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entu (UK) plc (ENTU)

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Tuesday 10 February, 2015

entu (UK) plc

Final Results

RNS Number : 4931E
entu (UK) plc
10 February 2015
 



Entu (UK) plc

Final Results for the Year Ended 31 October 2014

 

Highlights

·      A significant year of development for the Group, culminating in our admission to AIM in October 2014

·      Total Group revenues increased up 24.6%  to £119m (2013: £95.5m)

·      Revenue growth across all business segments:

Home Improvements division reported sales of £84.3m (2013: £71.2m)

Energy Generation and savings segment sales were £23.9m (2013: £20.8m)

The Insulation Division sales in the year were £8.4m (2013: £1.2m)

Repair and Renewal Service Agreements business achieved £2.4m sales during the year (2013: £2.2m)

·      Group operating profit before exceptional items rose 69.5% to £10.3m (2013 £6.1m)

·      Profit before tax increased 47.9% to £9m (2013: £6.1m)

·      EBTIDA grew 65.6% to £10.6m in 2014 (2013: 6.4m)

·      The Group also witnessed a significant shift in its profitability splits in 2014 compared to previous years, with a more equal distribution of profits among the different business segments

·      Net cash at 31 October 2014 of £5.8m (2013: (£1.8m))

·      Adjusted earnings per share increased 57.7% to 12.3p (2013: 7.8p)

·      Special interim dividend of 1.5p per share

·      This morning, MoU announced with FlowGroup plc to allow Entu to sell, install and maintain Flowgroup's electricity-generating domestic boiler and to market Flowgroup's home energy offer, through its Job Worth Doing subsidiary

 

Commenting on the Full Year Results, Ian Blackhurst said:

"This has been a significant year of development for the Group, culminating in our admission to AIM in October 2014. We have strengthened our leading positions in our target markets across the UK, buoyed by our strong brand reputation, our national coverage, and by steadily improving consumer demand. 

"Our primary strategy is to focus on driving organic growth from our diversified, fully integrated product portfolio, and also, over time, through the development of new product and service offerings, in particular, energy efficiency products and services.

"With our market leading positions, diversified product portfolio and deep customer knowledge, we are able to look forward to the future with confidence, and the Board believes Entu is well positioned to deliver growth and shareholder value."

10 February 2015

 

ENQUIRIES

 

Entu     

020 7457 2020

Ian Blackhurst, Chief Executive Officer     

Darren Cornwall, Group Chief Financial Officer




Grant Thornton UK LLP (Nominated Adviser)

020 7383 5100

Philip Secrett

Salmaan Khawaja

Jen Clarke

Jamie Barklem




Zeus Capital Limited (Broker)

020 7533 7727

John Goold

Dominic King

Andrew Jones


 

 

Instinctif Partners (Public Relations)

020 7457 2020

Helen Tarbet

Harry Cameron

James Gray       




Chairman's Statement

Overview & Strategic Update

I am pleased to report an excellent year for Entu. The Group achieved strong financial results and completed its successful admission to trading on AIM in October.

Total Group revenues were £119m, up 24.6% on the previous year (2013: £95.5m). Group operating profit before exceptional items rose 69.5% to £10.3m (2013: £6.1m). Profit before tax increased 47.9% to £9m (2013: £6.1m). Adjusted earnings per share increased 57.7% to 12.3p (2013: 7.8p).  At the year end, the Group had net cash of £5.8m (2013: (1.8m)).

The Company's admission to AIM represented the start of a phase of integration and growth for Entu that we believe has the potential to deliver significant value for our shareholders.

Whilst we are only at the start of our journey as a quoted company, we can already see evidence that the flotation will provide Entu with additional opportunities for growth, both by raising the profile of our existing businesses and by providing the Company with more readily accessible capital to fund acquisitions and other investment.  The Board intends to take advantage of these new opportunities as much as is prudent whilst ensuring that the risks inherent in the Group remain properly managed and controlled. 

Entu operates in a marketplace in which there are compelling opportunities for growth. There are around 27 million residential homes in the UK, and the overall home improvements market is worth an estimated £27 billion annually. Particularly exciting are the opportunities in the areas of energy generation and energy efficient products. These products are growing in popularity due to a combination of increasing consumer awareness, the generally high cost of traditional home energy products and Government incentives towards the adoption of green technology in the home. Entu is well positioned to take advantage of these market conditions.

Entu's strategy is to grow by offering and cross-selling a wide range of complementary products, including energy efficient windows, doors, conservatories, external and cavity wall insulations, solar power generation products and energy efficient boilers. The Group has a UK wide presence through established local brands, all united under the Entu name and supported by Job Worth Doing, the Group's national installation service.

There is significant scope to execute our strategy across our whole product range through enhanced marketing, increased cross-selling, more online sales and enhanced customer acquisition and retention. 

In addition to implementing our organic growth strategy, we will actively look at growing the Group by acquisition in the highly fragmented existing, and complementary, product lines and market areas.

Dividend

At the time of Entu's AIM admission the Board committed to implementing a dividend policy subject to their discretion and subject to the Company having sufficient distributable reserves which, based on their expectations of current and future trading and track record of the business, would commence for the year ending 31 October 2015.

In addition to the commitment above, the Directors are pleased to declare a special interim dividend for the year ending 31 October 2015, amounting to 1.5p per share which will be paid on 13 March 2015.

 Subject to the conditions noted above, the Board confirms its intention to recommend a total dividend (excluding the exceptional first interim dividend) of 8p per share for the year ending 31 October 2015.

 

The dividend will be paid in accordance with the following timetable:

Ex-Dividend Date                        19 February 2015

Record Date                               20 February 2015

Pay Date                                    13 March 2015

Annual General Meeting

The Company's 2015 Annual General Meeting will be held at 9:30am on 24 March 2015 at Eversheds LLP, 70 Great Bridgewater Street, Manchester M1 5ES.

Board & People

These strong results would not have been achieved without the enthusiasm, professionalism and commitment shown by our people this year. On behalf of the Board, I would like to thank them for all their hard work, and to emphasise how much I am looking forward to working with them as Entu enters this new and exciting phase of its life as a listed company.

The Entu (uk) plc Board itself has seen many changes this year, with the additions of myself as Independent Non-executive Chairman, and Lorraine Clinton and David Grundy as Independent Non-executive Directors to support Ian and Darren in driving the Group's growth strategy and delivering value to shareholders. We are well supported in this by an able and experienced senior management team which we have recently further strengthened with the appointment of a new Group Marketing Director, who is responsible for continuing to enhance sales leads and brand awareness as a combined Group, across all media.

Summary & Outlook

After an eventful and successful 12 months, the Group enters the current financial year with a strong balance sheet and a range of compelling opportunities for growth, which it is actively exploiting.  The Entu brand has benefitted from the enhanced profile resulting from the Company's status as a publically quoted business, and we will continue to build on this with our cross-selling and organic growth initiatives together with our prime mover advantage in the energy generation and energy efficiency space, allied with our prudent acquisition strategy. These factors will underpin and drive profitable growth in the years to come. We are well positioned in our target markets, and we look forward to the future with confidence.

 

David M Forbes

Chairman



Chief Executive's Statement

Overview

This has been a significant year of development for the Group, culminating in our admission to AIM in October 2014. We have strengthened our leading positions in our target markets across the UK, buoyed by our strong brand reputation, our national coverage, and by steadily improving consumer demand. 

Our primary strategy is to focus on driving organic growth from our diversified, fully integrated product portfolio, and also, over time, through the development of new product and service offerings, in particular, energy efficiency products and services, whilst continuing to strive for the highest levels of customer satisfaction across all the product range.

This growth will be enhanced by leveraging the unified, nation-wide Entu brand to drive cross-selling opportunities, as well as a greater proportion of sales through our website.

As a Group we have benefitted over the years from acquisitions and, to complement our organic growth, we are always exploring the potential to enhance our product offering through carefully targeted acquisitions which meet strict value enhancing criteria.

Results & Operational Review

For the year ended 31 October 2014, profit before tax increased to £9.0m (2013: £6.1m) on revenues of £119.0m (2013: £95.5m), giving adjusted earnings per share of 12.3p (2013: 7.8p). Net cash at year end was £5.8 m (2013: (1.8m)).

Home Improvement Products

Our home improvement products - doors, windows, conservatories and roofline - are sold through separate brands which are market leaders in their regions. The division has performed robustly as we have built on our market share, and as consumer confidence has increased and homeowners have decided to make replacements or improvements to their homes.  In the year to 31 October 2014, the division reported sales of £84.3m (2013: £71.2m), representing 71.0% of Group sales (2013: 74.6 %). Net margin for the division was 4.5% (2013: 5.0%).

During the year, the Home Improvement Products segment was strengthened through the acquisition of the Europlas brand in December 2013.

