and approved changes to the
Board’s Schedule of Matters Reserved
and its Committees’ terms of reference.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic report

Corporate governance report continued

Training and development
The efficient and effective operation of the Board depends on the
ability of individual Directors (and in particular the Non-Executive
Directors) to bring the benefit of their own business knowledge
and experience. Ensuring that all Directors have an in-depth
understanding of the Company’s own operations is an important
element in enabling the benefit of that experience, and we seek
to support this understanding through the detailed materials
circulated in advance of Board meetings, as well as collective and
individual Director site visits or days out in stores, which are usually
accompanied by different members of the Operations Board.

We also expect our Directors to keep themselves up to date in
relation to developments in regulation and corporate governance
best practice. As highlighted above the Company Secretary
ensures that the Board is briefed on forthcoming legal and
regulatory developments, and Directors are encouraged to attend
externally facilitated seminars, webinars and workshops to develop

Process

Discussions and output

their knowledge and experience in particular areas relevant to their
role with the business.

Evaluation and effectiveness
In accordance with provision 21 of the Code, the Board considered
whether it would be appropriate to conduct an externally facilitated
evaluation process during the year. Given the size of the Board, the
relative cost of an externally facilitated process, and a desire to allow
the Executive Directors to maintain focus on managing the business in
a challenging environment without unnecessary distraction, the Board
agreed that an internal evaluation process would again be the best
approach. However, to gather more qualitative feedback the Board
agreed that the process should move away from a questionnaire-
based approach to one led by the Chair and involving face-to-face
conversations with each member of the Board. Information about
the FY23 evaluation process, including its findings and key actions, is
summarised in the table below:

1. PLC Board
interviews

Carolyn Bradley met with each member of the Board. Discussions focused on:

• Board dynamics.

• Meeting content and process.

• Governance and activity programme.

• Committee performance.

•

Individual Director performance.

2. Operations

Gavin Peck led a group discussion with the Operations Board seeking feedback on:

Board
feedback
session

• Their interactions with Board Directors (through one-to-one meetings or their attendance at PLC Board meetings).

• Broader business/colleague perception and understanding of the Board’s role.

• The culture promoted by the Board.

3. Feedback

Summary feedback compiled by Carolyn Bradley was discussed at the April 2023 Board meeting. Key findings were:

• Universal agreement that Board dynamics are good.

• Meetings are effective, with appropriate content, papers and governance.

• Appropriate time is spent on strategy.

•

Interactions with Operations Board are positive and well received.

• Committees are well chaired and operate effectively.

• More time could be spent in stores and monitoring trends and developments in the retail sector.

• Challenge from the Non-Executive Directors is appropriate and well received.

4. Next steps

The Board agreed the following actions:

• Hold an extended two-day meeting each year to accommodate store visits alongside a strategy review.

• Consider the level of detail required in Operations Board reports to the Board, including whether they could

be more succinct.

• Consider ways to deepen broader business understanding/knowledge of the Board and its role.

Progress made in addressing some of the actions identified in the FY22 evaluation process is summarised below:

Key matter

Purpose, values
and strategy

Actions

Progress in FY23

• Develop an overall execution plan encompassing

all elements of the Company’s strategy.

• Regular updates provided by the CEO
on progress against strategic pillars.

• Create a dashboard to monitor and measure

progress against relevant KPIs.

Stakeholders

• Build on recent good stakeholder engagement

• Continued focus on colleague engagement.

with both colleagues and shareholders.

• Develop and support the Company’s ESG
programme, at Board and executive level,
recognising that the programme requires
more definition and data provision.

The Board and succession

•

Increase Nomination Committee focus
on succession planning at Board and
executive levels.

• Create more opportunities for the Board to

meet rising stars and future executive leaders.

TheWorks.co.uk plc Annual Report and Accounts 2023

• Chair has met with a number of shareholders

in the year.

• Significant focus on ESG (particularly climate

and net zero) in the year.

• Additional time devoted to succession planning

during the year.

• Operational ‘deep-dive’ presentations to the
Board expanded to include presentations by
Operations Board members’ direct reports.

Appointment and election
The Board considers all Directors to be effective and committed
to their roles and to have sufficient time to perform their duties.
In accordance with the Company’s Articles of Association
(articles), all members of the Board will be offering themselves
for reappointment at the Company’s AGM on 4 October 2023.

All of the Directors have service agreements or letters of
appointment and the details of their terms are set out below.

Executive Director service contracts

Name

Position

Date of
service
agreement

Notice
period by
Company
(months)

Notice
period by
Director
(months)

Gavin Peck

Steve Alldridge

CEO 19 July 2018

CFO 14 May 2021

The Non-Executive Directors (including the Chair) do not have
service contracts, but are instead appointed by letters of
appointment. Each of the Non-Executive Directors and the Chair
are appointed for a three-year term, subject to their annual
reappointment by shareholders at the AGM.

Non-Executive Director appointments

Name

Carolyn Bradley

Date of
appointment

Appointment letter
commencement
date

Unexpired
term as at 4
October 2023

30 September
2021

12 months

Catherine Glickman

19 July 2018

26 July 2022

22 months

Harry Morley

19 July 2018

26 July 2022

22 months

Conflicts of interest and external appointments
In accordance with the Board’s approved procedure relating to
the disclosure of any conflicts or potential conflicts of interest, all
Directors have confirmed that they did not have any conflicts of
interest with the Group during the year. None of the Directors took
on any new external appointments during FY23.

Whistleblowing
The Company has in place procedures by which colleagues may,
in confidence, raise concerns relating to possible improprieties
in matters of financial reporting, financial control or any other
matter. The Whistleblowing Policy applies to all colleagues across
the Group, and the Board is responsible for monitoring the policy
and ensuring that the arrangements are effective. A review of the
Whistleblowing Policy and arrangements was initiated in the latter
part of FY23, and while the Board continues to be of the view that
existing arrangements are appropriate it is anticipated that the
language of the policy will be updated in FY24 to bring it in line
with that of other workforce policies.

Stakeholder engagement
The CEO and Operations Board members are responsible for
the day-to-day management of stakeholder relationships and
ensuring that stakeholder issues are appropriately reported to the
Board. Further information on how we engage with stakeholders
is set out on pages 26 and 27. The Directors recognise their duty
under Section 172 of the Companies Act to consider the interests
of stakeholders, and the nature of our business means that the
interests of our colleagues, customers and suppliers are at the front
of mind in the Board’s decision-making process. The Company’s
Section 172 statement is included on page 28.

Engagement with the workforce
The Board recognises that the Company’s culture underpins its
long-term success. Accordingly, assessing and monitoring the
culture that is being fostered across the Group forms part of the
Board’s activity schedule. This assessment is conducted through
a combination of reviews of the output of our regular employee
engagement surveys, updates from the People Director through
our programme of Operations Board members’ ‘deep-dive’
presentations to the Board, formal reporting on people related
statistics in the monthly Board pack, and Board members’ own
interactions with colleagues across the Group (including through
Board or individual Director site visits). The Board also regularly
reviews workplace policies and practices.

As part of its review of Code compliance during the year, the
Board again assessed the various methods by which the Directors
engage with the wider workforce. The Board continues to be of the
view that the combination of existing engagement mechanisms
ensures that the Board is appropriately informed about, and
understands, workforce views, and therefore this approach
continues to appropriately address the requirement to engage
with the workforce under provision 5 of the Code. The Board
does not currently intend to adopt one of the three workforce
engagement methods suggested in that provision, but will continue
to monitor its workforce (and wider stakeholder) engagement
mechanisms to ensure they operate effectively.

Relations with shareholders
The Board recognises the importance of explaining financial
results and key strategic and operational developments in the
business to the Company’s shareholders, and of understanding
any shareholder concerns.

Ensuring a satisfactory dialogue with shareholders and receiving
reports on the views of shareholders are matters reserved for the
Board. Day-to-day responsibility for investor relations is delegated
to the CEO and the CFO, who are supported by the Company’s
retained financial PR advisers, and its corporate brokers. As part
of its investor relations programme, the Group aims to maintain
a dialogue with its shareholders, including institutional investors,
to discuss issues relating to the performance of the Group.
Information and investor news is also made available via the
Company’s website (https://corporate.theworks.co.uk/investors).

The Chair has also met with a number of shareholders during FY23.

Investor relations is a standing item on the Board’s agenda. The
Executive Directors and the Chair provide feedback directly to the
Board on key matters arising in their meetings with shareholders,
ensuring that all Directors are aware of shareholder views. These
matters are discussed and assessed by the Board before deciding
on whether any further action or engagement is required.

The Company’s AGM provides a further opportunity for
shareholders to engage directly with the Board. The Company’s
2023 AGM will take place at 9am on 4 October 2023 at Boldmere
House, Faraday Avenue, Hams Hall Distribution Park, Coleshill,
Birmingham B46 1AL. This Annual Report and financial statements
and Notice of the AGM will be made available to shareholders
in accordance with the required notice periods.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportAudit Committee report

Dear shareholder
I am pleased to present the Audit Committee’s report for the
52-week period ended 30 April 2023. The report sets out the
Committee’s work in relation to financial reporting, internal
control and audit, risk management and oversight of the
external audit process.

Timing of the FY23 results
The FY23 results have been published later than originally intended.
The delay was due to significant additional work being undertaken,
principally in relation to asset impairment charges and related
impacts on IFRS 16 calculations. As well as affecting the FY23 result,
this also entailed the restatement of comparative figures for prior
periods. Whilst the delay has been frustrating, we highlight that
the issues in question have not affected the Board’s assessment
of the underlying performance of the business (for example,
as represented by the EBITDA) and had no direct cash impact.
Information regarding the restatements is included in note 14 of the
financial statements.

Composition of Committee, role and main
activities in FY23
The Committee’s members, its role and main activities are detailed
in the adjacent panel. I am a qualified chartered accountant. I
also have an executive background in finance roles and am an
experienced audit committee chair. The Board is satisfied that I
have recent and relevant financial experience as recommended
under provision 24 of the Code. Both Catherine Glickman and
I have significant knowledge and experience of the retail and
leisure sectors; accordingly the Board is also satisfied that the
Committee has competence relevant to the sector in which the
Company operates.

Meetings and attendees
The Committee met on four occasions during the year, and has
met three times since the year end. All meetings were attended by
all members of the Committee as shown in the table on page 63.

The external auditor has the right to attend meetings, and the
Board Chair, Executive Directors and Head of Finance typically
attend each meeting by invitation. Other members of the
management team may also attend meetings by invitation from
time to time.

Outside of the formal meeting programme, the Audit Committee
Chair maintains a dialogue with key individuals involved in the
Company’s governance, including the Chair, the CEO, the CFO
and the external auditor. At least twice per year, the Committee
also meets the external auditor without members of the
management team present.

Members
• Harry Morley (Chair)

• Catherine Glickman

Number of meetings held in the year:
4

Committee’s role and responsibilities
• Reviews the annual financial statements, including

accounting estimates and judgements.

• Assists the Board with the discharge of its responsibilities
in relation to the external audit including audit scope,
external auditor appointment and the extent of non-audit
work undertaken by the external auditor.

• Reviews the effectiveness of the Group’s internal control

and risk management systems.

• Monitors the Group’s internal audit arrangements.

Main activities during FY23
• Assessing the effectiveness of the Group’s internal

control framework.

• Monitoring stock control improvements. Reviewing and

challenging management’s assessment of the Company’s
principal risks.

• Consideration of the viability and going concern

assessment and store impairment.

Terms of reference:

Available at https://corporate.theworks.co.uk/who-we-are/
corporate-governance

TheWorks.co.uk plc Annual Report and Accounts 2023

Activity during the year
The Committee’s activities during the year are set out in the table below. In addition to its ongoing oversight of the Company’s external
financial reporting, the Committee spent time on:

• Assessing the effectiveness of the Group’s internal control framework and ensuring it continues to develop to meet the evolving needs

of the business and adapts to align with new systems and processes.

• Monitoring stock control improvements.

• Reviewing and challenging management’s assessment of the Company’s principal risks given continued economic uncertainty and the

need to assess and manage climate-related risks and opportunities.

Audit Committee activity in FY23
Financial statements and reporting

• Reviewed significant accounting estimates and
judgements in connection with full-year and
half-year financial statements.

• Reviewed half-year and full-year financial

statements and associated narrative reporting,
and recommended approval of them by
the Board.

• Reviewed scenario analysis in support of going
concern and long-term viability assessments.

Risk management and internal control systems

• Received updates on workstreams to improve stock control systems and processes.

• Reviewed internal financial controls, and progress against agreed

improvement plans.

• Received regular updates on actions to strengthen finance team capability.

• Reviewed delegated authorities.

• Reviewed and challenged risk register, principal risks facing the business,

and process for identifying emerging risks.

External audit relationship

Governance and other matters

• Received and reviewed FY23 audit plan

• Approved FY23 tax strategy.

and strategy.

• Reviewed payment practices reporting and performance against supplier

• Received regular reports from KPMG on audit

payment terms.

progress and status.

• Reviewed and recommended minor changes to Audit Committee terms

• Reviewed effectiveness of FY22 audit process.

of reference.

• Reviewed auditor’s independence (including

non-audit services).

• Agreed audit fees.

Significant issues considered in relation to the financial statements
Significant issues and accounting judgements are identified by the finance team and through the external audit process and are
reviewed by the Audit Committee. The significant issues considered by the Committee in respect of the year ended 30 April 2023
are set out in the table below.

Significant issues and judgements

How the issues were addressed

Going concern

Carrying value of Parent Company investments

Impairment of property, plant and equipment,
right-of-use assets and intangibles

Existence, completeness and valuation of inventory

The Committee considered the appropriateness of applying the going concern convention
in the preparation of the financial statements. The Committee noted that under a “severe
but plausible” downside scenario model prepared to assess the appropriateness of the
basis of preparation, the Group could breach its fixed charge bank covenant when the
bank facility is being drawn upon. Whilst the Directors do not consider this a likely scenario
in practice, it is nevertheless a plausible one, and to comply with the approach required
by the relevant accounting standards, a material uncertainty in relation to the basis of
preparation has been included in Note 1 (b) of the financial statements.

Judgement was required to assess the carrying value of the parent company’s investment
in its subsidiaries, particularly given the current disparity between the estimated value in
use derived by management, and the Group’s market capitalisation. The Committee noted
that a significant impairment charge has been recognised in FY23 although the carrying
value remains significantly higher than the market capitalisation, even after taking this
into account. The Committee noted that the market capitalisation appears unusually low
compared to the Group’s peers, when compared on the basis of, for example, multiples of
earnings.

The committee considered the approach taken to calculating the value in use estimate
used in assessing the impairment of store fixed assets and the IFRS 16 right of use asset.
It was considered appropriate to allocate a greater proportion of the Group’s central
overhead costs to cash generating units than in previous years. This judgement resulted
in a significant impairment charge for the Period, and, the requirement to retrospectively
adjust impairment charges reported in respect of prior periods.

As noted in the ‘Risk management and internal control’ section of the committee’s report,
the committee reviewed the Group’s arrangements for improved stock taking processes.
The implementation of these reduced the level of judgement required in the valuation of
inventory compared with FY23. Although a degree of judgement will always be required in
relation to the valuation of stock, the process is now more mechanistic than previously.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportAudit Committee report continued

Financial Reporting Council (FRC) letter
In April 2023, the Company receive a query from the FRC following
a review of our Annual Report and Accounts for the 52-week period
ended 1 May 2022. The Committee reviewed all correspondence
between the Group and the FRC, and also discussed the matters
raised with our auditor. The matters raised by the FRC related to
the valuation of the Parent Company investment in subsidiaries,
and the calculation of income tax on gains recognised in other
comprehensive income. As a result of the review, in the FY23 Annual
Report and Accounts, the disclosure of the assumptions regarding
Parent Company investment have been increased.

The FRC’s enquiries, which were limited to a review of the FY22
Annual Report and Accounts, are now complete. The FRC does
not benefit from detailed knowledge of our business or an
understanding of the underlying transactions entered into, and
accordingly the review provides no assurance that the FY22 Annual
Report and Accounts is correct in all material respects.

Risk management and internal control
The Board has overall responsibility for setting the Group’s risk
appetite and ensuring that there is an effective risk management
framework to maintain levels of risk within the risk appetite.
The Board has delegated responsibility for review of the risk
management methodology and effectiveness of internal
control to the Audit Committee.

During the year the Audit Committee and the Board reviewed
the Group’s risk register, and challenged management on the
classification of risks and the mitigations in place. This included
a consideration of the principal risks and uncertainties facing
the Group and a discussion of emerging risks and how these are
identified. This process informed the Committee’s year-end review
of principal risks and uncertainties and its recommendation to the
Board. Further details of the Group’s risk management approach,
structure and principal risks are set out on pages 49 to 53.

The Group’s system of internal control comprises entity-wide high-
level controls, controls over business processes and store-level
controls. Policies and procedures and defined levels of delegated
authority have been approved and communicated across the
Group, and include an Internal Control Framework, corporate risk
register, business continuity plan and IT system policies. These
are supplemented by other policies and procedures which are
communicated to colleagues through the employee handbook.

Management has identified the key operational and financial
processes which exist and implemented internal controls over these
processes in addition to the higher level review and authorisation-
based controls. These policies are designed to ensure the accuracy
and reliability of financial reporting and govern the preparation
of the financial statements. The Board is ultimately responsible for
the Group’s system of internal controls and risk management and
discharges its duties in this area by:

• Holding regular Board meetings to consider the matters reserved

for its consideration.

• Receiving regular management reports which provide

an assessment of key risks and controls.

• Scheduling periodic Board reviews of strategy including reviews

of the material risks and uncertainties facing the business.

• Ensuring there is an organisational structure with defined

responsibilities and levels of authority.

• Ensuring there are documented policies and procedures in place.

• Regularly reviewing reports containing detailed information

regarding financial performance, forecasts, actual and forecast
bank covenant compliance and financial and non-financial KPIs.

In reviewing the effectiveness of the system of internal controls,
the Audit Committee:

• Reviews the risk register compiled and maintained by senior
managers within the Group and questions and challenges
where necessary.

• Regularly reviews the system of financial

and accounting controls.

The Committee’s review of the effectiveness of internal control
and risk management systems is an ongoing process. The key
areas of focus during FY23 are detailed below.

• As reported in the Company’s 2022 Annual Report, a Profit
Protection Manager (PPM) was appointed in January 2022.
During FY23, the Committee received and reviewed the PPM’s
strategy and plan to drive improvements across the Company’s
operational controls in order to reduce losses. The Committee
also received updates on the implementation of the plan,
including the introduction of a new rolling stock count process
covering the Group’s entire store estate, and discussed KPMG’s
audit of the FY23 stock position. The Committee also considered
plans to improve EPOS data analysis to support better detection
of in-store stock discrepancies.

•

In September 2022 the finance team presented a detailed
schedule of internal financial controls and planned
improvements, and the Committee has regularly reviewed
this schedule in order to monitor progress and assess the
effectiveness of the control improvements.

• Delegated authority limits are subject to regular review by
the Committee. During the last year, the finance team has
implemented a new and more sophisticated accounts payable
(AP) system which has improved the control environment for
invoice approval and embedded a workflow structure that
supports more effective controls. An updated delegated
authority matrix, including the documentation of the
improvements driven by the new AP system has been developed.

TheWorks.co.uk plc Annual Report and Accounts 2023

The Committee is satisfied that the internal controls and risk
management systems, including processes to identify and
improve such systems and controls where necessary, continue
to operate effectively.

Internal audit
In accordance with the Code, the Committee continues to keep
the need for an internal audit function under review. In making
that assessment, the Committee takes into account the risk and
controls environment of the Group, and in particular any areas
where additional assurance as to the effectiveness of controls
and processes (over and above assurance provided through the
Committee’s own reviews and the external audit process) may be
required. As previously reported, the Group has engaged specialist
independent advisers to review and make recommendations in
relation to certain IT matters, and in FY23 dedicated resource within
its finance team to review systems and processes, oversee and/or
implement improvements and review internal controls.

When reviewing requests for non-audit services the Audit
Committee will assess:

• Whether the provision of such services impairs the auditor’s
independence or objectivity and any safeguards in place
to eliminate or reduce such threats.

• The nature of the non-audit services.

• Whether the skills and experience make the auditor the most

suitable supplier of the non-audit service.

• The fee to be incurred for non-audit services, both for individual

non-audit services and in aggregate, relative to the Group
audit fee.

• The criteria which govern the compensation of the individuals

performing the audit.

The external auditor may not be engaged to provide non-audit
services which have been identified as ’prohibited’ in accordance
with legislative and regulatory requirements.

The Committee is satisfied that the work of the dedicated function
within the finance team has operated effectively to provide
appropriate assurance over internal controls during FY23. On this
basis, and with the option to use specialist independent advisers
to review any priority areas of focus, the Committee remains of the
view that there is no current requirement for the establishment of
a permanent dedicated internal audit function, but will continue
to keep this under review.

External auditor
The Audit Committee is responsible for overseeing the Group’s
relationship with its external auditor, KPMG LLP. This includes the
ongoing assessment of the auditor’s independence and the
effectiveness of the external audit process, the results of which inform
the Committee’s recommendation to the Board as to the auditor’s
appointment (subject to shareholder approval) or otherwise.

Appointment and tenure
KPMG was appointed as the Company’s external auditor in 2018.
The current lead audit partner, Gordon Docherty, was appointed
following the conclusion of the FY22 audit. In line with KPMG’s
internal policy, and subject to there having been no change in
external auditor, it is anticipated that Gordon Docherty will remain
as the lead audit partner for five years concluding with the FY27
audit. In accordance with the Code, the Audit Committee intends
to put the external audit out to tender at least every ten years.

Non-audit services
The engagement of the external audit firm to provide non-audit
services to the Group can impact on the independence
assessment. The Company has therefore adopted a policy which
requires Audit Committee approval for any permitted non-audit
services, except for permitted non-audit services with a fee of less
than £5k on an individual basis or £20k on an aggregated basis
which the CFO and the Audit Committee have pre-approved.

During the year, the only non-audit services which KPMG was
engaged to carry out related to the issuance of turnover
certificates for a small number of stores where the terms of the
lease require them to be independently verified. The fees paid to
KPMG LLP in respect of these services totalled £1k, representing less
than 1% of the total audit fee. Further detail is included in Note 7 to
the financial statements on page 110.

External audit effectiveness
During the year, the Committee reviewed the effectiveness
of the FY22 year-end audit process. The format of the review
included taking into account the views of the internal finance
team, members of the Committee and others involved in the
audit process which were discussed at the Committee’s meeting
in January 2023. In general, all parties had concluded that the
FY22 audit process had been rigorous, exhaustive and effective,
and that KPMG had demonstrated independence, objectivity
and an appropriate level of professional scepticism throughout
the process.

Performance evaluation
The evaluation of the performance of the Committee was
conducted as part of the broader Board evaluation process set
out on page 64 of this Annual Report. I am pleased to report that
feedback relating to the Committee was positive, indicating that
the Committee continues to operate effectively.

Harry Morley
Chair of the Audit Committee
30 August 2023

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportNomination Committee report

Promoting diversity and inclusion will be
key factors in our succession planning
and NED appointment processes.

Dear shareholder
I am pleased to present the Nomination Committee’s report for
the 52-week period ended 30 April 2023. This report summarises
the work of the Nomination Committee during the year.

Composition of Committee, role and main
activities in FY23
The Committee’s members, its role and main activities are
detailed in the adjacent panel. During the year there has been
specific focus on succession planning, both at Board and senior
management level, and diversity.

Meetings and attendees
The Committee met twice during the year. All meetings were
attended by all members of the Committee as shown in the
table on page 63.

Only members of the Committee have the right to attend meetings,
but the CEO and People Director are typically invited to attend at
least part of each meeting, particularly when executive succession
planning and other workforce related matters are being discussed.
Other Directors, executives or advisers may be invited to attend all
or part of any meeting as appropriate.

Succession planning
The Committee discussed Board succession planning and in
particular the need to plan appropriately for the rotation of the
Non-Executive Directors to support Board stability and avoid
a situation where both Catherine Glickman and Harry Morley
(who were appointed on the Company’s IPO in 2018) step down
at the same time. Although no Board changes are imminent, the
Committee has agreed in principle that Catherine and Harry will
step down in a staggered fashion and, given their respective key
roles as Chairs of the Remuneration and Audit Committees, that
there may be some overlap between the appointment of their
replacements and the date that they step down.

The Committee has also agreed that Board diversity (particularly
gender and ethnicity) will be key factors in any search process for
new Non-Executive Directors, albeit recognising that appointments
will always be made on merit and based on objective criteria.

In March 2023 the Committee received an update on Executive
Director and senior management succession led by the CEO and
People Director. This included a high-level analysis of potential
internal successors for Executive Director and Operations Board
roles. It is intended that more formal internal succession plans will
be developed, and this topic will continue to be a regular point
of discussion for the Committee. The Board will also monitor and
review initiatives to support the identification and development
of internal talent through its regular updates from the People
Director, and the action plans arising from our employee
engagement activity.

In line with our Executive Director succession plans, we were
delighted to announce that Rosie Fordham will succeed Steve
Alldridge as CFO following an orderly handover of responsibilities
and by the end of 2023.

Members
• Carolyn Bradley (Chair)

• Catherine Glickman

• Harry Morley

Number of meetings held in the year:
2

Committee’s role and responsibilities
• Oversees succession planning.

•

Identifies and nominates appointments to the Board.

• Reviews Non-Executive Directors’ time commitments.

• Reviews size and composition of the Board.

• Promotes diversity.

Main activities in FY23
• Succession planning at Board and senior

management level.

• Diversity.

Terms of reference:
Available at https://corporate.theworks.co.uk/who-we-are/
corporate-governance

TheWorks.co.uk plc Annual Report and Accounts 2023

Diversity and inclusion (D&I)
The Committee is responsible for monitoring compliance with the objectives of the Board Diversity Policy (the D&I Policy). During the year,
the Committee considered and approved an updated D&I Policy to ensure alignment with D&I policies and initiatives across the wider
business. The updated D&I Policy reflects the Board’s aspiration to achieve the gender and ethnic diversity targets introduced into the
Listing Rules in 2022, which reflect the recommendations of the FTSE Women Leaders Review and the Parker Review.

The updated D&I Policy also sets out the Company’s commitment to promote equality, diversity and inclusion, and a supportive culture
that actively values difference. It also recognises:

• That a key driver in building a workforce that is truly representative of all sections of society and the Group’s customers is a Board
that has a balance of skills, knowledge, strengths, experience, diversity and independence which enables it to provide a range
of perspectives, insight and challenge.

• The expectation that the Board will role model inclusive language, behaviours and practice, and set a clear message about

the importance of diversity and inclusion across the Company.

The specific objectives and Nomination Committee responsibilities set out in the D&I Policy, together with current status and progress
against those objectives and responsibilities, is set out below.

Aspirational objective or responsibility

Status and progress

Board to comprise at least 40% women.

Met. Current Board comprises 40% female members.

At least one of Chair, CEO, CFO or SID to be a woman.

Met. Chair is female.

At least one Director from a non-white ethnic minority background. Not met. Aim to address through future Board succession planning.

Regularly review the structure, size and composition of the Board.

Annually recurring item on the Nomination Committee agenda.

Encourage diversity in the recruitment process by:

• Only engaging search firms that are signatories to the Executive

Search Firm’s Voluntary Code of Conduct.

• Ensuring the search firm brief includes appropriate emphasis

on diversity.

• Encouraging long lists to include women, people from ethnic

minority backgrounds and other under-represented groups with
the skills and experience required.

