Registered number:
FOR THE PERIOD ENDED 27 JANUARY 2024
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE PERIOD ENDED 27 JANUARY 2024
The directors present their annual report and financial statements for the 52 week period ended 27 January 2024 (2023: 52 week period ended 28 January 2023).
The Company achieved growth in the period, both overall and Like for Like (LFL), reflecting good progress on the key growth platforms of omnichannel in the UK market and category development, particularly Accessories and Men’s.
During the period the Company opened five full price stores and implemented operational improvements to the Dune London e-commerce platform to enhance the customer experience. This growth was against the backdrop of a challenging and unpredictable trading environment, with the impact of the rising cost of living, unseasonal weather and geopolitical instability, affecting demand for fashion footwear and accessories and accentuating consumer focus on newness and value. Cost inflation has also had a significant impact on profitability. Consequently, the Company’s earnings before interest, tax, depreciation, amortisation (EBITDA) and exceptional costs during the period were a loss of £0.5m (2023: profit of £2.7m). In response to this, the Company has implemented certain internal restructuring measures to simplify operations and rationalise its cost base.
The Company has a clear strategy for future growth that concentrates on the strategic pillars of brand elevation, focus on the customer, digital capability and making Dune London a truly global brand.
The Company will continue to elevate the brand through enhanced product and brand marketing and by offering a premium customer shopping experience. The Company is also making important strides in making its product, supply chain and operations more sustainable. There will be further investment in online operations and partnerships, with a particular focus on customer relationship management, to allow us to communicate with our customers in a more engaging and relevant way. We will also continue to open new stores in high footfall locations when we are able to secure attractive rental terms that allow us to make an acceptable return. Category development, in particular in Accessories and Men’s, offers a key platform for growth, as we drive awareness of our brand in these categories and strengthen our elevated product offering in Accessories. We will also further develop our product collections to allow the brand to optimise distribution opportunities across markets and channels. Overall, we see considerable opportunity to continue to grow the Dune London brand and improve profitability through new marketplace opportunities, investment in our e-commerce platform to make it best in class and having an expanding UK store estate. At the same time, we will manage our costs and cash to improve our position and remain flexible in response to changing conditions.
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STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 27 JANUARY 2024
In addition to turnover and EBITDA before exceptional costs, the principal key performance indicators that the directors use to assess performance are: (1) the size of our retail estate, (2) growth in Dune website sales and (3) like for like (LFL) retail sales, meaning sales achieved under circumstances comparable to the previous period.
There were 50 stores and 73 concessions at period end (2023: 47 stores and 76 concessions). Sales through the Dune website grew +2.3% year on year (2023: +0%), and total ecommerce sales grew by +3.9% (2023: +10.8%). LFL Retail sales for the period were +1.4% (2023: +17.3%).
The directors acknowledge their responsibility for the Company's systems of internal control, and for identifying, evaluating and managing the risks faced by the business. The principal risks and uncertainties are detailed below:
Uncertain trading environment The business continues to operate in an environment impacted by an increasingly complex set of external factors. Ongoing cost of living challenges, cost of goods inflation, energy price volatility and increased interest rates, along with the potential for further global geopolitical and economic instability, have combined to create a difficult and unpredictable trading environment which could negatively impact performance. The Company is mindful that there may be an adverse impact on demand and prioritises focus and discipline across the business on cost, range and availability. Product A primary challenge as a fashion retailer is to produce an attractive product range which is distinctive, relevant and affordable. The business has invested consistently in design and development to ensure that it delivers a range that is fashionable, comfortable and of excellent quality. There is also a focus on transitional products that are less dependant on seasonal weather changes. The buying team has developed long term relationships with a broad network of suppliers to ensure the product meets these goals and that the supply chain is robust and reliable. People The Company's employees are a key differentiator in delivering outstanding product ranges and providing excellent customer service. The business is dedicated to attracting, developing and retaining high quality people to achieve these goals. IT risk The Company is reliant on a suite of IT systems to manage and control the business. There are policies and procedures in place in order to safeguard the hardware, software and the data the Company holds. Data privacy and cyber security The Company is GDPR compliant and processes have been established to review the data protection implications of any new projects. The Board provides an ongoing review of cyber security essentials and ensures that our IT security infrastructure is appropriately implemented, tested, reviewed and improved. Liquidity The Company manages working capital very closely in order to maximise free cash flow available to invest in the future of the business. The Company’s debt position, available liquidity and cashflow projections are monitored and reported to the Board on at least a monthly basis. Treasury The business is exposed to foreign exchange transactional risk as it sources the majority of its stock from overseas suppliers in US Dollars and Euros. The Company’s policy is to hedge against the risk of adverse movements in exchange rates through the use of forward contracts.