Energy Generation and Energy Saving Products

Products sold include solar photovoltaic installations, air to air heat pumps, voltage regulators, remote heating controls and boilers. For the year ended 31 October 2014, sales were £23.9m (2013: £20.8m), representing 20.0% of Group sales (2013: 21.8%). This is a segment in which we see significant opportunities for growth with the increasing adoption of energy efficient products and technologies, as I outline further below.

Insulation Products

Demand for this relatively new product segment is driven by a growing recognition of the financial and environmental benefits of home insulation. Products in this segment include cavity wall insulation, external wall insulation and loft insulation. Sales in the year were £8.4m (2013: £1.2m) or 7.0% of Group sales (2013: 1.3%).

 

Repairs and Renewals Service Agreement ("RRSA") Programme

Our RRSA programme is an annual warranty plan offered to customers on the vast majority of our products. It represented £2.4m of Group sales during the year (2013: £2.2m), 2.0% of Group sales (2013: 2.3%).   This gave the segment a gross margin of 78.7% in 2014 (2013: 82.5%), and at year end around 60% of our customers were members of the programme (2013: 60%).

National Installation

Our national installation service, Job Worth Doing ("JWD"), has comprehensive nationwide coverage, with 80% of the population living within one hour's drive of a JWD centre. It therefore unites all our brands and products, and facilitating cross-selling and in the roll-out of new products and services.

The Opportunity in Energy Efficiency

UK homes are becoming increasingly energy efficient. Households are now using around 20% less energy than they were in 2004 (Source: Delivering UK Energy Investment July 2014, www.gov.uk) and the growing recognition, from Government to household level, of the long term economic advantages of energy efficiency is continuing to drive adoption. For example, in the UK there are 24 million homes which would be suitable for loft insulation, 19 million suitable for cavity wall insulation and 27 million suitable for high efficiency boilers (Source: Delivering UK Energy Investment July 2014, www.gov.uk).

This is a major growth opportunity for Entu, and one of which we are well positioned to take advantage.

There is a gap in the market for a supplier which offers expert advice and guidance about energy efficiency, as well as practical installation services, to the consumer.

With our unique offering, we are well placed to establish a market leading presence in the home efficiency market, as part of our integrated portfolio of services. Entu already has an established foothold in this market through our energy efficiency brands Energy Hypermarket, Staybrite Solar and Zest, and we are actively looking to grow this.

Our aim now is to build by leveraging our knowledge of our customers' requirements from our 1 million strong Group database, engaging with our customers and showing them how they can realise tangible benefits from adopting energy saving products, and then offering affordable solutions tailored to them. 

We are currently at an early stage of developing a technology that will allow our customers to monitor their energy usage online on a daily, weekly and monthly basis to understand where they are consuming most energy and how energy efficient products can save them money. From this we can offer energy assessments and bespoke energy efficient solutions.

We are also actively seeking to grow our existing product line, especially in energy efficient boilers and in solar photovoltaic installations, and to capitalise on emerging trends by entering into partnership agreements with other players in the sector, for example, in the  "smart energy control" solutions. We look forward to providing updates on our progress in these initiatives in due course.

Financial Review

During the year, total Group revenues increased 24.6%, to £119m, compared to the prior year (2013: £95.5m), which was primarily driven by significant revenue increases in our Home Improvements and Insulation business segments.  Within our Home Improvement segment, revenues increased to £84.3m compared to £71.2m in 2013, and within the Insulation segment revenues increased to £8.4m from £1.2m in 2013.

Profit before taxation and exceptional items during 2014 was £10.3m, a 69.5% increase from £6.1m in 2013.  During the year, the Group saw a significant increase in profit before tax and exceptional items generated by its Energy Generation and Saving Segment from £0.2m in 2013 to £1.8m in 2014. 

In 2014, the Group incurred exceptional costs of £1.32m, which related to costs associated with the listing on AIM. 

Post exceptional items, the Group achieved profit before tax of £9.0m in 2014, compared to £6.1m in 2013, a 47.9% increase.  Within this growth in profits, the Group also witnessed a significant shift in its profitability splits in 2014 compared to previous years, with a more equal distribution of profits among the different business segments, giving our earnings greater resilience.

During the year, the Group also successfully negotiated an increased credit facility with Barclays Bank, which will give the Group additional capacity for further acquisitions and developments

At 31 October 2014, the Group had Cash and cash equivalents of £5.8m compared to a £1.8m overdraft at 31 October 2013.

Adjusted earnings per share increased 57.7% for the year ended 31 October 2014 to 12.3p (2013: 7.8p) and basic earnings per share rose 32% in the year to 10.3p (2013: 7.8p).

Current Trading & Outlook

The current year has started well and trading is in line with our expectations.

We look forward to continued organic growth through greater customer engagement and cross-selling, as well as by taking advantage of the exciting opportunities in the energy efficiency market. In addition, and where appropriate, we will supplement our organic growth through the use of strategic acquisitions in target product segments. 

With our market leading positions, diversified product portfolio and deep customer knowledge, we are able to look forward to the future with confidence, and the Board believes Entu is well positioned to deliver growth and shareholder value.

Ian Blackhurst

CEO

10 February 2015


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 October 2014

 

 

 

 

 

 

 

 

Year ended 31 October

 2014

 

Before exceptional items

 

Year ended 31 October

2014

 

Exceptional items (note 5)

 

Year ended 31 October

2014

 

Total

 

Year ended 31 October

2013

 

Total

 

Notes

£000's

£000's

£000's

£000's

Continuing operations

 

 

 

 

 

Revenue                                            

4

118,973

-

118,973

95,470

Cost of sales

 

(82,696)

-

(82,696)

(60,766)

Gross profit

36,277

-

36,277

34,704

 

 

 

 

 

 

Administrative expenses

 

(26,018)

     (1,320)

(27,338)

(28,653)

Operating profit/(loss)                           

4

 

10,259

 

(1,320)

8,939

6,051

 

 

 

 

 

 

Finance income

8

29

-

29

4

Finance costs

8

(11)

-

(11)

-

 

 

 

 

 

 

Profit/(loss) before taxation

 

10,277

(1,320)

8,957

6,055

Taxation                               

9

 

(2,215)

 

-

(2,215)

(946)

 

 

 

 

 

 

Profit/(loss) for the year from continuing operations

6

 

8,062

 

(1,320)

6,742

5,109

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

Loss from the period from discontinued operations

10

 

-

 

-

-

(500)

 

 

 

 

 

 

Profit/(loss) for the year

 

8,062

(1,320)

6,742

4,609

 

 

 

 

 

 

Basic earnings per share (pence)

12

 

 

10.3

7.8

Diluted earnings per share (pence)

12

 

 

10.3

7.8

 

 

 

 

 

 

Adjusted basic earnings per share (pence)

12

 

 

12.3

7.8

Adjusted diluted earnings per share (pence)

12

 

 

12.3

7.8

 

 

 

 

 

The notes below are an integral part of these consolidated financial statements.

 

There are no other items of comprehensive income for the year other than the profit/(loss) attributable to the equity holders.


CONSOLIDATED BALANCE SHEET

At 31 October 2014

 

 

 

31

October

2014

31 October 2013

31

October

2012

 

Notes

 

£000's

£000's

£000's

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

13

 

1,676

1,377

1,343

Property, plant and equipment

14

 

1,048

658

705

Deferred tax asset

20

 

19

10

5

 

 

 

2,743

2,045

2,053

Current assets

 

 

 

 

 

Inventories

15

 

1,751

1,144

616

Trade and other receivables

16

 

11,060

23,788

16,613

Cash and cash equivalents

17

 

5,768

4

5,867

 

 

 

18,579

 

24,936

23,096

Total assets

 

 

21,322

26,981

25,149

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

23

 

50

-

-

Retained earnings

 

 

871

9,317

4,960

Total shareholders' equity

 

 

921

9,317

4,960

Liabilities

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Deferred taxation liabilities

20

 

40

7

25

Provisions

21

 

1,488

 

1,633

2,812

 

 

 

1,528

1,640

2,837

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Borrowings

19

 

-

1,822

547

Trade and other payables

18

 

16,253

12,967

15,039

Current taxation payable

 

 

2,191

992

1,268

Provisions

21

 

429

243

498

 

 

 

18,873

16,024

17,352

Total liabilities

 

 

20,401

17,664

20,189

Total shareholders' equity and liabilities

 

 

 

21,322

26,981

     

        25,149

 

 

 

 

 

 

The financial statements were approved by the Board of Directors and authorised for issue.

