Company registration number 09469512 (England and Wales)
UNDERCOVER BROTHERS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 FEBRUARY 2024
UNDERCOVER BROTHERS LTD
COMPANY INFORMATION
Directors
I Ahmed
N Ahmed
R Ahmed
Company number
09469512
Registered office
Unit 2 Western Avenue Business Park
Mansfield Road
Acton
London
W3 0BZ
Auditor
Mercer & Hole LLP
21 Lombard Street
London
EC3V 9AH
UNDERCOVER BROTHERS LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Group statement of comprehensive income
9
Group balance sheet
10 - 11
Company balance sheet
12
Group statement of changes in equity
13 - 14
Company statement of changes in equity
15
Group statement of cash flows
16
Notes to the financial statements
17 - 40
UNDERCOVER BROTHERS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 1 -

The directors present the strategic report for the year ended 29 February 2024.

Review of the business

Turnover increased 12.9% to £47,675,279 from £42,218,543 in 2023. The closing net liabilities were £1,339,092 (2023: net assets of £113,195).

 

Average headcount decreased slightly to 102 (2023: 111).

Principal risks and uncertainties

The group's principal risks are as follows:

 

Overview

The directors are responsible for determining the level of risk acceptable to the group. This is subject to regular review. The group seeks to mitigate its risks through the application of strict controls and monitoring at the operational level.

 

Credit risk

Credit risk is the risk that customers will not be able to meet their obligations as they fall due. The directors conduct regular credit reviews of customers, revising terms as necessary and maintaining continuous contact with them.

 

Liquidity risk

The group continues to fund itself for both day to day operating activities and capital investment requirements through self-generated cash flow. This is managed through regular reviews of the group's working capital levels.

 

Foreign currency risk

Whilst sterling is the functional currency of the group it also enters into transactions conducted in multiple currencies, primarily US dollars and Euros. Exposure to fluctuating foreign exchange rates against sterling is mitigated by an internal hedge which arises because the group receives and pays in these non-sterling currencies. The group receives sufficient sterling amounts to pay its operational costs and therefore doesn't convert US dollars or Euros into sterling at unfavourable rates. The directors monitor on an ongoing basis the currency risk arising to the Company and ensures that risk remains at an acceptable level.

 

Price risk

While it is impossible to exclude the impact of price fluctuations altogether, the group uses its strong cash flow to negotiate favourable pricing to complement both long standing and new suppliers in our stock procurement.

Key performance indicators

The group's key financial and other performance indicators during the year were as follows:

 

            2024        2023    

 

Turnover         47,675,279    42,218,543

 

Operating profit        2,083,136    1,664,093    

Turnover growth %    13        14        

 

UNDERCOVER BROTHERS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 2 -

Going concern

The directors have, at the time of approving the financial statements, a reasonable expectation that the group and parent company will have adequate resources to continue in operational existence for the foreseeable future. The directors have therefore continued to adopt the going concern basis in preparing the group's financial statements in light of the group profit for the year of £593,022 (2023: £483,342), notwithstanding group net liabilities of £1,339,092 (2023: net assets of £113,195) and company net liabilities of £5,954,839 (2023: £3,494,664).

 

The group continues to generate organic cashflow through group company operations, and the directors elected to pay dividends totalling £nil (2023: £nil) during the year.

 

The directors have reviewed current performance, EBITDA forecasts and the cashflow forecasts and are satisfied that the group’s forecasts, taking account of scenario modelling performed, show that the group and parent company will continue in operation and meet their liabilities as they fall due for the foreseeable future and at a minimum for 12 months from the date of signing the financial statements.

 

The directors have therefore continued to adopt the going concern basis in preparing the group’s financial statements.

Section 172 statement

The directors are aware of their duty under s.172 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 group for the benefit of its members as a whole and, in doing so, to have regard (amongst other matters) to:

 

 

(“the s.172 matters”)

The directors of the group have sought to balance the needs of its members with the s.172 matters throughout the year, ensuring that the group’s reputation for high standards of conduct are maintained and through strong relationships with employees and colleagues. The directors of the group have a duty to promote the success of the group, and this relies on smooth operations and the support and joint efforts of management. Thus, effective communication and interaction are indispensable in the group’s business operations.

On behalf of the board

N Ahmed
Director
27 March 2025
UNDERCOVER BROTHERS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 3 -

The directors present their annual report and consolidated financial statements for the year ended 29 February 2024.

Principal activities

The principal activity of the group continued to be that of the sale of branded consumer products and rare and collectible sneakers and streetwear.

Results and dividends

The results for the year are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

I Ahmed
N Ahmed
R Ahmed
Post reporting date events

After the balance sheet date on 11 June 2024 Undercover Brothers Ltd granted options to key management over 3.5% of the share capital of the Company.

