Company Registration No. SC125327 (Scotland)
SCHUH LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
SCHUH LIMITED
COMPANY INFORMATION
Directors
C Temple
D M Gillan-Reid
S E Becker
M E Vaughn
T A George
(Appointed 18 October 2022)
P Desai
Secretary
D M Gillan-Reid
Company number
SC125327
Registered office
1 Neilson Square
Deans Industrial Estate
Livingston
West Lothian
United Kingdom
EH54 8RQ
Auditor
Johnston Carmichael LLP
227 West George Street
Glasgow
G2 2ND
SCHUH LIMITED
CONTENTS
Page
Strategic report
1 - 5
Directors' report
6 - 11
Directors' responsibilities statement
12
Independent auditor's report
13 - 15
Group statement of comprehensive income
16
Group balance sheet
17
Company balance sheet
18 - 19
Group statement of changes in equity
20
Company statement of changes in equity
21
Group statement of cash flows
22
Notes to the financial statements
23 - 49
SCHUH LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
The directors present the strategic report for the period ended 28 January 2023.
Principal activity
The principal activity of the group is the sale of footwear through its chain of retail stores and via on-line activities.
Business review
The principal companies within the Schuh Limited group ("Schuh group") were Schuh Limited and Schuh (ROI) Limited. At 28 January 2023, Schuh group operated 122 stores (2022: 122) across all territories, averaging approximately 5,041 square feet (2022: 5,041 square feet) for a main chain store and 2,826 square feet (2022: 2,826 square feet) for a standalone kids unit. These stores include both street-level, retail parks and mall locations in the United Kingdom, Channel Islands and the Republic of Ireland. The Schuh group closed four stores (2022: one) and opened four new stores (2022: nil). The Schuh group also sells footwear through e-commerce operations with specific UK, EU, Irish and German website domains.
The financial statements cover a 52 week period with the comparative financial results also covering a 52 week period. The group's key performance indicators are:
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Equity shareholders’ funds | | | |
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Current assets as a % of current liabilities | | | |
Average number of employees | | | |
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Turnover increased by 15.9% as the high street continues its post pandemic recovery and footfall increased 45.0% in our stores. E-commerce performance continues to be strong but is -9.2% like for like as it gives way to the strong store recovery. Full price sell through has been satisfying with margins holding up well against expectation.
The asset investment is made up of UK fixed asset additions (£7,195k) plus the Schuh (ROI) fixed asset additions of (€797k) converted at an exchange rate of 1.13 to give total Schuh (ROI) additions of (£703k) and total group additions of £7,898k.
The carrying values of stores have been compared to their recoverable amounts, represented by their value in use to the group. This resulted in an impairment in the period of £Nil (2022 : £392k).
While the retail environment continues to pose difficult trading conditions we will continue to review our store portfolio so to ensure we are best placed to adapt to this changing environment. We believe our continued investment in driving efficiency and operational improvements through technology will serve us well.
The balance sheet includes a figure within long term debt of £50m, this is an intercompany loan from Genesco Jersey Ltd. The loan expiry is April 2025, with an annual interest rate of 3.4% charged to Schuh Limited. This debt is listed on The International Stock Exchange.
More detailed analysis of performance can be found at www.genesco.com as part of our parent company's quarterly and annual U.S. SEC filings.
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SCHUH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
Principal risks and uncertainties
The Board considers the following to be the main risks which could materially affect the business:
profitability risk: total revenues can be affected by economic factors influencing the overall amount of consumer spend on clothing and footwear and also by fashion trends that can, to some extent, dictate average unit selling prices. The group continually seeks to maintain and improve its revenues through differentiation in its delivery of high standards of customer service. Costs are carefully controlled through commercially sound authorisation procedures and regular, sophisticated management reporting;
product risk: the group maintains a wide network of suppliers and invests in building long-term relationships with them. Through the buying, stock management and accounts payable teams, regular contact is maintained with every active supplier to ensure continuity of supply. The group also invests heavily in personnel with specialist expertise in footwear construction who maintain the group’s high quality standards through a programme of regular visits to manufacturers (pandemic restrictions allowing) and extensive product testing. Systems continually monitor and report quantities on order and in stock at item level to ensure the optimum flow of product into the business;
fraud risk: there are internal control procedures to ensure that detailed checking is carried out in all areas of the business. The company’s management reporting systems are designed, in part, to highlight irregularities at all stages of the cycle of cash and stock whilst moving through the business, during the process of disbursement of company funds and as regards the safety and security of company assets;
operational gearing risk: in line with most retailers, the business has a largely inflexible cost base. In particular, since all our stores are leased, we are subject to increases in rental costs which have, in many cases, outstripped general inflation;
treasury risk: the main treasury risks arise from exchange rate and interest rate fluctuations. The Board manages these risks by matching currency inflows and outflows;
IT risk: the group is dependent on reliable IT systems for managing and controlling the business. The group’s IT function oversees all systems and has policies and procedures to protect software, hardware and data and to prevent unauthorised access to systems;
credit risk: The credit risk on liquid funds is limited because the counter parties are banks with high credit ratings assigned by international credit rating agencies;
liquidity risk: The group obtains funding for its operations via the group’s bank facilities. The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans;
interest rate risk: The group has cash at bank which is subject to variable rates of interest. Interest rate risk is regularly monitored and is not considered to be material;
legacy Brexit risk: The new mini-DC (Distribution Centre) within the Republic of Ireland has now opened to mitigate any risks directly in relation to the impact of Brexit. Although we have eradicated the majority of transfers between the UK and ROI there remains a risk to the business in terms of duty and VAT implications. However, these are expected to have negligible impact on the group as the quantities involved will be minimal. The group will continue to monitor supplies which do not utilise the benefits of the Irish DC to ensure that the quantities involved do not exceed acceptable levels.
cyber risk: Cyber security continues to be an area that we treat seriously. For our head office infrastructure we have firewall protection at the border, as well as antivirus and anti malware systems installed. Before email traffic even reaches us, it passes through Mimecast’s systems to filter out malicious content. Our systems are backed up in the cloud, so that we could even recover from a cryptoware attack. For our website, systems including firewalls are in place that restrict incoming traffic, ensuring that secure access is limited and that botnet and DDOS attacks are mitigated against. Credit card companies require that we demonstrate our compliance to PCI Standards.
pandemic risk: The business has been exposed to significant disruption as a result of the COVID-19 pandemic with the mandatory closure of retail stores, and the ensuing reduced footfall since reopening have, brought many operational challenges for the business. Although the continued presence of the virus remains a concern we are confident that our operational agility will allow us to successfully navigate any future lockdowns should they be imposed.
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SCHUH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
Section 172 statement
The Directors are well aware of their duty under s172 of the Companies Act 2006 to act in the way which they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and, in doing so, to have regards (amongst other matters) to:
The likely consequences of any decision in the long term;
The interest of the Company’s employees;
The need to foster the Company’s business relationships with suppliers, customers and others;
The impact of the Company’s operation on the community and the environment;
The desirability of the Company maintaining a reputation for high standards of business conduct; and
The need to act fairly as between members of the Company.
Two of the Directors all have operational roles within the Company itself, who join their Director-designate colleagues in setting, approving and overseeing of the business strategy and related policies. Board meetings are held regularly involving all operational management where the Company’s activities are considered and decisions made. The non-operational Directors (of the Schuh entity), being Genesco Inc. board members (the parent Company) delegate authority for the day-to-day management to the Schuh operational team. All directors receive information to ensure that they have regard to section 172 when making relevant decisions.
In pursuant of the above duty the directors have put in place the following measures to engage with the wider stakeholder group to enable a decision making process that promotes the success of the Company for the benefit of its members as a whole.
Customers
We believe our first responsibility is to our customers who support the business by selecting Schuh as their destination of choice for fashion footwear. In return, we aim to offer the highest levels of customer service and care, whether our customers choose to buy in a store or online. Our commitment to service extends throughout the business and it is the duty of all employees, at any work location, to assist their colleagues in delivering the highest levels of service to our customers. Employees are empowered to take decisions which benefit service levels.
The following principal decisions made by the directors were made only after considering the input from engaging with customers;
Workforce
We recruit those with an enthusiasm for our products and our customers. We develop them through individual coaching and personal encouragement. We provide opportunities for training and development to those who wish to progress their career. We encourage loyalty and commitment to the business by ensuring that all employees treat each other with honesty and respect. We offer fair rewards, promote from within wherever possible and encourage teamwork.