They were signed on its behalf by:

 

 

Darren Cornwall                                                                                      

10 February 2015



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 October 2014

                                                                                                                                           Equity attributable to the equity holders

 

Share

Retained

 

 

capital

Earnings

Total

 

£000's

£000's

£000's


 

 

 


 

 

 

At 1 November 2011

-

2,327

2,327

Profit for the financial year

-

2,833

2,833

Transactions with owners

 

 

 

Ordinary dividends (Note 11)

-

(200)

(200)

Total transactions with owners recognised directly in equity

 

(200)

(200)

At 31 October 2012

-

4,960

4,960


 

 

 

At 1 November 2012

-

4,960

4,960

Profit for the financial year

 

4,609

4,609

Transactions with owners

 

 

 

Ordinary dividends (Note 11)

-

(252)

(252)

Total transactions with owners recognised directly in equity

-

(252)

(252)

At 31 October 2013

-

9,317

9,317


 

 

 

At 1 November 2013

-

9,317

9,317

Profit for the financial year

-

6,742

6,742

Transactions with owners:




Distributions to shareholders (note 28)

-

(15,188)

(15,188)

Proceeds from shares issued (Note 23)

50

-

50

Total transactions with owners recognised directly in equity

50

(15,188)

50

At 31 October 2014

50

871

921

 

Share capital

The share capital account includes the nominal value for all shares issued and outstanding.

 

Retained earnings

The retained earnings reserve includes the accumulated profits and losses arising from the consolidated statement of comprehensive income and certain items from the statement of changes in equity attributable to equity shareholders net of distributions to shareholders.

 

 

CONSOLIDATED CASH FLOW STATEMENT

 

Year ended 31 October 2014





2014

2013


Notes

£000's

£000's

Cash flows from operating activities

 

 

 

Cash generated from operations

25

10,389

5,429

Taxation paid

 

 

(1,007)

(1,245)

Net cash generated from operating activities

 

9,382

4,184

 


 

 

Cash flows from investing activities


 

 

Finance income

  

29

4

Finance costs

 

(11)

-

Purchase of property, plant and equipment

    14

(674)

(261)

Acquisition of trade and assets

27

(299)

(28)

Increase in loans due from related parties

 

(891)

(10,785)

Net cash used in investing activities

 

(1,846)

(11,070)

 

 

 

 

Cash flows from financing activities

 

 

 

Dividends paid

11

-

(252)

Proceeds from issue of share capital

 

50

-

Net cash generated from/(used in) financing activities

 

50

(252)

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

7,586

(7,138)

Cash and cash equivalents at the beginning of the year

 

 

(1,818)

5,320

Cash and cash equivalents at the end of the year

17

5,768

(1,818)

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Accounting policies

 

General information

 

Entu (UK) plc ('the Company') and its subsidiaries' (together "the Group") principal activity during the period was the sale of replacement windows, double glazing, entrance doors, patio doors and exterior improvement products within the United Kingdom.

 

The Company is incorporated and domiciled in the UK. The Company's registered number is 08957339. The address of its registered office is 8 Bow Chambers, Tib Lane, Manchester, M2 4JB.

 

The Company is a public limited company and has its primary listing on the AIM division of the London Stock Exchange.

 

The Group consolidated financial statements were authorised for issue by the Board on 10 February 2015.

 

Basis of preparation

  

While the financial information included in this preliminary announcement has been computed in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The accounting policies used are consistent with those in the Group's statutory financial statements for the year ended 31 October 2014 which have yet to be published. The key accounting policies applied by the Group have been set out below. The preliminary results for the year ended 31 October 2014 were approved by the Board of Directors on 10 February 2015.

 

The financial information set out in this preliminary announcement does not constitute the Group's statutory financial statements for the year ended 31 October 2014 but is derived from those financial statements which were approved by the Board of Directors on 10 February 2015. The auditors have reported on the Group's statutory financial statements and the report was unqualified and did not contain a statement under section 498 (2) or 498 (3) Companies Act 2006. The statutory financial statements for the year ended 31 October 2014 have not yet been delivered to the Registrar of Companies and will be delivered following the Company's Annual General Meeting.

 

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS as adopted by the EU), IFRS Interpretations Committee (IFRS IC) Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

 

The Group's deemed transition date to IFRS is 1 November 2012. The principles and requirements for first time adoption of IFRS are set out in IFRS 1. IFRS 1 allows certain exemptions in the application of particular standards to prior periods in order to assist companies with the transition process. The Group has not applied any of the optional exemptions under IFRS 1 other than in respect of IFRS 3 where acquisitions completed before the date of transitions have not been retrospectively adjusted. This is the first financial information prepared by the Group under IFRS.   The Group has not previously prepared or reported any consolidated financial information in accordance with any other GAAP.  Consequently, it is not possible to provide IFRS 1 reconciliations between financial information prepared under any previous GAAP and this consolidated financial information.

 

For the years ended 31 October 2012 and 31 October 2013 the Group existed as three separate Groups being HI Sales Limited, JWD Installations Limited and KBC Energy Limited. These three Groups operated under common management and were majority owned and controlled by Brian Kennedy.  

 

On 7 July 2014 the Company acquired a 100 per cent interest in each of the Groups but control remained with the majority shareholder in the company at that time, Brian Kennedy. The transaction is a business combination under common control and is not within the scope of IFRS 3. It has therefore been accounted for as a capital reorganisation.

 

Predecessor accounting has therefore been applied by presenting the financial information of the combined businesses, which has resulted in the comparative financial information being prepared on a consistent consolidated basis.

 

The financial statements have been prepared in GBP, being the Groups presentational currency and have been presented in thousands.

 

The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Group's accounting policies. 

 

Basis of consolidation

 

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The Financial Statements of subsidiaries are generally included in the Group Financial Statements from the date that control commences until the date that control ceases.

 

Transactions, balances and unrealised gains on transactions between Group companies have been eliminated on consolidation.  Unrealised gains have also been eliminated to the extent that they do not represent an impairment of a transferred asset.  Subsidiaries' accounting policies have been changed where necessary to ensure consistency with the policies adopted by the Group.



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Accounting policies continued

 

Adoption of new or amended standards and interpretations in the current year

 

In the current year, the following new or amended standards have been adopted.

 

IFRS 7 (amendment) "Financial instruments: disclosures" is effective for annual reporting periods beginning on or after 1 January 2013, and amends the disclosures required where certain items have been offset.

 

IFRS 13 "Fair value measurement" is effective for annual periods beginning on or after 1 January 2013. This standard applies to IFRSs that require or permit fair value measurements or disclosures and provides a single IFRS framework for measuring fair value and requires disclosures about fair value measurement.

 

IAS 19 (revised 2011) "Employee benefits" is effective for annual periods beginning on or after 1 January 2013. As the Company has no defined benefit pensions schemes the amendment to the standard has had no impact on the Group.

 

New or amended standard and interpretations in issue but not yet effective or EU endorsed

 

The following new standards, amendments to standards and interpretations that are expected to apply to the Group, which have not been applied in these financial statements, were in issue, but are not yet effective, or EU endorsed.

 

IFRS 9 "Financial Instruments" is effective for annual reporting periods commencing on or after 1 January 2018. The standard will eventually replace IAS 39.

 

IFRS 10 "Consolidated financial statements" is effective for annual reporting periods beginning on or after 1 January 2014. This standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within consolidated financial statements.

 

IFRS 11 "Joint arrangements" is effective for annual periods beginning on or after 1 January 2014. This standard provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. This is not expected to have a material impact.

 

IFRS 12 "Disclosure of interests in other entities" is effective for annual periods beginning on or after 1 January 2014. This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.

 

IFRS 15 "Revenue from contracts with customers" is to establish the principles that an entity shall apply to report about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. Application of the standard is mandatory for annual reporting periods starting from 1 January 2017 onwards.

 

IFRIC 21 "Levies", sets out the accounting for an obligation to pay levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to pay a levy. The Company is not currently subject to significant levies so the impact on the Company is not material. Effective for annual periods beginning on or after 1 January 2014.

 

IAS 27 (revised) "Separate financial statements" is effective for annual periods beginning on or after 1 January 2014. This standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.

 

IAS 28 (revised) "Investments in associates and joint ventures" is effective for annual periods beginning on or after 1 January 2014. This standard includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11.

 

IAS 32 "Offsetting financial assets and liabilities" is effective for annual periods beginning on or after 1 January 2014 and provides clarification on the application of offsetting rules.

 

The Group continues to assess the impact of adopting these new or amended standards and interpretations in future accounting periods.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Accounting policies continued

 

Going concern

 

The financial statements have been prepared on a going concern basis. For the purpose of considering going concern the board has considered a period of at least 12 months from the date of approving these financial statements. The principal risks to the company are set out in note 3 of these financial statements but it is felt that these do not pose a threat to the going concern status of the group going forward.

 

Revenue

 

Revenue from the sales of goods is recognised when the Group has transferred the significant risks and rewards of ownership to the buyer and it is probable that the Group will receive the previously agreed upon payment.  These criteria are considered to be met when installation has been completed. The Group does not consider that it has any long term contracts as all jobs are usually completed in a short time frame. Revenue is recognised net of VAT and any sales discounts and rebates offered. Warranty sales are recognised at the point of sale which is upon the completion of installation as the contracts are non-cancellable following the initial 14 day cooling off period.