 

Post year end the retail division of the Group closed its consignment stores in Paris, France and Riyadh, Saudi Arabia whilst opening another in Abu Dhabi, UAE.

Auditor

The auditor, Mercer & Hole LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Energy and carbon report

As the parent 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.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
N Ahmed
Director
27 March 2025
UNDERCOVER BROTHERS LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 4 -

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

UNDERCOVER BROTHERS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF UNDERCOVER BROTHERS LTD
- 5 -
Opinion

We have audited the financial statements of Undercover Brothers Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 29 February 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 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).

In our opinion the financial statements:

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:

UNDERCOVER BROTHERS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF UNDERCOVER BROTHERS LTD
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and 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:

Responsibilities of directors

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.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

We gained an understanding of the legal and regulatory framework applicable to the parent company and the industry in which it operates and considered the risk of acts by the parent company that were contrary to applicable laws and regulations, including fraud. These included, but were not limited to, the Companies Act 2006, employment law, and tax legislation.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure and management bias in accounting estimates.

Audit procedures performed by the engagement team included:

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non- compliance and cannot be expected to detect non-compliance with all laws and regulations.

UNDERCOVER BROTHERS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF UNDERCOVER BROTHERS LTD
- 7 -

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.

Andrew Turner (Senior Statutory Auditor)
For and on behalf of Mercer & Hole LLP
27 March 2025
Chartered Accountants
Statutory Auditor
21 Lombard Street
London
EC3V 9AH
UNDERCOVER BROTHERS LTD
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
47,675,279
42,218,543
Cost of sales
(28,241,297)
(25,505,814)
Gross profit
19,433,982
16,712,729
Administrative expenses
(17,351,287)
(15,048,641)
Other operating income
441
5
Operating profit
4
2,083,136
1,664,093
Share of results of associates
(1,483)
(12,194)
Interest receivable and similar income
8
80
119
Interest payable and similar expenses
9
(881,495)
(576,569)
Profit before taxation
1,200,238
1,075,449
Tax on profit
10
(607,216)
(592,107)
Profit for the financial year
593,022
483,342
Profit for the financial year is attributable to:
- Owners of the parent company
174,761
197,939
- Non-controlling interests
418,261
285,403
593,022
483,342
UNDERCOVER BROTHERS LTD
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 9 -
2024
2023
£
£
Profit for the year
593,022
483,342
Other comprehensive income
Currency translation gain/(loss) taken to retained earnings
43,586
(5,435)
Total comprehensive income for the year
636,608
477,907
Total comprehensive income for the year is attributable to:
- Owners of the parent company
227,798
192,619
- Non-controlling interests
408,810
285,288
636,608
477,907
UNDERCOVER BROTHERS LTD
GROUP BALANCE SHEET
AS AT 29 FEBRUARY 2024
29 February 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Goodwill
11
489,544
663,823
Other intangible assets
11
4,040,183
3,374,839
Total intangible assets
4,529,727
4,038,662
Tangible assets
12
5,245,123
3,549,194
Investments
13
47,954
49,437
9,822,804
7,637,293
Current assets
Stocks
18
7,856,832
9,456,153
Debtors
19
20,178,417
15,506,549
Cash at bank and in hand
1,797,476
1,430,396
29,832,725
26,393,098
Creditors: amounts falling due within one year
20
(40,658,684)
(33,738,855)
Net current liabilities
(10,825,959)
(7,345,757)
Total assets less current liabilities
(1,003,155)
291,536
Creditors: amounts falling due after more than one year
21
(225,819)
(52,588)
Provisions for liabilities
Deferred tax liability
24
(110,118)
(125,753)
(110,118)
(125,753)
Net (liabilities)/assets
(1,339,092)
113,195
Capital and reserves
Called up share capital
26
63
63
Other reserves
337,871
337,871
Profit and loss reserves
(2,364,607)
(3,194,515)
Equity attributable to owners of the parent company
(2,026,673)
(2,856,581)
Non-controlling interests
687,581
2,969,776
(1,339,092)
113,195
UNDERCOVER BROTHERS LTD
GROUP BALANCE SHEET (CONTINUED)
AS AT 29 FEBRUARY 2024
29 February 2024
- 11 -
The financial statements were approved by the board of directors and authorised for issue on 27 March 2025 and are signed on its behalf by:
27 March 2025
N Ahmed
Director
Company registration number 09469512 (England and Wales)
UNDERCOVER BROTHERS LTD
COMPANY BALANCE SHEET
AS AT 29 FEBRUARY 2024
29 February 2024
- 12 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
12
1,211,907
1,546,234
Investments
13
4,890,097
4,890,097
6,102,004
6,436,331
Current assets
Stocks
18
3,233,978
4,848,866
Debtors
19
27,851,005
31,097,272
Cash at bank and in hand
41,123
242,619
31,126,106
36,188,757
Creditors: amounts falling due within one year
20
(43,138,479)
(45,978,429)
Net current liabilities
(12,012,373)
(9,789,672)
Total assets less current liabilities
(5,910,369)
(3,353,341)
Creditors: amounts falling due after more than one year
21
(44,470)
(50,277)
Provisions for liabilities
Deferred tax liability
24
-
0
91,046
-
(91,046)
Net liabilities
(5,954,839)
(3,494,664)
Capital and reserves
Called up share capital
26
63
63
Profit and loss reserves
(5,954,902)
(3,494,727)
Total equity
(5,954,839)
(3,494,664)

