The directors present the strategic report for the period ended 28 January 2024.
The Directors are pleased with the performance of the business, although sales across the business decreased by (1.3%) this was against a very challenging economic backdrop, gross margin % has increased by 1.6%pts to 62.2%. There are ongoing pressures in relation to sourcing materials and increased costs relating to transport. As a Group, the directors are continuing to work with business partners in our supply chain and are balancing a tight control of costs with investment to support the growth of the business for the future.
We have plans to continue to enhance our online offerings, improve the customer shopping experience, both online and in store, and to focus on delivering our key services where customers want it the most. We have enhanced our Brand portfolio, we launched M&Co online in June 2023 and have opened the first M&Co store at Newton Mearns in May 2024 and we acquired the Evans brand and residual stock in August 2023, this launched online in September 2023.
Brexit
Uncertainties and complications relating to Brexit have inevitably impacted upon the Group. Brexit was a significant event for the country, the implications of which continue today. The Group has reviewed the effects to date and addressed ongoing trading relationships.
We have many EU based customers and we anticipate they will remain good customers and will continue to grow in numbers with us.
We have a significant number of EU nationals working for the group who we welcome and trust they will remain loyal to the group.
We believe we can work around any friction in the delivery of our sales to offer a competitive service.
Of key concern to the Group is US$ price and as necessary we continue to take all reasonable steps to mitigate the risk with forward currency contracts.
The Group is monitoring the impact and potential requirements of these risks and is well placed with its multichannel distribution offering and localised sourcing opportunities. We anticipate being able to react and mitigate where possible.
Inflation
The Group monitoring the effect of inflationary increases in costs for consumers, our product is competitively priced and we are committed to providing value for money.
The future of the high street
As a result of the changing high street, we are actively revisiting all leases with the objective of achieving a sustainable operating environment in conjunction with the landlords. We are moving towards a more equal risk based approach where rent is dependent upon store performance and the ability to end arrangements, without prolonged commitment, is incorporated into the lease. The new approach is creating a more streamlined business which allows us to maintain a high street presence which otherwise may not have been viable.
We are pleased with the performance of the brands within the Yours Clothing portfolio, existing brands have performed well in the challenging environment of cost of living and post Brexit whilst new brands have achieved a promising start. The Group launched M&Co online in June 2023,and acquired the Evans brand in August 2023. The challenging nature of high street retail and our move towards a more equal risk-based approach on leases has resulted in the closure of 6 (2023: 16) stores. Since the period end, we have closed a further 1 store and opened a new M&Co Branded store in Newton Meares.
In addition:
The development of distribution partners both wholesale and affiliate have been a key focus for 23/24 and this is continuing into 24/25 to allow new reach for our offering.
The Group believes in profitable trading on the high street and to support this has developed the ability to despatch online orders from stores.
Our key performance indicators used in the management of the business continue to be turnover, gross margin, stock holding, overhead cost percentage and employee headcount.
KPI | 2024 | 2023 | Variance | Commentary |
Turnover | 230,796,006 | 233,771,190 | -1.3% | See the above fair review of the business |
Gross margin | 62.2% | 60.6% | +1.6% | See the above fair review of the business |
Stock holding | 37,110,406 | 24,444,462 | +52% | Increase due to support increased trading activities |
*Overhead cost % | 46.3% | 39.1% | +7.2% | Increase due to support increased trading |
Headcount | 1,004 | 966 | +4% | Increased trading and brand activity |
*excludes exceptional cost of Director retirement costs
The directors recognise their duties under section 172(1) (a) to (f) of the Companies Act 2006 and at all times act in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole for the long term.
We have built and maintain strong relationships with our customers, suppliers and producers. We recognise that the ongoing relationship with our customers and key business partners are key to the success of our ongoing business. We therefore enter into dialogue with those parties and work with them wherever practical and mutually beneficial. We operate a customer service call centre with email feedback opportunities to engage with our customers and we have dedicated supplier service managers. In doing so we like to maintain our business standards to the highest ethical standards complying with rules and regulations not just in the UK, but also in the jurisdictions in which we operate throughout the world.
We are strong advocates in supporting the community locally and further afield. Support for charitable causes this year has included fundraising in support of the crisis in Ukraine with the backing of the British Red Cross and an ongoing community partnership with Barnados to support local families in need of assistance to cover emergency needs. This is in addition to supporting national fund raising drives for charities selected by its employees as well as being a bronze award holder for the level of charitable contributions donated to the charities trust through the Group assisted payroll giving scheme.