 

Provided the amount of revenue can be measured reliably and it is probable that the Group will receive any consideration, revenue for services is recognised in the period in which they are rendered.

 

Finance commission income

 

The Group recognises finance commissions receivable from finance providers upon receipt which occurs upon completion of the sale of finance to the end customer and so when the revenue is due to the Group. Income is recognised upon receipt with a provision put in place to estimate any potential claw backs of commission's receivable based upon past history of such claw backs. Finance commission income is recognised within revenue in the statement of comprehensive income.

 

Goodwill

 

Goodwill represents the excess of the cost of a business combination over the Group's interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired.  Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued. Contingent consideration is included in cost at the acquisition date fair value and, in the case of contingent consideration classified as a financial liability, re-measured subsequently through profit or loss. Direct costs of acquisition are recognised immediately as an expense in profit or loss.

 

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income.  Where the fair value of identifiable assets, liabilities and contingent liabilities exceeds the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.

 

Goodwill Impairment

 

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

 

Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in the profit or loss.  An impairment loss recognised for goodwill is not reversed.

 

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Accounting policies continued

 

Exceptional items

 

The Group adopts a columnar income statement format to highlight significant items within the Group results for the period. Such items are considered by the Directors to be exceptional in nature rather than being representative of the underlying trading of the Group, and in the current year include costs associated with the Group's initial public offering. The Directors apply judgement in assessing the particular items, which by virtue of their scale and nature should be disclosed in a separate column of the income statement and notes to the financial statements as 'Exceptional items'. The Directors believe that the separate disclosure of these items is relevant to an understanding of the Group's financial performance.

 

Business Combinations

 

The acquisition of subsidiaries is accounted for using the purchase method. The fair value of consideration of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 'Business combinations' are recognised at their fair values at the acquisition date. All acquisition costs are expensed as incurred as exceptional items.

 

Share capital

 

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

 

The Group's ordinary shares are classified as equity instruments.

 

Dividends

 

Dividends are recognised when they become legally payable and are approved by shareholders. In the case of interim dividends to equity shareholders, this is when they are paid.

 

Taxation

 

Income tax expense represents the sum of the tax currently payable and deferred tax.

 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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 and deferred tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

 

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 goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries 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.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Accounting policies continued

 

Taxation continued

 

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. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity.

 

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 liabilities on a net basis.

 

Property plant and equipment

 

All other assets are stated at historical cost less accumulated depreciation and accumulated impairment losses.  Historical cost includes expenditure that is directly attributable to the acquisition of the item.

Depreciation is charged so as to write off the cost or valuation of assets, other than land, over their estimated useful lives, using the straight-line method, on the following basis:

 

 

 

Freehold Property

-

5% per annum

 

Improvements to Freehold Property

-

33% per annum

 

Plant and Machinery

-

33% per annum

 

Fixtures and Fittings

-

33% per annum

 

Equipment

-

33% per annum

 

Motor Vehicles

-

33% per annum

 

Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate.

 

Gains or losses on disposal are included in the profit or loss for the year within admin costs.

 

Cash and cash equivalents

 

Cash and cash equivalents include cash in hand and balances with banks including outstanding bank overdrafts.

 

Financial Instruments

 

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

 

Financial instruments are recognised on the balance sheet at fair value when the Group becomes a party to the contractual provisions of the instrument.

 

Trade receivables

 

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables and is measured as the difference between carrying value and present value of estimated future cash flows. Subsequent recoveries of previously impaired trade receivables are recognised as a credit to profit as recorded.

 

Trade payables

 

Trade payables are not interest bearing and are stated at fair value and subsequently measured at amortised cost.



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Accounting policies continued

 

Borrowings

 

Interest-bearing bank loans and overdrafts are recorded at fair value, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis through the income statement using the effective interest method and are added to the carrying amount of the instrument to the extent they are not settled in the period in which they arise.

 

Defined contribution schemes

 

Contributions  to  defined  contribution  pension  schemes  are  charged  to  the  consolidated statement of comprehensive income in the year to which they relate.

 

Leases

 

Payments made under operating leases are recognised in profit and loss on a straight-line basis over the term of the lease. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

 

Finance income and costs

 

Finance income and costs are recognised in the income statement in the period in which they are incurred.

 

Inventories

 

Inventories  are  initially  recognised  at  cost,  and  subsequently  at  the  lower  of  cost  and  net realisable value.   Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Weighted average cost is used to determine the cost of ordinarily interchangeable items.

 

Discontinued operations

 

A discontinued operation is a component of the Group's business that represents a separate major  line  of  business  or  geographical  area  of  operations.

 

Discontinued operations are presented in the combined statement of comprehensive income  as  a  single  line  which  comprises  the  post-tax  profit  or  loss  of  the  discontinued operation along with the post-tax gain or loss recognised on the re-measurement to fair value less  costs  to  sell  or  on  disposal  of  the  assets  or  disposal  groups  constituting  discontinued operations.

 

Prior periods are re-stated so that disclosures relate to all operations that have been discontinued by the end of the reporting period for the latest period presented.

 

Segmental reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision-maker (CODM), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Board. 

 

Provisions

 

The  Group  has  recognised  provisions  for  liabilities  of  uncertain  timing  or  amount  including those  for  warranty  claims.    The provision  is  measured  at  the  best  estimate  of  the  expenditure  required  to  settle  the obligation  at  the reporting  date,  discounted  at  a  pre-tax  rate  reflecting  current  market assessments  of  the  time  value  of  money  and  risks  specific  to  the  liability.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. Critical accounting estimates and judgements

 

The Group makes certain estimates and assumptions regarding the future.  Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.  The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

Critical accounting judgements and key sources of estimation uncertainty

 

(a) Impairment of goodwill

 

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires an entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Any change in estimates could result in an adjustment to recorded amounts. More information can be found in note 13.

 

(b) Warranty provision

 

The Group have in place a warranty provision to cover the cost of future warranty work on certain products which offer a ten year warranty.  The estimation of this provision involves the estimation of the net present value of these future costs.  The costs are estimated based upon the applicable sales made in the previous ten years including those made before the acquisition of any companies acquired with existing warranties and the average number and value of warranty claims which have been made against these sales.  A discount rate of 10% has been used to determine the net present value of these costs. Any change in the method of estimation of costs or the discount rate could lead to an adjustment to the warranty provision.

 

 

3. Financial instruments - Risk Management

 

General objectives, policies and processes

 

The directors of the Group's parent company Entu (UK) plc have  overall  responsibility  for  the  determination  of  the  Group's  risk  management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of  the  objectives  and  policies  to  the  Group's  finance  function. Entu (UK) only became the ultimate parent company of the group on 7 July 2014 but the key directors of the group have remained unchanged throughout the period.

 

The overall objective of the directors is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility.  Further details regarding these policies are set out below:

 

The Group is exposed through its operations to the following financial risks:

 

· Credit risk

·           Liquidity risk

· Capital risk

· Fair value and cash flow interest rate risk

 

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.  This note describes the Group's objectives, policies and processes for managing those risks and the method used to measure them.  Further quantitative information in respect of these risks is presented throughout these financial statements.

 

Financial instruments include trade receivables, trade payables and cash and cash equivalents which are treated as loans and receivables or financial liabilities at amortised cost for IFRS 7 classification purposes.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Financial instruments - Risk Management continued

Credit risk

 

Credit risk is the risk that financial loss arises from the failure of a customer or counterparty to meet its obligations under a contract. The Group has dedicated standards, policies and procedures to control and monitor all such risks. Although the Group is potentially exposed to credit loss in the event of non-performance by counterparties, such credit risk is controlled through credit rating and equity price reviews of the counterparties and by limiting the total amount of exposure to any one party.

 

An analysis of the international long-term credit ratings of counterparties where cash and cash equivalents are held is as follows:

 

 

2014

£000's

 

 

2013

£000's

 

 

A

5,768

-

Total

5,768

-

 

 

Liquidity risk

 

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group monitors its risk to a shortage of funds through regular cash management and forecasting. The Group's objective is to maintain a balance between continuity of funds and flexibility to invest as necessary.

 

Capital risk management

 

The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios. 

 

The Group manages its capital structure and makes adjustments to it to suit economic conditions.  The Group regards called-up share capital and retained earnings as its capital as there is no long term debt capital.

 

The Group sets the amount of capital in proportion to risk.  The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.  In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

 

The Group does not seek to maintain any particular capital ratio but will consider investment opportunities on their merits and fund them in the most effective manner. 