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £2,460,175 (2023 - £2,457,954).

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 27 March 2025 and are signed on its behalf by:
27 March 2025
N Ahmed
Director
Company registration number 09469512 (England and Wales)
UNDERCOVER BROTHERS LTD
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 13 -
Share capital
Other reserves
Profit and loss reserves
Total controlling interest
Non-controlling interest
Total
£
£
£
£
£
£
Balance at 1 March 2022
63
337,871
(3,387,134)
(3,049,200)
2,673,168
(376,032)
Year ended 28 February 2023:
Profit for the year
-
-
197,939
197,939
285,403
483,342
Other comprehensive income:
Currency translation differences
-
-
(5,435)
(5,435)
-
(5,435)
Amounts attributable to non-controlling interests
-
-
115
115
(115)
-
Total comprehensive income
-
-
192,619
192,619
285,288
477,907
Acquisition of subsidiary
-
-
-
-
11,320
11,320
Balance at 28 February 2023
63
337,871
(3,194,515)
(2,856,581)
2,969,776
113,195
UNDERCOVER BROTHERS LTD
GROUP STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
Share capital
Other reserves
Profit and loss reserves
Total controlling interest
Non-controlling interest
Total
£
£
£
£
£
£
- 14 -
Year ended 29 February 2024:
Profit for the year
-
-
174,761
174,761
418,261
593,022
Other comprehensive income:
Currency translation differences
-
-
43,586
43,586
-
43,586
Amounts attributable to non-controlling interests
-
-
9,451
9,451
(9,451)
-
Total comprehensive income
-
-
227,798
227,798
408,810
636,608
Purchase of shares in subsidiary from non-controlling interest
-
-
-
-
(2,089,773)
(2,089,773)
Other movements
-
-
602,110
602,110
(601,232)
878
Balance at 29 February 2024
63
337,871
(2,364,607)
(2,026,673)
687,581
(1,339,092)
On 15 May 2023 a subsidiary in the group entered into an arrangement to repurchase and cancel 100% of its issued Ordinary B shares of £1 each for a consideration of £2,087,500. The repurchase was agreed to be completed in twelve separate tranches. At the balance sheet date, ten tranches had been completed for 19 shares for a consideration of £1,789,773, leaving two tranches for 2 shares to be completed for a consideration of £297,727, which were completed shortly after the balance sheet date.

Subsequent to that agreement there was a reorganisation of the A, C, D, and E shares, to effect the sub-division of each share into 1,000 shares. Following the sub-division, on 30 May 2023 the subsidiary entered into an agreement to repurchase and cancel 2,947 of the Ordinary E shares of £1 each for a consideration of £300,000. The repurchase was agreed to be completed in ten separate tranches. At the balance sheet date, all ten tranches had been completed. As a result of the repurchase and subsequent cancellation by the subsidiary of its own shares, the group's share in the subsidiary has increased.