• Considering candidates who may not have previous executive/

non-executive directorship roles.

Have regard to the D&I Policy when considering Board
succession planning.

Review the D&I Policy annually, assessing its effectiveness
and recommending any changes to the Board.

No external search process has been instructed to date, but any
future search process will be conducted in line with these points.

D&I Policy is taken into account when discussing Board succession.

The updated D&I Policy was approved in March 2023 and will
be reviewed annually as part of the Nomination Committee’s
programme of work.

Currently it is not anticipated that the size of the Board will be increased. Therefore all Non-Executive Directors in post at any one time
will also be members of each of the Audit, Remuneration and Nomination Committee, and the D&I Policy does not contain any specific
diversity objectives relating to the composition of the Board’s Committees.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportNomination Committee report continued

Diversity and inclusion (D&I) continued
As required under Listing Rule 9.8.6R, the breakdown of the gender identity and ethnic background of the Company’s Directors and
executive management (the Operations Board) as at 30 April 2023 is set out in the tables below. To compile this data each Board and
Operations Board member was asked to complete a survey. In the future the Company will seek to gather this data on the appointment
of any new Board or Operations Board member.

Gender identity

Men

Women

Not specified/prefer not to say

Ethnic background

White British or other White

Mixed/multiple ethnic groups

Asian/Asian British

Black/African/Caribbean/Black British

Other ethnic group, including Arab

Not specified/prefer not to say

Number of
Board members

Percentage
of the Board

Number of
senior positions
on the Board 1

Number
in executive
management

Percentage
of executive
management

—

60%

40%

—

78%

22%

—

Number of
Board members

Percentage
of the Board

Number of
senior positions
on the Board 1

Number
in executive
management

Percentage
of executive
management

—

100%

—

89%

11%

—

None of the factors which could impact the independence of Non-
Executive Directors (as set out in provision 10 of the Code) apply to
our Non-Executive Directors, and the Committee is satisfied that
both Catherine Glickman and Harry Morley remain independent in
thought and judgement. Catherine and Harry have both confirmed,
as have I, that we continue to be able to devote sufficient time to
fulfil our roles as Directors of the Company.

Performance evaluation
The evaluation of the Committee’s performance in 2023 was
conducted as part of the wider Board evaluation process described
on page 64. The Committee was found to be operating effectively.

Carolyn Bradley
Chair of the Nomination Committee
30 August 2023

Includes CEO, CFO, Chair and Senior Independent Director.

As shown in the tables above, as at 30 April 2023, the Company
achieved the Listing Rule targets of 40% of its Board of Directors
being women, and at least one of the senior Board positions
(in our case, the Chair) being held by a woman.

The Company has not achieved the target of at least one member
of the Board being from a minority ethnic background. Given
the size of our Board, which the Committee continues to believe
is appropriate, and the tenure of the existing Non-Executive
Directors, it is unlikely that this target will be achieved until
at least the first round of Non-Executive Director rotation.

The Committee will continue to keep the D&I Policy, and
broader diversity targets, under review and both will continue
to be important factors in our succession planning discussions
and any search process for new appointments.

Other matters considered
At its meeting in March 2023 the Committee conducted its annual
review of the size, structure and composition of the Board, the
independence of the Non-Executive Directors, and Non-Executive
Director time commitments. The Committee concluded that the
size, structure and composition of the Board and its Committees
remain appropriate taking into account the size and cost
structure of the business, and that the Board’s balance of skills
and experience is appropriate and supports effective debate
and decision making.

TheWorks.co.uk plc Annual Report and Accounts 2023

Directors’ remuneration report
Chair of the Remuneration Committee’s letter to shareholders

The Committee has continued to ensure that remuneration
reflects performance, incentivises management and aligns
with shareholders’ interests.

Dear shareholder
As Chair of the Remuneration Committee, I present our Directors’
remuneration report for the 52-week period ended 30 April 2023.

This year’s report consists of this letter, a summary of our Directors’
Remuneration Policy (the Policy) and how we propose to apply the
Policy in FY24, and the annual report on remuneration which sets out
payments made to the Directors and demonstrates how Company
performance and remuneration were aligned during FY23.

The Policy was approved at the 2022 AGM, with over 99% of votes
cast in favour of it, reflecting the strong shareholder support for our
responsible approach to Directors’ remuneration. During FY23, we have
considered the overall remuneration package for Gavin Peck, our CEO.
Gavin is an exceptional leader and in order to reward him appropriately,
we are proposing an amendment to the Policy reflecting our proposal
to increase Gavin’s maximum LTIP award opportunity to 150%
of salary. I explain our rationale for the proposal below.

At the 2023 AGM, we will be asking shareholders to vote on three
resolutions relating to remuneration as follows:

1. To approve an amendment to the Policy.

2. To approve an amendment to the rules of our LTIP to reflect

the Policy amendment.

3. The advisory vote on the annual report on remuneration.

FY23 remuneration in the context of our
business performance
As detailed in the Strategic report, the Group delivered a resilient
performance in FY23 against a challenging backdrop. In particular:

• Total sales growth increased 6.1% (with like-for-like sales growth

of 4.2%).

• Further improvements were made to our customer-focused
proposition, including through the expansion of our front list
book offer.

• Continued optimisation of the store estate by opening 14 new

stores and refitting 34 existing stores.

• Ended the year in a strong financial position, with net cash of £10.2m.

The FY23 bonus opportunity for Gavin Peck and Steve Alldridge
was up to a maximum of 100% of salary, with 90% of the award
based on stretching EBITDA targets and the remaining 10% based
on performance against key strategic objectives (details of the
measures and targets are set out on page 79). Our Adjusted EBITDA
result for FY23 was in line with revised market expectations at
£9.0m, but below our original EBITDA budget and the threshold
level of post-bonus EBITDA performance for Executive Director
bonuses. Therefore, not withstanding the Committee’s assessment
that Gavin Peck and Steve Alldridge had made good progress
against the strategic objectives set (as described on page 79),
no bonus was payable to the Executive Directors for FY23.

TheWorks.co.uk plc Annual Report and Accounts 2023

Members
• Catherine Glickman (Chair)

• Carolyn Bradley (member since 2021)

• Harry Morley (member since 2018)

Committee’s role
• Sets Remuneration Policy.

• Determines Executive Director and senior

management remuneration.

• Approves annual bonus and LTIP targets.

• Reviews workforce remuneration policies and practices.

Main activities during FY23
• Finalised Remuneration Policy and recommended its

approval at the 2023 AGM.

• Considered proposed increase to CEO maximum LTIP
opportunity, and amended Policy for approval at
the 2023 AGM.

• Approved LTIP awards and targets.

• Monitored annual bonus targets and outturn.

• Reviewed Executive Director salaries.

• Reviewed wider workforce pay and benefits.

Financial statementsCorporate governanceStrategic reportDirectors’ remuneration report continued

FY23 remuneration in the context of our business
performance continued
The Committee was impressed by progress, but ultimately
determined that it would not be appropriate to award any bonus
in respect of the strategic element based on the broader financial
performance of the Company and the fact that, in general, bonuses
were not payable to staff or senior management below Executive
Director level.

Gavin Peck was granted a Long-Term Incentive Plan (LTIP) award
in February 2021 which was subject to performance conditions
based on EPS performance over the three financial years ending
with FY23 and a share price target. Details of the targets are set
out on page 80. As Adjusted EPS is impacted by the prior year
restatements described in note 14 to the financial statements,
the Committee’s assessment of the outturn of the EPS target
is estimated. This estimate excludes the impact of a £0.6m tax
credit received during the year. This exclusion results in Adjusted
EPS (before the impact of prior period restatements) below the
threshold target and accordingly the Committee’s estimate is
that the LTIP award will lapse in full. The Committee considers that
exercise of discretion in this way is appropriate taking into account
operational performance. The Committee retains discretion to
make adjustments to formulaic vesting outturns (whether up or
down) in appropriate circumstances, including to take into account
changes in tax rates. The final vesting is being reviewed to ensure
that performance is being assessed on a fair and consistent basis
and is reflective of wider corporate performance.

The Committee has also considered prior year LTIP outturns for
FY22 and FY21 in the context of the impact of the prior period
restatements. The Committee has concluded that the outturns of
38.4% and 0% of maximum respectively were reflective of underlying
business performance and that it would not be appropriate to
make any adjustments that may otherwise increase the level of
vesting. In order to ensure that the Adjusted EPS performance
measures that apply to in-flight LTIPs can be assessed on a fair and
consistent basis (given the impact of prior period restatements),
the Committee intends to review those targets during FY24. This
review is intended to ensure that the level of stretch in the targets
is maintained and the targets are not made materially easier or
harder to achieve as a result of the restatement.

Remuneration across the business
The Committee continues to make decisions on remuneration for
the Executive Directors in the context of decisions for colleagues
across the Group.

For FY24, salaries for colleagues in retail have increased in line
with the National Living Wage, with further investment in the
management grades to maintain appropriate differentials. This
resulted in an average increase of 8.6% for colleagues in retail.
Salaries for Distribution Centre and Support Centre roles increased
in line with the National Living Wage where relevant with further
investment in certain grades to maintain appropriate differentials,
and outside of that, an average increase of 5% was applied.
Following a benchmarking exercise we also increased our car
allowance rates (the first such increase for over six years).

As reported last year, in August 2023, we launched a new
communications and engagement platform (MyWorks by Reward
Gateway) across the business. This offers colleagues discounts and
money saving offers with a number of businesses and services; this
has been well received. In response to the cost-of-living crisis we also
launched Wagestream, an app that offers all colleagues a range of

financial wellbeing tools, including early access to earned wages as
well as savings account access and financial wellbeing resources.

Our Operations Board directors continue to be an effective high-
performing team. For FY24, the starting point for Operations Board
salary increases was 5% (in line with the standard increase for
Distribution and Support Centre colleagues outside of National
Minimum Wage (NMW) increases), and we adjusted salaries to
reflect increased responsibilities for individual roles. Following the
departure of the Digital and Marketing Director during the year,
the net impact of the Operations Board salary increases is a circa
£0.1m saving. As indicated in our FY22 Annual Report, during FY23
we implemented a hybrid incentive arrangement comprising
an award of restricted shares (vesting after two years subject
to continued employment) plus an award of nil-cost options
subject to performance over a three-year period. For area and
retail management, we operate a bonus scheme which rewards
achievement of objectives aligned with our strategy.

Gavin Peck – incentive remuneration
As I mention above, during the year, we have considered Gavin
Peck’s remuneration. We want to recognise his exceptional
performance and leadership, providing him with a strong
incentivisation and retention mechanism, whilst taking into
account the interests of shareholders. The Committee concluded
that the correct approach to achieve this would be to align any
adjustment to reward with the long-term interests of shareholders
and propose increasing Gavin’s LTIP opportunity to 150% of
base salary.

Under the Policy approved at the 2022 AGM, the maximum annual
Long-Term Incentive Plan award is 100% of base salary, or 200%
of base salary in exceptional circumstances, with these limits
reflected in the formal rules of the LTIP. As it is our intention that
the 150% of salary level will become Gavin’s usual annual grant,
we have agreed that in the interests of transparency we will seek
shareholder approval to increase the ‘normal’ limit at the 2023
AGM. No increase will be made to the ‘exceptional circumstances’
limit, which will remain at 200% of base salary, and the CFO’s
maximum LTIP opportunity will remain at 100% of base salary
(reflecting our view that it is appropriate to recognise Gavin’s position
in leading the business by differentiating the level of his LTIP award).

In line with our approach to transparent communications with
shareholders, I wrote to our largest shareholders following the
FY23 year end to set out details of our proposed approach to the
LTIP, and offered the opportunity to discuss our approach. I was
pleased that a number of shareholders took up the opportunity
to speak with me directly, and indicated support for our proposals.
Having regard to feedback received during that engagement,
we are also proposing an additional minor amendment to the
Policy to clarify that a share retention requirement, aligned with
the in-service share ownership guideline, applies also to deferred
bonus shares in addition to LTIP shares.

Approach to remuneration for FY24
Our approach to Directors’ remuneration in respect of FY24
is summarised in the table on page 76, which also reflects the
proposed amendment to the Remuneration Policy.

The Committee approved salary increases of 5% for both Gavin
and Steve, with such increases being below the average increase
applied across the wider workforce, which outside of NMW
increases was an average of 7%.

TheWorks.co.uk plc Annual Report and Accounts 2023

For FY24, we will also apply a minor re-weighting of the
EBITDA and strategic measures which apply to the Executive
Directors’ annual bonus scheme. The maximum bonus
opportunity for both Executive Directors will remain at 100%
of base salary, but with 80% of the maximum opportunity
subject to EBITDA performance, and the remaining 20%
subject to strategic measures. This change will strengthen
the Committee’s ability to reward building the strategic
capability of the business, including performance against our
sustainability targets.

As noted in the Chair’s statement on page 7, during FY24 Rosie
Fordham will succeed Steve Alldridge as CFO. I am pleased
that we are in a position to make an internal appointment,
demonstrating our focus on development and succession
planning. Rosie’s remuneration from her appointment as CFO
will be in line with the Policy, and is summarised in the Policy
summary and FY24 intended implementation table on page
76. As Steve will leave the business during FY24, he will not be
eligible for a FY24 bonus and will not receive an LTIP award
during the year.

As reported last year, Harry Morley and I were awarded a
3% increase in our fees with effect from 1 September 2022.
Following the annual review, the Non-Executive Director and
Chair fees will be increased by 5% (in line with the increase for
the Executive Directors, and below the average increase for
the wider workforce) with effect from 1 September 2023.

Stakeholder engagement

Given the challenges of FY23, I would like to thank the Executive
Directors, the Operations Board Directors and all our colleagues
at The Works for their continued commitment, enthusiasm and
hard work.

Our colleagues are a vital part of our customer experience.
We continue to be a company in which colleagues can develop
their careers, with the majority of colleagues being internally
developed and 10% promoted in the last year. We are delighted
that we continue to be recognised as one of the 25 Best Big
Companies to Work for.

The Board continues to receive regular updates on colleague
wellbeing, morale, retention and health and safety and visits
stores and engages with colleagues regularly. We review the
annual Best Companies engagement survey results, in which
colleagues provide feedback on leadership, personal growth
and giving something back, as well as pay and benefits, and
these inform decisions on remuneration.

On behalf of the Board, I would like to thank shareholders for
their support for our Policy at the 2022 AGM. I remain happy
to receive any questions or feedback from shareholders at any
time, and hope that you will be happy to support the resolutions
proposed at our 2023 AGM.

Catherine Glickman
Chair of the Remuneration Committee
30 August 2023

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportDirectors’ remuneration report continued

Our Policy – summary and FY24 intended approach
In the interests of transparency, we have included on page 77 the LTIP and “in-service” shareholding guidelines sections of the Policy,
incorporating the amendments for which shareholder approval is to be sought at the 2023 AGM. Since we are not seeking approval for
a Directors’ Remuneration Policy at the 2023 AGM, in line with the applicable regulations, we have not included the Policy in this report.
The Policy is set out in our FY22 Annual Report which is available on our website.

The following table summarises the key aspects of our Policy approved at the 2022 AGM, changes proposed in the Policy and, subject
to shareholder approval for the amendment to the maximum LTIP opportunity for the CEO as described on page 74, information on
how we intend to implement the policy in FY24.

Policy summary

Implementation in FY24

Base salary

Ordinarily reviewed annually. In line with typical practice,
increases are normally within the range of increases
awarded to other colleagues. Flexibility is retained to
award higher increases in appropriate circumstances.

Retirement benefits

Defined contribution pension (or cash equivalent).
Maximum contribution aligned with the contribution
available to other employees.

Annual bonus

Maximum opportunity of 100% of salary.

Full bonus ordinarily paid in cash but with flexibility
to defer into shares for up to two years.

Up to 20% of maximum will be earned for threshold
performance and up to 50% of the maximum will be
earned for on-target performance.

The Committee has discretion to amend the pay-out
should any formulaic output not reflect the Committee’s
assessment of overall business performance.

At least 50% of the bonus is based on financial measures.

The balance of the bonus opportunity will be based
on financial measures and/or the delivery of strategic/
individual measures.

Subject to approval by shareholders at the 2023 AGM,
maximum award of 150% of salary, or 200% of salary in
exceptional circumstances, with up to 25% vesting for
threshold performance.

For at least 75% of an LTIP award, the performance
measures will be based on financial measures.

LTIP

For FY24, the Executive Directors’ salaries have been
increased by 5% to:

• Gavin Peck: £324,450.

• Steve Alldridge: £227,115.

• On her appointment to CFO, Rosie Fordham’s salary

will be £180,000. Subject to her developing in line with
expectations, it is intended that her salary will increase
to £200,000 for FY25, and to £220,000 for FY26.

Executive Director pension contributions continue to be
aligned with the wider workforce at 3% of base salary.

Rosie Fordham’s pension contribution will be reduced
to 3% on her appointment as CFO.

For FY24, the maximum bonus opportunity will be 100%
of salary for each Executive Director.

A minor change to the weightings of the performance
measures will be applied. Performance will be based
on EBITDA as regards 80% of the award and strategic
objectives with clear measurable targets as regards 20%
of the award. As targets (both financial and strategic)
under the annual bonus are considered commercially
sensitive, these will be disclosed retrospectively in the
FY24 Annual Report.

For Rosie Fordham, any bonus payable under the
Policy for FY24 will be pro-rata from the date of her
appointment as CFO.

A minor amendment to the Policy is proposed to increase
the maximum LTIP award to 150% of salary (from 100%
of salary).

For FY24, we propose to grant to our CEO, Gavin Peck,
at the level of 150% of salary and to our incoming CFO,
Rosie Fordham, will be granted an LTIP at the level of
100% of salary.

It is proposed that the awards will be subject to
performance conditions based on EPS and share price,
with an equal weighting.

The awards will not be granted until after the 2023 AGM.
Full details of the performance metrics and targets, which
will be set with a level of stretch commensurate with the
size of the LTIP awards, will be included in the regulatory
announcement at the time the awards are granted.

In-service shareholding
guidelines

Post-employment
shareholding guidelines

Executive Directors are required to retain half of all shares acquired under the LTIP (after sales to cover tax and any
exercise price) until such a time as their holding as a value is equal to 200% of salary.

Following employment, an Executive Director must retain for one year such of their relevant shares (shares acquired
pursuant to LTIP or deferred bonus awards granted after 1 May 2022) as have a value equal to 200% of their salary
(or, if fewer, all of their relevant shares).

Non-Executive Directors’
remuneration

Fees are set taking into account the responsibilities of the
role and expected time commitment.

Chair and Non-Executive Director fees for FY24 (with
effect from 1 September 2023) are as follows:

Chair’s fee

Harry Morley

Catherine Glickman

Base fee
£000

105

TheWorks.co.uk plc Annual Report and Accounts 2023

In the interests of transparency, we have set out below the LTIP and “in-service” shareholding guideline sections of the Policy approved at
the 2022 AGM, in each case updated to reflect the amendments for which shareholder approval is to be sought at the 2023 AGM.

Component

Purpose and link to strategy

Operation

Maximum opportunity

Performance measures

Long-Term
Incentive
Plan (LTIP)

The LTIP provides a clear link
between the remuneration
of the Executive Directors
and the creation of value for
shareholders by rewarding
the Executive Directors for
the achievement of longer-
term objectives aligned with
shareholders’ interests.

The maximum award level is
150% of base salary, or 200%
of base salary in exceptional
circumstances.

The market value of shares
subject to an LTIP award
will be determined on such
basis as the Committee
considers appropriate, which
will be applied consistently
where possible.

If a qualifying LTIP is granted,
the value of shares subject to
the CSOP option will not count
towards the limit referred
to above, reflecting the
provisions for the scale back
of the ordinary LTIP award.

For at least 75% of an LTIP
award, the performance
measures will be based
on financial measures
(which may include, but
are not limited to, earnings
per share, relative total
shareholder return and
share price). Any balance
of an LTIP award will be
subject to performance
measures based on
non-financial measures
aligned with the Company’s
strategic priorities.

Subject to the Committee’s
discretion to amend the
formulaic output, awards
will vest up to 25% for
threshold performance,
rising to 100% for maximum
performance.

Under the LTIP, the Committee may
grant awards as conditional shares
or as nil (or nominal) cost options.

Awards will usually vest following
the assessment of the applicable
performance conditions, typically
following the end of a three-year
performance period, but will not be
released (so that the participant is
entitled to acquire shares) until the
end of a holding period of two years
beginning on the vesting date.

Alternatively, awards may be granted
on the basis that the participant is
entitled to acquire shares following
the assessment of the applicable
performance conditions but that
(other than as regards sales to cover
tax liabilities and any exercise price)
the award is not released (so that
the participant is able to dispose
of those shares) until the end of the
holding period.

The Committee has discretion to amend
the pay out should any formulaic output
not reflect the Committee’s assessment
of overall business performance.

LTIP awards may incorporate the right
to receive additional shares calculated
by reference to the value of dividends
which would have been paid on the
vested shares subject to the award
up to the time of release; this amount
may be calculated assuming that the
dividends have been reinvested in the
Company’s shares on such basis as the
Committee determines.

The Committee may at its discretion
structure awards as qualifying LTIP
awards, consisting of a tax qualifying
Company Share Option Plan (CSOP)
option with a per share exercise price
equal to the market value of a share at
the date of grant and an ordinary nil
(or nominal) cost LTIP award, with the
ordinary award scaled back at exercise
to take account of any gain made on
exercise of the CSOP option.

Recovery provisions apply and are set
out in the Policy approved at the 2022
AGM and included on page 67 of our
FY22 Annual Report which is available
on our website.

Shareholding
guidelines

To align the interests of the Executive Directors with those of shareholders, the Committee has adopted formal shareholding
guidelines. Executive Directors are required to retain half of all shares acquired under the LTIP and any deferred bonus award
(after sales to cover tax and exercise price) until such time as their holding as a value is equal to 200% of salary.

Shares subject to LTIP awards which have vested but not been released (that is which are in a holding period), or which have been
released but have not been exercised, and shares subject to deferred bonus awards, count towards the guidelines on a net of
assumed tax basis.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportAnnual report on remuneration

This report has been prepared in accordance with the applicable regulations and the Code.

Composition of the Committee
The members of the Committee are Catherine Glickman (Chair), Carolyn Bradley and Harry Morley.

Duties and responsibilities
The Committee’s key responsibilities are detailed in the panel on page 73.

When determining the application of the Directors’ Remuneration Policy in FY23, the Committee considered the factors of clarity,
simplicity, risk, predictability, proportionality and alignment to culture as referred to in the Code. As with the approach in FY22, these were
reflected, in particular, in the Executive Directors’ LTIP awards which are subject to simple and transparent performance measures based
on our appetite for risk, with specific monetary caps added as a further risk mitigation.

As part of its work, the Committee reviewed the remuneration for the wider workforce and related policies and takes these into account
when setting the Policy for Executive Director and senior management remuneration.

Meetings and attendees
The Committee met a total of four times during the year and has met once since the year end. All members attended those meetings
as shown in the table on page 63. The Committee receives assistance from the CEO, CFO, People Director and Company Secretary,
who attend meetings by invitation, except when issues relating to their own remuneration are being discussed.

Performance evaluation
The evaluation of the performance of the Committee was conducted as part of the broader Board evaluation process set out on page
64. Feedback relating to the Committee indicated that it continues to operate effectively, with all members (and other attendees)
contributing appropriately to debate and discussion around remuneration matters.

Advisers
Deloitte LLP (Deloitte) is retained to provide independent advice to the Committee as required. Deloitte is a member of the Remuneration
Consultants Group and, as such, voluntarily operated under that group’s Code of Conduct in relation to executive remuneration
consulting in the UK. Deloitte’s fees for providing remuneration advice to the Committee were £3,000 for FY23. The Committee assesses
from time to time whether this appointment remains appropriate or should be put out to tender and takes into account the Remuneration
Consultants Group Code of Conduct when considering this.

Deloitte was appointed by the Committee and has provided share scheme advice and general remuneration advice to the Company.

Single figure table – audited information
The table below sets out total remuneration in respect of FY23 for each person who served as a Director in that year, along with the
corresponding remuneration for FY22:

Salary and
fees 1
£000

Benefits 2
£000

Pension 3
£000

Annual
bonus 4
£000

Long-term
incentive 5
£000

Executive Directors

Gavin Peck

Steve Alldridge
(appointed 14 May
2021)

Non-Executive
Directors

Carolyn Bradley
(appointed 30
September 2021)

Harry Morley

Catherine Glickman

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

309

300

216

203

100

—

234

—

163

N/A

—

N/A

Total fixed
remuneration
£000

Total variable
remuneration
£000

Total
£000

331

585

234

384

331

322

234

221

100

—

263

—

163

N/A

1 Salary and fees: The amount of salary/fees earned in respect of the year.

2 Benefits: The taxable value of benefits received in the year: these are principally private medical insurance and car or car allowance. For Gavin Peck the
2023 (and 2022) benefits figures include his SAYE options granted in November 2022 (and August 2021), valued as the aggregate discount of the exercise
price from the share price used to determine the exercise price.

3 Pension: The pension figure represents the cash value of pension contributions for the Executive Director to the defined contribution pension arrangement

and any cash payments in lieu of pension contributions made in the year.

4 Annual bonus: The cash value of the bonus earned in respect of the financial year. Further information in relation to the FY23 bonuses is set out below;

no bonuses were earned by the Executive Directors in respect of FY23.

TheWorks.co.uk plc Annual Report and Accounts 2023

5 Long-term incentives: Gavin Peck was granted an LTIP award in February 2021 subject to the performance conditions set out below. The estimated
outturn is that the award will lapse in full. The final vesting is being reviewed to ensure that performance is being assessed on a fair and consistent
basis taking into account the impact of prior period restatements on the EPS target and to ensure that the final vesting is reflective of wider corporate
performance. Any change in outturn will be trued up in the FY24 single figure table.

Truing up of FY22 single figure table numbers – audited information
The 2022 LTIP figure was calculated based on the three-month average share price to the end of FY22. The 2022 LTIP figure in the single
figure table above has therefore been adjusted to reflect the actual share price of £0.29 (being the closing share price on 22 September
2022, the day before the vesting date of 23 September 2022). The figure also includes the value of dividend equivalents for the period
from grant to the vesting date.

Annual incentive plan – audited information
Each Executive Director was eligible to earn a bonus in respect of FY23 of up to 100% of salary. 90% of the award was based on EBITDA
targets (required to be achieved after funding of any bonus payments triggered) which were considered to be suitably stretching, and
took account of the fact that we would not benefit from £5.6m business rates relief in FY23 as we had done in FY22. The remaining 10% was
based on performance against key strategic objectives as set out below, with any payout in respect of the strategic objectives element
being subject to the achievement of a threshold level of EBITDA performance.

As shown in the table below, actual adjusted EBITDA outperformance above the threshold target was not sufficient to support a threshold
bonus level and, therefore, no bonus was earned by either Executive Director in respect of this element for the year.

EBITDA element

Threshold

Maximum

Performance
(£m)

Vesting
(% of maximum
for EBITDA
element)

Actual
performance
(£m)

Bonus earned for
EBITDA element
(% of maximum
for EBITDA
element)

Bonus earned
for EBITDA
element
(% of salary)

20%

100%

9 1

Adjusted EBITDA before funding of any bonus. Outperformance over the threshold target was not sufficient to fund threshold level bonuses, and therefore
no bonus was earned for the EBITDA element.

Strategic objectives element
Each Executive Director made good progress in the year against the strategic objectives set (as summarised below). However, since the
adjusted EBITDA performance measure was not met, no bonus was earned by reference to those achievements.