 

Fair value and cash flow interest rate risk

 

The Group has had no outstanding loan balances throughout the period other than short term overdrafts.  Therefore a change in LIBOR of 1% would change the Group's profit before tax by an insignificant amount.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Financial instruments - Risk Management continued

 

 

Financial instruments by category

 

At 31 October 2014

 

Loans and receivables

 

£000's

Financial liabilities at amortised cost

£000's

Non financial items

 

£000's

Total

 

 

£000's

Assets

 

 

 

 

 

Non-current assets

 

-

-

2,743

2,743

Inventory

 

-

-

1,751

1,751

Trade receivables

 

6,122

-

-

6,122

Other non-derivative financial assets

 

2,572

-

-

2,572

Non-financial assets

 

-

-

2,366

2,366

Cash and cash equivalents

 

5,768

-

-

5,768

Total assets

 

14,462

-

6,860

21,322

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Deferred tax liabilities

 

-

-

(40)

(40)

Trade payables

 

-

(16,253)

-

(16,253)

Current tax liabilities

 

-

-

(2,191)

(2,191)

Non-financial liabilities

 

-

-

(1,917)

(1,917)

Total liabilities

 

-

(16,253)

(4,148)

(20,401)

 

 

 

 

 

 

Net assets

 

14,462

(16,253)

2,712

921

 

 

 

 

 

 

 

At 31 October 2013

 

Loans and receivables

 

£000's

Financial liabilities at amortised cost

£000's

Non financial items

 

£000's

Total

 

 

£000's

Assets

 

 

 

 

 

Non-current assets

 

-

-

2,045

2,045

Inventory

 

-

-

1,144

1,144

Trade receivables

 

4,348

-

-

4,348

Other non-derivative financial assets

 

17,589

-

-

17,589

Non-financial assets

 

-

-

1,851

1,851

Cash and cash equivalents

 

4

-

-

4

Total assets

 

21,941

-

5,040

26,981

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Borrowings

 

-

(1,822)

-

(1,822)

Deferred tax liabilities

 

-

-

(7)

(7)

Trade payables

 

-

(12,967)

-

(12,967)

Current tax liabilities

 

-

-

(992)

(992)

Non-financial liabilities

 

-

-

(1,876)

(1,876)

Total liabilities

 

-

(14,789)

(2,875)

(17,664)

 

 

 

 

 

 

Net assets

 

21,941

(14,789)

2,165

9,317

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Financial instruments - Risk Management continued

 

 

At 31 October 2012

 

Loans and receivables

 

£000's

Financial liabilities at amortised cost

£000's

Non financial items

 

£000's

Total

 

 

£000's

Assets

 

 

 

 

 

Non-current assets

 

-

-

2,053

2,053

Inventory

 

-

-

616

616

Trade receivables

 

4,939

-

-

4,939

Other non-derivative financial assets

 

8,999

-

-

8,999

Non-financial assets

 

-

-

2,675

2,675

Cash and cash equivalents

 

5,867

-

-

5,867

Total assets

 

19,805

-

5,344

25,149

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Borrowings

 

-

547

-

547

Deferred tax liabilities

 

-

-

25

25

Trade payables

 

-

5,901

-

5,901

Current tax liabilities

 

-

-

1,268

1,268

Other non-current liabilities

 

-

5,785

-

5,785

Non-financial liabilities

 

-

-

6,663

6,663

Total liabilities

 

-

12,233

7,956

20,189

 

 

 

 

 

 

Net assets

 

19,805

(12,233)

(2,612)

4,960

 

 

4. Segmental analysis

 

The Chief Operating Decision-Maker (CODM) has been identified as the Executive Board which comprises the two Executive Directors.

 

The CODM reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports which include an allocation of central costs as appropriate.

 

The CODM considers the business from an operating perspective, with the Home Improvements, Energy Generation and Saving, Repair and Renewal Service Agreements and Insulation divisions being the reporting segments.  The CODM assesses the performance based on operating profit before any exceptional items. Other information provided to the CODM, except as noted below, is measured in a manner consistent with that of the financial statements.

 

All revenue, profit and assets of the Group and all segments arise in the Companies county of domicile, being the United Kingdom.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. Segmental analysis continued

 

Business segments

2014

 

 

Home Improvements

 

 

£000's

Energy

Generation and Saving

 

£000's

Repair and Renewal Service Agreements

£000's

Insulation

 

 

 

£000's

Total

 

 

 

£000's

Total revenue

 

84,304

23,861

2,426

8,382

118,973

 

 

 

 

 

 

 

Profit before exceptional items and finance costs

 

3,816

1,800

1,911

2,732

10,259

Exceptional items

 

 

 

 

 

(1,320)

Profit after exceptional items

 

 

 

 

 

8,939

Finance income

 

 

 

 

 

29

Finance costs

 

 

 

 

 

(11)

Profit before taxation

 

 

 

 

 

8,957

 

 

 

 

 

 

 

Taxation

 

 

 

 

 

(2,215)

Profit for the year

 

 

 

 

 

6,742

 

 

 

 

 

 

 

 

 

 

2013

 

Home Improvements

 

 

£000's

Energy Generation and Saving

 

£000's

Repair and Renewal Service Agreements

£000's

Insulation

 

 

 

£000's

Total

 

 

 

£000's

Total revenue

 

71,202

20,847

2,214

1,207

95,470

 

 

 

 

 

 

 

Profit before finance income

 

3,591

202

1,827

431

6,051

 

 

 

 

 

 

 

Finance income

 

-

-

-

-

4

Profit before taxation

 

 

 

 

 

6,055

 

 

 

 

 

 

 

Loss for the year from discontinued operations (see note 10)

 

 

 

 

 

(500)

Taxation

 

 

 

 

 

(946)

Profit for the year

 

 

 

 

 

4,609

 

 

 

 

 

 

 

All revenue relates to the sale of goods.

 



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

5.   Exceptional items

 

 

 

 

 

Exceptional items

Year to 31 October 2014

 

 

 

Exceptional items included within operating profit:

 

 

£000's

IPO fees

 

 

(1,320)


 

 

(1,320)

 

The Group has incurred £1.3m of exceptional costs related to its Initial Public Offering fees that were incurred as part of the listing on AIM.

 

 

6. Profit/(loss) for the year from continuing operations - analysis by nature

Profit for the year has been arrived at after charging/(crediting):

 

2014

£000's

2013

£000's

Depreciation of property, plant and equipment

300

294

Profit/(loss) on disposal of property, plant and equipment

-

(14)

Cost of inventories purchased for resale

33,122

28,097

Employee costs (note 7)

10,651

8,961

Operating lease costs

2,265

1,913

Auditors' remuneration (see below)

69

42

 

 

A more detailed analysis of auditors' remuneration is provided below:

 

2014

£000's

2013

£000's

Fees payable to the Company's auditors for the audit of the Company's annual accounts and consolidation

10

-

Fees payable to the Company's auditors and their associates for other services to the Group:

 

 

- The audit of the Company's subsidiaries

59

37

Total audit fees

69

37

Fees payable to the Company's auditors and its associates for other services:

 

 

- Tax services

-

5

Total fees

69

42

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

7. Directors and employees

Employee costs

The average monthly number of employees (including Executive Directors) was as follows:


2014 Number

 

 

2013 Number

 

 

Total staff

531

416

 

-

 


531

416

 

The costs incurred in respect of the above were as follows:

 

2014

£000's

 

 

2013

£000's

 

 

Wages and salaries

9,145

7,811

Social security costs

1,274

1,018

Defined contribution pensions costs

232

132

 

-

 

 

10,651

8,961

 

Directors' remuneration

The costs incurred in respect of the Directors, who are regarded as the key management personnel, were as follows:


2014

£000's

 

 

2013

£000's

 

 

Short term employee benefits

ages and salaries

616

563

Post-employment benefits

14

14

 

 

 

Total

630

577

 

For the year ended 31 October 2014 the highest paid Director received total remuneration of £ 385,000 (2013: £343,000) and pension contributions of £1,200 (2013: £1,200).  

 

8.    Finance income and costs

 

2014

£000's

 

 

2013

£000's

 

 

 



Interest receivable

29

4

Interest payable

(11)

-

 

-


Net finance income

18

4

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

9. Taxation

 

2014

£000's

 

 

2013

£000's

 

 

Current tax

 

 

 

 

 

UK corporation tax charge for the year

2,191

968

Adjustments in respect of prior years

-

1

Total current tax charge

2,191

969

 

 

 

Deferred tax

 

 

Origination and reversal of temporary timing differences

24

(23)

Total deferred tax charge/(credit)

24

(23)

 

 

 

 

 

 

Total tax charge

2,215

946

 

UK corporation tax is calculated at 21% (2013: 23.4%) of the estimated assessable profit for the year.