On 23 February 2025 the company entered into an arrangement to repurchase and cancel 100% of the issued Ordinary E shares of £0.001p each for a consideration of £2,500,000 to be completed over seventeen separate tranches.
UNDERCOVER BROTHERS LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 15 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 March 2022
63
(1,036,773)
(1,036,710)
Year ended 28 February 2023:
Loss and total comprehensive income for the year
-
(2,457,954)
(2,457,954)
Balance at 28 February 2023
63
(3,494,727)
(3,494,664)
Year ended 29 February 2024:
Loss and total comprehensive income for the year
-
(2,460,175)
(2,460,175)
Balance at 29 February 2024
63
(5,954,902)
(5,954,839)
UNDERCOVER BROTHERS LTD
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 16 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
32
9,672,752
4,917,821
Interest paid
(381,495)
(76,569)
Income taxes paid
(222,165)
(898,147)
Net cash inflow from operating activities
9,069,092
3,943,105
Investing activities
Purchase of subsidiaries
-
(40,770)
Purchase of intangible assets
(665,344)
(899,338)
Purchase of tangible fixed assets
(2,224,334)
(1,284,403)
Proceeds from disposal of tangible fixed assets
50,696
97,175
Loan advances
(2,397,655)
(1,422,039)
Interest received
80
119
Net cash used in investing activities
(5,236,557)
(3,549,256)
Financing activities
Repayment of bank loans
(1,333,334)
(1,333,333)
Payment of finance leases obligations
(74,654)
(18,340)
Purchase of shares in subsidiary from non-controlling interest
(2,089,773)
-
Net cash used in financing activities
(3,497,761)
(1,351,673)
Net increase/(decrease) in cash and cash equivalents
334,774
(957,824)
Cash and cash equivalents at beginning of year
1,419,071
2,382,330
Effect of foreign exchange rates
43,586
(5,435)
Cash and cash equivalents at end of year
1,797,431
1,419,071
Relating to:
Cash at bank and in hand
1,797,476
1,430,396
Bank overdrafts included in creditors payable within one year
(45)
(11,325)
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 17 -
1
Accounting policies
Company information

Undercover Brothers Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, W3 0BZ.

 

The group consists of Undercover Brothers Ltd and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

Exemptions

The 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 for parent company information presented within the consolidated financial statements:

 

1.2
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Undercover Brothers Ltd 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 drawn up to the same date.

 

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 have been included in the group financial statements using the purchase method of accounting. Accordingly, the group profit and loss account and statement of cash flows include the results and cash flows of the subsidiaries from acquisition. The purchase consideration has been allocated to the assets and liabilities on the basis of fair value at the date of acquisition.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 18 -

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

 

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3
Going concern

The directors have, at the time of approving the financial statements, a reasonable expectation that the group and parent company will have adequate resources to continue in operational existence for the foreseeable future. The directors have therefore continued to adopt the going concern basis in preparing the group's financial statements in light of the group profit for the year of £593,022 (2023: £483,342), notwithstanding group net liabilities of £1,339,092 (2023: net assets of £113,195) and company net liabilities of £5,954,839 (2023: £3,494,664).

 

The group continues to generate organic cashflow through group company operations, and the directors elected to pay dividends totalling £nil (2023: £nil) during the year.

 

The directors have reviewed current performance, EBITDA forecasts and the cashflow forecasts and are satisfied that the group’s forecasts, taking account of scenario modelling performed, show that the group and parent company will continue in operation and meet their liabilities as they fall due for the foreseeable future and at a minimum for 12 months from the date of signing the financial statements.

 

The directors have therefore continued to adopt the going concern basis in preparing the group’s financial statements.

1.4
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided 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 (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 19 -

Commission revenue is recognised from the seller for products sold and authenticated via an online platform. The commission is recognised once the purchaser has paid and the product has been authorised and shipped.

 

Shipping revenue is also recognised when the product is shipped following authentication. The fair value of the consideration takes into account trade discounts and rebates.

1.5
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.7
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Software
10% straight line
1.8
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold improvements
Over the lower of 10 years and the remaining lease term
Fixtures and fittings
Over 10 years
Computers
Over 10 years
Motor vehicles
Over 5 years
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 20 -

Asset under construction are not depreciated. On completion of the construction the asset will be transferred to a relevant fixed asset heading and depreciated from the point that the asset is brought into use.

 

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.9
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities 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.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.10
Impairment of fixed assets

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.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 21 -

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.

1.11
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.12
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.13
Financial instruments

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

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.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 22 -
Other financial assets

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.

Impairment of financial assets

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.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 23 -
Other financial liabilities

Derivatives, including interest rate swaps and 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.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.14
Equity instruments

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.

1.15
Taxation

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

Current 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

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.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
1
Accounting policies
(Continued)
- 24 -
1.16
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.

 

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.

1.17
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.18
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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.

1.19
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
2
Judgements and key sources of estimation uncertainty
(Continued)
- 25 -
Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Valuation of investments

Investments in subsidiaries are initially measured at cost and subsequently at cost less impairment. In assessing whether an impairment should be recognised the directors consider the performance of the subsidiary as well as its expected future performance and its position at the reporting date.

Stock provision

Stock provision on slow moving and obsolete stock is designed to ensure that stock is valued accurately and is assessed with reference to selling price, historical sales pattern and post year end trading performance.

Debtor provision

Debtor provision on old and bad debt is designed to ensure that debtors are valued accurately and are only held to the extent that they are recoverable.