Gavin Peck, CEO
Gavin’s objectives were to develop the brand externally and internally, develop a quantified ESG approach including environmental
targets, drive the implementation of the strategy and continue to develop both leaders and colleagues. The Board considers that,
given the challenges during the year, overall Gavin has achieved his objectives (exceeding them in some areas), including:

• Roll out of first phase of the evolved brand.

• Refreshed product offer and loyalty scheme relaunched.

• Realignment of online operational team and deployment of new analytical tools following completion of website usability studies.

• Store estate improved - 17 new stores opened (including 3 relocations), and 34 refits.

•

Improved operational efficiency (new store labour model, implementation of improved supply chain systems, automation
in online fulfilment).

• Continued investor (including potential investor) engagement, and raised brand awareness.

• Led development of clear ESG strategy, incorporating strong positions on colleagues, community and environmental commitments

(base line targets, including Net Zero by 2045, set and agreed by the Board).

• Delivered MyWorks (colleague engagement platform) and Can Do Academy (learning and development platform). Improved ranking

from 13th to 12th in ‘Best Big Companies to Work For’ category and maintained 2* accreditation.

Steve Alldridge CFO
Steve’s objectives were to continue the stakeholder engagement with both investors and banks, improve the financial control
environment, improve the quality of data and performance reporting to enhance business support and strengthen the Finance Team.
The Board consider that Steve has met his objectives for the year:

• Successfully negotiated an extension of banking facilities at reduced cost and maintained strong relationships with our

banking partner.

• Continued to engage with investors and other stakeholders, changing broker at the end of the year.

• Tightened financial controls and disciplines, with better visibility and insight on stock holding.

•

Improved performance reporting, supported by a strengthened business partnering capability.

• Finance function strengthened with talented individuals, raising the future capability of the team.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportAnnual report on remuneration continued

Long-term incentives
LTIP award vesting
Gavin Peck was granted an LTIP award in the form of nil-cost options over 847,457 shares in February 2021. The award was subject
to performance conditions set out below, general and windfall-gain underpins, and a two-year post-vesting holding period.

Measure

Adjusted EPS

Share price1

Weighting

50%

Threshold
(20% vesting)

3.1 pence

£0.50

Maximum (100%
vesting)

13.1 pence

£2

Actual performance

N/A

33.85p

Average share price over the period of four weeks beginning with the announcement by the Company of its Full Year Trading Update for its 2022/23
financial year.

As described in the Remuneration Committee Chair’s letter on page 74, adjusted EPS is impacted by the prior year restatements
described in note 14 to the financial statements, as such, the Committee’s assessment of the outturn of the EPS target is estimated. This
estimate excludes the impact of a £0.6m tax credit received during the year. This exclusion results in adjusted EPS (before the impact of
prior period restatements) below the threshold target and accordingly the Committee’s estimate is that the LTIP award will lapse in full.

Long-term incentives – awards granted during FY23 – audited information

LTIP awards were granted to Gavin Peck and Steve Alldridge on 17 November 2022 equal to 100% of salary on the following basis:

Gavin Peck

Steve Alldridge

Type of award

Maximum
opportunity

Number of
shares

Face value at
grant £1

% of award vesting
at threshold

LTIP

100% of salary

936,363

655,454

308,999

216,299

20%

Performance period2

See footnote 2

For these purposes, the face value of an award is calculated by multiplying the number of shares over which the award was granted by 33 pence, the
average closing share price for each of the three business days prior to the date of grant (rounded up to the nearest whole pence).

2 Each award is subject to performance conditions assessed over the Company’s FY23, FY24 and FY25 financial years as regards the EPS element of the

performance condition, with the share price element of the performance condition assessed following the announcement by the Company of its Full Year
Trading Update for its FY25 financial year (as described further below). To the extent an award vests following the end of the performance period, it is
subject to a further two-year holding period before the shares are released.

A summary of the performance conditions for these awards (with half of each award based on EPS, and half on share price) is set out on
page 77. The Committee believes that the Executive Directors have direct influence over both measures, and that targets are stretching
but achievable.

SAYE Scheme options granted during FY23 – audited information
Gavin Peck was granted a SAYE Scheme option on 4 November 2022 as detailed below as part of the SAYE Scheme offer made to
all eligible colleagues.

Gavin Peck

Type of award

SAYE option

Number of
shares

31,034

Exercise price1

£0.29

Face value at
grant £2

10,964

In line with the SAYE Scheme, this is set at a 20% discount to 35.33 pence, the average closing share price on 5, 6 and 7 October 2022, the three business
days prior to the date of invitation.

2 For these purposes, the face value of the option is calculated by multiplying the number of shares over which the option was granted by 35.33 pence,

the average closing share price for each of the three business days prior to the date of invitation.

TheWorks.co.uk plc Annual Report and Accounts 2023

Statement of Directors’ shareholding and share interests – audited information
The number of shares of the Company in which the Directors had a beneficial interest, together with details of the Executive Directors’
long-term incentive interests, as at 30 April 2023, are set out in the table below.

Outstanding scheme interests 30 April 2023

Beneficially owned shares

Unvested LTIP
interests
subject to
performance
conditions

Scheme
interests not
subject to
performance
measures 1

Vested but
unexercised
scheme interests 2

Total shares
subject to
outstanding
scheme
interests 3

1 May 2022

30 April 2023

Total of all
scheme
interests and
shareholdings
at 30 April 2023

Executive Directors

Gavin Peck

Steve Alldridge

2,422,117

1,102,262

47,397

96,151

—

2,565,665

1,102,262

554,636

—

3,120,301

1,102,262

1 SAYE awards that have not vested.

2 LTIP awards that have vested but remain unexercised.

3 The tax qualifying CSOP awards granted as part of the 2019 awards are not included in these numbers, reflecting that if they were to be exercised the LTIP

element of those awards would be reduced to reflect the gain on the CSOP element, as referred to on page 77.

Non-Executive Directors

Carolyn Bradley

Harry Morley1

Catherine Glickman

Outstanding scheme interests 30 April 2023

Beneficially owned shares

Unvested LTIP
interests
subject to
performance
conditions

Scheme
interests not
subject to
performance
measures

Total shares
subject to
outstanding
scheme
interests

1 May 2022

1 April 2023

Total of all
scheme
interests and
shareholdings
at 30 April 2023

—

105,866

200,000

77,244

179,736

275,000

181,033

179,736

275,000

181,033

Includes interest of Kate Morley (a person closely associated with Harry Morley).

Executive Directors’ interests under share schemes – audited information
The table below sets out the Executive Directors’ interests in the LTIP and SAYE Schemes.

The LTIP awards are subject to performance conditions as set out in the table below.

Award date

Vesting, exercise
or release date

As at
1 May
2022

Granted
during the
year

Exercised
during the
year

Lapsed
during the
year

Gavin Peck

LTIP

3 September 20191,2

September 2022

15 February 2021

June 2023

250,617

847,457

30 September 2021

June 2024

638,297

—

17 November 2022

June 2025

—

936,363

SAYE

31 August 2021

1 October 2024

16,363

—

4 November 2022

1 December 2025

—

31,034

Steve Alldridge

LTIP

30 September 2021

June 2024

446,808

—

17 November 2022

June 2025

—

655,454

—

154,466

—

Number of
shares at
30 April
2023

96,151

847,457

638,297

936,363

16,363

31,034

446,808

655,454

Exercise
price

N/A

55p

29p

N/A

In addition to his LTIP award, Gavin Peck was also granted a tax qualifying CSOP award over 37,037 shares with an exercise price of £0.81. The CSOP
award vested at 38.4% (the same level as the LTIP award – see Note 2 below) and lapsed in respect of the balance of the shares subject to it so that it is
not held over 22,815 shares. To the extent a CSOP award is exercised at a gain, the extent to which the associated LTIP award can be exercised shall be
reduced by the amount of the gain so that there is no increase in the pre-tax value of the award.

2 38.4% of Gavin Peck’s LTIP award granted in 2019 vested by reference to EPS performance over the three financial years ending with FY22. The remaining
portion of the award (154,666) lapsed on the vesting date as shown in the table above. The vested portion of the award will not be released to Gavin so
that he can exercise it until the end of a further two-year holding period.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic report

Annual report on remuneration continued

Executive Directors’ interests under share schemes – audited information continued
The performance condition applying to Gavin Peck’s LTIP award granted in February 2021 is summarised on page 81. The estimated
outturn is that the award will lapse in full.

Vesting of the LTIP awards made in September 2021 and November 2022 is based on EPS and share price targets as set out in the
table below.

Award date

30 September 2021

17 November 2022

Measure

EPS1

Share price2

EPS3

Share price4

Weighting

Threshold (20% vesting)

Maximum (100% vesting)

50%

5.6 pence

£0.57

5.6 pence

£0.43

15.6 pence

£2.00

15.6 pence

£1.40

Basic EPS for the Company’s FY24, pre-IFRS 16 and subject to such adjustments as the Remuneration Committee determines to ensure that performance
is assessed on a fair and consistent basis.

2 Average share price over the period of four weeks following the announcement by the Company of its Full Year Trading Update for its 2023/24

financial year.

3 Basic EPS for the Company’s FY25, pre-IFRS 16 and subject to such adjustments as the Remuneration Committee determines to ensure that performance

is assessed on a fair and consistent basis.

4 Average share price over the period of four weeks following the announcement by the Company of its Full Year Trading Update for its 2024/25

financial year.

The awards are subject to a general performance underpin, whereby the Committee shall assess overall financial performance of the
Group over the performance period in determining the level of vesting and an assessment of whether any of the value of the awards on
assessment of the performance conditions represents a ‘windfall gain’. The awards are also subject to a cap such that the value of the
vested shares under an award, determined by reference to the price used to assess the share price element of the performance condition,
may not exceed £2,500,000 in the case of Gavin Peck’s award and £1,750,000 in the case of Steve Alldridge’s award.

As noted in the Remuneration Committee Chair’s statement on page 74, the EPS targets for in-flight LTIPs will be reviewed in FY24 to
consider the impact of prior period restatements and to ensure that performance can be assessed on a fair and consistent basis. This
review is intended to ensure that the level of stretch in the targets is maintained and the targets are not made materially easier or harder
to achieve as a result of the restatement.

Directors’ share ownership guidelines – audited information
The Committee has adopted a shareholding guideline for the Executive Directors, which requires the Executive Directors to retain half
of all shares acquired under the LTIP (after sales to cover tax and any exercise price) until such time as their holding has a value equal to
200% of salary. Shares subject to LTIP awards which have vested but not been released (i.e. which remain in a holding period), or which
have been released but have not been exercised, and any shares subject to deferred bonus awards, count towards the guidelines on a
net of assumed tax basis.

Executive Director

Gavin Peck

Steve Alldridge

Number
of shares
counting
towards the
guideline at
30 April 2023

Value of
shares
counting
towards
the guideline 1

Value of
shares as
a percentage
of base salary

Shareholding
guideline met?

605,596

£187,734

45.5%

In progress

—

In progress 2

1 Based on a share price of 31 pence as at 28 April 2023 (being the last trading day prior to the year end of 30 April 2023).

2 Steve Alldridge has not yet had any LTIP award which has vested. When he does so, he will be required to retain shares in accordance with the Policy

which will count towards the shareholding guideline.

TheWorks.co.uk plc Annual Report and Accounts 2023

Performance graph and historical CEO remuneration outcomes
The graph below shows the total shareholder return (TSR) performance for the Company’s shares in comparison to the FTSE SmallCap
for the period from Main Market Admission on 19 July 2018 to 30 April 2023. The TSR performance of the FTSE SmallCap index has been
selected as it is considered the most appropriate comparator group. For the purposes of the graph, TSR has been calculated as the
percentage change in the market price of the shares during the period, assuming that dividends are reinvested. The graph shows the
value, as at 30 April 2023, of £100 invested in shares in the Company on 19 July 2018 compared with £100 invested in the FTSE SmallCap.

150

140

120

100

)

0
0
1
£
o
t
d
e
s
a
b
e
r
(

n
r
u
t
e
r

r
e
d
o
h
e
r

a
h
s

a
t
o
T

YE
2019

YE
2020

YE
2021

YE
2022

YE
2023

TheWorks.co.uk plc

FTSE SmallCap

The table below sets out the CEO’s total remuneration over the last five financial years, valued using the methodology applied to the single
total figure of remuneration. The Committee does not believe that the remuneration paid in earlier years as a private company bears any
comparative value to that paid in its time as a public company and, therefore, the Committee has chosen to disclose remuneration only
for the four most recent financial years (with the figures for FY19 being for the period from Admission on 19 July 2018 to 28 April 2019):

Year (CEO)

2023 (Gavin Peck)

2022 (Gavin Peck)

2021 (Gavin Peck)

2020 (Gavin Peck – from 16 January 2020)

2020 (Kevin Keaney – until 16 January 2020)

2019 (Kevin Keaney)

Total single
figure
remuneration
£000 1

Annual
bonus payout
(% of maximum
opportunity)

LTIP vesting
(% of maximum
number of
shares)2

331

585

303

267

288

78%

38.4%

N/A

The 2022 figure reflects the CEO’s single total figure of remuneration for FY22 as included in this report updated to reflect the ‘truing up’ of the FY22 LTIP
figure as referred to on page 79.

2 There was no LTIP capable of vesting in respect of performance ending 2019 and 2020.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic report

Annual report on remuneration continued

Change in remuneration of Directors compared to Group employees
The table below sets out the annual change in salary and fees, benefits and bonus paid to each of the Directors from FY20 to FY23. The
regulations also require a comparison of the change in the remuneration of the employees of TheWorks.co.uk plc. The Company has no
employees other than the Executive Directors and, accordingly, strictly no disclosure is required. Given the added complexities of the
impact in FY21 of furlough, the Company has not included the average employee salary changes between FY21 and FY22, but, in the
interests of transparency, has provided information on the approach to the change in salary of the Group’s UK employees.

Notes to the table provide additional information in relation to the changes. Additional information in relation to the changes in previous
years is set out in the relevant previous Directors’ remuneration reports.

Salary/fees

FY22–FY23

Taxable benefits

Annual bonus

FY21–FY22

FY20–FY21

FY22–FY23

FY21–FY22

FY20–FY21

FY22–FY23

FY21–FY22

FY20–FY21

Executive Directors

Non-Executive Directors

UK employees’ average4

Gavin Peck

Steve Alldridge 1

Carolyn Bradley 1

Catherine
Glickman

Harry Morley

27%

18% 2

N/A 3

N/A

—

N/A 3

—

N/A

—

N/A

—

(2%)

N/A

(2%)

N/A

3.46% 5

See note to
corresponding
table in FY22 DRR

5.5%6

(17.8%)

23.49%

N/A

See note to
corresponding
table in FY22 DRR

(60.4%)

Carolyn Bradley and Steve Alldridge were appointed during FY22, and therefore there is no disclosure for the change in their remuneration between
FY21 and FY22. In the case of Steve Alldridge, the 3% change between FY22 and FY23 reflects the 3% increase to his salary for FY23.

2 Increase reflects increase due to SAYE discount included in taxable benefits.

3 No annual bonus was earned by Gavin Peck or Steve Alldridge in respect of FY23. Therefore, the percentage change between FY22 and FY23 is not

considered to be a meaningful disclosure.

4 The UK employees’ average changes are calculated comparing the remuneration for the tax year ended 5 April 2022 with the remuneration for the tax

year ended 5 April 2023 as this data is more readily available than data in respect of financial years. The value of SAYE options granted in November 2022
has been excluded for consistency with the CEO pay ratio calculation on page 85.

5 In FY22 rates for store and Distribution Centre colleagues were increased in line with increases in the National Living and Minimum Wages, with colleagues
aged 23 plus receiving an increase of 6.6% in April 2022. We applied an average 3% increase to non-minimum wage colleagues and maintained a wage
differential in store teams. In FY23 rates for store and Distribution Centre colleagues were increased in line with increases in the National Living and
Minimum Wages, with colleagues aged 23 plus receiving an increase of 9.7% in April 2023. Outside of all applicable NMW increases, an average of 7.1%
was given across the business (7% average for store management and 5% average for Store Support and Distribution Centre colleagues).

6 The increase in benefits paid in FY23 is due to a rise in the number of managers in our support centre who receive taxable benefits. The percentage

change reflects an increase in the average value of benefits provided from c.£119 to c.£126.

Relative importance of spend on pay
The following table sets out the total remuneration for all employees and the total shareholder distributions in FY22 and FY23. All figures
provided are taken from the relevant Company accounts.

Total remuneration for all employees (including Executive Directors)

Dividends and share buyback

FY22
£000

60,031

–

FY23
£000

62,235

1,492

Percentage
change

3.7%

N/A

Since there were no dividends or buybacks in FY22, the percentage change between FY22 and FY23 is not considered to be a
meaningful disclosure.

TheWorks.co.uk plc Annual Report and Accounts 2023

CEO pay ratio
The table below shows how the CEO’s remuneration (as taken from the single figure remuneration table and, therefore, taking into
account the CEO’s voluntary reduction in remuneration in relevant years as disclosed in previous Directors’ remuneration reports)
compares to equivalent remuneration for full-time equivalent UK employees, ranked at the 25th, 50th and 75th percentile.

Method

25th percentile

Median

75th percentile

25th percentile

Median

75th percentile

Pay ratio

Remuneration values (£)

Year

FY23

Option C

FY22

Option C

FY21

Option C

FY20

Option C

17:1

31:1

17:1

21:1

16:1

30:1

16:1

19:1

15:1

27:1

15:1

17:1

Salary only

Total remuneration

Salary only

Total remuneration

Salary only

Total remuneration

Salary only

Total remuneration

19,760

19,773

18,533

18,637

18,138

17,077

20,342

20,473

19,115

19,487

18,720

18,013

18,094

21,674

21,997

20,389

21,591

19,448

19,675

19,925

20,338

The methodology applied to calculate pay ratios was as follows:

• The regulations set out three methodologies for determining the CEO pay ratio. We have chosen ‘Option C’ consistent with the previous

years’ calculations.

•

As ratios could be unduly impacted by joiners and leavers who may not participate in all remuneration arrangements in the year of joining
and leaving, the Committee has modified the statutory basis to exclude any employee not employed throughout the financial year.

The FY22 ratios in this table have been updated to reflect the CEO’s single total figure of remuneration for FY22 as included in this report
and updated to reflect the ‘truing up’ of the FY22 LTIP figure (referred to on page 79).

Employee pay data is based on full-time equivalent (FTE) base pay for UK employees as at 31 March of the relevant year (based on
FTE salary for salaried employees and hourly pay rates for hourly paid employees), to which actual pension contributions, bonus and
benefits have been added, except that the value of SAYE options has been excluded (for the purposes of the FY20, FY22 and FY23
calculations) as their value is not considered to have a significant impact on the CEO pay ratios and sourcing the data for each
employee is administratively burdensome. The employees have then been ranked by FTE pay and benefits calculated on this basis
and the employees at the 25th percentile, 50th percentile (median) and 75th percentile have been identified. The FTE pay and benefits
calculated on this basis for those three employees are then compared to the CEO single figure of remuneration to calculate the ratios;
the calculations do not, therefore, take into account the impact of the identified employees having been furloughed during any year
in which that was relevant.

•

For 2020 the CEO single figure of remuneration used comprises the single total figure for FY20 for Kevin Keaney, plus the single total
figure for Gavin Peck for the period of the year from his appointment as CEO (16 January 2020) to 26 April 2020.

The CEO pay ratio has the potential to vary considerably year on year due to a significant proportion of the CEO’s remuneration package
comprising performance related variable pay. Gavin Peck earned a bonus equal to 78% of salary in respect of FY22 and the vesting at
38.4% of maximum of the LTIP award granted to him in September 2019 was similarly included in his FY22 single total figure of remuneration.
As reported elsewhere in this Directors’ Remuneration Report, Gavin Peck did not earn a bonus in respect of FY23 and the estimated
outturn of the LTIP granted to him in February 2021 is that the award will lapse in full. The variance in incentive outcomes between FY22
and FY23 is the primary reason for the decrease in the CEO pay ratio between FY22 and FY23.

The Company considers that the median pay ratio is consistent with pay, reward and progression policies for the Company’s employees
as a whole.

Payments to past Directors and for loss of office – audited information
No payments for loss of office or to past Directors were made during FY23.

Implementation of the Policy
Information on how the Committee intends to implement the Policy is set out in the Policy summary table on pages 76 and 77.

Shareholder voting at AGM
The following table shows the results of the binding vote on the Policy, and the advisory vote on the Directors’ Remuneration Report,
at the 2022 AGM.

For (including discretionary)

Against

Withheld

On behalf of the Board.

Catherine Glickman
Chair of the Remuneration Committee
30 August 2023

Approval of the Remuneration Policy

Approval of the Directors’
remuneration report

Total number
of votes

31,925,296

27,758

11,384

% of
votes cast

99.91

0.09

N/A

Total
number
of votes

31,924,870

29,758

9,810

% of
votes cast

99.91

0.09

N/A

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportDirectors’ report

The Directors present their report for the financial year ended 30 April 2023. Additional information which is incorporated by reference
into this Directors’ report, including information required in accordance with the Companies Act 2006 (the Act) and Listing Rule 9.8.4R
of the UK Financial Conduct Authority’s Listing Rules, can be located as follows:

Disclosure

Future business developments

Environmental policy

Employee engagement

Diversity policy

Viability

Section 172 statement

Stakeholder engagement in key decisions

Location

Strategic report – pages 1 to 57.

ESG review – pages 29 to 35.

Our stakeholders – pages 26 and 27.
ESG review – pages 29 to 35.
Corporate governance report – pages 62 to 65.

Nomination Committee report – pages 70 to 72.

Viability statement – pages 54 to 56.

Page 28.

Our stakeholders – pages 26 and 27.
Section 172 statement – page 28.
Corporate governance report – pages 62 to 65

Corporate governance compliance statement

Corporate governance report – pages 62 to 65.

Financial risk management objectives and policies
(including hedging policy and use of financial instruments)

Note 25 to the financial statements – pages 127 to 131.

Exposure to price risk, credit risk, liquidity risk and cash flow risk

Note 25 to the financial statements – pages 127 to 131.

Details of long-term incentive schemes

Directors’ remuneration report – pages 73 to 77.

Statement of Directors’ responsibilities

Page 89.

Directors
The Directors of the Company who held office throughout the period are set out below:

Carolyn Bradley (Chair)

Gavin Peck (CEO)

Steve Alldridge (CFO)

Harry Morley (Senior Independent Director)

Catherine Glickman (Non-Executive Director)

Summaries of the current Directors’ key skills and experience are included on pages 60 and 61.

Results and dividend
The results for the year are set out in the consolidated income statement on page 98. The Directors propose the payment of a final
dividend of 1.6 pence per share on 2 November 2023 (with a record date of 6 October 2023), subject to approval on 4 October 2023.

Articles of Association
The rules governing the appointment and replacement of Directors are set out in the Company’s Articles. The Articles may be amended by
a special resolution of the Company’s shareholders. The Articles also set out in full the powers of the Directors in relation to issuing shares
and buying back the Company’s own shares.

Share capital
Details of the Company’s share capital, including changes during the year, are set out in Note 24 to the financial statements. As at 30 April
2023, the Company’s issued share capital consisted of 62,500,000 ordinary shares of 1 pence each. There have been no changes to the
Company’s issued share capital since the financial period end.

Ordinary shareholders are entitled to receive notice of, and to attend and speak at, any general meeting of the Company. On a show of
hands every shareholder present in person or by proxy (or being a corporation represented by a duly authorised representative) shall have
one vote, and on a poll every shareholder who is present in person or by proxy shall have one vote for every share of which he is the holder.
The Notice of AGM specifies deadlines for exercising voting rights and appointing a proxy or proxies.

Other than the general provisions of the Articles (and prevailing legislation) there are no specific restrictions of the size of a holding or on
the transfer of the ordinary shares.

The Directors are not aware of any agreements between holders of the Company’s shares that may result in the restriction of the transfer
of securities or on voting rights. No shareholder holds securities carrying any special rights or control over the Company’s share capital.

TheWorks.co.uk plc Annual Report and Accounts 2023

Authority for the Company to purchase its own shares
Subject to authorisation by shareholder resolution, the Company may purchase its own shares in accordance with the Act. Any shares
which have been bought back may be held as treasury shares or cancelled immediately upon completion of the purchase.

At the Company’s AGM held on 27 October 2022, the Company was generally and unconditionally authorised by its shareholders to make
market purchases (within the meaning of Section 693 of the Act) of up to a maximum of 6,250,000 of its ordinary shares. The Company
has not repurchased any of its ordinary shares under this authority, which is due to expire at the AGM to be held on 4 October 2023, and
accordingly has an unexpired authority to purchase up to 6,250,000 ordinary shares with a nominal value of £62,500.00. A resolution
to renew the authority for a further year will be proposed at the 2023 AGM.

Directors’ interests
The number of ordinary shares of the Company in which the Directors were beneficially interested as at 30 April 2023 is set out in the
Directors’ remuneration report on pages 73 to 75.

Directors’ indemnities
The Company’s Articles provide, subject to the provisions of UK legislation, an indemnity for Directors and Officers of the Company
and the Group in respect of liabilities they may incur in the discharge of their duties or in the exercise of their powers.

Directors’ and Officers’ liability insurance cover is maintained by the Company and is in place in respect of all the Company’s Directors
at the date of this report. The Company reviews its level of cover on an annual basis.

Compensation for loss of office
The Company does not have any agreements with any Executive Director or employee that would provide compensation for loss of
office or employment resulting from a takeover except that provisions of the Company’s LTIP and other share schemes may cause
options and awards outstanding under such schemes to vest on a takeover. Further information is provided in the Directors’ remuneration
report on pages 76 to 77.

Significant interests
The table below shows the interests in shares notified to the Company in accordance with the Disclosure Guidance and Transparency
Rules as at 30 April 2023, and 29 August 2023 (being the latest practicable date prior to publication of this Annual Report).

Name of shareholder

Schroders plc

Jupiter Fund Management plc

Hudson Management Limited

Graeme Coulthard

Downing Strategic Micro-Cap
Investment Trust

As at 30 April 2023

As at 29 August 2023

Number of ordinary shares
of 1 pence each held

Percentage of
total voting rights held

Number of ordinary shares
of 1 pence each held

Percentage of
total voting rights held

12,043,141

5,317,667

3,911,000

3,500,000

2,750,000

19.27%

8.50%

6.25%

5.60%

4.40%

12,043,141

2,442,667

5,811,000

4,050,000

2,750,000

19.27%

3.90%

9.30%

6.48%

4.40%

Branches outside the UK
Other than ten stores located in the Republic of Ireland, the Company has no branches outside the UK.

Employee involvement
Information relating to employees of the Group and how the Company engages with its workforce can be found on pages 32 to 34

Disabled employees
It is the policy of the Group to provide equal recruitment and other opportunities for all colleagues regardless of sex, age, religion,
race, disability or sexual orientation. The Group gives full consideration to applications for employment from disabled people, where
they adequately fulfil the requirements of the job. Once employed by the Group, we ensure that disabled colleagues have full access
to training and career development opportunities. Where colleagues become disabled, it is the Group’s policy to provide continuing
employment and retraining where practicable.

Political donations
The Company did not make any political donations during the year.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportDirectors’ report continued

Change of control – significant agreements
There are a number of agreements that may take effect after, or terminate upon, a change of control of the Company, such as commercial
contracts, bank loan agreements and property lease arrangements.