The Company has maintained its policy of consulting with or informing employees on all matters of concern to them and of information relevant to the general performance of the company Company’s performance. For further information, please refer to the Employees section of the Directors’ Report on page 6.
Employees also participated in an approved Share Incentive Plan in the year to 28 January 2023 - see the note on page 48.
In the year to 28 January 2023 the Company has continued to commit substantial resource to developing its employees, aiming to encourage every employee to achieve their full potential, which in turn helps the company to achieve its own objectives.
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SCHUH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
Workforce (continued)
The following principal decisions made by the directors were made only after considering the input from engaging with employees;
Suppliers
The Company seeks to act ethically, fairly and transparently and to create effective long standing relationships with suppliers that are mutually beneficial. The Company has continued to engage with key suppliers through regular contact with both the Buying and Quality Control teams and this has served to strengthen relationships and promote good business practice.
The following principal decisions made by the directors were made only after considering the input from engaging with suppliers;
To fully engage and adopt the Company’s Ethical Supplier Policy.
To fully engage and adopt the Company’s Modern Slavery Statement. The most recent statement can be found on the main Schuh website. (www.schuh.co.uk).
Environment
The Company is committed to preventing pollution and minimising the impact of its operations on the environment.
We regard the conservation of energy, raw materials and water and reducing waste to be a high priority in our business. Through employee co-operation and efficient management procedures, the company undertakes to encourage sound environmental practices throughout the business.
The following principal decisions made by the directors were made only after considering the input from engaging with environmental agencies, suppliers and purpose groups;
To include Sustainability as a key purpose pillar - see next section, Purpose.
To be a carbon neutral company which was achieved during the period.
Purpose
As a business we are committed to diversity and inclusion which is channeled through our Purpose Pillars (Mental Wellness, Sustainability, LGBT+, Racial Equality, Disability Equality), both with our charity partners as well as with our employees and suppliers.
The following principal decisions made by the directors were made only after considering the input from engaging with our internal and external purpose groups;
Charity Partnership: We have partnered with Blueprint for All Trust where we not only provide an annual charitable donation but we will also be working together to support and promote their community projects throughout the UK.
Website: Our website has been updated to communicate our commitment to diversity and inclusivity (see Purpose within the main navigation).
Volunteer Work Groups: Internally, we have formed work stream groups to support each of our Purpose Pillars, comprising of staff volunteers from both head office and our stores. The team meet on a monthly basis to discuss the issues raised by the community/charity with their chosen pillar and put forward recommendations to the business for further initiatives.
Learning: We are currently receiving training on our all of our Purpose Pillars ranging from LGBT+, disability inclusion and racial equality training from the Blueprint for All. Our aim is to ensure we continue to learn from each community, our staff and charity partners.
Diversity & Inclusion in the work place: See commentary under the Employees section of the Directors’ Report on page 6.
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SCHUH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
D M Gillan-Reid
Director
31 January 2024
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SCHUH LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
The directors present their annual report and financial statements for the period from 30 January 2022 to 28 January 2023.
Principal activities
The principal activity of the group is the sale of footwear through its chain of retail stores and via on-line activities.
Branches
The Company has 100% ownership of an Irish entity Schuh (ROI) Limited, registered in the Republic of Ireland. This subsidiary controls ten stores and a distribution centre within Ireland.
Cross border merger
The Schuh Group has sought, where possible, to minimise administrative complexity and cost as well as enhance and optimise its structure. In this regard, there is an ongoing mandate to reduce the number of Schuh Group legal entities wherever possible.
On 11th August 2022 Schuh (ROI) Limited completed a cross border merger with its sister company Genesco Schuh Gmbh. Upon the merger becoming effective Genesco Schuh Gmbh was dissolved without liquidation. There are no anticipated tax advantages or disadvantages from the intended merger and in the opinion of the directors, the creditors of both Schuh (ROI) Limited and Genesco Schuh Gmbh will not be prejudiced. Genesco Schuh Gmbh has no employees under employment contract, thus no participation rights of employees shall be affected by the merger.
Results and dividends
The results for the period are set out on page 16.
No ordinary dividends were paid (2022: Nil). The directors do not recommend payment of a further dividend (2022: Nil).
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
C Temple
D M Gillan-Reid
K Ball
(Resigned 29 December 2022)
S E Becker
M E Vaughn
T A George
(Appointed 18 October 2022)
P Desai
Qualifying third party indemnity provisions
The company has made qualifying third party indemnity provisions for the benefit of its directors during the period. These provisions remain in force at the reporting date.
Research and development
Any research and development work would usually only be carried out by the IT function within the Company, the Notes to the Financial Accounts details a section under Accounting Policies which considers this IT development expenditure.
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SCHUH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
Employees
Applications for employment are considered based on the aptitude of prospective applicants, whether disabled or not. The group's policy is to, as far as possible, provide continued training and support to any member of staff who should become disabled but is still able to perform their job. Training and promotion opportunities for individuals will be unaffected by disability, provided they demonstrate the appropriate aptitude and ability. Schuh is an equal opportunities employer and has a Dignity at Work policy in place, which seeks to prevent any discrimination on the grounds of age; race; disability; gender reassignment; marriage or civil partnership; pregnancy and maternity; religion or belief; sex; or sexual orientation. The group consults with its employees on an annual basis at all locations and provides information to all employees on the financial and economic factors affecting the group's performance.
Political contributions
Neither the company nor any of its subsidiaries made any political donations or incurred any political expenditure during the period.
EU regulations
In line with the implementation of the European Directive regarding packaging waste regulations, Schuh (ROI) Limited is fully compliant through its membership of a Department of Environment approved collective compliance scheme.
Going concern
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The company’s directors have assessed the group’s ability to continue as a going concern for the period to January 2025. The assessment period considered by the directors’ is 12 months from the date of signing the accounts. A longer term assessment to January 2027 has also been carried out by the directors.true
Using prudent projections the group has sufficient headroom in its cash and bank facilities to continue to operate as a going concern and can meet its banking covenants.
The group has a facility with Lloyds Bank of £19 million available to November 2025. This is backed by a guarantee provided by the group’s parent, Genesco Inc, to the bank. This facility will be used to manage working capital throughout the going concern period. The bank requires the group to comply with the following covenants every quarter:
• Net leverage: the ratio of net borrowings as at the test dates to EBITDA shall not be less than 1.75 until maturity; and
• Interest cover: the ratio of EBITDA to interest for each test period shall not be less than 4.50:1.
In arriving at their conclusion on going concern management have considered the group’s ability to meet these covenants and are satisfied that all are met throughout the going concern period.
The directors have also taken the following factors into account in arriving at their conclusion:
• At 28 January 2023 the group had net current assets of £60.5 million and cash of £27.9million. At 30 January 2024 the group had cash of £20.9 million.
• During the assessment period the lowest cash balance under the base case is £10.7m million in September 2024 with the bank facility remaining undrawn.
• For the year ended 28 January 2023 the group made a profit before tax of £13.4 million and is forecast to continue to be profitable during the next financial year to 3 February 2024.
• At the balance sheet date, the group had net assets of £18.2 million. An amount of £50million is owed to Genesco Jersey, a fellow subsidiary. This loan is due for repayment in April 2025.
• Other than some short-term timing fluctuations in cash flow where the bank facility may be utilised, the directors believe the company will be able to operate sufficiently on self-generated cash. It is anticipated that the facility will remain undrawn at 2 February 2025.
Based on the above considerations the directors have concluded that it is appropriate to adopt the going basis in preparing the financial statements.
SCHUH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
Auditor
Johnston Carmichael LLP were appointed as auditor to the company during the period and are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Corporate governance statement
Schuh Limited, as part of the US-listed group Genesco Inc., places a high regard for effective corporate governance in all areas. Under The Companies (Miscellaneous Reporting) Regulations 2018, Schuh has applied the Wates Corporate Governance Principles for large private companies as its framework for disclosure regarding its corporate governance arrangements.
Details of how the Company has applied the Wates Principles throughout the year are outlined below.
Principle 1 - Purpose and Leadership
Our culture and business principles - we have adopted a range of beliefs and values that underpin the culture at Schuh and form the basis of the business principles on which the organisation is built. These are found throughout the entire organisation and focus on all areas. We have also included some of the particular Customer and Workforce examples within the Section 172 statement within the Strategic Report.