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STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 27 JANUARY 2024
This section describes how the directors have had regard to the matters set out in section 172(1)(a) to (f) of the Companies Act 2006 in exercising their duty to promote the success of the Company for the benefit of its members as a whole. We consider the Company's major stakeholders to be our customers, employees, partners, suppliers and shareholders.
Having regard to the likely consequences of any decision in the long term The board is committed to strong corporate governance and holds regular meetings to ensure that the implications of its strategic decisions are carefully assessed. Day-to-day management and decision making is delegated to the executive management team, however the board sets the strategic direction and reviews performance closely to ensure that all key decisions are favourable to the long-term sustainable growth of the business. Having regard to the interests of the Company’s employees The Board considers our employees to be key to the success of the business and ensures that their interests are fully considered when strategic decisions are made. Communication with employees is made through update emails, bi-annual conferences and face-to-face meetings. Members of the Board are highly visible in the central support office and regularly visit stores and the distribution centre which effectively ensures that the Board stays alert to the views of the workforce. We support hybrid working and other flexible working arrangements and conduct regular surveys to ensure that people feel adequately supported. The executive management team have undertaken diversity and inclusion training during the year. The Board is committed to helping employees improve their skills and knowledge, and training and development is available across the business. Having regard to the need to foster the Company’s business relationships with external stakeholders The interests of customers are considered in key decisions relating to store openings and closures, website development, selection of product lines, pricing, selection and monitoring of suppliers to ensure quality, social compliance and safety standards. We communicate with our customers through our Customer Experience Team, in stores, through social media and through post purchase surveys, and we discuss customer feedback in our weekly trade meetings. The business has longstanding relationships with many of its suppliers and we work collaboratively to address any issues that arise. When onboarding new suppliers, financial and non-financial factors are considered to ensure we are working with the right suppliers. Having regard to the impact of the Company’s operations on the community and the environment The directors are committed to the Company being a responsible retailer by working towards lessening environmental impacts and taking care of the people that design, make and sell our products. The business has set ambitious targets for recycled, renewable and responsibly sourced materials. To reduce our carbon emissions we have moved to renewable electricity, we use sea transportation wherever possible and have made changes in store refits and in our central support office and distribution centre to reduce energy consumption. We are members of both Sedex and AmforiBSCI, and through these ethical trading platforms we have visibility of the social audits of our supplier factories. We are a corporate partner of the charity Mental Health UK. As well as fundraising, we champion the work they do. In addition, we provide in-kind logistics support to the charity Goods for Good which sources products to be sent to communities in need around the world.
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STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 27 JANUARY 2024
Having regard to the desirability of the Company maintaining a reputation for high standards of business conduct
The directors recognise the importance of operating a strong corporate governance framework and are committed to conducting business in an ethical and transparent manner. We operate a number of employee and supplier policies which strengthen group and supplier awareness of our expectations. Our teams know that there are effective systems and measures in place to address any issues. The Audit Committee exercises strong oversight over the Company’s activities in these areas. We are in regular contact with our suppliers and monitor compliance to the required standards of quality and social conditions. Having regard to the need to act fairly as between members of the Company The directors are aware of their responsibility to protect and manage its shareholders’ investment. Long-term shareholder value is considered when making all strategic and impactful decisions.
This report was approved by the board and signed on its behalf by.
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DIRECTORS' REPORT
FOR THE PERIOD ENDED 27 JANUARY 2024
The directors present their report and the financial statements for the period ended 27 January 2024.
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
−select suitable accounting policies and then apply them consistently;
−make judgments 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 financial statements;
−prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the period, after taxation, amounted to £5,484,326 (2023: profit £70,417).
No dividends were paid in the period (2023: £nil) to the parent company, Dune Topco Limited.
The following directors who served during the period were:
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DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 27 JANUARY 2024
For further details on how the board has regard to the interests of the Company's employees, please refer to the s172(1) Statement in the Strategic Report.
The Company has not disclosed information in respect of greenhouse gas emissions, energy consumption and energy efficiency action as it has been provided within the consolidated accounts of the parent entity, Dune Topco Limited.
For details on how the board has had regard to the impact of the Company's operations on the community and the environment, to the Company's business relationships with suppliers, customers and others and to maintaining a reputation for high standards of business conduct, please refer to the s172(1) Statement in the Strategic Report.
Simmons Gainsford LLP, the previous auditors, have transferred their audit business to Sumer Auditco Limited who will be deemed to have been reappointed pursuant to section 487 (2) of the Companies Act 2006 and continue in office.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DUNE GROUP LIMITED
We have audited the financial statements of Dune Group Limited for the period ended 27 January 2024, which comprise the Profit and loss account and other comprehensive income, the Balance sheet, the Statement of changes in equity and the related notes, including a summary of 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).