 

 

The tax charge for the year can be reconciled to the profit per the consolidated statement of comprehensive income as follows:

 

 

 

 

 

2014   £000's

 

 

2013 

 £000's

 

 

 

 

 

Profit before tax on continuing operations

8,957

6,055

Loss on discontinued operations

-

(500)

 

8,957

5,555

 

 

 

Tax at the UK corporation tax rate of 21.8% (2013: 23.4%)

1,952

1,300

Tax effect of expenses that are not deductible

263

22

Tax effect of utilisation of tax losses not previously recognised

-

(377)

Adjustments in respect of prior periods

-

1

 

 

 

Tax charge for the year

2,215

946

 

Factors that may affect future tax charges


During the period, the relevant deferred tax balances have been re-measured as a result of reductions in the UK main rate of corporation tax to 21% from 1 April 2014 and 20% from 1 April 2015, changes which were substantially enacted on 2 July 2013.

No further changes in the UK main rate of corporation tax have been announced or enacted and there are no other known factors expected to affect the group's corporation tax charge in future periods.

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

10. Discontinued Operations

 

During the year ended 31 October 2012, the Group discontinued an operation which was considered to represent a separate major line of business. This was therefore classified as a discontinued operation in the consolidated statement of comprehensive income. The operation was ended with the assets used in the operation retained and re-used for other purposes. For the year ended 31 October 2013 final costs of exiting the business were incurred and no further costs were incurred in the year ended 31 October 2014. The results of the discontinued operation are shown below:

 

Results from discontinued operations

 

2014

£000's

 

 

2013

£000's

 

 

Expenses other than finance costs

-

(500)

Result/(loss) for the year

-

(500)

 

Statement of cashflows

The statement of cashflows includes the following amounts relating to discontinued operations:

 

2014

£000's

 

 

2013

£000's

 

 

Operating activities

-

(500)

Net cash outflow from discontinued operations

-

(500)

 

11. Dividends

 

2014   £000's

 

 

2013  

£000's

 

 

2012

£000's

 

 

 

 

 

 

 

 

 

Dividends paid

-

252

200

 




 

 

 

 

These dividends were paid out of subsidiary companies, Penicuik Home Improvements Limited in 2012 and Job Worth Doing Limited in 2013 but have not been eliminated from the consolidated financial information as they were paid outside of the Group. 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

12. Earnings per share

 

Basic earnings per share and diluted earnings per share are calculated by dividing profit for the period attributable to equity holders by the weighted average number of shares in issue.

 

 

2014

2013

 

Number

Number

 

000

000

 

 

 

 

 

 

Basic weighted average

65,600,000

65,600,000

 

 

 

Diluted weighted average

65,600,000

65,600,000

 

The weighted average number of shares used to calculate earnings per share has been set consistent with the number of ordinary shares in issue as at 31 October 2014 and this has been applied consistently for all periods reported within these financial statements. As a result of the formation of the Group and the Company's capital structure the application of the closing number of ordinary shares has been deemed to give the most relevant and comparable calculation of earnings per share in the financial years reported.

 

Deferred shares have been excluded from the basic and diluted number of shares as deferred shares carry no voting right and no rights to any distributions to be made by the Group.

 

No dilutive shares have been identified as all share option issued by the Group were issued on the year end date or post year end and as such have no dilutive impact for the years ended 31 October 2014 or 31 October 2013.

 

 

   2014

 2013

Basic earnings per share

10.3

7.8

Exceptional items

2.0

-

 

 

 

Adjusted basic earnings per share

12.3

7.8

 

 

 

Diluted earnings per share

10.3

7.8

Exceptional items 

2.0

-

 

 

 

Adjusted diluted earnings per share

12.3

7.8

 

 

Adjusted basic and diluted earnings per share figures are calculated by dividing adjusted profit after tax for the year by the weighted average number of shares in issue (as above). The adjusted profit after tax for the year is as follows:




2014

2013




£000's

£000's

Profit attributable to owners of the Parent



6,742

5,109

Exceptional items

 



1,320

-

 





Adjusted profit after tax



8,062

5,109

 

 

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

13. Goodwill




 

Goodwill 

Cost



£000's

 At 1 November 2011



1,394 

Recognised on acquisition of a subsidiary



22 

 At 31 October 2012



1,416 

Recognised on acquisition of a subsidiary



34 

At 31 October 2013



1,450 

Recognised on acquisition of a subsidiary (Note 27)



299 

At 31 October 2014



1,749 





Accumulated impairment losses




At 1 November 2011, 2012, 2013 and 2014



73 





Carrying amount




31 October 2014



1,676 

31 October 2013



1,377 

31 October 2012



1,343 

 

Goodwill




The goodwill has arisen as follows:

 

Weatherseal Holdings

Goodwill in relation to the purchase of 100% of the share capital of Weatherseal Holdings Limited whose trade is now held within Weatherseal Home Improvements Limited.

 

Zenith Staybrite

Goodwill in relation to the acquisition of the trade and assets of trade held within Zenith Staybrite Limited.

Christies Kitchens

Acquisition of the trade and assets whose trade now lies in Supreme 'O' Glaze Limited and Norwood Interiors (UK) Limited.

 

Penicuik Business

Acquisition of the trade and assets of a business which now sits in Penicuik Home Improvements Limited.

 

KBC Energy Group

Goodwill relates to the acquisition of 100% of the share capital of Soltrac Limited, Energy Hypermarket Limited and The Essex Solar Company Limited.

 

 

Europlas Limited

Goodwill in relation to the acquisition of the trade and assets of trade of Europlas, a division of Specialist Building Products Limited.

 

 

 

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

13. Goodwill continued

 

Impairment testing of Goodwill

 

The allocation of goodwill to Cash-Generating Units (CGU) is as follows:

 

 

Goodwill

 

2014 

£000's 

Goodwill 

 

2013 

£000's 

Goodwill 

 

2012 

£000's 

Weatherseal Holdings acquisition

876 

876 

876 

Zenith acquisition

200 

200 

200 

Christies Kitchens division

180 

180 

180 

Penicuik business acquisition

65 

65 

65 

KBC Energy Group

56 

56 

22 

Europlas Limited

299 

Total

1,676 

1,377 

1,343 

 

 

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets, covering three years that are approved by the Board. Income and costs within the budget are derived on a detailed, 'bottom up' basis - all income streams and cost lines are considered and appropriate growth, or decline, rates are assumed for each based on historical experience, all of which are then reviewed and challenged, firstly by senior management and ultimately by the Board. Income and cost growth forecasts are risk adjusted to reflect the specific risks facing each CGU and take account of the markets in which they operate. Cash flows beyond the budgeted period are extrapolated using the estimated growth rate stated below. The growth rate does not exceed the long-term average growth rate for the markets in which the CGU operates. Further, it is assumed that there are no material adverse changes in legislation that would affect the forecast cashflows.

 

The key assumptions used in the value-in-use calculations for each CGU are as follows:

Growth rate (after budget period): 2.5%

Market risk premium: 5.75%

 

The pre-tax discount rate used within the recoverable amount calculations was 10.0% (2013: 10.0%) and is based upon the weighted average cost of capital reflecting the specific principal risks and uncertainties applicable to each CGU. The discount rate takes into account, amongst other things, the risk free rate of return, the cost of equity and the market risk premium (which is used in deriving the cost of equity). The same discount rate has been used for each CGU as the principal risks and uncertainties associated with the Group, as highlighted in note 3 of this report as being those risks with the highest likelihood or impact, would also impact each CGU in a similar manner. The Board acknowledge that there are additional factors that could impact the risk profile of each CGU given the difference in operations, customer base and trading performance over recent years. These additional factors were considered by way of a sensitivity analysis performed as part of the annual impairment tests. A sensitivity analysis has been performed around the base assumptions with the conclusion that no reasonable possible changes in key assumptions would cause the recoverable amount of the goodwill and other intangible assets to be less than the carrying value.

 

Having completed the 2014 annual impairment review, the Group has recognised no impairment (2013: £nil). The level of any impairment recognised is predominantly dependent upon judgements used in arriving at future growth rates and the discount rate applied to cash flow projections. Key drivers to future growth rates are dependent on the Group's ability to maintain and grow income streams whilst effectively managing operating costs. The level of headroom may change if different growth rate assumptions or a different pre-tax discount rate were used in the cash flow projections.

.