We aim to over-deliver against expectations and try not to make a promise or give an undertaking unless it is achievable. This applies equally to customers, suppliers, colleagues and other stakeholders in the business.
We encourage leadership by example. We prefer discussion and explanation rather than the issuing of orders. We respect action more than words. Everyone is encouraged to succeed, rather than being afraid to fail.
Decisions are based only on what is right for the business. No individuals or groups benefit at the expense of their colleagues or the Company. We want to achieve success but not at the expense of our integrity.
When we operate according to these values and beliefs we instinctively know that we give our business the best chance to grow and prosper.
Principle 2 - Board Composition
Our formal board of Directors is made up of both Schuh Operating Directors and those of our ultimate parent company, Genesco Inc., a US-listed company. We also have an operational board of eight Directors and Director-designates who are collectively responsible for the management and effective oversight of the Company’s business. The Management Team has a range of skills across the board, from relevant business degrees and professional qualifications to time-served in both the Schuh business and other like organisations in the past. We regularly review the make-up of this Management Team to ensure that all relevant skills are present, equally that we have a diverse and representative range of views on all operational matters, and that where a particular knowledge or experience gap may be identified this is remedied by either supplementing with advice from a group company or a skilled and relevant appointed third party.
The Managing Director leads this operational board and is responsible for ensuring that those making decisions on behalf of the company have access to all relevant information in order to inform decision-making. The operational board also has full unrestricted access to other senior management who may attend regular board meetings to update on specific areas of their expertise. They also have regular contact with the parent company operational management board, as well as access to all professional advice and services of third parties pertinent to their respective areas or to inform on best practice on general board decisions.
The board considers that its size and composition is appropriate to its function to oversee and manage the Company. There are three Directors who are also employees of the business and have operational management roles in the Company as well as an equal number of Directors who are employees in operational management roles within the parent entity. This team is then supplemented by another six Director-designates all in operational roles which between them covers all operational and business functions and areas.
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SCHUH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
Corporate governance statement (continued)
Principle 3 - Director Responsibilities
The Directors assume ultimate responsibility for all matters, and along with the senior Management Team are committed to maintaining a robust control framework as the foundation for the delivery of good governance, including the effective management of delegation through the Corporate Governance Framework.
The Board and Management Team are supported by both its parent company in all Corporate Governance matters (including an internal audit team) and other Senior Managers to make recommendations on various matters delegated to them under the Corporate Governance Framework. Management team/Board meetings are managed and controlled by the Managing Director and occur at least every four weeks if not more frequently, have formal agendas but also allow for open debate and for adequate time for all participants to consider any proposals put forward. The Finance Director and each Management Team member are collectively responsible for the provision of accurate and timely information for each and every meeting. Every meeting also allows for any other matters to be raised by all participants. Formal notes are taken at each meeting and circulated afterwards for everyone’s approval, with any key decisions being recorded.
Principle 4 - Opportunity and Risk
The Schuh operational board will regularly focus on what opportunities are being presented to the business and also regularly undertake risk reviews. There is an also an annual risk exercise undertaken as part of the internal audit process with its parent company; looking at risk for the entire group and on a global basis. We will regularly engage with relevant third parties both on exploring additional and relevant business opportunities but also to assess any unidentified risks and evaluate appropriate mitigation protocol. What we believe are the currently identifiable principal risks and uncertainties are detailed previously in the Strategic Report on page 2.
Principle 5 - Remuneration
The Company will always ensure that remuneration is reviewed on a regular basis and is commensurate with all applicable laws regarding national minimum and national living wages within each of the territories within which the business operates. The remuneration of the management team will be set in conjunction with the parent company, Genesco Inc. As well as a market view, this will also factor in Company performance and profitability.
Principle 6 - Stakeholder Relationships and Engagement
Within the Section 172 statement above as part of the overall Strategic Report, we have detailed there the business perspective on key stakeholders and areas of engagement; these being Customers, Workforce, Suppliers, Environment and Purpose.
Other stakeholder engagement
A statement on engagement with suppliers, customers and others in a business relationship with the company is included as part of the Section 172 statement; please see pages 3 and 4.
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SCHUH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
Energy and carbon report
Schuh Limited has continued the appointment with Carbon Footprint Ltd, a leading carbon and energy management company, to independently assess its Greenhouse Gas (GHG) emissions in accordance with the UK Government’s ‘Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting Guidance’.
The GHG emissions have been assessed following the ISO 14064-1:2018 standard and have used the 2020 emission conversion factors published by Department for Environment, Food and Rural Affairs (Defra) and the Department for Business, Energy & Industrial Strategy (BEIS). The assessment follows the location-based approach for assessing Scope 2 emissions from electricity usage. The operational control approach has been used.
The table below summarises the GHG Market-Based emissions for reporting years: 30th January 2022 to 28th January 2023 and comparative 31st January 2021 to 29th January 2022.
| | 2022/2023 Location-Based (tCO2e) | 2022/2023 Market-Based (tCO2e) |
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| Transmission & Distribution | | |
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| Total tonnes of CO2e per employee | | |
| Total tonnes of CO2e per £m turnover | | |
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| Total tonnes of CO2e per employee | | |
| Total tonnes of CO2e per £m turnover | | |
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SCHUH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
Energy Efficiency Actions
We reduced our overall greenhouse gas emissions by 13.1% compared to 21/22. The reduction was largely achieved through the transition of electricity supply in all remaining sites to a renewable energy provider during the preceding year resulting in zero market-based electricity emissions for the period 22/23. We remain committed to operating a vehicle fleet made up of electric, hybrid and low emission vehicles and to an ongoing program of works to improve the energy efficiency of lighting, heating and air-conditioning across the estate.
This year’s carbon assessment methodology followed DEFRA guidelines and included scope 1, 2, and the following scope 3 categories: 3.3, 3.4, 3.6 and 3.7 (partially). The offset for our market-based emissions of 1,636 tonnes of carbon dioxide, includes well-to-tank emissions for the first time as well as an offset for the lifetime emissions associated with the manufacture, distribution and end-of-life recycling for our eCommerce mailbags, assessed using ISO 14047 methodology. Offsets will be carried out in FY24 via investment in three projects:
708 tCO2e offset through a solar energy project in India (VCS1753+1580)
708 tCO2e offset through a REDD+ project protecting rainforest habitat in the Cardomom National Park & Tatai Wildlife Sanctuary in Cambodia (VCS1748)
354 tCO2e offset through a community safe water project in Eritrea (GS6041/6042)
In addition, we planted 7,049 trees through the World Land Trust Plant a Tree Programme and 11,171 trees via Ecologi reforestation projects, to help sequester more carbon dioxide from the atmosphere. Through ongoing measurement, reduction and offsetting of carbon emissions our business has maintained its Carbon Neutral Organisation status for the period 2022/23
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Total energy consumed (kWh) | | |
Total Gross Market-Based Emissions (tCO2e) | | |
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Total Net Market-Based Emissions (tCO2e) | | |
Strategic report
In accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Director's Report) Regulations 2013, a strategic report and the group's results, activities, objectives, policies and risks have been included on pages 1 to 5 of the financial statements.true
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.
On behalf of the board
D M Gillan-Reid
Director
31 January 2024
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SCHUH LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED
28 JANUARY 2023
28 January 2023
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;
prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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SCHUH LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SCHUH LIMITED
Opinion
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We have audited the financial statements of Schuh Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 28 January 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
give a true and fair view of the state of the group's and the parent company's affairs as at 28 January 2023 and of the group's profit for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' eport for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
SCHUH LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCHUH LIMITED
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
- 14 -
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit is considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and parent company. focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
SCHUH LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCHUH LIMITED
- 15 -
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We gained an understanding of how the group and parent company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, and relevant correspondence with regulatory bodies.