 

 

3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Sale of goods
43,250,352
34,190,783
Authentication services
3,118,598
6,070,362
Other
1,306,329
1,957,398
47,675,279
42,218,543
2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
11,209,505
11,671,577
Europe
13,593,015
10,189,490
Rest of the world
22,872,759
20,357,476
47,675,279
42,218,543
2024
2023
£
£
Other revenue
Interest income
80
119
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 26 -
4
Operating profit
2024
2023
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange gains
(114,220)
(913,006)
Research and development costs
69,333
17,087
Depreciation of owned tangible fixed assets
740,966
941,804
Depreciation of tangible fixed assets held under finance leases
42,981
19,393
Loss/(profit) on disposal of tangible fixed assets
60,378
(10,000)
Amortisation of intangible assets
174,279
182,259
Impairment of intangible assets
-
0
1,397
Operating lease charges
2,177,045
1,835,194

Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to a £114,220 gain (2023 - £913,006 gain).

5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
22,365
21,300
Audit of the financial statements of the company's subsidiaries
83,875
69,925
106,240
91,225
For other services
All other non-audit services
30,110
28,675
6
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2024
2023
2024
2023
Number
Number
Number
Number
Administration
72
79
9
9
Logistics
22
21
-
-
Retail
8
11
6
6
Total
102
111
15
15
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
6
Employees
(Continued)
- 27 -

Their aggregate remuneration comprised:

Group
Company
2024
2023
2024
2023
£
£
£
£
Wages and salaries
4,134,896
4,572,912
341,235
305,008
Social security costs
298,453
370,561
40,951
46,267
Pension costs
54,342
55,197
6,563
6,554
4,487,691
4,998,670
388,749
357,829
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
121,274
125,813
8
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
80
119
9
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
104,950
69,472
Interest on finance leases and hire purchase contracts
36,020
7,062
Other interest
740,525
500,035
Total finance costs
881,495
576,569
10
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
341,712
499,085
Adjustments in respect of prior periods
6,319
(18,488)
Total UK current tax
348,031
480,597
Foreign current tax on profits for the current period
274,820
109,747
Total current tax
622,851
590,344
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
10
Taxation
2024
2023
£
£
(Continued)
- 28 -
Deferred tax
Origination and reversal of timing differences
(15,635)
1,763
Total tax charge
607,216
592,107

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2024
2023
£
£
Profit before taxation
1,200,238
1,075,449
Expected tax charge based on the standard rate of corporation tax in the UK of 24.49% (2023: 19.00%)
293,938
204,335
Tax effect of expenses that are not deductible in determining taxable profit
159,836
155,269
Tax effect of income not taxable in determining taxable profit
(1,089)
-
0
Unutilised tax losses carried forward
-
0
952,322
Adjustments in respect of prior years
16,101
(18,488)
Permanent capital allowances in excess of depreciation
42,681
33,282
Effect of overseas tax rates
(449,259)
(597,014)
Deferred tax adjustments in respect of prior years
2,975
13,086
Fixed asset differences
131,677
137,844
Other movements
171,939
(78,331)
Remeasurement of deferred tax for changes in rates
(5,517)
(210,198)
Deferred tax not provided
243,934
-
0
Taxation charge
607,216
592,107

An increase in the UK corporation rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. This will increase the company's future current tax charge and the deferred tax assets and liabilities accordingly.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 29 -
11
Intangible fixed assets
Group
Goodwill
Software
Total
£
£
£
Cost
At 1 March 2023
1,395,337
3,389,839
4,785,176
Additions
-
0
665,344
665,344
At 29 February 2024
1,395,337
4,055,183
5,450,520
Amortisation and impairment
At 1 March 2023
731,514
15,000
746,514
Amortisation charged for the year
174,279
-
0
174,279
At 29 February 2024
905,793
15,000
920,793
Carrying amount
At 29 February 2024
489,544
4,040,183
4,529,727
At 28 February 2023
663,823
3,374,839
4,038,662

At the balance sheet date intangible assets of £4,040,183 relating to the online platform have not been amortised because they remain in construction at the period end.

The company had no intangible fixed assets at 29 February 2024 or 28 February 2023.
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 30 -
12
Tangible fixed assets
Group
Leasehold improvements
Assets under construction
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 March 2023
3,379,089
672,824
1,007,340
244,399
709,723
6,013,375
Additions
287,488
1,482,466
400,314
24,066
384,723
2,579,057
Disposals
(682,154)
-
0
(34,945)
-
0
(49,990)
(767,089)
Exchange adjustments
6,589
-
0
(4,904)
-
0
-
0
1,685
At 29 February 2024
2,991,012
2,155,290
1,367,805
268,465
1,044,456
7,827,028
Depreciation and impairment
At 1 March 2023
1,596,705
-
0
401,571
123,485
342,420
2,464,181
Depreciation charged in the year
569,768
-
0
132,036
29,114
53,029
783,947
Eliminated in respect of disposals
(621,025)
-
0
-
0
-
0
(34,990)
(656,015)
Exchange adjustments
(2,979)
-
0
(7,229)
-
0
-
0
(10,208)
At 29 February 2024
1,542,469
-
0
526,378
152,599
360,459
2,581,905
Carrying amount
At 29 February 2024
1,448,543
2,155,290
841,427
115,866
683,997
5,245,123
At 28 February 2023
1,782,384
672,824
605,769
120,914
367,303
3,549,194