The only significant agreement to which the Company is a party that takes effect, alters or terminates upon a change of control of the Company
following a takeover bid, and the effect thereof, is the Company’s committed bank facility dated 10 June 2022 which contains a provision such
that, in the event of a change of control, the facility may be cancelled and all outstanding amounts, together with accrued interest, will become
repayable on the date falling 30 days following written notice being given by the lenders that the facility has been cancelled.

Audit information
Each of the Directors at the date of the approval of this report confirms that:

• So far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware.

• The Director has taken all the reasonable steps that he/she ought to have taken as a Director to make himself/herself aware of

any relevant audit information and to establish that the Company’s auditor is aware of the information.

The confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Act.

Auditor
A resolution to reappoint KPMG LLP will be proposed at the forthcoming AGM.

Annual General Meeting
The AGM will be held on 4 October 2023. The Notice of AGM is contained in a separate letter from the Chair accompanying this report.

Post-balance sheet events
Other than as disclosed in the Strategic report, there have been no material post-balance sheet events involving the Company or any
of the Company’s subsidiaries as at the date of this report.

The Strategic report on pages 1 to 57 and this Directors’ report have been drawn up and presented in accordance with, and in reliance
upon, applicable English company law and any liability of the Directors in connection with these reports shall be subject to the limitations
and restrictions provided by such law.

By order of the Board

Gavin Peck
Chief Executive Officer
30 August 2023

TheWorks.co.uk plc Annual Report and Accounts 2023

Statement of Directors’ responsibilities

Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance
with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law,
they are required to prepare the Group financial statements in accordance with UK adopted International Accounting Standards and
applicable law and have elected to prepare the Parent Company financial statements in accordance with UK accounting standards
and applicable law, including FRS 101 Reduced Disclosure Framework.

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent Company and of the Group’s profit or loss for that period. In preparing each of the
Group and Parent Company financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable, relevant, reliable and prudent;

• for the Group financial statements, state whether they have been prepared in accordance with UK adopted International

Accounting Standards;

• for the Parent Company annual statements, state whether applicable UK accounting standards have been followed, subject

to any material departures disclosed and explained in the Parent Company financial statements;

• assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern; and

• use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease

operations, or have no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They are 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,
and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.

Responsibility statement of the Directors in respect of the Annual Financial Report
We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as
a whole; and

• the Strategic report includes a fair review of the development and performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that
they face.

We consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and performance, business model and strategy.

By order of the Board

Gavin Peck
Chief Executive Officer
30 August 2023

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportIndependent auditor’s report
To the members of TheWorks.co.uk plc

1. Our opinion is unmodified
We have audited the financial statements of TheWorks.co.uk plc
(“the Company”) for the 52 week period ended 30 April 2023 which
comprise the Consolidated income statement, Consolidated
statement of comprehensive income, Consolidated statement of
financial position, Consolidated statement of changes in equity,
Consolidated cash flow statement, Company statement of
financial position and Company statements of changes in equity
and the related notes, including the accounting policies in note 1.

Overview

Materiality:
group financial
statements as a whole

Coverage

Key audit matters

£750k (2022: £750k)

0.27% (2022: 0.28%) of revenue

100% (2022: 100%) of revenue

2023 vs 2022

Recurring risks

Going concern

Existence, completeness
and accuracy of
inventory held in stores

Carrying amount of
Parent Company
investment in subsidiaries

Impairment of property,
plant and equipment
and right of use assets

In our opinion:

• the financial statements give a true and fair view of the state of
the Group’s and of the parent Company’s affairs as at 30 April
2023 and of the Group’s loss for the 52 week period then ended;

• the Group financial statements have been properly prepared in
accordance UK-adopted international accounting standards;

• the parent Company financial statements have been properly

prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and

New risk

• the financial statements have been prepared in accordance with

the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis
for our opinion. Our audit opinion is consistent with our report to
the audit committee.

We were first appointed as auditor by the directors on 11 July 2018. The
period of total uninterrupted engagement is for the 5 financial years
ended 30 April 2023. We have fulfilled our ethical responsibilities
under, and we remain independent of the Group in accordance
with, UK ethical requirements including the FRC Ethical Standard
as applied to listed public interest entities. No non-audit services
prohibited by that standard were provided.

TheWorks.co.uk plc Annual Report and Accounts 2023

2. Material uncertainty related to going concern

The risk

Disclosure quality
The financial statements explain how the Board has
formed a judgement that it is appropriate to adopt the
going concern basis of preparation for the Group and
parent Company.

That judgement is based on an evaluation of the inherent
risks to the Group’s and Company’s business model and
how those risks might affect the Group’s and Company’s
financial resources or ability to continue operations over
a period of at least 12 months from the date of approval
of the financial statements.

The risk for our audit is whether or not those risks are such
that they amounted to a material uncertainty that may
cast significant doubt about the ability to continue as a
going concern. If so, that fact is required to be disclosed
(as has been done) and, along with a description of the
circumstances, is a key financial statement disclosure.

Going concern
We draw
attention to note
1 to the financial
statements which
indicates that in
the severe but
plausible downside
scenario the
Group is forecast
to breach its loan
covenants during
the going concern
assessment period.
These events and
conditions, along
with the other
matters explained
in note 1, constitute
a material
uncertainty
that may cast
significant doubt
on the Group’s
and the parent
company’s ability
to continue as a
going concern.

Our opinion is not
modified in respect
of this matter.

Our response

Our procedures included:

• Funding assessment: Considering the

availability and sufficiency of the financing
arrangements in place at the Group, including
the headroom on financial covenants in place on
the Group’s renewed revolving credit facility

• Sensitivity analysis: Challenging the stress

testing performed by the Directors considering
the severe but plausible scenarios that
could arise;

• Historical comparisons: Assessing historical

forecasting accuracy, by comparing previous
forecast results to those actually achieved by
the Group;

• Assessing assumptions: Assessing the key

assumptions (including growth rates in turnover
and margin expectations) as included in the
directors’ business plans and approved at
the period-end date by considering historic
store performance, recent trading and sector
knowledge to set our own expectations;

• Evaluating directors’ intent: Evaluating the
achievability of the actions the directors
consider they would take to improve the position
should the risks materialise, taking into account
the extent to which the directors can control the
timing and outcome of these;

• Comparing assumptions: Considering whether
the forecasts and assumptions used by the
Directors are consistent with other forecasts
used by the Group (including those used to
assess recoverability of Parent Company
investments in subsidiaries and recoverability of
store assets); and

• Assessing transparency: Considering whether

the going concern disclosure in the basis
of preparation of the accounts gives a full
and accurate description of the Directors’
assessment of going concern, including the
identified risks and corresponding assumptions.

Our results
We found the going concern disclosure in note 1 with
a material uncertainty to be acceptable (2022 result
without any material uncertainty: acceptable).

3. Other key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, 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. Going concern is a significant key audit matter and is described in section 2 of our report. We summarise below
the other key audit matters in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit
procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were
addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial
statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a
separate opinion on these matters.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportIndependent auditor’s report continued
To the members of TheWorks.co.uk plc

3. Other key audit matters: our assessment of risks of material misstatement continued

The risk

Our response

Impairment of
property, plant
and equipment
and right-
of-use assets
Carrying amount
£78.5 million, out
of the total PPE
and ROUA of
£79.2 million (2022:
carrying amount
£85.5 million, out
of the total PPE
and ROUA of £86.5
million (restated)).

Refer to page 67
(Audit Committee
Report), page 115
note 14 (financial
disclosures – PPE
and ROU assets).

Forecast-based assessment:
The Group has significant property, plant and equipment
and right-of-use assets held on the consolidated
balance sheet.

The Group estimates the recoverable amount of property,
plant and equipment and right of use assets based on
their value in use, derived from a discounted cash flow
model prepared by management. The key assumptions
applied by management are short-term sales growth,
profit margin and discount rates, which all involve a high
degree of estimation uncertainty.

The increased economic uncertainty and the cost of
living crisis in the UK, has increased the risk in relation to
the recoverability of store assets at the cash generating
unit (“CGU”) level; each store being a CGU.

In addition as described in the financial statements
Note 14 the Group have reconsidered the allocation
of central costs to individual CGUs for the purposes of
impairment testing.

Subjective estimate
Subjective inputs to the value in use calculation, such as
the allocation of central overheads, discount rates and
remaining asset lives require judgement.

Calculation error
The model used to calculate the value in use is complex,
and so open to the possibility of mathematical error given
the complexity of the impairment methodology.

Prior year adjustment
The estimates used in, and accuracy of calculation of the
prior year adjustment could be incorrect. Furthermore,
the disclosures presented may not adequately address
the requirements of IAS 8 in relation to the description of
the adjustment and the impact of the correction.

The effect of these matters is that, as part of our risk
assessment for audit planning purposes we determined
that the degree of estimation uncertainty to be less than
that materiality, however in conducting our final audit
work, we reassessed the degree of estimation uncertainty
in relation to the value in use of store assets and we
determined that the risk has increased. It has a high
degree of estimation uncertainty with a potential range
of reasonable outcomes greater than our materiality
for the financial statements as a whole. The financial
statements (note 14) disclose the range/sensitivity
estimated by the Group.

We performed the detailed tests below rather
than seeking to rely on any of the Group’s controls
because the nature of the balance is such that we
would expect to obtain audit evidence primarily
through the detailed procedures described.

Our procedures included:

• Model design evaluation and re-performance:
We evaluated the reasonableness of the design
of VIU models in line with the requirements of
the accounting standard and re-performed
the calculations the Directors performed for
determining the VIU of each cash generating
unit, including assessing whether the allocation
of central overhead across each of the CGU is
appropriate.

• Benchmarking assumptions: We compared the
Group’s assumptions, in particular those relating
to forecast short-term sales growth rates and
discount rates, to externally derived data and
industry forecasts.

• Historical Comparisons: We assessed the

Group’s performance against budget in the
current and prior periods to evaluate the
historical accuracy of the Group’s forecasts
on a store by store basis and performed a
retrospective review on any prior year provisions/
impairments.

• Sensitivity Analysis: We performed sensitivity

analysis on the assumptions namely the
budgeted growth rates and discount rate.

• Assessing transparency: We assessed whether
the group’s disclosures about the sensitivity of
the outcome of the impairment assessment to
changes in key assumptions reflected the risks
related to the valuation of store assets. We
assessed if the disclosures in relation to the prior
year adjustment were in accordance with IAS 8.

Our results
We found the Group’s property, plant and
equipment and right-of-use assets balances
and the related impairment charges to be
acceptable (2022: acceptable). We found the prior
year adjustment and related disclosures to be
acceptable.

TheWorks.co.uk plc Annual Report and Accounts 2023

3. Other key audit matters: our assessment of risks of material misstatement continued

The risk

Our response

We performed the detailed tests below rather
than seeking to rely on any of the Group’s controls
because the our knowledge of the design of these
controls indicated that we would not be able to
obtain the required evidence to support reliance
on controls.

Our procedures included:

• Test of detail: We counted 640 line items at 25

stores close to the year end. We reconciled these
to the year end listings and compared our count
results with the company inventory records;

• Assessing methodology: We assessed the

methodology used by the group to calculate the
shrinkage provision;

• Independent reperformance: We performed
our own evaluation of the shrinkage based
on our count results, which we compared to
management’s estimate; and

• Assessing transparency: We assessed the

adequacy of the group’s disclosures about the
degree of estimation uncertainty involved in
arriving at the shrinkage provision.

Our results
The results of our testing were satisfactory and we
found the existence, completeness and accuracy
of Inventory to be acceptable (2022: acceptable).

Existence,
completeness
and accuracy
of Inventory
Stores Inventory:
£21.0 million;
(2022: £20.4 million)

Refer to page 67
(Audit Committee
Report), and
page 123 note
17 (financial
disclosures).

Subjective estimation:
Inventory is a significant balance. It is held in stores, at
the Company warehouse and at a third- party logistics
provider. The risks described below relate to inventory
held at the stores.

It is usual in a retail environment for differences to arise
between the inventory records and physical quantities
for a variety of reasons, including theft and other losses,
often referred to as shrinkage.

The existence and completeness of inventory and
the extent of shrinkage was previously assessed by
management through sample inventory counts at
every store throughout the year (“tactical counts”) and
complete inventory counts at a number of stores (“wall-
to-wall counts”). The inventory records were adjusted
to reflect the results of management’s count processes
and a shrinkage provision was established to cater for an
estimate of the losses incurred between the count dates
and the year end.

In the prior year, Management’s count processes in the
stores were disrupted by a cyber incident in March 2022.
As a result, management were not able to conduct as
many wall-to-wall counts as planned to confirm the
existence and completeness of store inventory during the
course of the year. Therefore, management conducted
wall-to- wall counts at a sample of stores and estimated
the level of unrecognised shrinkage across the estate on
this basis.

Management’s count processes in the stores for FY23 was
to perform wall-to-wall inventory counts across all stores
within the final quarter of the year to establish a new
inventory volume baseline. Management expected that
the pre-count inventory record contained inaccuracies
and therefore variances identified in the count were not
highly scrutinised. Additionally, the count process was
new for FY23. Based on these factors we considered that
there was a high risk that the counts would be executed
incorrectly, or the results recorded incorrectly resulting in
a material error in the inventory record.

Management still developed an estimate for the level of
unrecognised shrinkage in the stores inventory balance,
but this was based on count results from all stores and
the period between the count date and year-end was
far shorter for almost all stores. As a result, the provision
for shrinkage was considered to have a far lower degree
of estimation uncertainty with a potential range of
outcomes smaller than our materiality for the financial
statements as a whole.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportIndependent auditor’s report continued
To the members of TheWorks.co.uk plc

3. Other key audit matters: our assessment of risks of material misstatement continued

The risk

Our response

Carrying
amount
of Parent
Company
investment in
subsidiaries
£38.4 million;
(2022: £57.3 million)

Refer to page 67
(Audit Committee
Report), page 136
note 33 (financial
disclosures).

Forecast-based assessment:
The carrying amount of the Parent Company’s
investments in subsidiaries represents 100% (2022: 80.1%)
of the Parent Company’s total assets. The net assets
of the subsidiaries are less than the carrying amount
of the Parent Company’s investment which is therefore
assessed with reference to their discounted forecast
future cash flows. This is inherently judgemental due to
the subjectivity and uncertainty involved in selecting the
appropriate key assumptions, being long term growth
rate, discount rate and underlying cashflows, and
preparing the future discounted cash flow model.

The effect of these matters is that, as part of our risk
assessment, we determined that the carrying value of the
parent company’s investment in subsidiaries has a high
degree of estimation uncertainty, with a potential range
of reasonable outcomes greater than our materiality
for the financial statements as a whole. The financial
statements (Note 33) disclose the sensitivity estimated by
the Company.

We performed the tests below rather than seeking
to rely on any of the Group’s controls because the
nature of the balance is such that we would expect
to obtain audit evidence primarily through the
detailed procedures described.

Our procedures included:

• Test of Detail: We used our sector

knowledge and understanding of the
business and considered whether or not
they had been appropriately captured in the
impairment models;

• Our valuation expertise: We used experts to
assist us in assessing appropriateness of the
methodology and assumptions. In addition we
performed an independent calculation of the
discount rate based on market data to assist us
in assessing the discount rate assumptions used
by the Group;

• Assessing assumptions: We assessed the key

assumptions (including growth rates in turnover
and margin expectations) as included in the
directors’ business plans and approved at
the period-end date by considering historic
performance and industry forecasts to set our
own expectations;

• Sensitivity Analysis: We applied sensitivities to
key assumptions to assess their impact on the
recoverability of the assets;

• Historical comparison: We evaluated the

historical accuracy of the Group’s forecasts by
comparing previous budget to actual results;

• Comparing valuations: We compared the results
of discounted cash flows against the Group’s
market capitalisation; and

• Assessing transparency: We also considered
the adequacy of the Group’s disclosure of the
key risks and sensitivity around the outcome,
and whether that disclosure reflected the
risks inherent in the valuation of investments
in subsidiaries.

Our results
The results of our testing were satisfactory and
we found the impairment of £19.6m recorded and
the resulting carrying value of the investment in
subsidiaries to be acceptable (2022: acceptable).

TheWorks.co.uk plc Annual Report and Accounts 2023

4. Our application of materiality and an overview of the
scope of our audit
Materiality for the Group financial statements as a whole was set
at £750k (2022: £750k), determined with reference to a benchmark
of revenue of £280m (2022: £265m) as disclosed in note 3, of which it
represents 0.27% (2022: 0.28%).

Benchmark – Revenue
£280m (2022: £265m)

Group materiality
£750k (2022: £750k)

Materiality for the parent Company financial statements as a
whole was set at £412k (2022: £600k), determined with reference
to a benchmark of Company net assets, of which it represents
1.40% (2022: 1.17%).

In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable
level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the
financial statements as a whole.

Performance materiality was set at 65% (2022: 65%) of materiality
for the financial statements as a whole, which equates to £487.5k
(2022: £487.5k) for the Group and £267k (2022: £390k) for the parent
Company. We applied this percentage in our determination of
performance materiality based on the level of misstatements
and control deficiencies in the control environment during the
prior period.

9595++55++II

Revenue

Group materiality

£750k
Whole financial statements
materiality (2022: £750k)

£487.5k
Whole financial statements
performance materiality
(2022: £487.5k)

£37.5k
Misstatements reported
to the audit committee
(2022: £37.5k)

We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £37.5k
(2022: £37.5k), in addition to other identified misstatements that
warranted reporting on qualitative grounds.

The scope of the audit work performed was predominately
substantive as we placed limited reliance upon the Group’s internal
control over financial reporting.

The group team performed the audit of the group as if it was a
single aggregated set of financial information. The audit was
performed using materiality and performance materiality level
set out above.

5. Going concern
The directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the group
or the company, or to cease their operations, and as they have
concluded that the group and the company’s financial position
means that this is realistic for at least 12 months from the date of
approval of the financial statements (“the going concern period”).
As stated in section 2 of our report, they have also concluded that
there is a material uncertainty related to going concern.

An explanation of how we evaluated management’s assessment of
going concern is set out in section 2 of our report.

Our conclusions based on this work:

• we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements
is appropriate;

• we have nothing material to add or draw attention to in relation
to the directors’ statement in note 1 to the financial statements
on the use of the going concern basis of accounting, and
their identification therein of a material uncertainty over the
Group and Company’s use of that basis for the going concern
period; and

• the related statement under the Listing Rules set out on page

86 is materially consistent with the financial statements and our
audit knowledge.

6. Fraud and breaches of laws and regulations –
ability to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive
or pressure to commit fraud or provide an opportunity to commit
fraud. Our risk assessment procedures included:

• Enquiring of directors and inspection of policy documentation
as to the Group’s and the Company’s high-level policies and
procedures to prevent and detect fraud and the Group’s and the
Company’s channel for “whistleblowing”, as well as whether they
have knowledge of any actual, suspected or alleged fraud.

• Reading Board minutes.

• Considering remuneration incentive schemes and performance
targets for management and directors including the EPS target
for management remuneration.

• Held fraud risks discussions with Forensic Specialists.

We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit.

As required by auditing standards, and taking into account
possible pressures to meet profit targets and our overall knowledge
of the control environment we perform procedures to address the
risk of management override of controls, in particular the risk that
Group management may be in a position to make inappropriate
accounting entries and the risk of bias in accounting estimates
and judgements such as dilapidations, cashflow and impairment
assumptions. On this audit we do not believe there is a fraud risk
related to revenue recognition because transactions are highly
disaggregated, individually immaterial and quick cash settlement.

We did not identify any additional fraud risks.

We performed procedures including:

•

Identifying journal entries to test based on risk criteria and
comparing the identified entries to supporting documentation.
These included those posted to unusual accounts.

• Assessing whether the judgements made in making accounting

estimates are indicative of a potential bias.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportIndependent auditor’s report continued
To the members of TheWorks.co.uk plc

6. Fraud and breaches of laws and regulations – ability
to detect continued
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the directors and others management (as required
by auditing standards) and discussed with the directors (and other
management) the policies and procedures regarding compliance
with laws and regulations.

As the Group and Company are regulated, our assessment of risks
involved gaining an understanding of the control environment including
the entity’s procedures for complying with regulatory requirements.

We communicated identified laws and regulations throughout our
team and remained alert to any indications of non- compliance
throughout the audit.

The potential effect of these laws and regulations on the financial
statements varies considerably.

Firstly, the Group and Company are subject to laws and regulations
that directly affect the financial statements including financial
reporting legislation (including related companies legislation),
distributable profits legislation and taxation legislation and we
assessed the extent of compliance with these laws and regulations
as part of our procedures on the related financial statement items.

Secondly, the Group and Company are subject to many other
laws and regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in the
financial statements, for instance through the imposition of fines
or litigation We identified the following areas as those most likely
to have such an effect: health and safety, data protection laws,
anti-bribery, employment law, regulatory capital and liquidity,
recognising the regulated nature of the Group’s and Company’s
activities. Auditing standards limit the required audit procedures
to identify non-compliance with these laws and regulations to
enquiry of the directors and other management and inspection of
regulatory and legal correspondence, if any. Therefore if a breach
of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of
law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements
in the financial statements, even though we have properly planned
and performed our audit in accordance with auditing standards.
For example, the further removed non- compliance with laws
and regulations is from the events and transactions reflected
in the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance
or fraud and cannot be expected to detect non- compliance with
all laws and regulations.

7. We have nothing to report on the other information
in the Annual Report
The directors are responsible for the other information presented
in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance
conclusion thereon.

Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.

Strategic report and directors’ report
Based solely on our work on the other information:

• we have not identified material misstatements in the strategic

report and the directors’ report;

•

in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and

in our opinion those reports have been prepared in accordance
with the Companies Act 2006.

Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.

Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there
is a material inconsistency between the directors’ disclosures in
respect of emerging and principal risks and the viability statement,
and the financial statements and our audit knowledge.

Based on those procedures, other than the material uncertainty
related to going concern referred to above, we have nothing
further material to add or draw attention to in relation to:

• the directors’ confirmation within the Viability Statement page 54
that they have carried out a robust assessment of the emerging
and principal risks facing the Group, including those that would
threaten its business model, future performance, solvency and liquidity;

• the Emerging and Principal Risks disclosures describing these

risks and how emerging risks are identified, and explaining how
they are being managed and mitigated; and

• the directors’ explanation in the Viability Statement of how
they have assessed the prospects of the Group, over what
period they have done so and why they considered that period
to be appropriate, and their statement as to whether they
have a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall
due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications
or assumptions.

We are also required to review the Viability Statement, set out on
page 54 under the Listing Rules. Based on the above procedures,
we have concluded that the above disclosures are materially
consistent with the financial statements and our audit knowledge.

Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the absence of anything to report on these statements is not a
guarantee as to the Group’s and Company’s longer-term viability.

TheWorks.co.uk plc Annual Report and Accounts 2023

Auditor’s responsibilities
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 our
opinion in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not 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 aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.

The Company is required to include these financial statements
in an annual financial report prepared using the single electronic
reporting format specified in the TD ESEF Regulation. This auditor’s
report provides no assurance over whether the annual financial
report has been prepared in accordance with that format.

10. The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members,
as a body, for our audit work, for this report, or for the opinions we
have formed.

Gordon Docherty
(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
One Snowhill
Snowhill Queensway
Birmingham
B4 6GH
30 August 2023

7. We have nothing to report on the other information
in the Annual Report continued
Corporate governance disclosures
We are required to perform procedures to identify whether there
is a material inconsistency between the directors’ corporate
governance disclosures and the financial statements and our
audit knowledge.

Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:

• the directors’ statement that they consider that the annual
report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy;

• the section of the annual report describing the work of the

Audit Committee, including the significant issues that the audit
committee considered in relation to the financial statements,
and how these issues were addressed; and

• the section of the annual report that describes the review of

the effectiveness of the Group’s risk management and internal
control systems.

We are required to review the part of the Corporate Governance
Report relating to the Group’s compliance with the provisions of the
UK Corporate Governance Code specified by the Listing Rules for
our review. We have nothing to report in this respect.

8. We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:

• adequate accounting records have not been kept by the parent

Company, or returns adequate for our audit have not been
received from branches not visited by us; or

• the parent Company financial statements and the part of

the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law

are not made; or

• we have not received all the information and explanations we

require for our audit.

We have nothing to report in these respects.

9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 89,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; 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; assessing the Group
and parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportConsolidated income statement
For the period ended 30 April 2023

Revenue

Cost of sales

Gross profit

Other operating income/(expense)

Distribution expenses

Administrative expenses

Operating profit

Finance income

Finance expenses

Net financing expense

Profit before tax

Taxation

Profit for the period

Alternative performance measure
Profit before tax and IFRS 16

Basic earnings per share (pence)

Diluted earnings per share (pence)

52 weeks to 30 April 2023

52 weeks to 1 May 2022
(Restated – Note 14)

Result before
Adjusting items
£000

Note

280,102

(231,150)

48,952

(10,284)

(24,197)

14,479

227

(4,648)

(4,421)

10,058

265

10,323

3,025

16.5

16.4

Adjusting
items
£000

—

(5,052)

—

(5,052)

—

(5,052)

—

(5,052)

Total
£000

280,102

(236,202)

43,900

(10,284)

(24,197)

9,427

227

(4,648)

(4,421)

5,006

265

5,271

Result before
Adjusting items
£000

264,630

(209,598)

55,032

(111)

(9,128)

(24,116)

21,677

(5,192)

(5,176)

16,501

(276)

16,225

Adjusting
items
£000

(2,262)

—

(2,262)

—

(2,262)

—

(2,262)

(1,488)

1,537

10,980

(2,191)

8.4

26.0

25.6

Total
£000

264,630

(211,860)

52,770

(111)

(9,128)

(24,116)

19,415

(5,192)

(5,176)

14,239

(276)

13,963

8,789

22.3

22.0

Profit for the period is attributable to equity holders of the Parent.