We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
Completion of appropriate checklists and use of our experience to assess the Company’s compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
James Hamilton (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
Date: 31 January 2024
2024-01-31
Chartered Accountants
Statutory Auditor
227 West George Street
Glasgow
G2 2ND
SCHUH LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 28 JANUARY 2023
Period
Period
ended
ended
28 January
29 January
2023
2022
Notes
£'000
£'000
Turnover
3
354,491
305,893
Cost of sales
(300,508)
(266,691)
Gross profit
53,983
39,202
Administrative expenses
(33,514)
(22,641)
Other operating income
176
2,925
Earnings before interest, tax, depreciation, amortisation and impairments
20,645
19,486
Depreciation of tangible assets
(4,513)
(4,834)
Amortisation of intangible assets
(608)
(632)
Impairment of tangible assets
-
(330)
Profit before interest and tax
4
15,524
13,690
Interest receivable and similar income
8
5
4
Interest payable and similar expenses
9
(2,107)
(2,079)
Profit before taxation
13,422
11,615
Tax on profit
10
(3,033)
1,085
Profit for the financial period
26
10,389
12,700
Other comprehensive income
Currency translation differences
(38)
9
Total comprehensive income for the period
10,351
12,709
Profit for the financial period is all attributable to the owners of the parent company.
Total comprehensive income for the period is all attributable to the owners of the parent company.
- 16 -
SCHUH LIMITED
GROUP BALANCE SHEET
AS AT 28 JANUARY 2023
28 January 2023
28 January
29 January
2023
2022
Notes
£'000
£'000
£'000
£'000
Fixed assets
Goodwill
11
87
141
Other intangible assets
11
874
915
Total intangible assets
961
1,056
Tangible assets
12
21,749
18,505
22,710
19,561
Current assets
Stocks
15
45,519
32,007
Debtors
16
31,652
39,472
Cash at bank and in hand
27,939
26,568
105,110
98,047
Creditors: amounts falling due within one year
17
(44,615)
(43,927)
Net current assets
60,495
54,120
Total assets less current liabilities
83,205
73,681
Creditors: amounts falling due after more than one year
18
(56,614)
(56,013)
Provisions for liabilities
Provisions
20
8,371
9,799
(8,371)
(9,799)
Net assets
18,220
7,869
Capital and reserves
Called up share capital
25
206
206
Share premium account
26
124
124
Revaluation reserve
26
212
212
Capital redemption reserve
26
412
412
Contributed equity
26
940
940
Profit and loss reserves
26
16,326
5,975
Total equity
18,220
7,869
The financial statements were approved by the board of directors and authorised for issue on 31 January 2024 and are signed on its behalf by:
D M Gillan-Reid
Director
- 17 -
SCHUH LIMITED
COMPANY BALANCE SHEET
AS AT 28 JANUARY 2023
28 January 2023
2023
2022
Notes
£'000
£'000
£'000
£'000
Fixed assets
Intangible assets
11
874
916
Tangible assets
12
20,918
18,175
Investments
13
3,046
3,046
24,838
22,137
Current assets
Stocks
15
39,990
29,967
Debtors
16
38,988
38,764
Cash at bank and in hand
25,421
20,215
104,399
88,946
Creditors: amounts falling due within one year
17
(41,405)
(34,633)
Net current assets
62,994
54,313
Total assets less current liabilities
87,832
76,450
Creditors: amounts falling due after more than one year
18
(56,476)
(55,855)
Provisions for liabilities
Provisions
20
8,284
9,731
(8,284)
(9,731)
Net assets
23,072
10,864
Capital and reserves
Called up share capital
25
206
206
Share premium account
26
124
124
Revaluation reserve
26
8
8
Capital redemption reserve
26
412
412
Contributed equity
26
940
940
Profit and loss reserves
26
21,382
9,174
Total equity
23,072
10,864
As permitted by s408 Companies Act 2006, the truecompany has not presented its own profit and loss account and related notes. The company’s profit for the year was £12,208k (2022 - £12,439k profit).
- 18 -
SCHUH LIMITED
COMPANY BALANCE SHEET (CONTINUED)
AS AT 28 JANUARY 2023
28 January 2023
The financial statements were approved by the board of directors and authorised for issue on 31 January 2024 and are signed on its behalf by:
31 January 2024
D M Gillan-Reid
Director
Company Registration No. SC125327
- 19 -
SCHUH LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 28 JANUARY 2023
Share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Contributed equity
Profit and loss reserves
Total
Notes
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31 January 2021
206
124
212
412
1,194
(7,307)
(5,159)
Period ended 29 January 2022:
Profit for the period
-
-
-
-
-
12,700
12,700
Other comprehensive income:
Currency translation differences
-
-
-
-
-
9
9
Total comprehensive income for the period
-
-
-
-
-
12,709
12,709
Credit to equity for equity settled share-based payments
24
-
-
-
-
-
319
319
Transfers
-
-
-
-
(254)
254
-
Balance at 29 January 2022
206
124
212
412
940
5,975
7,869
Period ended 28 January 2023:
Profit for the period
-
-
-
-
-
10,389
10,389
Other comprehensive income:
Currency translation differences
-
-
-
-
-
(38)
(38)
Total comprehensive income for the period
-
-
-
-
-
10,351
10,351
Balance at 28 January 2023
206
124
212
412
940
16,326
18,220
- 20 -
SCHUH LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 28 JANUARY 2023
Share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Contributed equity
Profit and loss reserves
Total
Notes
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Balance at 31 January 2021
206
124
8
412
1,194
(3,838)
(1,894)
Period ended 29 January 2022:
Profit and total comprehensive income for the period
-
-
-
-
-
12,439
12,439
Credit to equity for equity settled share-based payments
24
-
-
-
-
-
319
319
Transfers
-
-
-
-
(254)
254
-
Balance at 29 January 2022
206
124
8
412
940
9,174
10,864
Period ended 28 January 2023:
Profit and total comprehensive income for the period
-
-
-
-
-
12,208
12,208
Balance at 28 January 2023
206
124
8
412
940
21,382
23,072
- 21 -
SCHUH LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 28 JANUARY 2023
2023
2022
Notes
£'000
£'000
£'000
£'000
Cash flows from operating activities
Cash generated from operations
30
10,989
14,123
Income taxes (paid)/refunded
(636)
297
Net cash inflow from operating activities
10,353
14,420
Investing activities
Purchase of intangible assets
(513)
(644)
Purchase of tangible fixed assets
(7,898)
(1,696)
Proceeds on disposal of tangible fixed assets
59
-
Interest received
5
4
Net cash used in investing activities
(8,347)
(2,336)
Financing activities
Interest paid
(306)
(338)
Net cash used in financing activities
(306)
(338)
Net increase in cash and cash equivalents
1,700
11,746
Cash and cash equivalents at beginning of period
26,568
14,964
Effect of foreign exchange rates
(329)
(142)
Cash and cash equivalents at end of period
27,939
26,568
- 22 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
Company information
Schuh Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 1 Neilson Square Deans Industrial Estate Deans, Livingston West Lothian EH54 8RQ, Scotland.
The group consists of Schuh Limited and all of its subsidiaries.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £'000.
The financial statements have been prepared under the historical cost convention, modified to include certain tangible fixed assets carried at deemed cost. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102 and has taken advantage of the exemption available from the requirement to present a company only cash flow statement and related notes and disclosures.
1.2
Business combinations
The group recognises goodwill at the acquisition date as:
the fair value of the consideration (excluding contingent consideration) transferred; plus
estimated amount of contingent consideration (see below); plus
the fair value of the equity instruments issued; plus
directly attributable transaction costs: less
the net recognisable amount (generally fair value) of the identifiable assets and liabilities acquired and contingent liabilities assumed.
When the excess is negative, this is recognised and separately disclosed on the face of the balance sheet as negative goodwill. Consideration which is contingent on future events is recognised based on the estimated amount if the contingent consideration is probable and can be measured reliably. Any subsequent changes to the amount are treated as an adjustment to the cost of the acquisition.
Goodwill
Goodwill is stated at cost less any accumulated amortisation and accumulated impairment losses. Goodwill is allocated to cash-generating units or group of cash-generating units that are expected to benefit from the synergies of the business combination from which it arose.
Amortisation
Goodwill is amortised on a straight line basis over its deemed useful life of 20 years.
- 23 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
(Continued)
1.3
Basis of consolidation
The consolidated group financial statements consist of the financial statements of the parent company Schuh Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 28 January 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
1.4
Going concern
- 24 -
The company’s directors have assessed the group’s ability to continue as a going concern for the period to January 2025. The assessment period considered by the directors’ is 12 months from the date of signing the accounts. A longer term assessment to January 2027 has also been carried out by the directors.