Understanding and clear communication remains key to our relationship with our Bankers and professional advisors, together they offer valued experienced guidance.
We are an equal opportunity employer and continue to invest in our people and their working conditions. We increased our standards of cleaning and introduced additional measures to help protect our staff and any other individuals, from the impact of the recent pandemic. We look to continue to improve employee conditions with the development of additional warehouse space which contains improved staff facilities and working conditions in the new year 23/24. We seek to identify training and development opportunities and support staff where possible to progress in their employment within the organisation. We offer a confidential employee support service and remain committed to good human relations and working practices in all areas of our business.
We endeavour to minimise our impact upon the environment and to contribute positively wherever possible. We recycle all plastics and cardboard throughout our stores, warehouse and offices. We utilise Hybrid cars to reduce emission as well as having installed solar panels which supply non-polluting electricity back to the National Grid. The Group actively follows up on our Energy Savings Opportunity Scheme (ESOS) Reports.
On behalf of the board
The directors present their annual report and financial statements for the period ended 28 January 2024.
The results for the period are set out on page 10.
Ordinary dividends were paid amounting to £1,431,120 (2022: £1,072,435). The directors do not recommend payment of a further dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
Liquidity risk arises from the Group's management of working capital and the repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group policy is to ensure that there will be sufficient cash to meet its liabilities as they fall due. To achieve this cash balances are maintained at a level to meet expected requirements for at least the next month. The Board regularly receives both short and long term cash flow projections. At the end of the period these projections indicated that the Group is expected to have sufficient liquid resources to meet its obligations.
Market risk arises primarily from the Group's use of foreign currency financial instruments. It is the risk that the fair value of future currency cash flows from financial instruments will fluctuate because of changing foreign exchange rates. The Group is predominately exposed to currency risk on purchases made from suppliers in the Far East, but denominated in US $. The Group is also increasingly exposed to Sales in the Euro-zone and elsewhere, denominated in Euro €. Some purchases are made from suppliers denominated in Euro € and for the moment these perform a natural hedge.
Credit risk is the risk of financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligation. Being a retailer, credit sales are of a minimum, but where goods are sold on credit an appropriate credit assessment is implemented before entering a contract. Trade receivables predominantly relate to balances due from trusted customer payment platforms and selected reputable trade customers. The accounts are actively monitored, and minimal credit losses are expected on such contracts. Credit risk also arises from cash and cash equivalents and deposits with banks. Only highly rated banks are accepted. We bank with Barclays Bank Plc and Allied Irish Banks Plc whose current Moodys Credit Ratings are grade A. The Group does not enter into arrangements to manage credit risk.
The group's policy is to consult and discuss with employees, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
In accordance with the company's articles, a resolution proposing that be reappointed as auditor of the group will be put at a General Meeting.
This statement incorporates the performance of the UK activities of the AK Retail Holdings Limited and its subsidiary; Yours Clothing Limited.
The Group is committed to control and where possible reduce greenhouse gas emissions. We have already taken a number of steps to reduce our energy consumption from fossil fuels, including upgrading to LED in stores, all of our company cars are petrol electric hybrids and vehicles are serviced in accordance with manufacturer’s recommendations, we have installed smart meters in the majority of our stores, and we have a large solar PV array installed at our Head Office to supply non-polluting electricity back to the National Grid.
Our greenhouse gas emissions performance and energy usage for the period ended 28 January 2024 is:
| kWh Energy Consumed YTD | tCO2e Emitted YTD | Intensity Ratio | ||||||
| Electricity | Natural Gas | Transport | Total | Scope 1 | Scope 2 | Scope 3 | Scope 1+2 | |
2023-2024 | 4,749,288 | - | 319,554 | 5,068,842 | 112 | 983 | - | 1,096 | 1.11 |
2022-2023 | 5,042,254 | - | 314,072 | 5,356,326 | 148 | 975 | - | 1,123 | 1.23 |
Intensity ratio tCO2e/FTE (tonnes of carbon dioxide equivalent / full time equivalent employees) kWh=kilowatt hour
The greenhouse gas emissions and climate change performance is aligned with the GHG Protocol methodology. The GHG Protocol establishes comprehensive global standardised frameworks to measure and manage greenhouse gas (GHG) emissions from private and public sector operations, value chains and mitigation actions. The framework has been in use since 2001, and forms a recognised structured format, to calculate a carbon footprint. Emissions Factors Applied – DEFRA 2021.
We have audited the financial statements of AK Retail Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 28 January 2024 which comprise the group profit and loss account, 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, the company 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).
Basis for opinion
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's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company 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.
Other information
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' report 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.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or 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.