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DUNE GROUP LIMITED (CONTINUED)
The other information comprises the information included in the annual report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the 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 Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DUNE GROUP LIMITED (CONTINUED)
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 Auditors' 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 order to identify and assess the risks of material misstatements, including fraud and non-compliance with laws and regulations that could be expected to have a material impact on the financial statements, we have considered: - the results of our enquiries of management and those charged with governance of their assessment of the risks of fraud and irregularities; - the nature of the Company, including its management structure and control systems (including the opportunity for management to override such controls); - management's incentives and opportunities for fraudulent manipulation of the financial statements including the Company's remuneration and bonus policies and performance targets; and - the industry and environment in which it operates. We also considered UK tax and pension legislation and laws and regulations relating to employment and the preparation and presentation of the financial statements such as the Companies Act 2006. Based on this understanding we identified the following matters as being of significance to the entity: - laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards, Company Law, tax and pension legislation and distributable profits legislation; - the timing of the recognition of commercial income; - management bias in selecting accounting policies and determining estimates; - recoverability of debtors; and - the requirement to impair its stocks and investments and the amount of any such impairment. We communicated the outcomes of these discussions and enquiries, as well as consideration as to where and how fraud may occur in the entity, to all engagement team members. Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised: - enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; - enquiries with the same concerning any actual or potential litigation or claims; - discussion with the same regarding any known or suspected instances of non-compliance with laws and regulation and fraud; - assessment of matters reported to management and the result of the subsequent investigation; - obtaining an understanding of the relevant controls during the period; - obtaining an understanding of the policies and controls over the recognition of income and testing their implementation during the period; - review documentation relating to compliance with the regulations relating to health and safety including health and safety certificates; fire assessment reports and the Company's internal audit reports;
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DUNE GROUP LIMITED (CONTINUED)
- challenging assumptions made by management in their specific accounting policies and estimates, in
particular in relation to depreciation of tangible fixed assets; impairment of investments; carrying value of stock; onerous lease provision; and deferred tax asset; - identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or crediting revenue or cash; - assessing the recovery of debtors in the period since the balance sheet date and challenging assumptions made by management regarding the recovery of balances which remain outstanding; - reviewing the financial statements for compliance with the relevant disclosure requirements; - performing analytical procedures to identify any unusual or unexpected relationships or unexpected movements in account balances which may be indicative of fraud; - reviewing the minutes of board meetings and correspondence with HMRC; and - evaluating the underlying business reasons for any unusual transactions. No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
14th Floor
33 Cavendish Square
W1G 0PW
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PROFIT AND LOSS ACCOUNT AND OTHER COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 27 JANUARY 2024
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BALANCE SHEET
AS AT 27 JANUARY 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 37 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 27 JANUARY 2024
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Dune Group Limited is a company limited by shares incorporated in England and Wales. The registered office and principal trading address is 4th Floor, The White Building, 11 Evesham Street, London, W11 4AJ.
2.Accounting policies
These financial statements have been prepared under the historic cost convention, unless otherwise specified in these accounting policies, and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and the Companies Act 2006. The Company's functional currency and the presentational currency of these financial statements are sterling.
The Company has not prepared group accounts as it is exempt from the requirement to do so by section 400 of the Companies Act 2006 as it is a subsidiary undertaking of Dune Topco Limited, a company incorporated in England and Wales, and is included in the consolidated accounts of that company which are available to the public and may be obtained from 4th Floor, The White Building, 11 Evesham Street, London, W11 4AJ. In these financial statements, the Company is considered to be a qualifying entity (for the purpose of this FRS) and has applied the exemptions available under FRS 102 in respect of the following disclosures: - Cash Flow Statement and related notes; and - Key Management Personnel compensation. The accounting policies set out below, unless otherwise stated, have been applied consistently to all periods presented in these financial statements.
The financial statements have been prepared on a going concern basis which assumes that the Company is able to meet its obligations as they fall due for the foreseeable future. In adopting the going concern basis for preparing the financial statements, the Directors have considered the business activities as well as the Company's principal risks and uncertainties.
Management has prepared forecasts to model the business including profit and cash projections for the next three years. They have also performed a formal review of the headroom against banking covenants. As a result of this process, the Directors believe that the group can generate sufficient profitability and has sufficient cashflow liquidity available to meet the covenant and all liabilities as they fall due for the next 12 months. The Company therefore continues to adopt the going concern basis in the financial statements.
Transactions in foreign currencies are translated to sterling at the system rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to sterling at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
2.Accounting policies (CONTINUED)
The Company 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 Company's Balance sheet when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. Equity instruments are any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
2.Accounting policies (CONTINUED)
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
2.Accounting policies (CONTINUED)
Cash flow hedges
Where the hedged risk is the foreign exchange risk in a firm commitment or a highly probable forecast transaction, the Company recognises the effective part of any gain or loss on the derivative financial instrument in other comprehensive income (OCI). Any ineffective portion of the hedge is recognised immediately in the profit and loss account. The hedging gain or loss recognised in OCI is reclassified to profit or loss when the hedged item is recognised in the profit and loss account or when the hedging relationship ends.