TheWorks.co.uk plc Annual Report and Accounts 2023

Consolidated statement of comprehensive income
For the period ended 30 April 2023

Profit for the year

Items that may be recycled subsequently into profit and loss

Cash flow hedges – changes in fair value

Cash flow hedges – reclassified to profit and loss

Cost of hedging – changes in fair value

Cost of hedging – reclassified to profit and loss

Tax relating to components of other comprehensive income

Other comprehensive (expense)/income for the period, net of income tax

Total comprehensive income for the period attributable to equity shareholders of the Parent

FY22
(Restated –
Note 14)
£000

13,963

4,181

(321)

(83)

3,871

17,834

FY23
£000

5,271

(2,862)

(62)

(162)

262

(2,733)

2,538

TheWorks.co.uk plc Annual Report and Accounts 2023

Financial statementsCorporate governanceStrategic reportConsolidated statement of financial position
As at 30 April 2023

Non-current assets

Intangible assets

Property, plant and equipment

Right-of-use assets

Deferred tax assets

Current assets

Inventories

Trade and other receivables

Derivative financial asset

Current tax asset

Cash and cash equivalents

Total assets

Current liabilities

Lease liabilities

Trade and other payables

Provisions

Derivative financial liability

Current tax liability

Non-current liabilities

Lease liabilities

Provisions

Total liabilities

Net assets

Equity attributable to equity holders of the Parent

Share capital

Share premium

Merger reserve

Share based payment reserve

Hedging reserve

Retained earnings

Total equity

Note

14, 15

15, 20

FY22
(Restated –
Note 14)
£000

1,617

9,896

76,621

4,708

92,842

29,387

8,427

2,393

—

16,280

56,487

FY23
£000

916

11,733

67,463

4,854

84,966

33,441

7,507

—

1,149

10,196

52,293

137,259

149,329

23,449

34,479

565

1,048

—

25,434

35,958

204

—

740

59,541

62,336

74,766

1,298

76,064

85,702

913

86,615

135,605

148,951

1,654

378

625

28,322

(54)

2,780

(331)

625

28,322

(54)

2,252

2,227

(29,688)

(32,994)

1,654

378

These financial statements were approved by the Board of Directors on 30 August 2023 and were signed on its behalf by:

Steve Alldridge
Chief Financial Officer

Company registered number: 11325534

100

TheWorks.co.uk plc Annual Report and Accounts 2023

Consolidated statement of changes in equity

Attributable to equity holders of the Company

(441)

651

378

5,271

(2,733)

2,538

175

528

(1,492)

(473)

(1,437)

Reported balance at 2 May 2021

Cumulative adjustment to opening balance (Note 14)

Restated balance at 2 May 2021

Total comprehensive income for the period

Profit for the period (Restated – Note 14)

Other comprehensive income

Total comprehensive income for the period

Hedging gains and losses and costs of hedging transferred
to the cost of inventory (Note 25)

Transactions with owners of the Company

Share-based payment charges

Total transactions with owners

Share
capital
£000

625

Share
premium
£000

28,322

—

(54)

—

Merger
reserve
£000

Share-based
payment
reserve
£000

Hedging
reserve 1
£000

Retained
earnings
£000

1,601

(1,203)

(20,463)

Total
equity
£000

8,828

(26,494)

1,601

(1,203)

(46,957)

(17,666)

13,963

—

13,963

3,871

17,834

—

651

—

3,871

(441)

—

Balance at 1 May 2022 (Restated – Note 14)

625

28,322

(54)

2,252

2,227

(32,994)

Total comprehensive income/(expense) for the period

Profit for the period

Other comprehensive expense

Total comprehensive income/(expense) for the period

Hedging gains and losses and costs of hedging transferred
to the cost of inventory (Note 25)

Transactions with owners of the Company

Share-based payment charges

Dividend

Own shares purchased by employee benefit trust

Total transactions with owners

Balance at 30 April 2023

—

528

—

528

—

(2,733)

175

—

5,271

—

5,271

—

(1,492)

(473)

(1,965)

625

28,322

(54)

2,780

(331)

(29,688)

1,654

Hedging reserve includes £170k (FY22: £175k) in relation to changes in forward points which are recognised in other comprehensive income and
accumulated as a cost of hedging within the hedging reserve.

TheWorks.co.uk plc Annual Report and Accounts 2023

101

Financial statementsCorporate governanceStrategic reportConsolidated cash flow statement
For the period ended 30 April 2023

Profit for the year (including Adjusting items)

Adjustments for:

Depreciation of property, plant and equipment

Impairment of property, plant and equipment

Reversal of impairment of property, plant and equipment

Depreciation of right-of-use assets

Impairment of right-of-use assets

Reversal of impairment of right-of-use assets

Amortisation of intangible assets

Impairment of intangible assets

Derivative exchange (gain)/loss

Financial income

Financial expense

Interest on lease liabilities

Loss on disposal of property, plant and equipment

Profit on disposal of right-of-use assets and lease liability

Loss on disposal of intangible assets

Share-based payment charges

Taxation

Operating cash flows before changes in working capital

Decrease/(increase) in trade and other receivables

Increase in inventories

(Decrease)/increase in trade and other payables

Increase in provisions

Cash flows from operating activities

Corporation tax paid

Net cash inflow from operating activities

Cash flows from investing activities

Acquisition of property, plant and equipment

Capital contributions received from landlords

Acquisition of intangible assets

Interest received

Net cash outflow from investing activities

Cash flows from financing activities

Payment of lease liabilities (capital)

Payment of lease liabilities (interest)

Payment of RCF fees

Other interest paid

RCF drawdown

Repayment of bank borrowings

Dividend paid

Purchase of treasury shares

Net cash outflow from financing activities

Net (decrease)/increase in cash and cash equivalents

Exchange rate movements

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

102

TheWorks.co.uk plc Annual Report and Accounts 2023

FY23
£000

5,271

4,458

944

(574)

14,840

6,126

(2,562)

878

1,118

(721)

(227)

518

4,130

149

(1,105)

528

(265)

33,520

1,033

(3,129)

(1,443)

746

30,727

(1,508)

29,219

(7,296)

1,928

(1,309)

227

(6,450)

(22,672)

(4,130)

(336)

(321)

4,000

(4,000)

(1,492)

(473)

FY22
(Restated –
Note 14)
£000

13,963

4,040

1,389

(573)

15,094

6,165

(6,094)

567

1,375

289

(16)

692

4,500

179

(441)

—

651

276

42,056

(1,514)

(892)

9,336

399

49,385

(222)

49,163

(2,818)

882

(1,015)

(2,935)

(25,969)

(4,500)

—

(157)

—

(7,500)

—

(29,424)

(38,126)

(6,655)

571

16,280

10,196

8,102

(137)

8,315

16,280

Notes to the consolidated financial statements
(Forming part of the financial statements)

1. Accounting policies
Where accounting policies are particular to an individual note, narrative regarding the policy is included with the relevant note; for
example, the accounting policy in relation to inventory is detailed in Note 17 (Inventories).

(a) General information
TheWorks.co.uk plc is a leading UK multi-channel value retailer of arts and crafts, stationery, toys, games and books, offering customers a
differentiated proposition as a value alternative to full price specialist retailers. The Group operates a network of over 500 stores in the UK
& Ireland and online.

TheWorks.co.uk plc (the ‘Company’) is a UK-based public limited company (11325534) with its registered office at Boldmere House, Faraday
Avenue, Hams Hall Distribution Park, Coleshill, Birmingham B46 1AL.

These consolidated financial statements for the 52 weeks ended 30 April 2023 (FY23 or the ‘Period’) comprise the results of the Company
and its subsidiaries (together referred to as the ‘Group’) and are presented in pounds sterling. All values are rounded to the nearest
thousand (£000), except when otherwise indicated.

(b) Basis of preparation
The Group financial statements have been prepared in accordance with UK-adopted International Accounting Standards.

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect
the application of policies, and the reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience, future budgets and forecasts, and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods. The Group’s significant judgements and estimates relate to going concern and fixed asset impairment;
these are described in Note 1(f).

(i) Going concern
The financial statements have been prepared on a going concern basis, which the Directors consider appropriate for the reasons set
out below.

The Directors have assessed the prospects of the Group, taking into account its current position and the potential impact of the principal
risks documented in the Strategic report on pages 1 to 57. The financial statements have been prepared on a going concern basis, which
the Directors consider appropriate having made this assessment.

The Group has prepared cash flow forecasts for a period of at least twelve months from the date of approval of these financial statements
(the going concern assessment period), based on the Board’s forecast for FY24 and its 3 Year Plan, referred to as the ‘Base Case’ scenario.
In addition, a ‘severe but plausible’ ‘Downside Case’ sensitivity has been prepared to support the Board’s conclusion regarding going
concern, by stress testing the Base Case to indicate the financial headroom resulting from applying more pessimistic assumptions.

In assessing the basis of preparation the Directors have considered:

• the external environment;

• the Group’s financial position including the quantum and expectations regarding availability of bank facilities;

• the potential impact on financial performance of the risks described in the Strategic report;

• the output of the Base Case scenario, which mirrors the Group’s 3 year plan and therefore represents their estimate of the most likely

financial performance over the forecast period;

• measures to maintain or increase liquidity in the event of a significant downturn in trading;

• the resilience of the Group to these risks having a more severe impact, evaluated via the Downside Case which shows the impact on the

Group’s cash flows, bank facility headroom and covenants.

These factors are described below.

External environment
The risks which are considered the most significant to this evaluation relate to the economy and the market, specifically their effect on
the strength of trading conditions, and the Group’s ability to successfully execute its strategy. The risk of weaker consumer demand is
considered to be the greater of these risks, due to the continued high level of inflation and its potential effect on economic growth and
consumer spending.

An emerging risk has been noted in relation to the possible effects of climate change, but this is not expected to have a material financial
impact on the Group during the forecast period.

TheWorks.co.uk plc Annual Report and Accounts 2023

103

Financial statementsCorporate governanceStrategic report1. Accounting policies continued
(b) Basis of preparation continued
(i) Going concern continued
Financial position and bank facilities
At the end of FY23 the Group held net cash at bank of £10.2m (FY22: net cash at bank of £16.3m).

After the Period end, the Group extended the tenor of its bank facility by one year and it now expires on 30 November 2026. At the
same time, following a review of the historic utilisation of the facility, the Group’s anticipated future cash requirements, and the costs of
maintaining the facility, the Group requested that HSBC reduce the size of the facility from £30m to £20m.

The facility includes two financial covenants which are tested quarterly:

the “Leverage Ratio” or level of net debt to LTM (last twelve months’) EBITDA must not exceed 2.5 times during the life of the facility.

the “Fixed Charge Cover” or ratio of LTM EBITDA prior to deducting rent and interest, to LTM rent and interest. This covenant increases
in steps to reflect the expectation of progressively improving financial performance during the life of the facility, as follows: until
October 2023, the ratio must be at least 1.20 times; for the following 12 months the ratio must be at least 1.25 times, and thereafter at
least 1.30 times.

The Group expects to be able to operate and have sufficient headroom within these covenants during the forecast period.

Potential impact of risks on financial scenarios
It is considered unlikely that all the risks described in the Strategic report would manifest themselves to adversely affect the business at
the same time. The Base Case scenario/the Group’s 3 year financial plan, implicitly already takes into account the risks described, and
assumes that they manifest themselves in a way or to an extent that might be considered “neutral”.

The Downside Case scenario assumes that there are more severely negative effects than in the Base Case. In particular, the Downside
Case assumptions are that macroeconomic conditions are significantly worse, resulting in reduced consumer spending and lower sales.
It should be noted that the Base Case already takes into account the current subdued consumer market conditions. The Downside Case
assumes that conditions become worse still from the second half of the FY24 financial year.

Base Case scenario
The Base Case scenario assumptions reflect the following factors:

• Store sales (which represent over 85% of total sales) during the first part of FY24 are above the Base Case requirement but online sales
are below it. The Group is implementing plans to improve its online profitability in the medium term; in the short term, costs relating to
the online business are being tightly controlled to ensure that they reflect the reduced sales level.

• The Base Case gross margin percentage reflects the expected full year effect in FY24 of targeted price increases applied since the
beginning of 2023 and also significantly lower ocean container freight costs. These favourable factors are partially offset by a less
favourable hedged FX rate than in FY23.

• Anticipated further inflationary effects, in particular the increase in the National Living Wage. In respect of other costs, notably property

occupancy costs, it is not expected that there will be further significant inflationary effects during FY24 and FY25, following the
significant increases (for example in electricity costs) already experienced during FY23.

• Capital expenditure levels are in line with the Group’s strategic plan. A significant proportion of the Group’s capital expenditure is

discretionary, particularly over a short-term time period. As a result, if required, it can therefore be reduced substantially, for example, in
the event the Group needing to preserve cash.

• The anticipated costs of the Group’s net zero climate change commitments have been incorporated within the Base Case model. As set
out in the climate related disclosures on pages 36 to 44, the impact on the Group’s financial performance and position is not expected
to be material in the short term.

• The plan makes provision for dividend payments.

Under the Base Case scenario, the Group expects to make routine operational use of its bank facility each year as stock levels are
increased in September-October, prior to peak sales occurring. This is consistent with the normal pattern experienced prior to COVID-19.

The output of the Base Case model scenario indicates that the Group has sufficient financial resources to continue to operate as a going
concern and for the financial statements to be prepared on this basis.

Measures to maintain or increase liquidity in circumstances such as are described below
If necessary, mitigating actions can and would be taken in response to a significant downturn in trading such as is described below, which
would increase liquidity.

These include, for example, delaying and reducing stock purchases, stock liquidation, reductions in capital expenditure, the review of
payment terms and the review of dividend levels. Some of these potential mitigations have been built into the Downside Case model,
and some are additional measures that would be available in the event of that scenario, or worse, actually occurring.

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Notes to the consolidated financial statements continued(Forming part of the financial statements)1. Accounting policies continued
(b) Basis of preparation continued
(i) Going concern continued
Severe but plausible Downside Case scenario
The Downside Case makes the following assumptions to reflect more adverse macroeconomic conditions compared to the Base Case:

• Store LFL sales are assumed to be 5% lower than in the Base Case from October 2023 until January 2025.

•

In this scenario online sales are assumed to be lower than in the Base Case during FY24 despite the Group’s attempts to increase them,
but show recovery in FY25.

• The product gross margin assumptions are the same as in the Base Case other than in January 2024 when it is lower, to allow for the

clearance of stock which is assumed would have accumulated due to the inability to reduce stock purchases immediately in response
to the lower sales level. Expected FX requirements are hedged until mid FY25, and freight rates are hedged until the end of 2023. Beyond
that time, it is not anticipated that there will be any interruption to global freight systems as was experienced as a result of the COVID
pandemic, which were a consequence of unique circumstances. Other gross margin inputs are relatively controllable, including via the
setting of selling prices to reflect any systematic changes in the cost price of goods bought for resale.

• Volume related costs in the Downside Case are lowered where they logically alter in a direct relationship with sales levels, for example,

forecast online fulfilment and marketing costs. The model also reflects certain steps which could be taken to mitigate the effect of lower
sales, depending on management’s assessment of the situation at the time. These include adjustments to stock purchases, reducing
capital expenditure, reductions in labour usage, a reduction in discounts allowed as part of the Group’s loyalty scheme and the
suspension of dividend payments.

• The combined financial effect of the modified assumptions in this scenario compared with the Base Case, during FY24 and FY25,

including implementing some of the mitigating activities available, would result in:

• a reduction in store net sales of approximately £34m.

• a reduction in online net sales of approximately £1m.

• a reduction to EBITDA of approximately £9m.

Under this scenario the Group will draw on its bank facility prior to Christmas 2023 but, as a result of the mitigating actions that would
be taken in H2 FY24 in response to a downturn in sales, particularly in reducing the value of stock bought for resale, it would not make
subsequent use of the bank facility.

The bank facility financial covenants are complied with during the pre-Christmas 2023 period when the facility is being used, but the
forecast indicates that the Fixed Charge covenant will not be complied with throughout FY25, although at this time, the facility is not
expected to be in use under this scenario.

On the basis of this Downside Case scenario with the “severe but plausible” set of assumptions as described, the business would continue
to have adequate resources to continue in operation.

However, the cash headroom at the quarterly covenant testing points in FY25 falling within the going concern period is limited, and there
are reasonably plausible scenarios in which this headroom could be eroded and create a borrowing requirement. For example, if sales
decreased by a further 1% during the going concern period compared with the Downside Case, a small borrowing requirement could arise.
The Group has a strong relationship with its bank, HSBC, and has a recent track record of working collaboratively with the bank to resolve
potential covenant issues, for example, a waiver was agreed by HSBC in 2021 as noted in the Group’s FY21 Annual Report. Despite this
strong relationship with the bank and the recent evidence of successfully managing comparable situations, if a borrowing requirement
arose when the financial covenants are not complied with, there is a risk that the Group would not be able to utilise its borrowing facilities
if required.

The Directors believe that, should such a situation arise in practice, it would have time before a potential breach to mitigate further,
and potentially to make arrangements with the bank, as has occurred previously, to adjust the covenant levels to prevent a breach.
Furthermore, the Group has successfully managed through challenging conditions during the recent COVID pandemic, and the Directors
believe it unlikely that comparably challenging conditions will be experienced during the forecast period, despite the concerns regarding
the current macroeconomic conditions. Nevertheless, despite the Directors’ confidence in relation to these matters, there is no certainty
as to whether the mitigating actions would provide the level of liquidity required in the time available to implement them, nor whether the
bank would make adjustments to the financial covenants.

Going concern and basis of preparation conclusion
Based on all of the above considerations the Directors believe that it remains appropriate to prepare the financial statements on a
going concern basis. However, these circumstances indicate the existence of a material uncertainty related to events or conditions that
may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern and, therefore, that the Group and
Company may be unable to realise their assets and discharge their liabilities in the normal course of business. The financial statements do
not include any adjustments that would result from the basis of preparation being inappropriate.

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Financial statementsCorporate governanceStrategic report1. Accounting policies continued
(b) Basis of preparation continued
(ii) New accounting standards
The Group has applied the following new standards and interpretations for the first time for the annual reporting period commencing
2 May 2022:

• Annual Improvements to IFRS 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41)

• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)

• Property, Plant and Equipment – Proceeds before Intended Use (Amendments to IAS 16)

• References to the Conceptual Framework (Amendments to IFRS 3)

• COVID-19 Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16)

The adoption of the standards and interpretations listed above has not led to any changes to the Group’s accounting policies or had any
other material impact on the financial position or performance of the Group.

As at the date of approval of these financial statements, the following standards and interpretations, which have not been applied in
these financial statements, were in issue, but not yet effective:

•

Insurance Contracts (IFRS 17)

Initial Application of IFRS 17 and IFRS 9 – Comparative Information (Amendments to IFRS 17)

• Extension to the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)

• Disclosure of Accounting Policies (Amendments to IAS 1)

• Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12)

• Definition of Accounting Estimates (Amendments to IAS 8)

The adoption of the standards and interpretations listed above is not expected to have a material impact on the financial position or
performance of the Group.

(c) Accounting convention
The consolidated financial statements have been prepared under the historical cost convention, except for certain financial assets and
financial liabilities (including derivative instruments), which are held at fair value.

(d) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries). Control is achieved when the Group is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to direct the activities that affect those returns through its power over the entity. Consolidation of a subsidiary begins
from the date control commences and continues until control ceases. The Company reassesses whether or not it controls an investee if
circumstances indicate that there are changes to the elements of control detailed above.

An Employee Benefit Trust operated on the Group’s behalf (EBT) is acting as an agent of the Company, therefore the assets and liabilities
of the EBT are aggregated into the Company balance sheet and shares held by the EBT in the Company are presented as a deduction
from equity.

(e) Business combinations
Subject to the transitional relief in IFRS 1, all business combinations are accounted for by applying the acquisition method. Business
combinations are accounted for using the acquisition method as at the acquisition date, which is 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, less the fair value of identifiable
assets acquired and liabilities assumed. Any contingent consideration payable is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. Costs related to the acquisition are
expensed to the income statement as incurred.

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Notes to the consolidated financial statements continued(Forming part of the financial statements)1. Accounting policies continued
(f) Key sources of estimation uncertainty
The preparation of consolidated financial statements requires the Group to make estimates and judgements that affect the application
of policies and reported amounts.

Critical judgements represent key decisions made by management in the application of the Group’s accounting policies. Where a
significant risk of materially different outcomes exists, this will represent a key source of estimation uncertainty.

Estimates and judgements are based on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. Actual results may differ from these estimates.

Key sources of estimation uncertainty which are material to the financial statements are described in the context of the matters to which
they relate, in the following notes:

Description

Going concern

Impairment of intangible assets, property, plant and equipment and right-of-use assets

Note

1(b)(i)

13, 14

Page

103 to 105

113 to 118

2. Segmental reporting
IFRS 8 requires segment information to be presented on the same basis as is used by the Chief Operating Decision Maker for assessing
performance and allocating resources.

The Group has one operating segment with two revenue streams, bricks and mortar stores and online. This reflects the Group’s
management and reporting structure as viewed by the Board of Directors, which is considered to be the Group’s Chief Operating Decision
Maker. Aggregation is deemed appropriate due to both operating segments having similar economic characteristics, similar products on
offer and a similar customer base.

3. Revenue
Accounting policy
Revenue comprises receipts from the sale of goods, less deductions for actual and expected returns, discounts and vouchers redeemable
by members of the Group’s loyalty scheme and is stated net of value added tax and other sales taxes. Revenue is recognised at the point
of completing the physical sale in stores, and when the goods have been delivered to the customer in the case of online sales. These are
the points when IFRS 15 ‘performance obligations’ are deemed to have been satisfied.

Transactions that result in customers earning points subsequently exchangeable for discounts under the Group’s loyalty scheme are
accounted for as multiple element revenue transactions. The fair value of the consideration received is allocated between the goods
supplied and the points granted. The consideration allocated to the points is measured by reference to their fair value – the amount for
which the points could theoretically be sold separately. The consideration allocated to the points is not recognised as revenue at the time
of the initial sale transaction, but is deferred, and recognised as revenue when the points are redeemed and the Group’s obligations have
been fulfilled.

Sale of goods

Total revenues

FY23
£000

FY22
£000

275,305

260,087

4,797

4,543

280,102

264,630

Seasonality of operations
The Group’s revenue is subject to seasonal fluctuations as a result of peaking during the approach to Christmas, from October to
December. Therefore, the first half of the financial year, from April to October, typically produces lower revenue and profit than the
second half.

4. Other operating income/(expense)
Accounting policy
The business was classified as a ‘non-essential retailer’ during the COVID-19 pandemic and was therefore required to close its shops
during periods of lockdown in the FY20 and FY21 financial years. Accordingly, the Group made full use of the support schemes available
from the Government to partially mitigate the loss of profit caused by the various periods of closure of the retail stores.

The £119k charge noted in the prior period is to correct an immaterial overstatement of the Coronavirus Job Retention Scheme (CJRS)
income reported in respect of FY21.

The COVID-19 business rates relief received during the year was £227k (FY22: £5,828k), which is included within cost of sales.

COVID-19 furlough scheme grants receivable

Rent receivable

FY23
£000

—

FY22
£000

(119)

(111)

TheWorks.co.uk plc Annual Report and Accounts 2023

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5. Alternative performance measures (APMs)
Accounting policy
The Group tracks a number of APMs in managing its business, which are not defined or specified under the requirements of IFRS because
they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated
and presented in accordance with IFRS or are calculated using financial measures that are not calculated in accordance with IFRS.

The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders
with additional helpful information on the performance of the business. They are consistent with how the business performance is planned
and reported internally and are also consistent with how these measures have been reported historically. Some of the APMs are also used
for the purpose of setting remuneration targets.

The APMs should be viewed as supplemental to, but not as a substitute for, measures presented in the consolidated financial statements
prepared in accordance with IFRS. The Group believes that the APMs are useful indicators of its performance but they may not be
comparable with similarly titled measures reported by other companies due to the possibility of differences in the way they are calculated.

Like-for-like (LFL) sales
The FY23 like-for-like (LFL) sales increase has been calculated with reference to the FY22 comparative sales figures. In FY22’s Annual
Report, two-year comparatives were used because the use of a normal one-year LFL comparative was prevented by the various
disruptions to store trading brought about by COVID-19 restrictions in the FY21 comparative period. Furthermore, for the last five weeks of
FY22, it was necessary to calculate the LFL percentages with reference to the corresponding weeks in FY19, because the equivalent weeks
during FY20 were also affected by enforced store closures. Similar comparison periods were also used for the total sales growth figures.

LFL sales are defined by the Group as the year-on-year growth in gross sales from stores which have been trading for a full financial year
prior to the current year and have been trading throughout the current financial period being reported on, and from the Company’s online
store, calculated on a calendar week basis. The measure is used widely in the retail industry as an indicator of sales performance. LFL
sales are calculated on a gross basis to ensure that fluctuations in the VAT rates of products sold are excluded from the like-for-like sales
growth percentage figure.

A reconciliation of IFRS revenue to sales on an LFL basis is set out below:

Total LFL sales

Non-LFL store sales

Total gross sales

VAT

Loyalty points

Revenue per consolidated income statement

FY23
£000

297,009

19,621

316,630

(35,144)

(1,384)

FY22
£000

285,012

13,359

298,371

(33,467)

(274)

280,102

264,630

Pre-IFRS 16 Adjusted EBITDA (EBITDA) and Adjusted profit after tax
EBITDA is defined by the Group as pre-IFRS 16 earnings before interest, tax, depreciation, amortisation and profit/loss on the disposal of
fixed assets, after adding back or deducting Adjusting items. See Note 6 for a description of Adjusting items. Pre-IFRS 16 EBITDA is used for
the bank facility LTM EBITDA covenant calculations.

The table provides a reconciliation of pre-IFRS 16 EBITDA to profit/(loss) after tax and the impact of IFRS 16:

Pre-IFRS 16 Adjusted EBITDA1
Income statement rental charges not recognised under IFRS 16
Foreign exchange difference on euro leases

Post-IFRS 16 Adjusted EBITDA1
Profit on disposal of right-of-use assets and lease liability recognised under IFRS 16
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation
Finance expenses
Finance income
Tax credit/(charge)

Adjusted profit after tax
Adjusting items (including impairment charges and reversals)
Tax charge

Profit after tax

FY23
£000
9,000
24,865
(152)

33,713
1,105
(149)
(14)
(4,458)
(14,840)
(878)
(4,648)
227
265

10,323
(5,052)
—

5,271

FY22
(Restated –
Note 14)
£000
16,562
24,434
120

41,116
441
(179)
—
(4,040)
(15,094)
(567)
(5,192)
16
(276)

16,225
(2,262)
—

13,963

1 Also adjusted for profit and loss on disposal of right-of-use assets and liabilities, property, plant and equipment and intangible assets.

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TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)

5. Alternative performance measures (APMs) continued
Profit before tax and IFRS 16
The table provides a reconciliation of profit/(loss) before tax and IFRS 16 adjustments to profit/(loss) before tax.

Profit/(loss) before tax and IFRS 16
adjustments

Remove rental charges not recognised under
IFRS 16

Remove hire costs from hire of equipment

Remove depreciation charged on the
existing assets

Remove interest charged on the
existing liability

Depreciation charge on right-of-use assets

Interest cost on lease liability

Loss on disposal of right-of-use assets

Profit on disposal of lease liability

Foreign exchange difference on euro leases

Additional impairment charge under IAS 36

Net impact on profit/(loss)

Profit/(loss) before tax

FY23

FY22 (Restated — Note 14)

Adjusted
£000

Adjusting items
£000

Total
£000

Adjusted
£000

Adjusting items
£000

Total
£000

3,025

(1,488)

1,537

10,980

(2,191)

8,789

24,737

128

151

(14,840)

(4,130)

(297)

1,402

(152)

—

7,033

10,058

—

(3,564)

(5,052)

24,737

128

151

(14,840)

(4,130)

(297)

1,402

(152)

(3,564)

3,469

5,006

24,308

126

(15,094)

(4,500)

(1,899)

2,340

120

—

5,521

16,501

—

(71)

(2,262)

24,308

126

(15,094)

(4,500)

(1,899)

2,340

120

(71)

5,450

14,239

Adjusted profit metrics
Profit measures including operating profit, profit before tax, profit for the period and earnings per share are calculated on an adjusted
basis by adding back or deducting Adjusting items. These adjusted metrics are included within the consolidated income statement and
consolidated statement of other comprehensive income, with further details of Adjusting items included in Note 6.

6. Adjusting items
Adjusting items are unusual in nature or incidence and sufficiently material in size that in the judgement of the Directors merit disclosure
separately on the face of the financial statements to ensure that the reader has a proper understanding of the Group’s financial
performance and that there is comparability of financial performance between periods.

The Directors believe that the Adjusted profit and earnings per share measures included in this report provide additional useful
information to users of the accounts. These measures are consistent with how business performance is measured internally. The profit
before tax and Adjusting items measure is not a recognised profit measure under IFRS and may not be directly comparable with adjusted
profit measures used by other companies.

If a transaction or related series of transactions has been treated as an Adjusting item in one accounting period, the same treatment will
be applied consistently year on year.

In relation to FY23, the items classified as ‘Adjusting’, as shown below, were related to transactions that had been treated as Adjusting in
prior periods.