Using prudent projections the group has sufficient headroom in its cash and bank facilities to continue to operate as a going concern and can meet its banking covenants.
The group has a facility with Lloyds Bank of £19 million available to November 2025. This is backed by a guarantee provided by the group’s parent, Genesco Inc, to the bank. This facility will be used to manage working capital throughout the going concern period. The bank requires the group to comply with the following covenants every quarter:
• Net leverage: the ratio of net borrowings as at the test dates to EBITDA shall not be less than 1.75 until maturity; and
• Interest cover: the ratio of EBITDA to interest for each test period shall not be less than 4.50:1.
In arriving at their conclusion on going concern management have considered the group’s ability to meet these covenants and are satisfied that all are met throughout the going concern period.
The directors have also taken the following factors into account in arriving at their conclusion:
• At 28 January 2023 the group had net current assets of £60.5 million and cash of £27.9million. At 30 January 2024 the group had cash of £20.9 million.
• During the assessment period the lowest cash balance under the base case is £10.7m million in September 2024 with the bank facility remaining undrawn.
• For the year ended 28 January 2023 the group made a profit before tax of £13.4 million and is forecast to continue to be profitable during the next financial year to 3 February 2024.
• At the balance sheet date, the group had net assets of £18.2 million. An amount of £50million is owed to Genesco Jersey, a fellow subsidiary. This loan is due for repayment in April 2025.
• Other than some short-term timing fluctuations in cash flow where the bank facility may be utilised, the directors believe the company will be able to operate sufficiently on self-generated cash. It is anticipated that the facility will remain undrawn at 2 February 2025.
Based on the above considerations the directors have concluded that it is appropriate to adopt the going basis in preparing the financial statements.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
(Continued)
1.5
Reporting period
These financial statements cover the period from 30 January 2022 to 28 January 2023. The comparative financial statements cover the period from 31 January 2021 to 29 January 2022. The company's accounting reference date is 31 January and the company closes its books on the last Saturday of the month, which for this year was 28 January 2023. Both the current and prior period represent 52 week trading periods.
1.6
Turnover
- 25 -
Turnover represents the fair value of the consideration received or receivable for goods supplied in the ordinary course of the group’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the company.
Revenue recognition
Revenue is recognised to the extent that the group obtains the right to consideration in exchange for its performance. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes or duty. The following criteria must also be met before revenue is recognised.
the significant risks and rewards of ownership of the goods have passed to the buyer, usually on receipt of the goods;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the entity; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from interest income is recognised as interest accrues using the effective interest method. Revenue from dividends is recognised when the group's right to receive payment is established.
Revenue represents the amounts (excluding value added tax) derived from the sale of goods to customers, net of discounts, during the period.
All turnover revenue relates to the sale of goods.
Other operating income - rental income
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in other income. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
1.7
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is allocated to cash-generating units or group of cash-generating units that are expected to benefit from the synergies of the business combination from which it arose.
Cash-generating units to which goodwill has been allocated are tested for impairment at least 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.
Goodwill is amortised on a straight line basis over its deemed useful life of 20 years.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
(Continued)
1.8
Intangible fixed assets other than goodwill
Internally generated assets - Development expenditure
Development expenditure incurred on an individual projects is only capitalised if all of the following criteria are demonstrated:
An asset is created that can be identified and is available to use (such as software);
It is probable that the asset created will be used and will generate future economic benefits; and
The development costs of the asset can be measured reliably.
Following the initial recognition of development expenditure, the cost is amortised over the estimated useful life of the asset created. Amortisation commences on the date that the asset is brought into use.
Software
3 years
1.9
Tangible fixed assets
Tangible fixed assets are stated at deemed cost less accumulated depreciation and accumulated impairment losses. Certain items of tangible fixed assets that had been revalued to fair value on or prior to the date of transition to FRS 102, are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation.
Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible assets, for example land is treated separately from buildings.
Leases in which the entity assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. All other leases are classified as operating leases. Leased assets acquired by way of finance lease are stated on initial recognition at an amount equal to the lower of their fair value and the present value of the min imum lease paymen ts at in ception of the lease, in cludin gan y in cremen talcosts directly attributable to negotiating and arranging the lease. At initial recognition a finance lease liability is recognised equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The present value of the minimum lease payments is calculated using the interest rate implicit in the lease. There were no leases considered as finance leases during the period (2022: none).
Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of tangible fixed assets. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The estimated useful lives are as follows:
Land and buildings
10 to 40 years
Leasehold acquisition costs
shorter of remaining period of lease or 10 years
Furniture, fittings and equipment
5 to 10 years or remaining period of lease
Computer Equipment
4 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
1.10
Fixed asset investments
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
- 26 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
(Continued)
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.11
Impairment of fixed assets
The carrying amounts of the entity's non-financial assets, other than stocks and deferred tax assets, are reviewed at each reporting date to determine whether there is an indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit"). The goodwill acquired in business combination, for the purpose of impairment testing is allocated to cash-generating units, or ("CGU") that are expected to benefit from the synergies of the combination. For the purpose of goodwill impairment testing, if goodwill cannot be allocated to individual CGU's or groups of CGU's on a non-arbitrary basis the impairment of goodwill is determined using the recoverable amount of the acquired entity, or if it has been integrated then the entire group of entities into which it has been integrated.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGU's are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss is reversed if and only if the reasons for the impairment have ceased to apply. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
1.12
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to sell. Cost is based on the first-in first-out principle and includes expenditure incurred in acquiring the stocks, production or conversion costs and other costs in bringing them to their location and condition.
1.13
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand and cash floats.
1.14
Financial instruments
- 27 -
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
(Continued)
- 28 -
Basic financial assets
Basic financial assets, which include certain debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including certain creditors, bank loans, and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
1.15
Equity instruments
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs.
Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
(Continued)
1.16
Taxation
- 29 -
Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustments to tax payable in respect of previous periods.
Deferred tax
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. The following timing differences are not provided for: differences between accumulated depreciation an d tax allowances for the cost of a fixed asset if and when all conditions for retaining the tax allowances have been met; and differences relating to investments in subsidiaries, to the extent that it is not probable that they will reverse in the foreseeable future and the reporting entity is able to control the reversal of the timing difference. Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non-taxable or are dis-allowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.
Deferred tax is provided in respect of the additional tax that will be paid or avoided on differences between the amount at which an asset (other than goodwill) or liability is recognised in a business combination and the corresponding amount that can be deducted or assessed for tax. Goodwill is adjusted by the amount of such deferred tax.
Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax balances are not discounted.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
(Continued)
1.17
Provisions
A provision is recognised in the balance sheet when the entity has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the amount required to settle the obligation at the reporting date.
Where the parent company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group, the company treats the guarantee contract as a contingent liability in its individual financial statements until such time as it becomes probable that the company will be required to make a payment under the guarantee.
Sales of stock returns provision
The provision for stock returns is based on the historical actual return dates and applied to goods sold within the last 12 months, based on Schuh group's return policy of 365 days.
Slow moving and obsolete stock provision
The provision is based on the cost plus attributable selling costs, this value is compared to the realisable value and the provision is made for future losses based on net realisable value less the adjusted cost price.
Onerous lease provision
Onerous lease provisions include provisions for leases on unprofitable stores (and vacated properties(if any)). These provisions are based on the least net cost of fulfilling or exiting the lease contract. The calculation of the value in use of the leased properties to the Group is based on the same assumptions for growth rates and expected changes to future cash flows as those for Group owned properties discounted at the appropriate risk free rate. The cost of exiting lease contracts is estimated as the present value of expected surrender premiums or deficits from subletting at market rents, assuming that the Group can sublet properties at market rents, based on discounting at the appropriate risk adjusted rate. Where a store operated out of a leased property has become lossmaking, an onerous lease provision is recognised only to the extent that the Group does not reasonably expect to recover its own remaining lease commitment by subletting the property or from projected future trading income.
1.18
Retirement benefits
- 30 -
A defined contribution plan is a post-employment benefit plan under which the group pays fixed contributions into a separate entity and will have no legal or constructive obligations to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.
1.19
Share-based payments
The group's parent issues equity settled share-based payments to certain employees which must be measured at fair value and recognised as an expense in the profit and loss account with a corresponding increase in equity (treated as a capital contribution from the parent company).