Assets under construction relates to stage payments incurred on investment property in the process of being constructed. The property remained in construction at the balance sheet date and accordingly no depreciation has been recognised.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
12
Tangible fixed assets
(Continued)
- 31 -
Company
Leasehold improvements
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 March 2023
2,700,804
167,572
25,381
14,279
2,908,036
Additions
251,626
1,732
6,267
-
0
259,625
Disposals
(581,820)
-
0
-
0
-
0
(581,820)
At 29 February 2024
2,370,610
169,304
31,648
14,279
2,585,841
Depreciation and impairment
At 1 March 2023
1,240,545
101,670
11,019
8,568
1,361,802
Depreciation charged in the year
505,740
18,536
5,691
2,856
532,823
Eliminated in respect of disposals
(520,691)
-
0
-
0
-
0
(520,691)
At 29 February 2024
1,225,594
120,206
16,710
11,424
1,373,934
Carrying amount
At 29 February 2024
1,145,016
49,098
14,938
2,855
1,211,907
At 28 February 2023
1,460,259
65,902
14,362
5,711
1,546,234

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2024
2023
2024
2023
£
£
£
£
Motor vehicles
419,922
108,180
-
0
-
0
13
Fixed asset investments
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Investments in subsidiaries
14
-
0
-
0
4,382,184
4,382,184
Investments in associates
15
47,952
49,435
507,911
507,911
Investments in joint ventures
16
2
2
2
2
47,954
49,437
4,890,097
4,890,097

The directors have performed a full impairment analysis based on the recoverable value of the investments. The recoverable amounts have been determined based on the fair value of the net assets of the subsidiary undertakings. Based on the fair value calculations no impairment of investments was identified.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
13
Fixed asset investments
(Continued)
- 32 -
Movements in fixed asset investments
Group
Shares in associates and joint ventures
£
Cost or valuation
At 1 March 2023
49,437
Share of profit in associate
(1,483)
At 29 February 2024
47,954
Carrying amount
At 29 February 2024
47,954
At 28 February 2023
49,437
Movements in fixed asset investments
Company
Shares in subsidiaries, associates and joint ventures
£
Cost or valuation
At 1 March 2023 and 29 February 2024
4,890,097
Carrying amount
At 29 February 2024
4,890,097
At 28 February 2023
4,890,097
14
Subsidiaries

Details of the company's subsidiaries at 29 February 2024 are as follows:

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
14
Subsidiaries
(Continued)
- 33 -
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Crep Protect Limited
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
92.00
-
Crep Protect Unipessoal Lda
20 Rua Dr. Brito Camara, Funchal, 9000 039 , Portugal
Ordinary
100.00
-
K'lekt Gmbh
Alter Wall 20-22, Hamburg, 20457, Germany
Ordinary
99.50
-
Sneaker King Limited
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
71.25
-
Authenticated By Ltd
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
-
99.50
Crep Protect Inc
7714 North Lehigh Avenue, Niles, IL, 60714, US
Ordinary
100.00
-
Crep Protect Cleaning Ltd
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
100.00
-
K'lekt BV
Heksekamp 31A, Zaltbommel, 5301 LX, Netherlands
Ordinary
-
99.50
Presented By SAS
25 Place de la Madeleine, Paris, 75008, France
Ordinary
100.00
-
Crep Protect BV
Heksekamp 31A, Zaltbommel, 5301 LX, Netherlands
Ordinary
100.00
-
Crep Protect China Limited
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
100.00
-
Crep Protect (Ningbo) Trading Co. Limited
Room 319, No. 2432, East Baizhang Road, Qiuai Town, Ningbo City, Zheijiang Province, 315105, China
Ordinary
100.00
-
Luxury Street Presented By SA de CV
101 Av Pdte Masaryk , Mexico City, 11570, Mexico
Ordinary
60.00
-
PresentedBy Ltd
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
100.00
-
Consignment General Trading LLC
142-0 Airport Road, Port Saeed, 129-385, UAE
Ordinary
75.00
-
K'lekt Inc
7714 North Lehigh Avenue, Niles, IL, 60714, US
Ordinary
-
99.50
15
Associates