Cost of sales

Impairment charges1

Impairment reversals1

Total cost of sales

Total Adjusting items

1 These relate to fixed asset impairment charges and reversals of prior year impairment charges.

FY22
(Restated –
Note 14)
£000

8,929

(6,667)

2,262

FY23
£000

8,188

(3,136)

5,052

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7. Operating profit
Operating profit before Adjusting items is stated after charging/(crediting) the following items:

Loss on disposal of property, plant and equipment

Loss on disposal of intangible assets

Profit on disposal of right-of-use assets and lease liability

Depreciation

Amortisation

Operating lease payments:

– Hire of plant and machinery1

– Other operating leases1

Net foreign exchange loss/(gain)

Cost of inventories recognised as an expense

Staff costs

FY23
£000

149

(1,105)

19,298

878

371

2,136

392

119,085

62,235

FY22
(Restated —
Note 14)
£000

179

—

(441)

19,134

567

389

1,549

(128)

106,954

60,031

1 These balances relate to non-IFRS 16 operating lease rentals during the year; please refer to Note 15 for further details of these balances.

Auditor’s remuneration:

Fees payable to the Group’s auditor for the audit of the Group’s annual accounts

Amounts payable in respect of other services to the Company and its subsidiaries

Audit of the accounts of subsidiaries

Audit related assurance services (provision of turnover certificates required under certain leases)

Total services

FY23
£000

500

541

FY22
£000

450

491

Please refer to the Audit Committee report for details regarding the safeguarding of auditor objectivity and independence.

8. Staff numbers and costs
The average number of people employed by the Group (including Directors) during the year, analysed by category, was as follows:

Number of employees

Store support centre colleagues

Store colleagues

Warehouse and distribution colleagues

The corresponding aggregate payroll costs were as follows:

Wages and salaries

Social security costs

Contributions to defined contribution pension schemes

Total employee costs

Agency labour costs

Total staff costs

The Directors’ remuneration for the year was as follows:

Directors’ remuneration

Contributions to defined contribution plans

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TheWorks.co.uk plc Annual Report and Accounts 2023

FY23

243

3,564

147

3,954

FY23
£000

57,189

4,156

890

62,235

2,035

64,270

FY23
£000

759

774

FY22

216

3,468

140

3,824

FY22
£000

55,600

3,654

777

60,031

1,505

61,536

FY22
£000

1,118

1,133

Notes to the consolidated financial statements continued(Forming part of the financial statements)

8. Staff numbers and costs continued
The following number of Directors were members of:

Company defined contribution scheme

The highest paid Director’s remuneration during the year was as follows:

Directors’ remuneration

FY23

FY22

FY23
£000

331

FY22
£000

585

9. Finance income and expense
Accounting policy
Finance expense comprises interest charges and amortised facility fee costs. Finance income comprises interest income and is
recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably.
Interest is recognised in profit as it accrues, using the effective interest method.

Recognised in consolidated statement of comprehensive income

Finance income

Bank interest receivable

Total finance income

Finance expense

Bank interest payable

Other interest payable

Interest on lease liabilities

Total finance expense

Net financing expense

FY23
£000

227

(295)

(223)

(4,130)

(4,648)

(4,421)

FY22
£000

(401)

(291)

(4,500)

(5,192)

(5,176)

10. Taxation
Accounting policy
The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never
taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date.

Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the
initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised
based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or
credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the
deferred tax is also dealt with in other comprehensive income.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

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Financial statementsCorporate governanceStrategic report

10. Taxation continued
Accounting policy continued
Deferred tax continued
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets
and liabilities on a net basis.

Current tax and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly
in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is
included in the accounting for the business combination.

Recognised in consolidated income statement

Current tax expense

Current year

Adjustments for prior years

Current tax (credit)/expense

Deferred tax credit

Origination and reversal of temporary differences

Increase in tax rate

Adjustments for prior years

Deferred tax credit

Total tax expense

FY23
£000

230

(611)

(381)

(212)

(172)

500

116

(265)

FY22
(Restated1)
£000

1,288

1,291

(111)

(1,120)

216

(1,015)

276

1 The FY22 corporation tax charge has been restated to reflect the tax impact of the restatements documented in Note 14.

The UK corporation tax rate for FY23 was 19.5% on average with the UK corporation tax rate changing from 19.0% to 25.0% 11 months into
the financial year (FY22: 19.0%). Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

An increase in the UK corporation rate from 19.0% to 25.0% (effective 1 April 2023) was substantively enacted on 24 May 2021. As the
deferred tax assets and liabilities should be recognised based on the corporation tax rate applicable when they are anticipated to
unwind, the assets and liabilities on UK operations have been recognised at a rate of 25.0% (FY22: 25.0%). Assets and liabilities arising on
foreign operations have been recognised at the applicable overseas tax rates.

Reconciliation of effective tax rate

Profit for the year

Tax using the UK corporation tax rate of 19.5% (FY22: 19.0%)

Non-deductible expenses

Effect of tax rates in foreign jurisdictions

Tax (over)/under provided in prior periods

Utilisation of unrecognised tax losses brought forward

Deferred tax not recognised

Losses carried forwards

Change in tax rate

Total tax (credit)/expense

FY22
(Restated
– see above)
£000

14,239

2,705

182

(40)

219

FY23
£000

5,006

976

147

(13)

(111)

(1,211)

(1,756)

(18)

137

(172)

(265)

—

(1,120)

276

The Group’s total income tax credit in respect of the period was £265k (FY22: expense of £276k). The effective tax rate on the total profit
before tax was (5.3)% (FY22: 1.9% on the profit before tax) whilst the effective tax rate on the total profit before Adjusted items was (2.6)%
(FY22: 1.7% on the profit before Adjusted items). The difference between the total effective tax rate and the Adjusted tax rate relates to
fixed asset impairment charges and reversals within Adjusting items being non-deductible for tax purposes.

The current year tax credit recognised above relates to an adjustment to the prior year corporation tax creditor recognised; this was
higher than the corporation tax payable when the FY22 corporation tax computations were finalised due to the inclusion of the super
deduction in the final year-end tax computations.

112112

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)

11. Dividends
Accounting policy
At the balance sheet date, dividends are only recognised as a liability if 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.

Final dividend for the year ended 1 May 2022

Total dividend paid to shareholders during the year

Pence per share

2.4p

FY23
£000

1,492

FY22
£000

—

Dividend equivalents totalling £603k (FY22: £375k) were accrued in the year in relation to share-based long-term incentive schemes.

The Board has recommended the payment of a 1.6 pence per share final dividend in respect of FY23 (FY22: 2.4 pence).

12. Earnings per share
Basic earnings per share is calculated by dividing the profit or loss for the period, attributable to ordinary shareholders, by the weighted
average number of ordinary shares in issue during the period.

Diluted earnings per share is based on the weighted average number of shares in issue for the period, adjusted for the dilutive effect
of potential ordinary shares. Potential ordinary shares represent shares that may be issued in connection with employee share
incentive awards.

The Group has chosen to present an Adjusted earnings per share measure, with profit adjusted for Adjusting items (see Note 6 for further
details) to reflect the Group’s underlying profit for the year.

Number of shares in issue

Number of dilutive share options

Number of shares for diluted earnings per share

Total profit for the financial period

Adjusting items

Adjusted profit for Adjusted earnings per share

Basic earnings per share

Diluted earnings per share

Adjusted basic earnings per share

Adjusted diluted earnings per share

FY23
Number

FY22
Number

62,500,000

621,130

940,673

63,121,130

63,440,673

£000

5,271

5,052

10,323

Pence

8.4

16.5

16.4

£000
(Restated –
Note 14)

13,963

2,262

16,225

Pence
(Restated –
Note 14)

22.3

22.0

26.0

25.6

13. Intangible assets
Accounting policy
Goodwill
Goodwill arising on consolidation represents any excess of the consideration paid and the amount of any non-controlling interest in the
acquiree over the fair value of the identifiable assets and liabilities (including intangible assets) of the acquired entity at the date of the
acquisition. Goodwill is recognised as an asset and assessed for impairment annually or as triggering events occur. Any impairment in
value is recognised within the income statement. Goodwill was fully impaired in FY20.

Software
Where computer software is not an integral part of a related item of computer hardware, the software is treated as an intangible asset.
Capitalised software costs include external direct costs of goods and services (such as consultancy), as well as internal payroll related
costs for employees who are directly working on the project. Internal payroll related costs are capitalised if the recognition criteria of IAS
38 Intangible Assets are met or are expensed as incurred otherwise.

Capitalised software development costs are amortised on a straight-line basis over their expected economic lives, normally between
three and seven years. Computer software under development is held at cost less any recognised impairment loss. Any impairment in
value is recognised within the income statement and treated as an Adjusting item.

TheWorks.co.uk plc Annual Report and Accounts 2023

113113

Financial statementsCorporate governanceStrategic report

13. Intangible assets continued
Accounting policy continued
Software continued

Cost

Balance at 1 May 2022

Additions

Disposals

Balance at 30 April 2023

Amortisation and impairment

Balance at 1 May 2022

Amortisation charge for the year

Impairment charges

Disposals1

Balance at 30 April 2023

Net book value

At 1 May 2022

At 30 April 2023

Goodwill
£000

Software
£000

Total
£000

16,180

—

16,180

—

16,180

—

9,058

1,309

(1,057)

9,310

7,441

878

1,118

(1,043)

8,394

1,617

916

25,238

1,309

(1,057)

25,490

23,621

878

1,118

(1,043)

24,574

1,617

916

During FY23 the Group reviewed assets on the fixed asset register with a nil net book value. Following this review intangible assets with a cost and
accumulated depreciation of £1,043k were deemed to no longer be in use by the Group and have therefore been disposed of.

Cost

Balance at 3 May 2021

Additions

Balance at 1 May 2022

Amortisation and impairment

Balance at 3 May 2021 (Restated2)

Amortisation charge for the year (Restated2)

Impairment charge (Restated2)

Balance at 1 May 2022 (Restated2)

Net book value

At 3 May 2021 (Restated2)

At 1 May 2022 (Restated2)

Goodwill
£000

Software
£000

16,180

—

16,180

—

16,180

—

8,043

1,015

9,058

5,499

567

1,375

7,441

2,544

1,617

Total
£000

24,223

1,015

25,238

21,679

567

1,375

23,621

2,544

1,617

2 These balances have been restated to reflect the impact of the prior period restatements in Note 14.

Goodwill impairment testing
Goodwill of £16.2m was impaired to £Nil in FY20; therefore, no further impairment testing is necessary in relation to this.

Impairment of other intangible assets
Please refer to Note 14 for details of impairment of tangible and intangible assets.

114114

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)

14. Property, plant and equipment
Accounting policy
Items of property, plant and equipment are stated at their cost of acquisition or production, less accumulated depreciation and
accumulated impairment losses.

Depreciation is charged on a straight-line basis over the estimated useful lives as follows:

• Leasehold property improvements: over the life of the lease.

• Fixtures and fittings: 15% per annum straight line or depreciated on a straight-line basis over the remaining life of the lease, whichever

is shorter.

• Computer equipment: 25 to 50% per annum straight-line.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date, with the effect of any
changes in estimate accounted for on a prospective basis. An asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated recoverable amount.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from
the continued use of the asset. The gain or loss arising on the disposal or scrappage of an asset is determined as the difference between
the sale proceeds and the carrying amount of the asset and is recognised in profit or loss.

IFRS 16
IFRS 16 creates the concept of right-of-use assets. The accounting policy and description of the accounting treatment in respect of IFRS 16
is included within Note 15.

Impairment of tangible and intangible assets
The carrying amounts of the Group’s tangible and intangible assets with a measurable useful life are reviewed at each balance sheet
date to determine whether there is any indication of impairment to their value. If such an indication exists, the asset’s recoverable amount
is estimated and compared to its carrying value. Where the asset does not generate cash flows that are independent from other assets,
the Group estimates the recoverable amount of the CGU to which the asset belongs. The Directors consider an individual retail store to be
a cash generating unit (CGU), as well as the Company’s website.

The recoverable amount of an asset is the greater of its fair value less disposal cost and its value in use (the present value of the future
cash flows that the asset is expected to generate). In determining value in use, the present value of future cash flows is discounted using a
discount rate that reflects current market assessments of the time value of money in relation to the period of the investment and the risks
specific to the asset concerned.

The carrying value represents each CGU’s specific assets, as well as the IFRS 16 right-of-use asset, plus an allocation of corporate assets
where these assets can be allocated on a reasonable and consistent basis.

Where the carrying value exceeds the recoverable amount an impairment loss is established with a charge being made to the income
statement. When the reasons for a write down no longer exist, the write down is reversed in the income statement up to the net book
value that the relevant asset would have had if it had not been written down and if it had been depreciated.

Measuring recoverable amounts
The Group estimates the recoverable amount of each CGU based on the greater of its fair value less disposal cost and its value in use
(VIU), derived from a discounted cash flow model which excludes IFRS 16 lease payments. In assessing the fair value less disposal cost
the ability to sublease each store has been considered and it is concluded that this is not applicable for the majority of the store estate.
Where it is deemed reasonable to assume the ability to sublet the potential cash inflows generated are insignificant, therefore the VIU
calculation is used for all stores. A proportion of ‘click and collect’ sales are included in store cash flows to reflect the contribution stores
make to fulfilling such orders. The key assumptions applied by management in the VIU calculations are those regarding the growth rates
of sales and gross margins, medium-term growth rates, central overhead allocation and the discount rate used to discount the assumed
cash flows to present value.

Projected cash flows for each store are limited to the useful life of each store as determined by its current lease term unless a lease has
already expired or is due to expire within 12 months of 30 April 2023 where the intention is to remain in the store and renew the lease. For
these leases, an average lease term is used for cash flow projections.

Projected cash flows for the website are limited to 60 months as this is in line with the average useful economic life of the assets assigned
to the web CGU.

Impairment triggers
Due to the challenging macroeconomic environment and the existence of a material brought forwards impairment charge, all CGUs other
than stores which have been open for less than 12 months have been assessed for impairment.

TheWorks.co.uk plc Annual Report and Accounts 2023

115115

Financial statementsCorporate governanceStrategic report14. Property, plant and equipment continued
Key assumptions
The key financial assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key
assumptions represent management’s assessment of current market conditions and future trends and have been based on historic data
from external and internal sources. Management determined the values assigned to these financial assumptions as follows:

The pre-tax discount rate is derived from the Group’s weighted average cost of capital, which has been estimated using the capital asset
pricing model, the inputs of which include a company risk-free rate, equity risk premium, Group size premium, a forecasting risk premium
and a risk adjustment (beta). The discount rate is compared to the published discount rates of comparable businesses and relevant
industry data prior to being adopted. The FY23 pre-tax discount rate has been calculated on a post-IFRS 16 basis. FY22’s originally
reported impairment was calculated on a pre-IFRS 16 basis discounted using a pre-IFRS 16 WACC of 17.9%; however, when the prior year
restatements documented below were calculated, the cash flows were produced on a post-IFRS 16 basis and discounted using a post
IFRS 16 WACC to ensure consistency of approach.

Pre-tax discount rate

Medium-term growth rate

FY23

12.78%

1.0%

FY22
(Restated)

11.48%

2.0%

While the online CGU is in a different stage of establishment to that of the store CGUs, the same pre-tax discount rate has been used
in the impairment assessment. Given that the website is not performing in line with expectations, all assets relating to the web CGU are
fully impaired, as such an increase in the pre-tax discount rate used for the web assessment would not increase the impairment charge
recognised.

Cash flow forecasts are derived from the most recent Board-approved corporate plans that form the Base Case on which the VIU
calculations are based. These are described in Note 1(b)(i) (Going concern).

The assumptions used in the estimation of future cash flows are:

• rates of growth in sales and gross margins, which have been determined on the basis of the factors described in Note 1(b)(i) (Going concern);

• central costs are reviewed to identify amounts which are necessarily incurred to generate the CGU cash flows. As a result of the analysis

performed at the end of FY23, 87% (FY22: 91%) of central costs have been allocated by category using appropriate volumetrics.

Cash flows beyond the corporate plan period (2027 and beyond) have been determined using the medium-term growth rate; this is based
on management’s future expectations, reflecting, amongst other things, current market conditions and expected future trends and has
been based on historical data from both external and internal sources. Immediately quantifiable impacts of climate change and costs
expected to be incurred in connection with our net zero commitments, are included within the cash flows. The useful economic lives of
store assets are short in the context of climate change scenario models therefore no medium to long-term effects have been considered.

Impairment charge
During FY23, an impairment charge of £7,572k was recognised against 209 stores with a recoverable amount of £24,055k, and an
impairment charge of £616k was recognised against the website (FY22 restated: an impairment charge of £7,540k was recognised
against 200 stores with a recoverable amount of £26,528k, and an impairment charge of £1,389k was recognised against the website).
An impairment reversal of £3,136k has been recognised in FY23 relating to 100 stores with a recoverable amount of £18,090k as at 30 April
2023 (FY22 restated: an impairment reversal of £6,667k was recognised relating to 108 stores with a recoverable amount of £24,950k).

A net impairment charge of £5,052k (FY22 restated: £2,262k) has therefore been shown on the face of the consolidated income statement.
In line with the previously adopted treatment, impairment charges and reversals have been shown as Adjusting items.

Sensitivity analysis
Whilst the Directors believe the assumptions adopted are realistic, reasonably possible changes in key assumptions could still occur,
which could cause the recoverable amount of certain stores to be lower or higher than the carrying amount. The impact on the net
impairment charge recognised from reasonably possible changes in assumption are detailed below:

• a reduction in sales of 5% from the Base Case plan to reflect a potential Downside Scenario would result in an increase in the net
impairment charge of £8,981k. An increase in sales of 5% from the Base Case plan would decrease the net impairment charge
by £5,827k;

• a reduction in gross margin of 2% would result in an increase in the net impairment charge of £2,320k. An increase in gross margin of 2%

would decrease the net impairment charge by £2,063k;

• a 200 basis point increase in the pre-tax discount rate would result in an increase in the net impairment charge of £1,412k, while a 200

basis point decrease in the pre-tax discount rate would result in a decrease in the net impairment charge of £1,387k;

• a 100 basis point decrease in the medium-term growth rate would result in an increase in the net impairment charge of £493k, while a

100 basis point increase in the medium-term growth rate would result in an increase in the net impairment charge of £481k;

•

increasing the percentage of central costs allocated across CGUs from 87% to 97% would result in an increase in the net impairment
charge of £2,234k. Decreasing the percentage of central costs allocated across CGUs from 87% to 77% would result in a decrease in the
net impairment charge of £2,000k.

116116

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)
14. Property, plant and equipment continued
Sensitivity analysis continued
Whilst the Directors consider their assumptions to be realistic, should actual results be different from expectations, then it is possible that
the value of property, plant and equipment included in the balance sheet could become materially different to the estimates used.

RoUA –
property
£000

RoUA –
plant and
equipment
£000

Leasehold
improvements
£000

Plant and
equipment
£000

Fixtures and
fittings
£000

Total
£000

Cost

Balance at 1 May 2022 (Restated2)

151,091

2,421

Additions

Disposals1

9,530

(6,570)

—

Balance at 30 April 2023

154,051

2,434

Depreciation and impairment

Balance at 1 May 2022 (Restated2)

Depreciation charge for the year

Impairment charge

Impairment reversals

Disposals

At 30 April 2023

Net book value

At 1 May 2022 (Restated2)

At 30 April 2023

75,483

14,483

6,126

(2,562)

(6,273)

87,257

75,608

66,794

1,408

357

—

1,765

1,013

669

10,729

933

(4,254)

7,408

8,686

1,315

(172)

(4,190)

5,648

2,043

1,760

3,818

1,109

(1,271)

3,656

3,507

307

388

—

27,259

4,772

(12,836)

195,318

16,357

(24,931)

19,195

186,744

19,717

2,836

547

(402)

108,801

19,298

7,070

(3,136)

(1,230)

(12,792)

(24,485)

2,972

9,906

107,548

311

684

7,542

9,289

86,517

79,196

During FY23 the Group reviewed assets on the fixed asset register with a nil net book value. Following this review, fixed assets with a cost and accumulated
depreciation of £17,502k were deemed to no longer be in use by the Group and have therefore been disposed of. The totals disposed of by category were
as follows: £3,995k leasehold improvements, £1,172k plant and equipment, £12,375k fixtures and fittings.

2 These balances have been restated to reflect the impact of the prior period restatements discussed below.

Cost

Balance at 3 May 2021 (Restated2)

Additions (Restated2)

Disposals

Balance at 1 May 2022 (Restated2)

Depreciation and impairment

Balance at 3 May 2021 (Restated2)

Depreciation charge for the year (Restated2)

Impairment charge (Restated2)

Impairment reversals (Restated2)

Disposals

Balance at 1 May 2022

Net book value

At 3 May 2021 (Restated2)

At 1 May 2022 (Restated2)

RoUA –
property
£000

154,319

2,540

(5,768)

151,091

64,619

14,662

6,165

(6,094)

(3,869)

75,483

89,700

75,608

RoUA –
plant and
equipment
£000

Leasehold
improvements
£000

Plant and
equipment
£000

Fixtures and
fittings
£000

1,913

508

—

2,421

976

432

—

1,408

937

1,013

10,410

548

(229)

10,729

7,712

1,268

134

(252)

(176)

8,686

2,698

2,043

Total
£000

196,185

5,571

(6,438)

26,167

1,499

(407)

27,259

195,318

17,049

2,431

844

(313)

(294)

93,140

19,134

7,554

(6,667)

(4,360)

3,376

476

(34)

3,818

2,784

341

411

(8)

(21)

3,507

19,717

108,801

592

311

9,118

7,542

103,045

86,517

2 These balances have been restated to reflect the impact of the prior period restatements discussed below.

Prior period restatements
Leasehold assets useful economic lives
In prior years, leasehold assets were being depreciated over a life longer than the life of the lease they relate to. To correct this, leasehold
improvements depreciation has been restated. The FY21 closing accumulated depreciation has been increased by £1,768k with a
corresponding decrease in closing FY21 reserves.

The FY22 in year depreciation charge has increased by £537k, reducing adjusted profit before tax and closing property, plant and
equipment net book value. In the consolidated cash flow statement, the FY22 adjustment has increased the ‘depreciation of property,
plant and equipment’ by £537k, however there is no overall impact on net cash flows from operating, financing and investing activities or
on ‘net increase in cash and cash equivalents’.

TheWorks.co.uk plc Annual Report and Accounts 2023

117117

Financial statementsCorporate governanceStrategic report

14. Property, plant and equipment continued
Prior period restatements continued
Lease incentives received and initial direct costs incurred at the inception of a lease
In prior years, landlord capital contributions, and capitalised legal fees incurred upon negotiation of lease agreements were recorded
within leasehold improvements rather than included within the initial measurement of the IFRS 16 right-of-use asset. Therefore, the
costs and accumulated depreciation amounts relating to these assets have been reclassified from ‘leasehold improvements’ into
‘RoUA property’, resulting in a £344k reduction in the right-of-use asset NBV at 3 May 2021, and a £743k reduction at 1 May 2022, with
a corresponding increase in the NBV of leasehold assets. This adjustment has no impact on the consolidated income statement or
consolidated cash flow statement.

Central cost allocation within fixed asset impairment assessment
In prior years, when assessing the impairment of right-of-use assets, property, plant and equipment and intangible assets, central costs
were not allocated to each cash generating unit (CGU). During the current year, the directors have reconsidered the allocation of central
costs and based on the existence of a consistent store estate and cost base, concluded that certain costs can be allocated to individual
CGUs on a reasonable and consistent basis. The directors additionally considered whether a consistent allocation was appropriate in
earlier periods and concluded that an allocation became appropriate following the change in strategy to “Better not just Bigger”, the
implementation of which occurred following the appointment of Gavin Peck as CEO in January 2020 over a protracted period as a result
of COVID-19, that ultimately resulted in a more consistent store estate and cost base. The directors have applied judgement to conclude
that the effect of the revised allocation of central costs in 2023 should be reflected by restating the impairment opening balances at 2
May 2021 and 1 May 2022.

The FY21 closing impairment balance relating to right-of-use assets has increased by £26,681k, the closing impairment balance relating to
property, plant and equipment has increased by £5,638k, and the closing impairment balance relating to intangible assets has increased
by £281k. The adjustment to closing FY21 reserves is therefore £32,600k.

The FY22 reassessment resulted in a £173k higher net impairment charge relating to right-of-use assets, a £479k higher net impairment
charge relating to property, plant and equipment, and a £1,375k higher net impairment charge relating to intangible assets. Therefore, the
reduction in total profit before tax relating to FY22 impairment charges is £2,027k. These adjustments have resulted in the restatement of a
number of reconciling items in the consolidated cash flow statement relating to impairment charges, reversal of impairment charges, and
profit / loss on disposal of fixed assets, however they have no overall impact on net cash flows from operating, financing and investing
activities or on ‘net increase in cash and cash equivalents’.

Depreciation reduction due to impairment restatement
As a result of the impairment adjustment detailed above the net book value of fixed assets was lower at the start of the FY21 and FY22,
resulting in the depreciation charge in FY21 and FY22 being overstated. The FY21 closing accumulated depreciation has been reduced by
£5,120k relating to right-of-use assets, £1,946k relating to property, plant and equipment and £362k relating to intangible assets, with a
corresponding increase in closing FY21 reserves.

The FY22 in year depreciation charge has decreased by £4,748k relating to right-of-use assets, £1,658k relating to property, plant and
equipment, and £239k relating to intangible assets, increasing adjusted profit before tax by £6,645k. These adjustments decrease the
‘depreciation of property, plant and equipment’, ‘depreciation of right-of-use assets’ and ‘amortisation of intangible assets’ balances in
the consolidated cash flow statement, however there is no overall impact on ‘net increase in cash and cash equivalents’.

Corporation tax restatement
The above adjustments have resulted in restatements to the corporation tax charges, current tax assets / liabilities and the deferred tax
asset. Please refer to notes 10 and 16 for restated taxation disclosures.

The following tables summarise the impact of the above restatements on the Group’s consolidated financial statements including the
impact of current and deferred corporation tax.