The fair values of these payments are measured at the dates of grant using pricing models, taking into account the terms and conditions upon which the awards are granted. The fair value is recognised over the period during which employees become unconditionally entitled to the awards subject to an estimate of the number of awards which will lapse, either due to employees leaving employment prior to vesting or due to non-market based performance conditions not being met.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
1
Accounting policies
(Continued)
1.20
Leases
- 31 -
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
In accordance with the requirements of FRS102, lease incentives are recognised over the term of the lease.
Operating lease
Payments (excluding costs for services and insurance) made under operating leases are recognised in the profit and loss account on a straight-line basis over the term of the lease unless the payments to the lessor are structured to increase in line with expected general inflation; in which case the payments related to the structured increases are recognised as incurred. Lease incentives received are recognised in the profit and loss account over the term of the lease as an integral part of the total lease expense.
Finance Lease
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability using the rate implicit in the lease. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the periods in which they are incurred.
1.21
Foreign exchange
Company
Transactions in foreign currencies are initially recorded in the entity’s functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the profit and loss account.
Group
Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
The assets and liabilities of overseas subsidiary undertakings are translated into the presentational currency at the rate of exchange ruling at the balance sheet date. Income and expenses for each statement of comprehensive income are translated at exchange rates at the dates of transaction.
All resulting exchange differences are recognised in other comprehensive income, in retained earnings.
2
Judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 32 -
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
IT development expenditure
IT development expenditure is capitalised in accordance with the accounting policy given below. Initial capitalisation of costs is based on management's judgement that development enhances the technical capabilities of the software and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised management makes assumptions regarding the expected future cash generation of the assets and the expected period of benefits.
The directors consider in-house IT development expenditure more efficient and cost effective than outsourcing essential projects. The development of systems can be too time sensitive to risk competing for time and results with clients of an external IT development provider. The directors deem that this expenditure provides access to future economic benefits for three years, after which time they are considered obsolete as a stand alone asset, or have been replaced by subsequent investment in improvements.
The carrying value included within these financial statements for IT developments which have been internally generated is £874k (2022: £915k).
IT developments costs which have been capitalised within the reporting period are in relation to the following key projects:
a) Introduction SCHUH CLUB loyalty scheme
Providing us with the opportunity to better focus our marketing for customers, this project is expected to increase sales through customer loyalty.
b) New Customer Relationship Management (CRM) program
To ensure we can continue to build customer relationships and streamline processes. The overall aim of this is to improve customer service with a view to increase sales and increase profitability through our customers having an improved purchase and after sales experience.
c) New Irish Distribution Centre
Prior to Brexit, it was identified that a distribution centre within a country remaining in the EU would be significantly beneficial to negate substantial duty and VAT costs. In order to maximise these benefits, the existing IT system had to be able to differentiate between stock held within the UK and EU. The main benefits to this action are significant VAT and duty cost savings due to:
EU suppliers ship direct to ROI, as the goods remain within the EU, they are considered to be in Free Circulation and don't incur additional duties
Shipments between the UK Distribution Centres and ROI are minimised, negating "double duties" from EU to UK to EU shipments
EU customer orders are not subject to customs charges on sales or returns, improving customer satisfaction, and ease of return/replacement.
d) Improvements to the existing website
In order to maximise the added value of both the loyalty and CRM programs, and to take full advantage of the VAT and duty savings on offer from the new Irish Distribution Centre, the group must continually ameliorate existing UK and Irish websites to enable the systems to communicate. This project is expected to keep the website operating smoothly and to increase sales in collaboration with other projects.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 33 -
Lease classification
The group has entered into commercial property leases and vehicle leases and as a lessee it obtains use of property, plant and equipment. The classification of such leases as operating or finance lease requires the group to determine, based on an evaluation of the terms and conditions of the arrangements, whether it retains or acquires the significant risks and rewards of ownership of these assets and accordingly whether the lease requires an asset and liability to be recognised in the statement of financial position.
In considering the leases, it was determined that none of the following finance lease conditions were met:
To obtain substantially all the economic benefits from the use of the underlying asset, and;
To direct the use of the underlying asset (e.g. direct how and for what purpose the asset is used)
At the end of each lease term, the asset is either returned or a new lease is negotiated at market rate, the asset is not automatically transferred to the group's ownership and the assets have not been leased for the majority of their useful life. Therefore, the directors' consider all leases entered into by the group as operating lease.
The impact of environmental factors on group operations
As a business we are committed to continuing to reduce our impact on the environment but we recognise that there are many factors out with our control such as;
The occurrence of climate affected prolonged adverse weather conditions or a natural disasters such as an earthquake or typhoon could severely interfere with the manufacturing and/or shipment of our products and would have a material adverse effect on our operations.
government policy; the success of our business depends to a significant extent upon the level of consumer spending in general and on our product categories. Changes in government policy in an effort to combat climate change, particularly in relation to taxation which may affect, amongst other things, energy prices and impact our consumers discretionary spend;
Governmental and societal responses to climate change risks continue to develop, and are interdependent upon each other. Consequently the financial statements cannot capture all possible future outcomes as these are not yet known. The degree of certainty of these changes may also mean that they cannot be taken into account when determining asset and liability valuations and the timing of future cash flows.
The directors therefore believe that the impact of climate risk and the effects of the material climate risks have been appropriately reflected in these financial statements
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 34 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Goodwill and intangible assets
The group establishes a reliable estimate of the useful life of goodwill and intangible assets arising on business combinations. This estimate is based on a variety of factors such as the expected use of the acquired business, growth rate, discount rate, the expected usual life of the cash generating units to which the goodwill is attributed, any legal, regulatory or contractual provisions that can limit useful life and assumptions that market participants would consider in respect of similar businesses.
Impairment of non-financial assets
Where there are indicators of impairment of individual assets, the group performs impairment tests based on an value in use calculation. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the group is not yet committed to or significant future investments that will enhance the asset's performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as expected future cash flows and the growth rate used for extrapolation purposes. The discount rate used by the group in an impairment assessment is in line with that used by the wider Genesco group.The growth rates used for the stores in the model vary depending on store type (adult, kids etc) but these rates are in line with the assumptions made in long term (5 year planning) models.
Sales returns
The group provides for returns on purchases for up to one year from the transaction date. At the period end an estimate is made of the expected returns from transactions in the period. Historic return rates, timescales and transactions data are used in reaching this estimate. The return estimate is most sensitive to changes in the timescale of customer returns. The sales return assumption is based on historical return rates from the prior financial year.
3
Turnover and other revenue
2023
2022
£'000
£'000
Turnover analysed by class of business
Sales of footwear
354,491
305,893
2023
2022
£'000
£'000
Turnover analysed by geographical market
UK
328,247
289,568
Europe
26,244
16,325
354,491
305,893
2023
2022
£'000
£'000
Other significant revenue
Rent received
175
140
Other operating income
1
2,785
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
3
Turnover and other revenue
(Continued)
The group benefitted from Government and local authority assistance during the prior financial period in the form of £2,785k received from local authorities in respect of Covid grants. Other operating income in the current period includes sundry income of £1k.
4
Operating profit
2023
2022
£'000
£'000
Operating profit for the period is stated after charging/(crediting):
Exchange differences
-
(9)
Depreciation of owned tangible fixed assets
4,513
4,834
Impairment of owned tangible fixed assets
-
330
Loss/(profit) on disposal of tangible fixed assets
102
(215)
Amortisation of intangible assets
608
632
Stocks impairment losses recognised or (reversed)
395
257
Share-based payments
271
319
Operating lease charges
26,160
22,073
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£'000
£'000
For audit services
Audit of the financial statements of the group and company
143
134
For other services
All other non-audit services
14
-
6
Employees
The average monthly number of persons (including directors) employed by the group and company during the period was:
Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Administration and support
328
303
327
303
Sales and distribution
3,641
2,975
3,300
2,721
Directors
8
8
6
6
Total
3,977
3,286
3,633
3,030
- 35 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
6
Employees
(Continued)
Their aggregate remuneration comprised:
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Wages and salaries
49,558
37,320
44,771
40,036
Social security costs
2,984
2,562
2,599
2,270
Pension costs
1,830
1,319
1,809
1,301
54,372
41,201
49,179
43,607
Wages and salaries costs include £271k (2022: £319k) in respect of share-based payment expenses.
7
Directors' remuneration
2023
2022
£'000
£'000
Remuneration for qualifying services
2,884
1,066
Company pension contributions to defined contribution schemes
166
99
3,050
1,165
- 36 -
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 3).