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

14.   Property, plant and equipment









Freehold

Plant and

Fixtures and

Motor

Equipment



Property

machinery

fittings

Vehicles


Total


£000's

£000's

£000's

£000's

£000's

£000's

Cost







At 1 November 2011

                      250

90

443

85

378

1,246

Additions

                        44

6

191

-

123

364

Disposals

                             -

-

(22)

-

-

(22)

At 31 October 2012

                      294

96

612

85

501

1,588

Additions

-

72

125

-

64

261

Disposals

                           -

-

(14)

-

-

(14)

At 31 October 2013

                      294

168

723

85

565

1,835

Additions

                            -

2

246

297

145

690

Disposals

-

-

-

-

-

-

At 31 October 2014

294

170

969

382

710

2,525

 

Accumulated depreciation







At 1 November 2011

-

54

317

20

258

649

Charge for the year

1

26

101

36

89

253

Disposals

                              -

-

(19)

-

-

(19)

At 31 October 2012

1

80

399

56

347

883

Charge for the year

                         15

60

98

6

115

294

Disposals

-

-

-

-

-

-

At 31 October 2013

                           16

140

497

62

462

1,177

Charge for the year

                     15

13

170

11

91

300

Disposals

-

-

-

-

-

-

At 31 October 2014

31

153

667

73

553

1,477

Net book values







At 31 October 2014

                   263

17

302

309

                157

1,048

At 31 October 2013

278

28

226

23

103

658

At 31 October 2012

293

16

213

29

154

705

 

At 31 October 2014, the Group had entered into commitments for the acquisition of property, plant and equipment amounting to £Nil (2013: £Nil).

 

15.  Inventories

 

2014

2013

2012

 

£000's

£000's

£000's

Raw materials and consumables

900

800

352

Finished goods and goods for resale

851

344

264


1,751

1,144

616

 

During the year ended 31 October 2014 £Nil (2013: £Nil) was charged to the income statement for slow moving and obsolete inventories.  The cost of the inventories recognised as an expense and included in cost of sales amounts to £33.1m (2013: £28.1m).

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

16. Trade and other receivables

Receivables due within one year

2014

2013

2012


£000's

£000's

£000's

Trade receivables

6,847

5,185

5,112

Less: provision for impairment of trade receivables

(725)

(837)

(173)

Net trade receivables

6,122

4,348

4,939

Amounts owed by related parties (Note 28)

1,406

1,336

5,065

Loans to relates parties

-

14,298

3,542

Other receivables

1,166

1,955

392

Prepayments

2,366

1,851

2,675

 

 

 

 

 

 

 

 

 

 

11,060

23,788

16,613

The fair value of trade and other receivables has been considered to be consistent with the book value given their short term nature.

Movements in the Group provision for impairment of trade receivables are as follows:


2014

2013

2012


£000's

£000's

£000's

At 1 November

(837)

(173)

(207)

Provision for receivables impairment

(367)

(664)

(87)

Receivables written off during the year

479

-

121

At 31 October

(725)

(837)

(173)

Provisions are estimated by management based on past default experience and their assessment of the current economic environment. The creation and release of provisions for receivables is charged/(credited) to administrative expenses in the statement of comprehensive income.

The credit risk of customers is assessed at a subsidiary and Group level, taking into account their financial positions, past experiences and other relevant factors. Individual customer credit limits are imposed based on these factors.

No other receivables have been deemed to be impaired.

The following table shows trade receivables at the reporting date which are overdue and for which no allowance for impairment has been recognised:


2014

2013

2012


£000's

£000's

£000's

31-60 days

974

543

298

61-90 days

542

283

214

91+ days

821

1,038

999


2,337

1,864

1,511

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

17. Cash and cash equivalents

 


2014

      2013

        2012


£000's

£000's

£000's

Cash at bank and in hand

5,768

4

5,867

Cash and cash equivalents

5,768

4

5,867

 

Cash and cash equivalents represent cash at bank and in hand and bank overdrafts. Bank overdrafts have been offset against cash at bank and in hand as the company has an enforceable right to offset and settle bank overdrafts net with cash at bank and in hand. As at 31 October 2014 bank overdrafts offset against cash at bank and in hand totalled £0.5m. No offsetting of cash at bank and in hand and bank overdrafts has been presented in prior years as no such right to offset existed.

 

18.   Trade and other payables

 


2014

2013

2012


£000's

£000's

£000's

Trade payables

9,436

4,431

3,706

Payments on account

1,389

450

1,349

Other taxation and social security

1,667

1,685

1,469

Amounts owed by related parties

2,089

2,496

6,054

Other payables

-

412

577

Accruals

1,299

3,300

1,629

Deferred income

373

193

255


16,253

12,967

15,039

 

Trade and other payables comprise amounts outstanding for trade purchases and on-going costs. The Directors consider the carrying amount of trade and other payables approximates their fair value due to their short term nature.

 

 

19. Borrowings

 


2014

2013

2012


£000's

£000's

£000's

Unsecured borrowings at amortised cost




Bank overdrafts

-

1,822

547


-

1,822

547

Total borrowings




Amount due for settlement within 12 months

-

1,822

547





Amount due for settlement after 12 months

-

-

-

 

 

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

20.  Deferred tax


Accelerated

 tax

depreciation

Total


£000's

£000's

At 1 November 2011

(10)

(10)

Charge to income

(10)

(10)

At 31 October 2012

(20)

(20)

Credit to income

23

23

At 31 October 2013

3

3

Charge to income

(24)

(24)

At 31 October 2014

(21)

(21)

 

Certain deferred tax assets and liabilities have been offset in accordance with IAS 12 'Income taxes'. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:


2014 

2013 

2012 


£000's 

£000's 

£000's 

Deferred tax assets

19 

10 

Deferred tax liabilities

(40) 

(7) 

(25) 






(21) 

(20) 

 

There are no amounts on which a deferred tax asset is not recognised.

21.  Provisions

 




Warranty

provision

Finance

Clawback

provision

Total




£000's

£000's

£000's

At 1 November 2011



3,344

46

3,390

Charged /(credited) to the income statement:






Additional provisions



195

185

380

Utilised during year



(414)

(46)

(460)

At 31 October 2012



3,125

185

3,310

Charged /(credited) to the income statement:






Additional provisions



182

62

244

Utilised during year



(378)

(185)

(563)

Released during the year



(1,115)

-

(1,115)

At 31 October 2013



1,814

62

1,876

Charged/(credited) to the income statement:






Additional provisions



171

107

278

Utilised during year



(175)

(62)

(237)

At 31 October 2014



1,810

107

1,917

 

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

21.  Provisions continued

 


2014

2013

2012


£000's

£000's

£000's

Warranty provision

1,810

1,814

3,125

Finance clawback provision

107

62

185


1,917

1,876

3,310





Current

429

243

498

Non-current

1,488

1,633

2,812


1,917

1,876

3,310

 

Warranty provision

Certain Group companies have in place a warranty provision to cover for the cost of future warranty work on certain products which offer a ten year warranty against any installation faults on products sold and installed by the Group, as such a provision is estimated to cover the cost of any future maintenance work on such goods. It is expected that the expenditure will be incurred equally over the ten year life of the warranty. Expected future costs are discounted at a discount rate of 10%.

 

In 2013 the underlying business circumstances relating to the overall warranty provision changed, which resulted in the large reduction in the provision balance shown above. Previously the warranty provision covered all costs associated with the cost of meeting any claims as related companies were involved in extruding the pvc that forms the main material component of the window and conservatory base product and also fabricated some of these finished products. These material and fabrication costs are now met by external suppliers to the Group under supplier agreements resulting in a lower warranty provision being required.

 

Finance clawback provision

Group members offer a financing agreement to customers upon the purchase of certain products. The financing is provided by a third party from whom the group receives a commission. This may be clawed back within the first 6 months of the agreement due to any issues that may arise due to the financing. Given this the provision has been classed as current within the financial statements.

 

22.   Retirement benefits

 

The group operates a defined contribution pension scheme. The assets of the scheme are administered by trustees in funds independent from those of the company.

 

The total contributions paid in the year amounted to £232,000 (2013: £132,000) and at the balance sheet date pension contributions of £Nil (2013: £9,034) were outstanding.

 


 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

23. Share capital

 

              2014

 

2013

              2012

 

 

Number

         Amount


Number

Amount

Number

Amount

 

000

     £000's


000

£000's

000

£000's

Authorised:








Ordinary Shares of £0.0005 each

65,600

33


-

-

-

-

Deferred shares of £0.0005 each

34,400

17


-

-

-

-

Issued and fully paid:








Ordinary Shares of £0.0005  each

65,600

33


-

-

-

-

Deferred Shares of £0.0005 each

34,400

17


-

-

-

-

Total called up share capital

100,000

50


-

-

-

-

 

The company was incorporated on 25 March 2014 at which time 100 ordinary shares of £0.01 were issued to the shareholders of the company which were settled in full in cash.

 

On 7 July 2014 a further 10,020 £0.01 ordinary shares were issued by the Company. Consideration for the issue of these shares was in the form of the issued share capital of JWD Installations Limited, HI Sales Limited and KBC Energy Limited, which were entities controlled by common shareholders.

 

On 8 October 2014 a further 4,989,880 £0.01 ordinary shares were issued by the Company which were settled in full in cash.

 

On 8 October 2014 the Company's issued share capital of 5,000,000 £0.01 ordinary shares were subdivided into 100,000,000 £0.0005 ordinary shares.