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 parent company or to cease operations, or have no realistic alternative but to do so.
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.
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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team:
obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the group operates in and how the group are complying with the legal and regulatory framework;
inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;
discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the group's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the period was £23,540,207 (2023 - £32,641,593).
AK Retail Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Newcombe House, Bakewell Road, Orton Southgate, Peterborough, PE2 6XU.
The group consists of AK Retail Holdings Limited and all of its subsidiaries.
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 £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company AK Retail Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 28 January 2024.
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.
At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.
Turnover is recognised at the fair value of the consideration received or receivable for sale of goods in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, 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. The recognition for store sales is deemed to be the completion of transaction. For internet sales this is the anticipated receipt of the goods by the customer. For all other revenue streams the recognition point is dictated by the terms and conditions forming the sales contract. Where the buyer has a right of return and has subsequently exercised that right, an appropriate provision is made against revenue.
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.
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.
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.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets 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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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.
Basic financial assets, which include 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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, 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.
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.
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, including creditors 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.
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.
Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
An onerous contact is considered to exist where the unavoidable costs exceed any economic benefit to be received from the contract. The present obligation under an onerous contract is measured and recognised as a provision.
Provision for the expected cost of customer right of return under sale of goods legislation and group terms and conditions is recognised at the period end. The provision is the director's best estimate of the amounts required to settle any such obligation.
Where the group has incurred a liability to make good a leasehold property, at the expiration of the lease or on leaving an estimate is made for that cost and a provision for such amount is spread over the life of the lease.
In any circumstances where there is a potential liability and the amount cannot be estimated reliably then a contingent liability is disclosed.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Short-term investment
Short-term investment includes deposits held with banks for maturity date more than three months and less than twelve months.
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.
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.
The Group has contractual obligations to return leasehold properties to their original state prior to return to the landlord at the end of the lease. The Group estimates the amount of this future liability based upon a combination of historical experience of vacating stores and a best estimate of the likely future costs to be incurred in making good the Group property portfolio. The estimate is calculated store by store as a specific amount with adjustment made for any special circumstances relating to an individual property. The carrying value is disclosed in note 24.
The Group determine the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has many lease contracts that include extension and termination options. The Group evaluates whether it is reasonably certain whether or not to exercise option to renew or terminate the lease. It considers all relevant economic factors as to whether to exercise either renewal or termination.
The Group provides for the full cost price of specific stock items where they are identified as damaged or not fit for sale. The Group also provides for stock shrinkage, based on historically observed rates of loses, for the period between the most recent stock take and the period end. Slow moving stock items are provided for in full and items identified with a cost price in excess of current sales price, based on managements understanding of the products and market, are provided for to reduce the stock value to the recoverable amount.
Return provision
The Group estimates Store returns by applying a return rate percentage, based on historical experience, to sales in the period leading up to the period end. Online sales return provision is based upon the actual return of sold items following the period end.
Other provisions
The Government grant income received by the Group is subject to UK subsidy control conditions, as well as specific conditions attached to the grants themselves. The unprecedented nature of Covid-19 support funding means application of these conditions is open to a degree of interpretation. Where the Group has received income in connection with government grants but does not believe it will comply with all of the conditions, a provision is made for the Group's best estimate of amounts that will be repaid but the actual amount that will be repaid is not certain. The amount of £2,652,459, as was provided for in the previous financial period, is included within accruals and deferred income in relation to Government Grants.
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2023 - 1).
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The actual charge 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:
Listed investments comprise publically traded shares. The shares have been carried at their closing price as at the reporting date using data obtained from the Financial Times.
Investment property comprises a residential property held for rental income and capital appreciation. The fair value of the investment property has been arrived at on the basis of a valuation carried out by Tailor Made Estate Agency, who are not connected with the company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
Details of the company's subsidiary at 28 January 2024 is as follows:
During the period, the Company deposited £50m into four fixed term deposits with Santander. The maturity dates of the deposit range from 22 April 2024 and 13 October 2024.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset /liability set out above is expected to reverse within 12 months.
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. At the balance sheet date, £90,245 (2023: £64,787) was outstanding.
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:
The Group has taken advantage of the exemption available under FRS 102 para 33.1A not to disclose transactions entered into between two or more members of a group.
All key management personnel are also Directors. Please see note 8 for the Directors remuneration.
At the period end, the Group and the Company has made provision for non-recoverability of a loan of £375,000 given to Spalding United Football Club (2017) Ltd. Mr A R Killingsworth is a director and majority shareholder of Spalding United Football Club (2017) Ltd.