Tangible fixed assets are stated at cost less accumulated depreciation and impairment provisions. Such cost includes costs directly attributable to making the asset capable of operating as intended.
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the date of acquisition, of each asset evenly over its expected useful life, as follows:
The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
2.Accounting policies (CONTINUED)
Financial assets (including trade and other debtors)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. For financial instruments measured at cost less impairment, an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to be recognised through the unwinding of the discount. Impairment losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the profit and loss account. Non-financial assets The carrying amounts of the Company's non-financial assets are reviewed at each reporting date to determine whether there is any 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 generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit"). 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 the profit and loss account. Impairment losses recognised in respect of CGUs 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.
Page 18
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
2.Accounting policies (CONTINUED)
Short term employee benefits
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. Defined contribution plans and other long term employee benefits A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees. Termination benefits Termination benefits are recognised as an expense when the Company is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an Offer made to encourage voluntary redundancy. If benefits are payable more than 12 months after the reporting date, then they are discounted to their present value.
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 profit and loss over the term of the lease as an integral part of the total lease expense. Interest receivable and Interest payable Interest income and interest payable are recognised in profit or loss as they accrue, using the effective interest method.
Page 19
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
2.Accounting policies (CONTINUED)
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 adjustment to tax payable in respect of previous periods. Taxable profit differs from net profit as reported in the profit and account because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. 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 and 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, branch, joint ventures 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 disallowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense. 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. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Provisions for onerous leases are recognised when the Company believes that the unavoidable costs of meeting or exiting the lease obligations exceed the economic benefits expected to be received under the lease.
Page 20
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
2.Accounting policies (CONTINUED)
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. Critical judgements The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements: Onerous lease provision Determination of whether a loss is unavoidable requires areas of judgement such as consideration of potential future investment decisions, the possibility of sub-letting, local conditions which may be impacting on current performance and the opportunity to surrender a lease back to the landlord. Additionally, some estimation is required in determining the future EBITDA performance of each site and the potential to exit leases earlier than the expiry date. Impairment of assets Property, plant and equipment is reviewed tor impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount of an asset or a cash generating unit is determined based on value-in-use calculations prepared on the basis of management's assumptions and estimates in the period. Where the recoverable amount of the cash generating unit is negative, an impairment loss is recognised in the profit and loss account. Financial instruments The Company uses derivative financial instruments in the form of contracts for the forward purchase of US Dollars and Euros. These grant the Company the ability to buy foreign currency at a fixed price over the life of the contracts. The fair value of these contracts as at the balance sheet date has been calculated using an estimated forward rate as at that date. This forward rate has been calculated using the interpolated zero coupon rates based upon the then money market and swap interest rates for each currency pair as reported by ICE Benchmark Administration Limited and the Financial Times respectively. Deferred tax asset Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Management uses judgement in estimating whether there will be sufficient taxable profits in the future to recognise a deferred tax asset. Management will also need to make estimates about the expected timing of reversal of the deductible and taxable temporary differences when considering whether a deferred tax asset can be recognised. The timing of the reversal of deferred tax asset on capital allowance has been estimated based on the longevity of the business's operations. Key sources of estimation uncertainty The directors are of the view that there are no estimates or assumptions in addition to the above which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities.
Page 21
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 22
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 23
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 24
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
8.Taxation (CONTINUED)
Page 25
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 26
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 27
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 28
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 29
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 30
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Called up share capital - represents the nominal value of shares that have been issued.
Cashflow hedge reserves - comprises the movement in fair value of derivatives on the balance sheet. Retained earnings - includes all current and prior period retained profits and losses.
The Company together with its group entities, Dune Holdings Limited, Dune International Limited, Dune Brand Limited and Dune Topco Limited, have given a cross guarantee to its lender for group facilities and borrowings. At the period end, there are no borrowings in the other group entities (2023: £nil).
Page 31
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 32
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 33
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
The immediate parent is Dune Topco Limited, a company registered in England and Wales and the ultimate controlling parties are Daniel and Anne Rubin, directors.
The largest group in which the results of the Company are consolidated is that headed by Dune Topco Limited. The consolidated financial statements of the group are available to the public and may be obtained from 4th Floor, The White Building, 11 Evesham Street, London, W11 4AJ.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 35
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
Page 36
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 27 JANUARY 2024
The following table indicates the periods in which the cash flows associated with cash flow hedging instruments are expected to occur as required by FRS 102.12.29(a) for the cash flow hedge accounting models:
The following table indicates the periods in which the cash flows associated with cash flow hedging instruments are expected to affect the profit and loss account:
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