Details of associates at 29 February 2024 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Wonda Mix Ltd
124 City Road, London, England, EC1V 2NX
Ordinary
40
16
Joint ventures

Details of joint ventures at 29 February 2024 are as follows:

Name of undertaking
Registered office
Interest
% Held
held
Direct
Indirect
SNKR Bag Ltd
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
50.00
-
Pressplay Media And Entertainment Ltd
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
50.00
-
Pressplay Music Publishing Ltd
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
-
50.00
Pressplay Records Ltd
Unit 2 Western Avenue Business Park, Mansfield Road, Acton, London, United Kingdom, W3 0BZ
Ordinary
-
50.00
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
16
Joint ventures
(Continued)
- 34 -

During the year Pressplay Media and Entertainment Ltd repurchased and cancelled 100% of its issued Ordinary B shares of £0.01 each for a consideration of £75,000. As a result of the repurchase and subsequent cancellation of Pressplay Media and Entertainment Ltd's own shares, the group’s share in Pressplay Media and Entertainment Ltd (and indirectly its subsidiaries) has increased from 33% to 50% and the entity is now consolidated as a joint venture.

17
Financial instruments
Group
Company
2024
2023
2024
2023
£
£
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
19,018,020
14,928,422
n/a
n/a
Carrying amount of financial liabilities
Measured at amortised cost
36,194,244
29,898,308
n/a
n/a

As permitted by the reduced disclosure framework within FRS 102, the company has taken advantage of the exemption from disclosing the carrying amount of certain classes of financial instruments, denoted by 'n/a' above.

18
Stocks
Group
Company
2024
2023
2024
2023
£
£
£
£
Finished goods and goods for resale
7,856,832
9,456,153
3,233,978
4,848,866
19
Debtors
Group
Company
2024
2023
2024
2023
Amounts falling due within one year:
£
£
£
£
Trade debtors
4,087,082
4,753,942
563,557
563,194
Amounts owed by group undertakings
-
-
4,308,435
1,606,719
Other debtors
14,967,892
10,283,894
22,836,609
28,693,517
Prepayments and accrued income
1,123,443
468,713
142,404
233,842
20,178,417
15,506,549
27,851,005
31,097,272
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 35 -
20
Creditors: amounts falling due within one year
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Bank loans and overdrafts
22
444,489
1,789,103
444,453
1,789,097
Obligations under finance leases
23
126,644
19,806
-
0
-
0
Trade creditors
6,903,509
5,695,936
378,585
703,758
Amounts owed to group undertakings
-
0
-
0
40,032,935
41,167,154
Corporation tax payable
2,960,176
2,112,812
1,546,245
1,114,095
Other taxation and social security
1,730,083
1,780,323
8,626
14,610
Other creditors
25,134,053
19,765,971
245,340
505,841
Accruals and deferred income
3,359,730
2,574,904
482,295
683,874
40,658,684
33,738,855
43,138,479
45,978,429
21
Creditors: amounts falling due after more than one year
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Obligations under finance leases
23
225,819
52,588
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
44,470
50,277
225,819
52,588
44,470
50,277
22
Loans and overdrafts
Group
Company
2024
2023
2024
2023
£
£
£
£
Bank loans
444,444
1,777,778
444,444
1,777,778
Bank overdrafts
45
11,325
9
11,319
444,489
1,789,103
444,453
1,789,097
Payable within one year
444,489
1,789,103
444,453
1,789,097

At the balance sheet date amounts totalling £444,444 remained outstanding on the Coronavirus Business Interruption Loan (CBIL) held with HSBC UK Bank PLC.

 

A fixed and floating charge is registered over all of the parent company's assets in favour of HSBC UK Bank PLC in relation to the Coronavirus Business Interruption Loan (CBIL) owed by the parent company. The charge remained outstanding at the balance sheet date.

Under the terms of the £4 million loan, CBILS loan interest payments for the first 12 months were covered by the UK Government. Interest thereafter is charged at a rate of 3.99% above Bank of England base rate.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 36 -
23
Finance lease obligations
Group
Company
2024
2023
2024
2023
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
126,644
19,806
-
0
-
0
In two to five years
225,819
52,588
-
0
-
0
352,463
72,394
-
-

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

24
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
2024
2023
Group
£
£
Accelerated capital allowances
110,118
125,753
Liabilities
Liabilities
2024
2023
Company
£
£
Accelerated capital allowances
-
91,046
Group
Company
2024
2024
Movements in the year:
£
£
Liability at 1 March 2023
125,753
91,046
Credit to profit or loss
(15,635)
(91,046)
Liability at 29 February 2024
110,118
-
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 37 -
25
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
54,342
55,197

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.