The number of directors who are entitled to receive shares under long term incentive schemes during the period was 2 (2022 - 3).
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£'000
£'000
Remuneration for qualifying services
454
345
Company pension contributions to defined contribution schemes
-
48
8
Interest receivable and similar income
2023
2022
£'000
£'000
Interest income
Interest on bank deposits
5
4
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
9
Interest payable and similar expenses
2023
2022
£'000
£'000
Interest on bank overdrafts and loans
306
338
Interest payable to group undertakings
1,801
1,741
Total finance costs
2,107
2,079
10
Taxation
2023
2022
£'000
£'000
Current tax
UK corporation tax on profits for the current period
1,071
494
Adjustments in respect of prior periods
(16)
(383)
Total current tax
1,055
111
Deferred tax
Origination and reversal of timing differences
1,824
(494)
Changes in tax rates
(672)
Previously unrecognised tax loss, tax credit or timing difference
(30)
Adjustment in respect of prior periods
154
Total deferred tax
1,978
(1,196)
Total tax charge/(credit)
3,033
(1,085)
- 37 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
10
Taxation
(Continued)
The actual charge/(credit) for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
2023
2022
£'000
£'000
Profit before taxation
13,422
11,615
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
2,550
2,207
Tax effect of expenses that are not deductible in determining taxable profit
489
562
Tax effect of income not taxable in determining taxable profit
(70)
(129)
Tax effect of utilisation of tax losses not previously recognised
1
Unutilised tax losses carried forward
20
Change in unrecognised deferred tax assets
299
Adjustments in respect of prior years
(16)
(383)
Effect of change in corporation tax rate
246
(672)
Group relief
(251)
(2)
Permanent capital allowances in excess of depreciation
(2,281)
Other permanent differences
49
(73)
Effect of overseas tax rates
(257)
(119)
Deferred tax adjustments in respect of prior years
154
(30)
Super deduction
(175)
Share options
14
(185)
Taxation charge/(credit)
3,033
(1,085)
A change in the future UK Corporation tax rate to 25% with effect from 1 April 2023 was announced in the March 2021 budget and substantively enacted on 24 May 2021. This change will have a consequential effect on the group's future tax charge in the UK and as the 25% tax rate was substantively enacted prior to the reporting date with deferred tax unwinding after 1 April 2023, deferred tax has been calculated at 25% as opposed to the current tax rate of 19%.
- 38 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
11
Intangible fixed assets
Group
Goodwill
Software
Total
£'000
£'000
£'000
Cost
At 30 January 2022
1,177
7,743
8,920
Additions - internally developed
513
513
At 28 January 2023
1,177
8,256
9,433
Amortisation and impairment
At 30 January 2022
1,036
6,828
7,864
Amortisation charged for the period
54
554
608
At 28 January 2023
1,090
7,382
8,472
Carrying amount
At 28 January 2023
87
874
961
At 29 January 2022
141
915
1,056
Company
Software
£'000
Cost
At 30 January 2022
7,743
Additions - internally developed
513
At 28 January 2023
8,256
Amortisation and impairment
At 30 January 2022
6,827
Amortisation charged for the period
555
At 28 January 2023
7,382
Carrying amount
At 28 January 2023
874
At 29 January 2022
916
The internally generated software development costs are the development time and costs of internal development projects. These costs are amortised over a 3 year period.
- 39 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
12
Tangible fixed assets
Group
Land and buildings
Leasehold acquisition costs
Furniture, fittings and equipment
Total
£'000
£'000
£'000
£'000
Cost
At 30 January 2022
12,558
11,700
71,720
95,978
Additions
43
950
6,905
7,898
Disposals
(594)
(2,130)
(2,724)
Exchange adjustments
11
9
20
At 28 January 2023
12,601
12,067
76,504
101,172
Depreciation and impairment
At 30 January 2022
6,084
9,062
62,327
77,473
Depreciation charged in the period
201
601
3,711
4,513
Eliminated in respect of disposals
(528)
(2,035)
(2,563)
At 28 January 2023
6,285
9,135
64,003
79,423
Carrying amount
At 28 January 2023
6,316
2,932
12,501
21,749
At 29 January 2022
6,474
2,638
9,393
18,505
Company
Land and buildings
Leasehold acquisition costs
Furniture, fittings and equipment
Total
£'000
£'000
£'000
£'000
Cost
At 30 January 2022
12,542
10,329
63,058
85,929
Additions
43
858
6,294
7,195
Disposals
(590)
(2,051)
(2,641)
At 28 January 2023
12,585
10,597
67,301
90,483
Depreciation and impairment
At 30 January 2022
6,081
7,822
53,851
67,754
Depreciation charged in the period
201
568
3,581
4,350
Eliminated in respect of disposals
(528)
(2,011)
(2,539)
At 28 January 2023
6,282
7,862
55,421
69,565
Carrying amount
At 28 January 2023
6,303
2,735
11,880
20,918
At 29 January 2022
6,461
2,507
9,207
18,175
- 40 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
12
Tangible fixed assets
(Continued)
Lease acquisition costs includes legal and professional costs incurred to obtain leases.
Lloyds Bank PLC holds standard security over both Unit 1, Neilson Square, Livingston (head office) and J4M8, Bathgate (distribution centre), the total carrying value of these assets is £10,450k (2022: £6,461k).
13
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£'000
£'000
£'000
£'000
Investments in subsidiaries
14
3,046
3,046
Movements in fixed asset investments
Company
Shares in subsidiaries
£'000
Cost or valuation
At 30 January 2022 and 28 January 2023
3,046
Carrying amount
At 28 January 2023
3,046
At 29 January 2022
3,046
14
Subsidiaries
Details of the company's subsidiaries at 28 January 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Schuh (ROI) Limited
c/o McCann Fitzgerald, Riverside One, Sir John Rogerson's Quay, Dublin 2, Republic of Ireland
Ordinary
100.00
15
Stocks
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Finished goods and goods for resale
45,519
32,007
39,990
29,967
Group
The stock provision loss included in profit and loss is £696k (2022: Loss of £300k). Included within the stock balance is a right of return asset of £616k (2022: £496k).
Company
The stock provision loss included in profit and loss is £611k (2022: Loss of £280k). Included within the stock balance is a right of return asset of £571k (2022: £462k).
- 41 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
16
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£'000
£'000
£'000
£'000
Trade debtors
6,097
5,084
5,898
4,955
Amounts owed by group undertakings
16,119
22,789
24,347
22,789
Other debtors
767
727
735
727
Prepayments and accrued income
7,010
7,235
6,344
6,656
29,993
35,835
37,324
35,127
Deferred tax asset (note 21)
1,659
3,637
1,664
3,637
31,652
39,472
38,988
38,764
17
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£'000
£'000
£'000
£'000
Trade creditors
17,610
12,585
15,379
12,118
Amounts owed to group undertakings
578
7,173
578
520
Corporation tax payable
633
214
587
111
Other taxation and social security
1,812
1,153
2,317
650
Deferred income
22
1,835
1,587
1,758
1,533
Other creditors
5,113
8,309
4,780
7,699
Accruals and deferred income
17,034
12,906
16,006
12,002
44,615
43,927
41,405
34,633
18
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£'000
£'000
£'000
£'000
Other borrowings
19
50,000
50,000
50,000
50,000
Deferred income
22
6,614
6,013
6,476
5,855
56,614
56,013
56,476
55,855
- 42 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
19
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Loans from group undertakings
50,000
50,000
50,000
50,000
Payable after one year
50,000
50,000
50,000
50,000
The group has recently refinanced, replacing the previous £19m CLBILS (Coronavirus Large Business Interruption Loan Scheme) facility with a new £19m Revolving Credit Facility (RCF) with Lloyds Banking Group from 2nd November 2022. The RCF is a 3 year facility with an option to extend for a further two, one year periods. Interest is charged is 2.35% plus the Bank of England SONIA (Sterling Overnight Index Average) rate and charged on a monthly basis.
The company has no outstanding drawing on the Lloyds facility at the balance sheet date.
