The directors present the strategic report for the period ended
The principal activity of the company is that of an investment holding company which is part of the Genesco Inc. group.
The company was incorporated on 3 June 2010 and its financial year ends on the Saturday closest to 31 January. The company has not traded during the period or the preceding financial period. During this time, the company received no income and incurred no expenditure.
In view of its limited activities, the company is only exposed to risks arising from:
Investment risk, in that the value of its investment in Schuh (Holdings) Limited could fall below its historical cost carrying value. The Schuh trading Group 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. The carrying value of investments is reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
Specific investment risk exists due to the UK decision to exit the EU with the end of the transition period on 31 December 2020. The Schuh Group is exposed to Brexit risk due to trading within the Republic of Ireland ('ROI'). The movement of inventory from the UK to stores in Ireland is now subject to additional operating costs, as well as potential delays that impact the trading in ROI, which could adversely affect Schuh Group’s revenues and operating income. To mitigate this impact, Schuh Group’s management opened a distribution center within the ROI.
Liquidity risk, the company 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.
Financial risk management objectives and policies
The company does not permit trade in any financial instruments or derivatives.
Measurement of the company's performance is consistently applied and control is exercised by local and divisional management. The company has a budgeting system in place whereby actual performance is measured against budget on a monthly reporting timetable. As the principal activity of the company is that of an investment holding company, management has not assigned any key performance indicators.
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.
As the principal activity of the company is to act as an intermediate holding company, the company has no employees and no external customers or suppliers. Therefore, the Board primarily considers the interest of its ultimate parent company, Genesco Inc., with regard to performing their duties under section 172. Board meetings are held regularly where the company’s activities are considered and decisions are made. All Board decisions made during the year were to promote the success of both the company and its ultimate parent company and were in line with the strategic goals and objectives of the group. All directors receive information to ensure that they have regard to section 172 when making relevant decisions.
The Directors have determined that there is no material impact from climate change known about now or that could arise in the future given the principal activity of the company is that of an investment holding company which is part of the Genesco Inc. group. The company has no active trade.
On behalf of the board
The directors present their annual report and financial statements for the period ended 28 January 2023.
The results for the period are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The company expects similar activity in the 2024 financial period, continuing as a holding company.
The auditor, Johnston Carmichael LLP, were appointed as auditors in the period and are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Basis for 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 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.
Other information
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 strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor's report.
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.
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to the 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:
UK GAAP
Companies Act 2006
Corporation Tax legislation
We gained an understanding of how the 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, external inspections, relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the 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:
Management override of controls
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 group 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;
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 member 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 member those matters we are required to state to the member 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 member for our audit work, for this report, or for the opinions we have formed.
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
There are no items of other comprehensive income in the current or prior period.
Schuh Group Limited is a private company limited by shares incorporated in Scotland. The registered office is 1 Neilson Square, Deans Industrial Estate, Livingston, West Lothian, United Kingdom, EH54 8RQ.
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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements (where applicable to the company):
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Genesco Inc. These consolidated financial statements are available from its registered office, 535 Marriott Drive, Nashville, TN 37214, USA.
The company has taken advantage of the exemption under section 401 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Schuh Group Limited is a wholly owned subsidiary of Genesco Inc and the results of Schuh Group Limited are included in the consolidated financial statements of Genesco Inc which are available from that company's registered address which is outlined above.
The company prepares its financial year end to the Saturday closest to 31 January. For the current reporting period this has resulted in the financial statements being prepared for the period from 29 January 2022 to 28 January 2023. The comparative financial statements, prepared on the same basis, cover the period from 31 January 2021 to 29 January 2022 and as a result the comparative results (including related notes) are not directly comparable.
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 company after deducting all of its liabilities.
Basic financial liabilities, including certain creditors, 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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’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.
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.
At each reporting period end date, the directors review the carrying value of the company's fixed asset investments to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). The assessment of recoverable amount involves judgement over net sales value and future cash generation attributable to the underlying assets. The carrying value of fixed asset investments at the reporting date is outlined at note 7.
Fees payable to the company's auditor have been borne by Schuh Limited, the company's subsidiary undertaking.
Due to the principal activity of being a holding company, the company does not have any employees.
No director received payment, or was due to receive payment, from the company for their services provided during the period. These costs are borne by other group companies. The directors consider that the level of their qualifying services provided to this company is inconsequential in both 2023 and 2022.
The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
Deferred tax not recognised
The company has not recognised deferred tax assets in respect of certain tax losses carried forward as at 28 January 2023 on the basis that the timing during which tax losses could be regarded as recoverable against future profits cannot be determined with reasonable certainty. The unprovided deferred tax asset is estimated at £258k (2022 - £258k).
Change in tax rate
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 company's future tax charge in the UK and as the 25% tax rate was substantively enacted prior to the reporting date, deferred tax expected to unwind after 1 April 2023 has been calculated at 25% as opposed to the current tax rate of 19%.
Details of the company's subsidiaries at 28 January 2023 are as follows:
Genesco Schuh GmbH was previously a subsidiary and was dissolved in the year.
The company's immediate parent undertaking is
Genesco Inc.
535 Marriott Drive
Nashville, TN 37214
USA