26
Share capital
Group and company
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of 1p each
1,575
1,575
16
16
Ordinary B shares of 1p each
1,575
1,575
16
16
Ordinary C shares of 1p each
1,575
1,575
16
16
Ordinary D shares of 1p each
1,575
1,575
15
15
6,300
6,300
63
63

All share classes have issued and fully paid ordinary share capital totalling £15.75, and any differences above relate to rounding only.

27
Operating lease commitments
Lessee

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

Group
Company
2024
2023
2024
2023
£
£
£
£
Within one year
1,601,693
1,161,552
174,452
165,000
Between two and five years
4,704,553
4,427,181
516,712
553,750
In over five years
5,205
229,345
5,205
90,000
6,311,451
5,818,078
696,369
808,750
28
Events after the reporting date

After the balance sheet date on 11 June 2024 Undercover Brothers Ltd granted options to key management over 3.5% of the share capital of the Company.

 

Post year end the retail division of the Group closed its consignment stores in Paris, France and Riyadh, Saudi Arabia whilst opening another in Abu Dhabi, UAE.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 38 -
29
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2024
2023
£
£
Aggregate compensation
328,374
299,147
Other information

The following amounts relate to the parent company, as at and for the year ended 29 February 2024:

 

At the balance sheet date the following amounts were owed:

 

Amounts totalling £14,609,366 (2023: £13,498,288) owed to the parent company by RIN Intellectual Holdings Limited, a company owned by a director of the parent company.

 

Amounts totalling £740,000 (2023: £740,000) owed to the parent company by RIN Developments Limited, a company owned by a director of the parent company.

 

Amounts totalling £245,186 (2023: £502,567) owed by the parent company to Wonda Mix Ltd, an associate undertaking.

 

The following amounts relate to the group, as at and for the year ended 29 February 2024:

 

During the year, a subsidiary undertaking was charged £6,001,283 (2023: £4,836,292) for royalties by RIN Intellectual Property Limited, a company owned by a director of the parent company. At the balance sheet date amounts totalling £13,956,269 (2023: £8,953,834) were owed by the parent company to RIN Intellectual Property Limited.

 

At the balance sheet date the following amounts were also owed:

 

Amounts totalling £4,979,384 (2023: £3,880,820) owed to the group by RIN Intellectual Holdings Limited, a company owned by a director of the parent company.

 

Amounts totalling £740,000 (223: £740,000) owed to the group by RIN Developments Limited, a company owned by a director of the parent company.

 

Amounts totalling £214,716 (2023: £502,567) owed by the group to Wonda Mix Ltd, an associate undertaking.

UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 39 -
29
Directors' transactions

Dividends totalling £0 (2023 - £0) were paid in the year in respect of shares held by the company's directors.

The following amounts relate to the parent company, as at and for the year ended 29 February 2024:

 

Included within other debtors is an amount of £5,752,699 (2023: £13,290,284) owed by the directors of the parent company.

 

The following amounts relate to the group, as at and for the year ended 29 February 2024:

 

Included within other debtors is an amount of £5,752,699 (2023: £3,355,044) owed by the directors of the parent company. Included within other creditors is an amount of £10,585,486 (2023: £9,898,095) owed to the directors of the parent company.

31
Analysis of changes in net funds/(debt) - group
1 March 2023
Cash flows
Exchange rate movements
29 February 2024
£
£
£
£
Cash at bank and in hand
1,430,396
323,494
43,586
1,797,476
Bank overdrafts
(11,325)
11,280
-
(45)
1,419,071
334,774
43,586
1,797,431
Borrowings excluding overdrafts
(1,777,778)
1,333,334
-
(444,444)
Obligations under finance leases
(72,394)
(280,069)
-
(352,463)
(431,101)
1,388,039
43,586
1,000,524
UNDERCOVER BROTHERS LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 29 FEBRUARY 2024
- 40 -
32
Cash generated from group operations
2024
2023
£
£
Profit after taxation
593,022
483,342
Adjustments for:
Share of results of associates and joint ventures
1,483
12,194
Taxation charged
607,216
592,107
Finance costs
881,495
576,569
Investment income
(80)
(119)
Loss/(gain) on disposal of tangible fixed assets
60,378
(10,000)
Amortisation and impairment of intangible assets
174,279
182,259
Depreciation and impairment of tangible fixed assets
783,947
961,197
Movements in working capital:
Decrease in stocks
1,599,321
2,576,161
Increase in debtors
(1,827,535)
(4,526,889)
Increase in creditors
6,799,226
4,071,000
Cash generated from operations
9,672,752
4,917,821
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