On 14th April 2020, Genesco UK Limited refinanced its loan notes listed on the International Stock Exchange. During the year to January 2021, Schuh Limited declared a dividend distribution of £50,000,000 to Genesco UK Limited and Genesco UK Limited issued a new £36,461,107 note payable to Genesco Jersey Limited with an interest rate of 3.4% and a maturity date of April 2025. The £50,000,000 dividend is included within the creditors section of the Balance Sheet in Schuh Limited and interest is charged on a monthly basis. The debt is listed on The International Stock Exchange.
20
Provisions for liabilities
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Onerous leases
7,172
8,726
7,172
8,726
Retail returns
1,199
1,073
1,112
1,005
Total Provisions
8,371
9,799
8,284
9,731
Movements on provisions:
Onerous leases
Retail returns
Total
Group
£'000
£'000
£'000
At 30 January 2022
8,726
1,073
9,799
Additional provisions in the year
238
126
364
Reversal of provision
(1,792)
-
(1,792)
At 28 January 2023
7,172
1,199
8,371
- 43 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
20
Provisions for liabilities
(Continued)
Onerous leases
Retail returns
Total
Company
£'000
£'000
£'000
At 30 January 2022
8,726
1,005
9,731
Additional provisions in the year
238
107
345
Reversal of provision
(1,792)
-
(1,792)
At 28 January 2023
7,172
1,112
8,284
Onerous leases
The group recognises a provision for lease obligations where the trading income from the stores is not expected to fully cover the lease costs committed to.
Retail returns
The group recognises a provision in relation to expected sales returns. The expected timing of outflow is within 3 months from the reporting date.
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Assets
Assets
2023
2022
Group
£'000
£'000
Accelerated capital allowances
1,344
2,335
Tax losses
-
837
Short term timing differences
315
465
1,659
3,637
Assets
Assets
2023
2022
Company
£'000
£'000
Accelerated capital allowances
1,349
2,335
Tax losses
-
837
Short term timing differences
315
465
1,664
3,637
- 44 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
21
Deferred taxation
(Continued)
Group
Company
2023
2023
Movements in the period:
£'000
£'000
Asset at 30 January 2022
(3,637)
(3,637)
Charge to profit or loss
1,978
1,973
Asset at 28 January 2023
(1,659)
(1,664)
The group had estimated UK trade losses of £Nil (2022: £2.7m) available for carry forward and offset against future trading profits.
22
Deferred income
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Other deferred income
8,449
7,600
8,234
7,388
Other deferred income is in respect of rent free period accruals. The deferred income is included in the financial statements as follows:
Current liabilities
1,835
1,587
1,758
1,533
Non-current liabilities
6,614
6,013
6,476
5,855
8,449
7,600
8,234
7,388
23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£'000
£'000
Charge to profit or loss in respect of defined contribution schemes
1,996
1,319
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
- 45 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
- 46 -
24
Share-based payment transactions
Scheme details and movements
Employee Restricted Stock
On 30 August 2016 certain employees were included within the Genesco Inc restricted stock plan. Restricted shares are allocated to Schuh employees as part of a long term incentive scheme. The shares can be exercised over a period of 4 years if the employee remains in service at each anniversary, with an equal amount exercised each year. The exercise price of the stock is equal to the average share price on the date of grant. There is no cash alternative.
Genesco Inc. set an average stock price (based on a 30-day period) in the run up to the annual vesting/granting date of the end of June each year. This share price (converted at the actual exchange rate as of that same date) is then used to value any grants, exercising and forfeitures/cancellations within that year. The outstanding value at the end of each year is therefore a weighted average of the opening position and a reflection of the movements within the year.
A reconciliation of the movement in share options during the period were as follows:
Group
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£'000
£'000
Outstanding at 30 January 2022
31,897
42,314
29.46
33.30
Granted
5,503
6,808
47.82
45.07
Forfeited
(4,669)
(9,151)
47.82
45.07
Exercised
(10,172)
(8,074)
47.82
45.07
Expired
(3,282)
-
47.82
-
-------
-------
-------
-------
Outstanding at 28 January 2023
19,277
31,897
17.44
29.46
=======
=======
=======
=======
Exercisable at 28 January 2023
-
-
-
-
=======
=======
=======
=======
Company
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£'000
£'000
Outstanding at 30 January 2022
31,897
42,314
29.46
33.30
Granted
5,503
6,808
47.82
45.07
Forfeited
(4,669)
(9,151)
47.82
45.07
Exercised
(10,172)
(8,074)
47.82
45.07
Expired
(3,282)
-
47.82
-
-------
-------
-------
-------
Outstanding at 28 January 2023
19,277
31,897
17.44
29.46
=======
=======
=======
=======
Exercisable at 28 January 2023
-
-
-
-
=======
=======
=======
=======
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
--
24
Share-based payment transactions
(Continued)
- 47 -
The options outstanding at 28 January 2023 had an exercise price ranging from $19.62 to $64.41, and a remaining contractual life of 4.5 years (June 2027).
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Expenses recognised in the period
Arising from equity settled share based payment transactions
271
319
271
319
25
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£'000
£'000
Issued and fully paid
Ordinary shares of £1 each
133,492
133,492
133
133
B Ordinary shares of £1.46 each
50,000
50,000
73
73
183,492
183,492
206
206
The holders of Ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. Both classes of shares have the same rights.
26
Reserves
Share premium reserve
The share premium account represents the difference between the par value of the shares issued and the subscription or issue price.
Capital redemption reserve
The capital redemption reserve arose on the buy-back purchase of shares by the company in previous periods.
Profit and loss reserves
Retained earnings represent accumulated profits and losses less distributions and transfers from other reserves.
Revaluation reserve
The revaluation reserve is the remaining balance of a revaluation of Neilson Square on 30th March 1997 using the open market value basis.
Contributed equity
The contributed equity reserve represents the future liability of Schuh employee share options maturing and the expected issue price of the Genesco Inc shares.
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
27
Operating lease commitments
Lessee
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Within one year
18,557
28,132
15,983
24,360
Between two and five years
59,181
78,730
51,922
67,024
In over five years
19,406
24,191
16,414
19,357
97,144
131,053
84,319
110,741
Group
The amount of non-cancellable operating lease payments recognised as an expense during the period was £26,353,909 (2022: £22,279,427).
Company
The amount of non-cancellable operating lease payments recognised as an expense during the period was £23,215,761 (2022: £19,934,320).
Lessor
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
Group
Company
2023
2022
2023
2022
£'000
£'000
£'000
£'000
Within one year
129
141
129
141
Between two and five years
-
129
-
129
129
270
129
270
Group and company
Total contingent rents recognised as income in the period are £140,398 (2022: £140,398).
- 48 -
SCHUH LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 JANUARY 2023
28
Related party transactions
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions trueor balances between two or more members of a group, provided that any subsidiary which is party to the transaction is wholly owned by such a member.
29
Controlling party
The group is a subsidiary undertaking of Schuh Group Limited incorporated in Scotland. The financial statements of Schuh Group Limited are available to the public and may be obtained from Companies House or 1 Neilson Square, Deans Industrial Estate, Livingston, Scotland, United Kingdom.
Schuh Group Limited is a subsidiary undertaking of Genesco UK Limited which in turn is a subsidiary of Genesco Inc. which is the ultimate parent company. Genesco Inc. is incorporated in the United States and its most recent financial statements are available from its website on www.genesco.com.
30
Cash generated from group operations
2023
2022
£'000
£'000
Profit for the period after tax
10,389
12,700
Adjustments for:
Taxation charged/(credited)
3,033
(1,085)
Finance costs
2,107
2,079
Investment income
(5)
(4)
Loss/(gain) on disposal of tangible fixed assets
102
(215)
Amortisation and impairment of intangible assets
608
632
Depreciation and impairment of tangible fixed assets
4,513
5,099
Equity settled share based payment expense
271
319
Decrease in provisions
(1,428)
(1,149)
Movements in working capital:
Increase in stocks
(13,512)
(1,265)
Decrease/(increase) in debtors
5,842
(7,457)
(Decrease)/increase in creditors
(1,780)
5,684
Increase/(decrease) in deferred income
849
(1,215)
Cash generated from operations
10,989
14,123
31
Analysis of changes in net debt - group
30 January 2022
Cash flows
Exchange rate movements
28 January 2023
£'000
£'000
£'000
£'000
Cash at bank and in hand
26,568
1,429
(58)
27,939
Borrowings excluding overdrafts
(50,000)
-
-
(50,000)
(23,432)
1,429
(58)
(22,061)
- 49 -
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