Summarised consolidated income statement

Adjustments

Per FY22
financial
statements

Leasehold asset
useful economic
life reduction

Landlord
contributions
and legal fees
incorporation
within RoUA

Impairment
charge
increase

Depreciation
charge
reduction

Taxation impact
of restatements

FY22
restated
balance

264,630

(216,053)

48,577

(111)

(9,128)

(24,004)

15,334

(5,176)

10,158

(1,436)

8,722

—

(425)

—

(112)

(537)

—

(537)

—

(537)

—

(2,027)

—

(2,027)

—

(2,027)

—

(2,027)

—

6,645

—

6,645

—

6,645

—

6,645

—

1,160

264,630

(211,860)

52,770

(111)

(9,128)

(24,116)

19,415

(5,176)

14,239

(276)

13,963

Income statement

Revenue

Profit before tax

Gross profit

Other operating income

Distribution expenses

Administrative expenses

Operating profit

Net financing expense

Profit before tax

Taxation

Profit after tax

118118

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)14. Property, plant and equipment continued
Summarised consolidated statement of financial position

Adjustments

Non-current assets

Intangible assets

Property, plant and equipment

Right-of-use assets

Deferred tax assets

Current assets

Total assets

Liabilities

Tax liability

Other liabilities

Total liabilities

Net assets

Equity attributable to equity
holders of the Parent

Retained earnings

Other reserves

Total equity

Per FY22
financial
statements

Leasehold asset
useful economic
life reduction

2,672

13,970

94,351

3,477

114,470

56,487

170,957

(1,115)

(148,211)

(149,326)

—

(2,304)

—

(2,304)

—

21,631

(2,304)

(11,741)

33,372

21,631

(2,304)

—

(2,304)

Per FY21
financial
statements

Leasehold asset
useful economic
life reduction

Non-current assets

Intangible assets

Property, plant and equipment

Right-of-use assets

Deferred tax assets

Current assets

Tax asset

Other current assets

Total assets

Total liabilities

Net assets

Equity attributable to equity
holders of the Parent

Retained earnings

Other reserves

Total equity

2,463

17,524

112,542

2,852

135,381

704

44,360

45,064

180,445

(171,617)

8,828

(20,463)

29,291

8,828

—

(1,768)

—

(1,768)

—

(1,768)

—

(1,768)

—

(1,768)

Landlord
contributions
and legal fees
incorporation
within RoUA

—

743

(743)

—

Landlord
contributions
and legal fees
incorporation
within RoUA

—

344

(344)

—

Impairment
charge
increase

Depreciation
charge
reduction

Taxation impact
of restatements

FY22
restated
balance

(1,657)

(6,117)

(26,853)

—

602

3,604

9,866

—

(34,627)

14,072

—

(34,627)

14,072

—

1,231

—

1,231

375

—

375

1,617

9,896

76,621

4,708

92,842

56,487

149,329

(740)

(148,211)

(148,951)

(34,627)

14,072

1,606

378

(34,627)

14,072

—

(34,627)

14,072

1,606

—

1,606

(32,994)

33,372

378

Adjustments

Impairment
charge
increase

Depreciation
charge
reduction

Taxation impact
of restatements

FY21
restated
balance

(281)

(5,638)

(26,681)

—

(32,600)

—

(32,600)

—

(32,600)

—

(32,600)

362

1,946

5,120

—

7,428

—

7,428

—

7,428

—

7,428

—

842

(396)

—

(396)

446

—

446

—

446

2,544

12,408

90,637

3,694

109,283

308

44,360

44,668

153,951

(171,617)

(17,666)

(46,957)

29,291

(17,666)

TheWorks.co.uk plc Annual Report and Accounts 2023

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Financial statementsCorporate governanceStrategic report14. Property, plant and equipment continued
Summarised consolidated statement of changes in equity

Reported balance at 1 May 2022

Cumulative adjustment

Restated balance at 1 May 2022

Reported balance at 2 May 2021

Cumulative adjustment

Restated balance at 2 May 2021

Share
capital
£000

625

—

625

Share
capital
£000

625

—

625

Share
premium
£000

28,322

—

28,322

Share
premium
£000

28,322

—

28,322

Attributable to equity holders of the Company

Merger
reserve
£000

Share-based
payment
reserve
£000

Hedging
reserve 1
£000

Retained
earnings
£000

Total
equity
£000

(54)

—

(54)

2,252

2,227

(11,741)

21,631

—

(21,253)

2,252

2,227

(32,994)

378

Attributable to equity holders of the Company

Merger
reserve
£000

Share-based
payment
reserve
£000

1,601

—

(54)

—

(54)

Hedging
reserve 1
£000

(1,203)

Retained
earnings
£000

(20,463)

Total
equity
£000

8,828

—

(26,494)

1,601

(1,203)

(46,957)

(17,666)

15. IFRS 16
Accounting policy
IFRS 16 establishes principles for the recognition, measurement, presentation and disclosure of leases.

IFRS 16 requires the use of a single definition of leases, which recognises a right-of-use asset (RoUA) and a lease liability for all leases,
with exceptions only permitted for short-term and low-value leases. Accordingly, the impact of IFRS 16 is to require recognition of a lease
liability and a corresponding RoUA in relation to leases previously classified as operating leases, which were hitherto accounted for via a
single charge to the profit and loss account.

The most significant impact is that the Group’s retail store operating leases are recognised on the balance sheet as right-of-use
assets representing the economic benefits of the Group’s right to use the underlying leased assets, together with the associated future
lease liabilities.

Under IFRS 16, the Group recognises right-of-use assets and lease liabilities at the lease commencement date.

Identifying an IFRS 16 lease
At the inception of a contract, the Group assesses whether it is, or contains, a lease. A contract is, or contains, a lease if it conveys the
right to control the use of an asset for a period of time, in exchange for consideration. Control is conveyed where the Group has both the
right to direct the asset’s use and to obtain substantially all the economic benefits from that use. For each lease or lease component, the
Group follows the lease accounting model as per IFRS 16, unless the permitted recognition exceptions can be used.

Recognition exceptions
The Group leases many assets, including properties, IT equipment and warehouse equipment.

The Group has elected to account for lease payments as an expense on a straight-line basis over the lease term or another systematic
basis for the following types of leases:

(i) Leases with a term of 12 months or less.

(ii) Leases where the underlying asset has a low value.

(iii) Concession leases where the landlord has substantial substitution rights.

For leases where the Group has taken the short-term lease recognition exemption and there are any changes to the lease term or the
lease is modified, the Group accounts for the lease as a new lease.

For leases where the Group has taken a recognition exemption as detailed above, rentals payable under these leases are charged to
income on a straight-line basis over the term of the relevant lease except, where another more systematic basis is more representative of
the time pattern in which economic benefits from the lease asset are consumed.

Lessee accounting under IFRS 16
Upon lease commencement, the Group recognises a right-of-use asset and a lease liability.

Initial measurement
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and
remove the underlying asset, or to restore the underlying asset or the site on which it is located at the end of the lease, less any lease
incentives received.

The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the
incremental borrowing rate as the rate implicit in the lease cannot be readily determined.

120120

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)15. IFRS 16 continued
Lessee accounting under IFRS 16 continued
Variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability and are initially
measured using the index or rate as at the commencement date. Amounts expected to be payable by the Group under residual value
guarantees are also included. Variable lease payments that are not included in the measurement of the lease liability are recognised
in profit or loss in the period in which the event or condition that triggers payment occurs unless the costs are included in the carrying
amount of another asset under another accounting standard.

The Group has applied judgement to determine the lease term for some lease contracts that include renewal options. The assessment
of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the value of lease
liabilities and right-of-use assets recognised.

The payments related to leases are presented under cash flows from financing activities and cash flows from operating activities in the
cash flow statement.

Subsequent measurement
After lease commencement, the Group values right-of-use assets using a cost model. Under the cost model, a right-of-use asset is
measured at cost less accumulated depreciation and accumulated impairment.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is
re-measured to reflect changes in: the lease term (using a revised discount rate); the assessment of a purchase option (using a revised
discount rate); the amounts expected to be payable under residual value guarantees (using an unchanged discount rate); and future
lease payments resulting from a change in an index or a rate used to determine those payments (using an unchanged discount rate).

The re-measurements are matched by adjustments to the right-of-use asset. Lease modifications may also prompt re-measurement of
the lease liability unless they are determined to be separate leases.

Depreciation of right-of-use assets
The right-of-use asset is subsequently depreciated using the straight-line method, from the commencement date to the earlier of either
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are
determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is reduced by impairment
losses, if any, and adjusted for certain re-measurements of the lease liability.

Determining the lease term
Termination options are included in a number of property leases across the Group. These terms are used to maximise operational
flexibility. At the commencement date of property leases, the Group determines the lease term to be the full term of the lease, assuming
that any option to break or extend the lease is unlikely to be exercised. Leases will be revalued if it becomes likely that a break clause is
to be exercised. In determining the likelihood of the exercise of a break option, management considers all facts and circumstances that
create an economic incentive to exercise the termination option. For property leases, the following factors are the most relevant:

• The profitability of the leased store and future plans for the business.

•

If there are any significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend.

COVID-19 concessions
The Group elected to account for qualifying COVID-19 related rent concessions as variable lease payments, recognising the concession
in the period in which the event or condition that triggers the payments occurs. Rent concessions are qualifying if the following
conditions are met:

(i) The concession is a direct consequence of the COVID-19 pandemic.

(ii)

The change in lease payments resulted in revised consideration for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change.

(iii) The reduction in lease payments only affects payments due on or before 30 June 2022.

(iv) There is no substantive change to other terms and conditions of the lease.

The Group has applied this practical expedient consistently to all lease contracts with similar characteristics and in similar circumstances.

Amounts recognised in the statement of financial position
Right-of-use assets

Land and buildings

Plant and equipment

Total right-of-use assets

Additions to the right-of-use assets during FY23 were £9,543k (FY22: £3,048k).

FY23
£000

66,794

669

67,463

FY22
(Restated –
Note 14)
£000

75,608

1,013

76,621

TheWorks.co.uk plc Annual Report and Accounts 2023

121121

Financial statementsCorporate governanceStrategic report
15. IFRS 16 continued
Amounts recognised in the statement of financial position continued
Lease liabilities
Lease liabilities included in the statement of financial position as at the financial year end:

Current

Non-current

Maturity analysis – contractual undiscounted cash flows:

Less than one year

One to two years

Two to three years

Three to four years

Four to five years

More than five years

FY23
£000

23,449

74,766

98,215

FY23
£000

27,163

22,926

18,039

12,944

9,185

21,718

FY22
£000

25,434

85,702

111,136

FY22
£000

31,592

27,283

23,655

18,977

13,102

21,862

Total undiscounted lease liabilities

111,975

136,471

Amounts recognised in the statement of profit and loss

FY23
£000

14,840

4,130

(1,105)

(152)

3,564

371

877

977

397

(181)

FY22
(Restated –
Note 14)
£000

15,094

4,500

(441)

120

389

454

943

(11)

484

(408)

2,136

1,549

FY23
£000

14,483

357

14,840

FY22
(Restated –
Note 14)
£000

14,662

432

15,094

Depreciation charge on right-of-use assets (RoUA)

Interest cost on lease liability

Profit on disposal of RoUA / lease liability

Foreign exchange difference on euro leases

Additional impairment charge under IAS 36

Operating lease rentals – hire of plant, equipment and motor vehicles

– Low-value leases

Total plant, equipment and motor vehicle operating lease rentals

Operating lease rentals – store leases

– Stores with variable lease rentals

– Concession leases (the landlord has substantial substitution rights)

– Low-value leases

– Lease is expiring within 12 months or has rolling break clauses

– Lease has expired

– Variable lease payments as a result of COVID-19 concessions

Total store operating lease rentals

Depreciation of right-of-use asset by class:

Land and buildings

Plant and equipment

Total right-of-use asset depreciation

122122

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)

16. Deferred tax assets
Recognised deferred tax assets
Deferred tax assets are attributable to the following:

Property, plant and equipment

Leases

Temporary timing differences

Financial assets/liabilities

Tax assets

Movement in deferred tax during the year

At 1 May 2022 (Restated1)

Adjustment in respect of prior years

Deferred tax (charge)/credit to profit and loss

Deferred tax credit in equity profit and loss

At 30 April 2023

Assets

Liabilities

FY23
£000

2,876

1,362

354

262

4,854

Fixed assets
£000

2,868

(499)

507

—

2,876

Leases
£000

1,645

—

(283)

1,362

FY22
(Restated1)
£000

2,868

1,645

195

—

4,708

Temporary
timing
differences
£000

195

—

159

—

354

FY23
£000

—

Financial
assets/
liabilities
£000

—

(598)

—

860

262

Financial
assets/
liabilities
£000

328

—

(328)

—

FY22
(Restated1)
£000

—

Total
£000

4,708

(1,097)

383

860

4,854

Total
£000

3,694

(216)

1,230

—

4,708

1 The FY22 deferred tax asset has been restated to reflect the tax impact of the restatements documented in Note 14.

Movement in deferred tax during the year

At 1 May 2022 (Restated1)

Adjustment in respect of prior years

Deferred tax (charge)/credit to profit and loss (Restated1)

Deferred tax credit in equity profit and loss

At 1 May 2022 (Restated1)

Fixed assets
£000

1,574

—

1,294

—

2,868

Temporary
timing
differences
£000

372

(216)

—

195

Leases
£000

1,420

—

225

—

1,645

1 The FY22 deferred tax asset has been restated to reflect the tax impact of the restatements documented in Note 14.

Tax losses carried forward for which no deferred tax asset has been recognised total £9,273k (FY22: £14,288k) with an expiry date of
April 2024.

17. Inventories
Accounting policy
Inventories comprise stocks of finished goods for resale and are valued on a weighted average cost basis and carried at the lower of cost
and net realisable value. ‘Cost’ includes all direct expenditure and other attributable costs incurred in bringing inventories to their present
location and condition.

The process of purchasing inventories may include the use of cash flow hedges to manage foreign exchange risk. Where hedge
accounting applies, an adjustment is applied such that the cost of stock reflects the hedged exchange rate.

Inventory summary

Gross stock value

Less: stock provisions for shrinkage and obsolescence

Goods for resale net of provisions

Stock in transit

Inventory

FY23
£000

31,278

(1,037)

30,241

3,200

33,441

FY22
£000

29,817

(3,252)

26,565

2,822

29,387

The cost of inventories recognised as an expense during the period was £119.1m (FY22: £107.7m).

Stock provisions
The Group makes provisions in relation to stock quantities, due to potential stock losses not yet reflected in the accounting records,
commonly referred to as unrecognised shrinkage and, in relation to stock value, where the net realisable value of an item is expected to
be lower than its cost, due to obsolescence.

TheWorks.co.uk plc Annual Report and Accounts 2023

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Financial statementsCorporate governanceStrategic report

17. Inventories continued
Stock provisions continued
Shrinkage provision
During the prior financial year, the Group carried out ‘tactical’ (perpetual inventory basis) stock counts in its retail stores on a regular basis, such
that at the end of the financial year a significant proportion of stock in stores had been counted and stock file adjustments made to correct
errors indicated by the counts. In addition, full four wall counts (i.e. a controlled count of all stock in a store) had been performed in 71 stores
during the last 6 weeks of the financial year, with an additional 53 four wall counts performed in the month following the financial year end.

During FY23, full four wall counts were performed in 524 stores during the last 13 weeks of the financial year. Through these counts, the
Group established that its accounting records reflected the actual quantities of stock in stores. This process also provides the Group with
an indication of the typical percentage of stock loss, which is used to calculate, by extrapolation, unrecognised shrinkage at the balance
sheet date. The stock records were updated to reflect the results of the stock counts, which occurred nearer to the end of the financial
year than the counts undertaken in FY22, as a result of which, the provision required for unrecognised shrinkage materially decreased
compared with the value at the end of FY22, by £1.4m to £0.4m.

The unrecognised shrinkage provision was £0.4m at the Period end (FY22: £1.9m), representing 1.9% of gross store stock (FY22: 8.6%). The
provision relates to store stock with a value of £20.9m (FY22: £22.2m). This represents management’s best estimate of the likely level of
stock losses experienced.

Obsolescence provision
Generally, the Group’s inventory does not comprise a large proportion of stock with a ‘shelf life’. Stock lines which are slow selling because they
have been less successful than planned or which have sold successfully and become fragmented as they reach the natural end of their planned
selling period, are usually discounted and sold during ‘sale’ events, for example the January sale. This stock is referred to as terminal stock.

During FY23, a high degree of focus has been placed on clearing terminal stock and at the period end the Group held significantly less
terminal stock than the prior year. Consequently, the obsolescence provision has reduced by £0.7m to £0.6m.

The Group has considered the impact of customer preferences and ESG considerations on potential stock obsolescence, and these
factors are not deemed to have a material impact on the level of provision required.

18. Trade and other receivables

Current

Trade receivables

Other receivables

Prepayments

Trade and other receivables

FY23
£000

2,864

359

4,284

7,507

FY22
£000

2,606

1,793

4,028

8,427

Trade receivables are attributable to sales which are paid for by credit card and are classified as finance assets at amortised cost; they
are all current. No credit is provided to customers. The value and nature of trade receivables is such that no material credit losses occur;
therefore, no loss allowance has been recorded at the period end (FY22: £Nil).

Other receivables relate to stock on water deposits paid, and other accounts payable debit balances. Prepayments relate to prepaid
property costs and other expenses.

19. Cash and cash equivalents

Cash and cash equivalents per balance sheet

Net cash and cash equivalents

The Group’s cash and cash equivalents are denominated in the following currencies:

Sterling

Euro

US dollar

Net cash and cash equivalents

FY23
£000

10,196

FY23
£000

8,208

1,949

10,196

FY22
£000

16,280

FY22
£000

12,198

3,102

980

16,280

At 30 April 2023, the Group held net cash (excluding lease liabilities) of £10.2m (FY22: net cash (excluding lease liabilities) of £16.3m). This
comprised cash of £10.2m (FY22: cash of £16.3m).

For the year ended 30 April 2023, the Group’s bank facilities comprise an RCF of £30.0m expiring 30 November 2025. Since the Period end,
the facility was extended by a year and reduced in size by £10.0m.

The facility includes financial covenants in relation to the level of net debt to LTM EBITDA and ‘Fixed Charge Cover’ or ratio of LTM EBITDA
prior to deducting rent and interest, to LTM rent and interest.

None of the Group’s cash and cash equivalents (FY22: £Nil) is held by the trustee of the Group’s employee benefit trust in relation to the
share schemes for employees.

124124

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)

20. Borrowings
Accounting policy
Interest-bearing bank loans and overdrafts, loan notes and other loans are recognised in the balance sheet at amortised cost. Finance
charges associated with arranging non-equity funding are recognised in the income statement over the life of the facility. All other
borrowing costs are recognised in the income statement in accordance with the effective interest rate method. A summary of the Group’s
objectives, policies, procedures and strategies with regard to financial instruments and capital management can be found in Note 25. At
30 April 2023, all borrowings were denominated in sterling (FY22: sterling).

Non-current liabilities

Lease liabilities

Non-current liabilities

Current liabilities

Lease liabilities

Current liabilities

Reconciliation of borrowings to cash flows arising from financing activities

Borrowings at start of year (excluding overdrafts)

Changes from financing cash flows

Payment of lease liabilities (capital)

Payment of lease liabilities (interest)

Proceeds from loans and borrowings1

Repayment of bank borrowings1

Total changes from financing cash flows

Other changes

Lease liability additions

Disposal of lease liabilities

The effect of changes in foreign exchange rates

Interest expense

Total other changes

Borrowings at end of year (excluding overdrafts)

1 £4.0m was drawn under the Group’s RCF from 29 September 2022 until 31 October 2022.

Net debt reconciliation

Net debt (excluding unamortised debt costs)

Cash and cash equivalents

Net bank cash

Non-IFRS 16 lease liabilities

Non-IFRS 16 net cash

IFRS 16 lease liabilities

Net debt including IFRS 16 lease liabilities

21. Trade and other payables

Current

Trade payables

Other tax and social security

Accrued expenses

Trade and other payables

FY23
£000

74,766

23,449

FY22
£000

85,702

25,434

FY23
£000

FY22
£000

111,136

143,009

(22,672)

(4,130)

4,000

(4,000)

(25,969)

(4,500)

—

(7,500)

(26,802)

(37,969)

10,991

(1,402)

152

4,140

13,881

3,634

(2,340)

(120)

4,922

6,096

98,215

111,136

FY23
£000

FY22
£000

(10,196)

268

(9,928)

97,946

88,018

(16,280)

485

(15,795)

110,651

94,856

FY23
£000

FY22
£000

22,960

2,610

8,909

34,479

20,091

2,792

13,075

35,958

Trade payables and accruals principally comprise amounts outstanding for trade purchases and operating costs. The Group has financial
risk management policies in place to ensure that all payables are paid within agreed credit terms.

TheWorks.co.uk plc Annual Report and Accounts 2023

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Financial statementsCorporate governanceStrategic report

21. Trade and other payables continued
The Directors consider that the carrying amount of trade payables approximates to their fair value.

Accrued expenses comprise various accrued property costs, payroll costs and other expenses, including £484k (FY22: £453k) of deferred
income in relation to the customer loyalty scheme. The decrease in the balance from FY22 is due to a decrease in the bonus accrual held
at year end.

The Group has net US dollar denominated trade and other payables of £6.6m (FY22: £4.9m).

22. Provisions and contingent liabilities
Accounting policy
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be
required to settle that obligation. Provisions are the best estimate of the expenditure required to settle the obligation at the end of the
reporting period and are discounted to present value where the effect is material.

Balance as at 3 May 2021

Provisions made during the year

Balance as at 1 May 2022

Provisions made during the year

Provisions used during the year

Balance as at 30 April 2023

Maturity analysis of cash flows:

Due in less than one year

Due between one and five years

Due in more than five years

HMRC VAT
£000

Property
£000

—

514

—

514

718

399

1,117

450

(218)

1,349

HMRC VAT
£000

Property
£000

514

—

760

538

Total
£000

718

399

1,117

964

(218)

1,863

Total
£000

565

760

538

514

1,349

1,863

Property provision
In accordance with IAS 37 Provisions, the Group recognises provisions for the cost of reinstating certain Group properties at the end of their
lease term, based on the conditions set out in the terms of the individual leases. The timing of the outflows will match the ends of the relevant
leases, which range from 1 to 10 years for stores and 13.2 years for the head office. The average remaining term of the store estate is 4.8 years.

HMRC VAT provision
HMRC initiated a VAT review in August 2022 in respect of FY19 to FY22 and have reviewed 4 years of sales data. In the initial output of their
review, HMRC have identified a number of areas where they disagree with the VAT treatment applied by the business.

Management accepts that there is a possibility that the VAT rate charged is incorrect for some SKUs under review, predominantly activity
sets that include books and activity resources, and that the rate may be concluded to be mixed or standard rate. HMRCs view is that
these rates are not zero, and therefore we believe it appropriate to recognise a provision for a potential liability for £514k on the basis that
50% of the SKUs under review are concluded to be standard rated, and the 50% mixed rated.

23. Defined contribution pension plans
Accounting policy
A defined contribution pension plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate
entity and will have no obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are
recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.

The Group operates a defined contribution pension scheme. The pension cost charge for the period represents contributions payable by
the Group to the scheme and amounted to £890k (FY22: £777k).

At the end of the year contributions of £243k (FY22: £155k) were outstanding.

24. Share capital and share premium
Accounting policy
The following describes the nature and purpose of each reserve within equity:

• Share premium account: Proceeds received in excess of the nominal value of shares issued, net of any transaction costs.

• Hedging reserve: Cumulative gains and losses on hedging instruments deemed effective in cash flow hedges.

• Merger reserve: Created in 2018 on the formation of TheWorks.co.uk plc, it represents the difference between the cost of the investment
in The Works Investment Limited (and its subsidiaries, The Works Stores Limited and The Works Online Limited) of £51,499,891 and the
nominal value of the ordinary shares issued in exchange of £109.

• Share based payment reserve: Represents the cumulative charges to income under IFRS 2 Share-based Payments on all share options

and schemes granted, net of share option exercises.

• Retained earnings: All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

Ordinary shares are classified as equity.

126126

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)
24. Share capital and share premium continued
Accounting policy continued

Share capital

Allotted, called up and fully paid ordinary shares of 1p:

At the start of the period

Issued in the period

At the end of the period

Share capital

At the start of the period

Issued in the period

At the end of the period

Share premium

At the start of the period

Issued in the period

At the end of the period

FY23
Number
000

FY22
Number
000

62,500

—

62,500

FY23
£000

625

—

625

28,322

—

28,322

62,500

—

62,500

FY22
£000

625

—

625

28,322

—

28,322

During the year, the Employee Benefit Trust purchased £473k (FY22: £Nil) of the Company’s shares for the purpose of satisfying future
employee share-based payment awards.

Investment in own shares
At 30 April 2023, the Employee Benefit Trust held 1,240,577 (FY22: Nil) of the Company’s shares.

The Trust has waived any entitlement to the receipt of dividends in respect of its holding of the Company’s ordinary shares. The market
value of these shares at 30 April 2023 was £390,161 (FY22: £Nil). In the current period, 1,408,086 (FY22: Nil) were repurchased and transferred
into the Trust, with 167,491 (FY22: Nil) reissued on exercise of share options.

25. Financial instruments
Accounting policy
Non-derivative financial assets
Non-derivative financial assets comprise trade and other receivables and cash and cash equivalents. The Group classifies all its non-
derivative financial assets as financial assets at amortised cost. Financial assets at amortised cost are initially measured at fair value plus
directly attributable transaction costs, except for trade and other receivables without a significant financing component that are initially
measured at transaction price. Subsequent to initial recognition, non-derivative financial assets are carried at amortised cost using the
effective interest method, subject to impairment.

At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is
‘credit impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have
occurred. The Group measures loss allowances at an amount equal to lifetime expected credit loss.

Cash and cash equivalents comprise cash in hand, at bank and on short-term deposit for less than three months. Bank overdrafts, within
borrowings, that are repayable on demand and form an integral part of the Group’s cash management are included as a component of
cash and cash equivalents for the purposes of the cash flow statement.

Non-derivative financial liabilities
Non-derivative financial liabilities comprise bank borrowings and trade and other payables. Non-derivative financial liabilities are initially
recognised at fair value, less any directly attributable transaction costs, and subsequently stated at amortised cost using the effective
interest method.

Derivative financial instruments
Derivative financial instruments are mandatorily categorised as fair value through profit or loss (FVTPL), except to the extent they are
part of a designated hedging relationship and classified as cash flow hedging instruments. The Group utilises foreign currency derivative
contracts to manage the foreign exchange risk on future US dollar denominated purchases.

Gains and losses in respect of foreign exchange derivative financial instruments that are not part of an effective hedging relationship are
recognised within cost of sales and net finance expense.

Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative
is recognised in other comprehensive income (OCI) and accumulated in the hedging reserve. The effective portion of changes in the
fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on
a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised
immediately in profit or loss.

TheWorks.co.uk plc Annual Report and Accounts 2023

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Financial statementsCorporate governanceStrategic report

25. Financial instruments continued
Accounting policy continued
The Group designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in cash
flow hedging relationships and applies a hedge ratio of 1:1. The change in fair value of the forward element of forward exchange contracts
(forward points) is separately accounted for as a cost of hedging and recognised in the hedging reserve separately as costs of hedging.

When foreign exchange hedged forecast transactions subsequently result in the recognition of inventory, the amount accumulated in the
hedging reserve and the cost of hedging reserve is included directly in the initial cost of the inventory.

Hedging gains and losses and costs of hedging transferred to the cost of inventory in the year were £175k (FY22: (£441k).

If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised,
then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has
been accumulated in the hedging reserve remains in equity until it is included in the cost of inventory on its initial recognition.

If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve
and the cost of hedging reserve are immediately reclassified to profit or loss.

Fair value estimation
The techniques applied in determining the fair values of financial assets and liabilities are disclosed below.

Foreign currency
The consolidated financial statements are presented in pounds sterling, which is the functional currency of the Group.

Transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange
prevailing on the dates of the transactions. The majority of currency transactions that are not in the functional currency of the trading
entity relate to inventory purchases. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement within cost of sales, except when deferred in other comprehensive income as qualifying cash flow hedges. Foreign currency
gains and losses are reported on a net basis.

The Group is exposed to foreign currency risk, most significantly to the US dollar as a result of sourcing certain products which are paid
for predominantly in US dollars. The Group hedges these exposures using forward foreign exchange contracts and hedge accounting
is applied when the requirements of IFRS 9 are met, which include that a forecast transaction must be ‘highly probable’. The Group has
applied judgement in assessing whether the forecast purchases remain ‘highly probable’.