 

On 8 October 2014 30,000,000 £0.0005 ordinary shares issued by the company were converted into deferred shares in the company.

 

On 8 October 2014 4,400,000 £0.0005 ordinary shares issued by the company were converted into deferred shares in the company.

 

Ordinary shares give holders the right to vote and participate in general meetings of the Group as well as the rights over distributions and the assets of the Group. All ordinary shareholders rank pari-passu.

Deferred share carry no voting rights and no rights to distributions and the assets of the Group.

 

24. Retained earnings








£000's

Balance at 1 November 2011



2,327

Dividends paid



(200)

Profit for the year



2,833

Balance at 31 October 2012



4,960

Dividends paid (note 28)



(252)

Profit for the year



4,609

Balance at 31 October 2013



9,317

Distributions to shareholders



(15,188)

Profit for the year



6,742

Balance at 31 October 2014



871

 

 

 

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

25.  Reconciliation of profit before tax to cash generated from operations


2014

2013



£000's

£000's

Profit before tax


8,957

5,555

Finance income


(29)

(4)

Finance costs


11

-

Depreciation of property, plant and equipment


300

294

Loss on disposal of property, plant and equipment


-

IPO Costs


1,320

Operating cash flows before movements in working capital


10,559

5,859

Movements in working capital:



Increase in inventories


(480)

Decrease/(increase) in trade and other receivables


176

Increase/(decrease) in trade and other payables

 

120

Increase/(decrease) in provisions

 

14

 


-


Cash generated from operations


10,389

5,429

 

 

26. Operating lease commitments

 

 



2014

2013

 



£000's

£000's

Lease payments under operating leases recognised as an expense in the year



 

2,265

 

1,913

 

 

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

 



2014

2013

 



£000's

£000's

Within one year



2,256

1,529

In the second to fifth years inclusive



5,268

4,302

Over five years



1,381

1,575




8,905

7,406

 

 

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

27.  Business Combinations

 

On 20 December 2013, Europlas Limited, a member of the Group acquired the trade and assets of Europlas ("Europlas"), a division of Specialist Building Products Limited with the full consideration being settled in cash.

 

Europlas's principal activity is the retail and installation of home improvement products.

 

The amount of identifiable net assets assumed at the acquisition date is shown below:

 

 




Provisional Fair Values

 




£000's

Property, plant and equipment




16

Stock




127

Trade and other receivables




156

Trade and other payables




(299)

Identifiable net assets




-

Goodwill




299

Total cash consideration




299

 

Goodwill acquired represents expected synergies to be achieved through combining Europlas with the Group and the value of employees acquired with the business. The goodwill acquired is expected to be deductible for tax purposes.

The fair value of trade and other receivables is £156,000 and includes trade receivables with a fair value of £156,000. The gross contractual amount for trade receivables due is equal to their fair value.

The revenue included in the consolidated statement of comprehensive income since 20 December 2013 contributed by Europlas Limited was £3,500,000. Europlas Limited also contributed profit of £485,000 over the same period.

 

28. Related party transactions

During the year, group companies entered into the following transactions with related parties who are not members of the group:

All of the below companies are related due to them being under common control or significant influence throughout the period.

 

             Sale of goods

                   Purchase of goods

 

2014

         2013


 2014

2013

 

£000's

                     £000's


£000's

                   £000's

Latium Management Services Limited

26

47


896

659

Spectus Systems Limited

-

-


                  39

34

Kestrel-BCE Limited

-

-


              1,227

932

Indigo Products Limited

-

-


              4,359

7,710

Sierra

-

-


                 477

-

DB Glass

-

-


                    12

                                -


26

47


               7,010

9,335

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

28. Related party transactions continued

 

The following amounts were outstanding at the balance sheet date:

 

             Amounts owed by related

                           parties

 

             Amounts owed to related                   

                             parties

 

2014

         2013


 2014

2013

 

£000's

                     £000's


£000's

                   £000's

Premier Frames (UK) Limited

34

57


-

-

Latium Management Services Limited

17

-


-

16

Spectus Systems Limited

81

81


                      -

-

Weatherseal Holdings Limited

1,274

1,198


                       -

-

Kestrel-BCE Limited

-

-


                   460

373

Indigo Products Limited

-

-


                1,338

2,107

Sierra

-

-


                   281

-

DB Glass

-

-


                      10

                                  -


1,406

1,336


                  2,089

2,496

 

There were no provisions in place against any balance as at any year end. All of the above companies are associated through common directors.

 

The entities above were related parties throughout the year, up until 30 October 2014 when the Group completed its admission to AIM. They were related parties as a result of being entities under common control. After admission to AIM and reflecting the Group has no ultimate controlling party they are no longer related. The year end balances due and from these entities have been disclosed for completeness for the year ended 31 October 2014.

 

Weatherseal Holdings Limited is controlled by Mr B G Kennedy and the Group's executive directors are shareholders in the company. The company was a related party throughout the year up until the Group's admission to AIM and is no longer a related party but the balance due from the company has been disclosed for completeness for the year ended 31 October 2014.

Loans to related parties

 

Over the course of the last 3 financial years, three companies within the Entu group, Zenith Staybrite Limited, Job Worth Doing Limited and Window Care Limited have made loans to related party companies. As shown below, the loans have been made to four related party companies - Latium Management Services Limited, Blackhurst Investments Limited, Nykorak Investments Limited and Manchester Sale Rugby Club Limited all of which are related through common directors. The Loans attracted no interest and had no set repayment date. A table of the relevant loans is shown below.

 

 

 



2014

2013

2012

 



£000's

£000's

£000's

Latium Management Services Limited



-

2,341

-

Nykorak Investments Limited



-

1,139

-

Blackhurst Investments Limited



-

3,545

838

Manchester Sale Rugby Club Limited



-

8,906

4,337




-

15,931

5,175

 

During the year, related party loans totalling £15.2m were waived including the £14.3m outstanding at 31 October 2013 plus an additional £0.9m made in 2014. The entities with which the related party loans existed were controlled and owned by the shareholders of the Group at the time the loans were waived. Therefore, in accordance with section 846 of the Companies Act 2006, these have been treated as distributions to shareholders. As the transfer of assets, arising as a result of the loan waivers, results in the assets transferred being at a value less than book value; the difference of £15.2m has been treated as a distribution to shareholders and has been recognised directly in equity.

 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

29.  Subsidiaries

Details of the Company's principal subsidiaries at 31 October 2014 are as follows:

Company

 

 

Operation


Incorporated
in:

Parent
Company's
interest

Proportion
of voting
interest

Entu (UK) Holdings Limited

Holding Company

United Kingdom

       *100%

       *100%

Hi Sales Limited
St Andrews Home Improvements Limited (Formerly Supreme O Glaze Limited)

Holding Company (Dormant)
Retail

United Kingdom
United Kingdom

  *100%
      †100%

*100%
      †100%

Weatherseal Home Improvements Limited

Retail

United Kingdom

      †100%

      †100%

Penicuik Home Improvements Limited

Retail/Marketing

United Kingdom

      †100%

      †100%

Zenith Staybrite Limited

Manufacturing/Retail

United Kingdom

      †100%

      †100%

Home Install Limited

Retail/Marketing

United Kingdom

      †100%

      †100%

Europlas Limited (Formerly Christies Bedrooms (UK) Limited

Retail

United Kingdom

†100%

†100%

Norwood Interiors (UK) Limited (Formerly

Christies Kitchens (UK) Limited

Retail/Marketing

United Kingdom

      †100%

      †100%

KBC Energy Limited

Holding Company (Dormant)

United Kingdom

       *100%

       *100%

Soltrac Limited

Retail

United Kingdom

      †100%

      †100%

The Essex Solar Company Limited

Retail

United Kingdom

      †100%

      †100%

Energy Hypermarket Limited

Retail

United Kingdom

†100%

†100%

JWD Installations Limited

Dormant

United Kingdom

*100%

*100%

Job Worth Doing Limited

Retail/Services to Group

United Kingdom

†100%

†100%

Window Care Limited        

Retail

United Kingdom

†100%

†100%

Zenith Windows Limited

Dormant

United Kingdom

†100%

†100%

Staybrite Windows Limited

Dormant

United Kingdom

†100%

†100%

Quotes Near Me Limited

Dormant

United Kingdom

†100%

†100%

My Greenhouse Limited

Dormant

United Kingdom

†100%

†100%

 

-  All subsidiary entities have a year end of 31 October.

-  No subsidiaries of the Group have taken the exemption from audit under Section 479A of CA 2006.

* Shares held by the Parent Company

† Shares held by a subsidiary

                                                                                                                               

 

30. Ultimate controlling party

 

Until 30 October 2014 the Group was controlled by Mr B G Kennedy by virtue of his controlling stake. On completion of the Group's admission to AIM the directors consider there to be no ultimate controlling party of the Group.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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