The Group’s policy is that approximately 50% of the forecast purchase requirements are initially hedged, approximately 12 months prior,
with incremental hedges taken out over time, as the buying period approaches and therefore as certainty increases over the forecast
purchases. As a result of this progressive strategy, reducing the supply pipeline of inventory, should this occur, does not immediately
lead to over-hedging and the disqualification of ‘highly probable’. If the forecast transactions were no longer expected to occur, any
accumulated gain or loss on the hedging instruments would be immediately reclassified to profit or loss.

Financial risk management
The Board has overall responsibility for managing risks and uncertainties and these are reviewed on an ongoing basis. The principal
financial risks faced by the Group include market risk, currency risk, cash flow interest rate risk, credit risk and liquidity risk.

In order to manage the Group’s exposure to these risks, in particular the Group’s exposure to currency risk, the Group enters into forward
foreign currency contracts. No transactions in derivatives are undertaken for speculative purposes.

Further details of the Group’s approach to managing risk are included in the ‘Principal Risks and Uncertainties’ section of the Strategic
report and in the Corporate governance report.

(a) Market risk
The Group’s activities expose it to two types of market risk, being currency risk and cash flow interest rate risk. The Group’s policies for
managing currency risk and interest rate risk are set out below.

(i) Currency risk
The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales,
purchases, receivables and borrowings are denominated. A significant proportion of the Group’s retail products are procured from
overseas suppliers in transactions denominated in US dollars.

The Group uses foreign currency derivative contracts and US dollar denominated cash balances to manage the foreign exchange risk on
US dollar denominated inventory purchases.

As described above, the Group takes a prudent, but flexible, approach to hedging the risk of exchange rate fluctuations. At 30 April 2023,
the Group held forward contracts with a nominal value of $40.0m (FY22: $30.0m), all with maturity dates of less than one year. These
contracts have an average forward rate of $1.2183 (FY22: $1.3964).

128128

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)25. Financial instruments continued
Financial risk management continued
Exposure to currency risk
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are
as follows:

US dollar

Euro

Liabilities

Assets

FY23
£000

6,552

352

FY22
£000

4,905

454

FY23
£000

1,958

FY22
£000

980

3,092

Currency sensitivity analysis
The Group is exposed to the US dollar and, to a significantly lesser extent, the euro.

The following table details the Group’s sensitivity to a 10% increase or decrease in sterling against the relevant foreign currencies. 10%
represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign
currency rates. A positive number below indicates an increase in profit and other equity where sterling strengthens 10% against the
relevant currency. For a 10% weakening of sterling against the relevant currency, there would be a comparable impact on the profit and
other equity, and the balances below would be negative.

Profit/(loss) for the period

USD impact

Euro impact

FY23
£000

592

FY22
£000

357

FY23
£000

(146)

FY22
£000

(240)

This is mainly attributable to the exposure outstanding on US dollar and euro cash balances held, trade payables and other accruals at
the reporting date.

The sensitivity analysis above represents the inherent foreign exchange risk as at the year end, but is not reflective of the exposure, and
therefore the profit impact, to foreign currency exchange movements during the year.

(ii) Interest rate risk
The Group is also exposed to the effects of fluctuations in the interest rate on its banking facility. The sensitivity analysis below has been
determined based on an increase in the interest rate of 1.0% on the average cash balances throughout the year.

Variable rate instruments (100 bp increase)

Variable rate instruments (100 bp decrease)

FY23
£000

132

(132)

FY22
£000

123

(123)

(b) Credit risk
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. The Group does not offer any credit to customers; therefore, the credit risk with respect to exposure to customers is low.

The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics. The Group defines counterparties as having similar characteristics if they are related entities.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings
assigned by international credit rating agencies.

The carrying amount of the financial assets recorded in the financial statements represents the Group’s and the Company’s exposure to
credit risk.

(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset.

The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously
monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Group’s remaining contractual maturity for its financial assets and liabilities with agreed repayment
periods. The tables have been drawn up based on the undiscounted cash flows, excluding interest, based on the earliest date on which
the Group can be required to pay.

TheWorks.co.uk plc Annual Report and Accounts 2023

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Financial statementsCorporate governanceStrategic report

25. Financial instruments continued
Contractual maturity of financial liabilities

30 April 2023

Interest bearing

Non-interest bearing

Finance lease liability (undiscounted cash flows)

Derivative

Forward currency contracts

1 May 2022

Interest bearing

Non-interest bearing

Finance lease liability (undiscounted cash flows)

Derivative

Forward currency contracts

Within 1 year
£000

1-5 years
£000

5+ years
£000

Total
£000

—

31,950

27,163

1,048

60,161

—

32,917

31,592

—

760

—

538

63,094

21,718

—

33,248

111,975

—

1,048

63,854

22,256

146,271

—

913

—

83,017

21,862

—

33,830

136,471

—

64,509

83,930

21,862

170,301

Hedge accounting
IFRS 9 requires the Group to ensure that hedge accounting relationships are aligned with the Group’s risk management objectives and
strategy and to apply a qualitative and forward-looking approach to assessing hedge effectiveness.

The Group determines the existence of an economic relationship between the hedging instrument and the hedged item based
on the currency, amount and timing of their respective cash flows. The Group assesses whether the derivative designated in each
hedging relationship is expected to be, and has been, effective in offsetting cash flows of the hedged item using the hypothetical
derivative method.

In these hedge relationships, the main sources of ineffectiveness are:

• The effect of counterparties and the Group’s own credit risk on the fair value of the forward foreign exchange contracts, which is not

reflected in the change in the fair value of the hedged cash flows attributable to the change in exchange rates.

• Changes in the timing of the hedged transactions.

Fair value measurements
Financial instruments carried at fair value are measured by reference to the following fair value hierarchy, based on the degree to which
the fair value is observable:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not

based on observable market data (unobservable inputs).

Derivative financial instruments are carried at fair value under a Level 2 valuation method. All other financial instruments carried at fair
value are measured using the Level 1 valuation method.

There were no transfers between the levels during the current or prior year.

Derivative financial instruments
The fair value of derivative financial instruments at the balance sheet date is as follows:

Net derivative financial instruments

Foreign exchange contracts

Classification of financial instruments
The table below shows the classification of financial assets and liabilities as at 30 April 2023.

The fair value of financial instruments has been assessed as approximating to their carrying value.

FY23
£000

FY22
£000

(1,048)

2,393

130130

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the consolidated financial statements continued(Forming part of the financial statements)

25. Financial instruments continued
Classification of financial instruments continued

As at 30 April 2023

Financial assets measured at fair value

Derivative financial instruments

Financial assets not measured at fair value

Trade and other receivables

Cash and cash equivalents

Financial liabilities measured at fair value

Derivative financial instruments

Financial liabilities not measured at fair value

Unsecured bank loans

Lease liabilities

Trade and other payables

As at 30 April 2023

As at 1 May 2022

Financial assets measured at fair value

Derivative financial instruments

Financial assets not measured at fair value

Trade and other receivables

Cash and cash equivalents

Financial liabilities measured at fair value

Derivative financial instruments

Financial liabilities not measured at fair value

Unsecured bank loans

Lease liabilities

Trade and other payables

As at 1 May 2022

Mandatorily
at FVTPL
£000

Cash flow
hedging
instruments
£000

Financial
assets at
amortised
cost
£000

Other
financial
liabilities
£000

—

(1,048)

—

7,507

10,196

—

(98,215)

(34,479)

(1,048)

17,703

(132,694)

Mandatorily
at FVTPL
£000

Cash flow
hedging
instruments
£000

Financial
assets at
amortised
cost
£000

Other
financial
liabilities
£000

—

2,393

—

8,427

16,280

—

(111,136)

(35,958)

2,393

24,707

(147,094)

26. Equity-settled share-based payment arrangements
Accounting policy
The Group operates an equity-settled share-based compensation plan.

The cost of the awards to employees is expensed to the income statement, together with a corresponding adjustment to equity, on a
straight-line basis over the vesting period of the award. The total income statement charge is based on the Company’s estimate of the
number of share awards that will eventually vest in accordance with the vesting conditions. The awards granted during FY23 include
market-based vesting conditions. At each balance sheet date, the Company revises its estimate of the number of awards that are
expected to vest. Any revision to estimates is recognised in the income statement, with a corresponding adjustment to equity.

During FY23, the Group had three (FY22: three) share-based payment schemes, which are described below.

TheWorks.co.uk Long-Term Incentive Plan (LTIP)
Further details of the Group’s LTIP arrangements are included in the Directors’ remuneration report. The LTIP rules provide for the grant of
performance related and restricted awards.

The LTIP awards are subject to a three-year vesting period and will usually only vest following the satisfaction of performance conditions.
Vested shares will not be released until the end of an additional holding period of two years beginning on the vesting date. Performance
measures under the LTIP are based on financial measures. For FY23, the vesting conditions require three years’ service from the grant
date and the achievement of an EPS target, and a share price target (FY22 awards: three years’ service from the grant date and the
achievement of an EPS target, and a share price target).

Restricted stock awards (RSA)
Restricted stock awards have previously been granted to certain employees, with a three-year vesting period. Restricted share awards
are not subject to performance conditions.

TheWorks.co.uk plc Annual Report and Accounts 2023

131131

Financial statementsCorporate governanceStrategic report

26. Equity-settled share-based payment arrangements continued
Save As You Earn Scheme (SAYE)
A Save As You Earn Scheme is established which is a UK tax-qualified scheme under which eligible employees (including Directors) may
save up to a maximum monthly limit of £250 (as determined by the Remuneration Committee) over a period of three years. Participants
are granted an option to acquire shares at up to a 20% discount to the price as at the date of grant. The number of shares under option is
that which can be acquired at that price using savings made.

Number of share options

Outstanding at 1 May 2022

Granted

Forfeited

Lapsed

Exercised

Outstanding at 30 April 2023

Weighted average exercise price (£)

Outstanding at 1 May 2022

Granted

Forfeited

Lapsed

Exercised

Outstanding at 30 April 2023

LTIP

RSA

SAYE

2,720,807

1,525,242

2,064,003

2,682,726

1,097,879

2,349,307

(181,818)

(485,828)

(206,266)

(192,598)

(1,641,100)

—

(1,009,860)

(66,773)

—

4,529,621

2,363,750

1,762,350

LTIP

RSA

SAYE

—

0.56

0.36

0.41

0.58

—

0.43

2.13

FY22
£000

486

651

Weighted average remaining contractual life (years)

3.85

2.48

The exercise prices of outstanding share options as at 30 April 2023 range from £0.21 to £0.81.

Expense recognised in the income statement

LTIP – share-based payment expense

RSA – share based payment expense

SAYE – share-based payment expense

Total IFRS 2 charges

FY23
£000

275

199

528

27. Capital commitments
At 30 April 2023 the Group had capital commitments of £368k (FY22: £139k).

28. Related party transactions
Identity of related parties with which the Group has transacted
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note. Transactions between the Group and its associates are disclosed below.

Transactions with key management personnel
The compensation of key management personnel (including the Directors) is as follows:

Key management remuneration - including social security costs

Pension contributions

Long-Term Incentive Plan - including social security costs

Total transactions with key management personnel

FY23
£000

3,132

184

313

3,629

FY22
£000

2,077

134

621

2,832

Further details on the compensation of key management personnel who are Directors are provided in the Group’s Directors’
remuneration report.

29. Subsidiary undertakings
The results of all subsidiary undertakings are included in the consolidated financial statements. The principal place of business and the
registered office addresses for the subsidiaries are the same as for the Company.

Company

The Works Investments Limited

The Works Stores Limited

The Works Online Limited

132132

TheWorks.co.uk plc Annual Report and Accounts 2023

Active/
dormant

Direct/
indirect control

Registered
number

Active

Dormant

Direct

09073458

Indirect

06557400

08040244

Class of
shares held

Ordinary

Ownership

100%

Notes to the consolidated financial statements continued(Forming part of the financial statements)

Company statement of financial position
As at 30 April 2023

Fixed assets

Investment

Current assets

Trade and other receivables

Total assets

Current liabilities

Trade and other payables

Total liabilities

Net assets

Share capital

Share premium

Share-based payment reserve

Retained earnings

Total equity

Note

FY22
(Restated –
Note 35)
£000

FY23
£000

38,377

57,537

38,384

57,557

8,986

29,398

625

28,322

2,780

(2,329)

29,398

6,465

51,092

625

28,322

2,252

19,893

51,092

These financial statements were approved by the Board of Directors on 30 August 2023 and were signed on its behalf by:

Steve Alldridge
Chief Financial Officer

Company registered number: 11325534

TheWorks.co.uk plc Annual Report and Accounts 2023

133

Financial statementsCorporate governanceStrategic report

Company statement of changes in equity

Share capital
£000

Share premium
£000

Share based
payment reserve
£000

Reported balance at 2 May 2021

Cumulative adjustment to opening balance (Note 35)

Restated balance at 2 May 2021

Total comprehensive expense for the period

Loss for the period

Total comprehensive expense for the period

Transactions with owners of the Company

Share-based payment charge

Transactions with owners of the Company

625

—

625

—

28,322

1,546

—

Retained
Earnings
£000

40,529

(5,549)

Total equity
£000

71,022

(5,549)

28,322

1,546

34,980

65,473

—

706

(15,087)

—

706

Balance at 1 May 2022 (Restated - Note 35)

625

28,322

2,252

19,893

51,092

Total comprehensive expense for the period

Loss for the period

Total comprehensive expense for the period

Transactions with owners of the Company

Share-based payment charge

Dividend

Own shares purchased by employee benefit trust

Transactions with owners of the Company

—

Balance at 30 April 2023

625

28,322

—

(20,257)

528

—

528

2,780

—

(1,492)

(473)

(1,965)

(2,329)

528

(1,492)

(473)

(1,437)

29,398

134

TheWorks.co.uk plc Annual Report and Accounts 2023

Notes to the Company financial statements

30. Accounting policies
(a) Basis of preparation
The Company financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (FRS 101). In preparing these financial statements, the Company applies the recognition, measurement and disclosure
requirements of UK-adopted International Accounting Standards (Adopted IFRSs) but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken. The
financial statements have been prepared under the historical cost convention.

An Employee Benefit Trust operated on the Company’s behalf (‘EBT’) is acting as an agent of the Company, therefore the assets and
liabilities of the EBT are aggregated into the Company balance sheet and shares held by the EBT in the Company are presented as a
deduction from equity.

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least
12 months from the date of issue of these financial statements. Accordingly, the financial statements have been prepared on a going
concern basis. Refer to Note 1(b)(i) for further information regarding the basis of preparation.

Principal accounting policies
The principal accounting policies set out below have been applied consistently to all periods presented in these financial statements.

New accounting standards
The Company has applied the following new standards and interpretations for the first time for the annual reporting period commencing
2 May 2022:

• Annual Improvements to IFRS 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41)

• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)

• Property, Plant and Equipment – Proceeds before Intended Use (Amendments to IAS 16)

• References to the Conceptual Framework (Amendments to IFRS 3)

• COVID-19 Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16)

The adoption of the standards and interpretations listed above has not led to any changes to the Company’s accounting policies or had
any other material impact on the financial position or performance of the Company.

(b) Income statement
The Company made a loss after tax of £20.1m for the period relating to the impairment of the investment balance (FY22: loss of £15.1m).
As permitted by Section 408 of the Companies Act 2006, the income statement of the Company is not presented as part of the financial
statements.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:

• Cash flow statement and related notes.

• Comparative period reconciliations for share capital.

• Transactions with wholly owned subsidiaries.

• Capital management.

• The effects of new but not yet effective IFRS.

• The compensation of key management personnel.

As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101
available in respect of the following disclosures:

•

IFRS 2 share-based payments in respect of Group-settled share-based payments.

(c) Key sources of estimation uncertainty
The preparation of financial statements requires the Company to make estimates and judgements that affect the application of policies
and reported amounts.

Critical judgements represent key decisions made by management in the application of the Company accounting policies. Where a
significant risk of materially different outcomes exists due to the requirement to make assumptions in arriving at a figure, this will represent
a key source of estimation uncertainty.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next
12 months are discussed below.

Key sources of estimation uncertainty which are material to the financial statements are described in the context of the matters to which
they relate, in the following note:

Description

Impairment of investments in subsidiaries

Note

Page

136

31. Employee costs
The Company has no employees other than the Board of Directors. Full details of Directors’ remuneration are set out in the Directors’
remuneration report.

TheWorks.co.uk plc Annual Report and Accounts 2023

135

Financial statementsCorporate governanceStrategic reportNotes to the Company financial statements continued

32. Dividends
Accounting policy
At the balance sheet date, dividends are only recognised as a liability if 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.

Final dividend for the year ended 1 May 2022

Total dividend paid to shareholders during the year

Pence per share

2.4p

FY23
£000

1,492

FY22
£000

—

Dividend equivalents totalling £603k (FY22: £375k) were accrued in the year in relation to share-based long-term incentive schemes.

The Board has recommended the payment of a 1.6 pence per share final dividend in respect of FY23 (FY22: 2.4 pence).

33. Investments in subsidiaries
Key source of estimation uncertainty
The carrying value of the investment in subsidiary undertakings is reviewed for impairment on an annual basis. The recoverable amount
is determined based on value in use. The value in use method requires the Group to determine appropriate assumptions (which are key
sources of estimation uncertainty) in relation to the growth rates of sales and gross margins, operating costs, future capital maintenance
expenditure, long-term growth rates and the pre-tax discount rate used to discount the assumed cash flows to present value. Estimation
uncertainty arises due to changing economic and market factors.

At 2 May 2021
Additions
Impairment charge
At 1 May 2022
Additions
Impairment charge

At 30 April 2023

FY23
£000

57,279
14,105
(13,847)
57,537
386
(19,546)

38,377

Investments in subsidiaries represent the Company’s investment in its subsidiary, The Works Investments Limited.

Impairment of investments in subsidiaries
The Company evaluates its investments in subsidiaries annually for any indicators of impairment. The Company considers the relationship
between its market capitalisation and the carrying value of its investments, among other factors, when reviewing for indicators of impairment.

As described above, key assumptions for the value in use calculation include those regarding the pre-tax discount rate, long-term growth
rates, and expected trading performance (sales, gross margin and operating costs).

The recoverable amount of the investment in The Works Investments Limited has been re-evaluated based on the Group’s latest forecast
post-tax cash flows included in its Base Case plan (see Note 1(b)(i)) which have regard to historical performance and knowledge of the
current market, together with the Group’s views on the future achievable growth and the impact of committed cash flows. The cash flows
include estimates of ongoing capital expenditure required to maintain the store network, but exclude any significant growth capital
initiatives. The immediately quantifiable costs of short term climate change risks and our net zero commitments have been included
in the cashflows. Increased capital expenditure has been included in the medium term cashflows to reflect anticipated technological
investment that is likely to be required either due to climate risk or in meeting our net zero commitments.

Management estimates pre-tax discount rates that reflect the current market assessment of the time value of money and the risks
specific to the Group. The pre-tax discount rate is derived from the Group’s weighted average cost of capital, which has been estimated
using the capital asset pricing model, the inputs of which include a company risk-free rate, equity risk premium, Group size premium,
a forecasting risk premium and a risk adjustment (beta). The FY23 pre-tax discount rate has been calculated on a pre-IFRS 16 basis,
therefore the cashflows used in the value in use calculation include IFRS-16 lease payments.

Pre-tax discount rate
Long-term growth rate

FY23

17.19%
1.0%

FY22

17.88%
2.0%

As a result of this analysis, an impairment charge of £19.5m has been recognised during FY23.

Sensitivity analysis
As disclosed in the accounting policies note, the cash flows used within the impairment model, the long-term growth rate and the pre-tax
discount rate are sources of estimation uncertainty and changes in these assumptions could lead to further impairment.

Management has performed sensitivity analysis on the assumptions in the impairment model using reasonably possible changes in these
key assumptions:

• a 10 basis point reduction in the long-term growth rate would result in an increase in impairment of £1.3m;

• a 10% reduction in cash flows from the Base Case plan would result in an increase in the impairment of £2.8m; and

• a 20 basis point increase in the pre-tax discount rate would result in an increase in impairment of £3.3m.

In the event that all three were to occur simultaneously, there would be an increase in impairment of £6.7m.

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TheWorks.co.uk plc Annual Report and Accounts 2023

34. Trade receivables

Prepayments and accrued income

Trade and other receivables

35. Trade payables

Non-trade payables and accrued expenses

Accruals

Amounts owed to Group undertakings

Trade and other payables

FY23
£000

208

8,692

8,986

FY22
£000

FY22
(Restated1)
£000

208

6,165

6,465

1 These balances have been restated to reflect the impact of the prior period restatements discussed below.

Amounts owed to Group undertakings are non-interest bearing and repayable on demand. The increase in the balance relates to the
FY22 final dividend and Plc related payroll costs being paid by The Works Stores Limited during the year as the Company does not have a
bank account.

Prior Period Restatements
The FY21 fixed asset impairment restatement detailed in Note 14 retrospectively reduces the distributable reserves in The Works Stores
Limited at the end of FY21. This prior year restatement affects an intercompany loan waiver which occurred in FY21, of a £5.5m payable
which had been due to The Works Stores Limited from TheWorks.co.uk plc. As this is a waiver from a subsidiary to the parent company,
the waiver is a deemed distribution of profits. Following the prior year restatement, The Works Stores Limited had negative distributable
reserves as at the time of the waiver, as such the distribution was unlawful. Therefore, as at the date of the waiver the Company is liable
to repay an amount equal to the original amount subject to the waiver, and an intercompany payable of £5.5m was created at this date.
This results in a £5.5m increase to amounts owed to group undertakings as at the end of FY21, with a corresponding reduction in profit
after tax. In the FY22 financial statements, the amounts owed to group undertakings is increased by £5.5m compared with the amount
previously stated, and the brought forward retained earnings balance has been reduced by £5.5m.

The following tables summarise the impact of the above restatements on the Group’s consolidated financial statements.

Summarised consolidated statement of financial position

Total assets

Liabilities

Trade and other payables

Total liabilities

Net assets

Equity attributable to equity holders of the Parent

Retained earnings

Other reserves

Total equity

Total assets

Liabilities

Trade and other payables

Total liabilities

Net assets

Equity attributable to equity holders of the Parent

Retained earnings

Other reserves

Total equity

Per FY22
financial
statements

57,557

Adjustment

—

(916)

56,641

25,442

31,199

56,641

(5,549)

—

(5,549)

Per FY21
financial
statements

71,477

Adjustment

—

(455)

71,022

40,529

30,493

71,022

(5,549)

—

(5,549)

FY22
restated
balance

57,557

(6,465)

51,092

19,893

31,199

51,092

FY21
restated
balance

71,477

(6,004)

65,473

34,980

30,493

65,473

TheWorks.co.uk plc Annual Report and Accounts 2023

137

Financial statementsCorporate governanceStrategic report

Notes to the Company financial statements continued

35. Trade payables continued
Prior Period Restatements continued
Summarised consolidated statement of changes in equity

Reported balance at 1 May 2022

Cumulative adjustment

Restated balance at 1 May 2022

Reported balance at 2 May 2021

Cumulative adjustment

Restated balance at 2 May 2021

Attributable to equity holders of the Company

Share
capital
£000

Share
premium
£000

Share-based
payment
reserve
£000

Retained
earnings
£000

Total
equity
£000

625

28,322

2,252

25,442

56,641

—

(5,549)

625

28,322

2,252

19,893

51,092

Attributable to equity holders of the Company

Share
capital
£000

Share
premium
£000

Share-based
payment
reserve
£000

Retained
earnings
£000

Total
equity
£000

625

28,322

1,546

40,529

71,022

—

(5,549)

625

28,322

1,546

34,980

65,473

36. Share capital and share premium
Accounting policy
The following describes the nature and purpose of each reserve within equity:

• Share premium account: Proceeds received in excess of the nominal value of shares issued, net of any transaction costs.

• Share based payment reserve: Represents the cumulative charges to income under IFRS 2 Share-based Payments on all share options

and schemes granted, net of share option exercises.

• Retained earnings: All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

Share capital

Allotted, called up and fully paid ordinary shares of 1p:

At the start of the period

Issued in the period

At the end of the period

Share capital

At the start of the period

Issued in the period

At the end of the period

Share premium

At the start of the period

Issued in the period

At the end of the period

FY23
Number
000

FY22
Number
000

62,500

—

62,500

FY23
£000

625

—

625

28,322

—

28,322

62,500

—

62,500

FY22
£000

625

—

625

28,322

—

28,322

During the year, the Employee Benefit Trust purchased £473k (FY22: £Nil) of the Company’s shares for the purpose of satisfying future
employee share-based payment awards.

Investment in own shares
At 30 April 2023, the Employee Benefit Trust held 1,240,577 (FY22: Nil) of the Company’s shares.

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TheWorks.co.uk plc Annual Report and Accounts 2023

37. Equity-settled share-based payment arrangements
Accounting policy
The Group operates an equity-settled share-based compensation plan.

The cost of the awards to employees is expensed to the income statement, together with a corresponding adjustment to equity, on a
straight-line basis over the vesting period of the award. The cost of awards to employees of subsidiary undertakings is recognised as an
increase in the investment in the subsidiary. The total income statement charge is based on the Company’s estimate of the number of
share awards that will eventually vest in accordance with the vesting conditions. The awards granted during FY23 include market-based
vesting conditions. At each balance sheet date, the Company revises its estimate of the number of awards that are expected to vest.
Any revision to estimates is recognised in the income statement, with a corresponding adjustment to equity.

During FY23, the Group had three (FY22: three) share-based payment schemes, which are described below.

Save As You Earn Scheme (SAYE)
A Save As You Earn Scheme is established which is a UK tax-qualified scheme under which eligible employees (including Directors) may
save up to a maximum monthly limit of £250 (as determined by the Remuneration Committee) over a period of three years. Participants
are granted an option to acquire shares at up to a 20% discount to the price as at the date of grant. The number of shares under option is
that which can be acquired at that price using savings made.

For more information, refer to Note 26.

Expense recognised in the Company income statement

Share-based payment expenses

Expense recognised in the Company income statement

Expense recognised in the subsidiary income statement

Total IFRS 2 charges recognised in the Group income statement

FY22
(Restated –
Note 35)
£000

396

310

706

FY23
£000

143

385

528

TheWorks.co.uk plc Annual Report and Accounts 2023

139139

Financial statementsCorporate governanceStrategic report

Advisers and contacts

Corporate Brokers
Singer Capital Markets Advisory LLP
One Bartholomew Lane
London
EC2N 2AX

Legal Advisers
Squire Patton Boggs (UK) LLP
6 Wellington Place
Leeds
LS1 4AP
Tel: 0113 284 7000

Auditor
KPMG LLP
One Snowhill
Snowhill Queensway
Birmingham
B4 6GH
Tel: 0121 740 3516

Principal Bankers
HSBC Bank Plc
Birmingham Corporate Centre
6th Floor, 120 Edmund Street
Birmingham
B3 2QZ
Tel: 03455 852 569

Registrars
Equiniti Limited
Aspect House, Spencer Road
Lancing
West Sussex
BN99 6DA

Financial Public Relations and Investor Relations
Sanctuary Counsel
5-8 The Sanctuary
Westminster
London
SW1P 3JS
Tel: 0207 340 0395

Registered Office
Boldmere House, Faraday Avenue
Hams Hall Distribution Park
Coleshill
Birmingham
B46 1AL
Tel: 0121 313 6050

140

TheWorks.co.uk plc Annual Report and Accounts 2023

CBP020499

TheWorks.co.uk plc’s commitment to environmental issues
is reflected in this Annual Report, which has been printed
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Boldmere House
Faraday Avenue
Hams Hall Distribution Park
Coleshill
Birmingham B46 1AL