Registered number:
For the period ended
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Moss Bros Group Limited
Company Information
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Moss Bros Group Limited
Contents
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Moss Bros Group Limited
Strategic report
For the period ended 29 January 2022
The directors present their strategic report together with the audited financial statements for the 52 week period ended 29 January 2022.
Principal activities Moss Bros Group Ltd (“the Group”) retails, hires and offers custom made formal wear for men, predominantly in the UK through retail stores and online. Total sales for the 52-week financial period ending 29 January 2022 increased by £54.5m or 141.0% to £93.2m (prior period 53 weeks). The increase is a direct result from our stores reopening in April 2021 after the Covid pandemic. The strong performance also reflects the Moss strategy to meet the post-pandemic demand. The lifting of restrictions allowed people to attend weddings, social, sporting and other similar events which were postponed due to Covid 19. EBITDA (Earnings before interest, tax, depreciation and amortization) for the year is £17.0m compared to negative EBITDA of £11.7m in the prior year which was significantly impacted by the Covid pandemic. Similarly, the profit before tax for the year is £12.4m compared to a loss of £21.8m in the prior year. No dividends were paid by the Company to the shareholders (2021: £nil) The Company monitors a range of key performance indicators (KPIs) on a regular basis to manage the business, enable timely decision-making and to react quickly to a rapidly changing environment. Particular attention is paid to weekly KPIs and trading information with variances to budget and forecasts for individual product ranges and sales channels being reviewed. The primary KPIs reviewed regularly are turnover, gross margin and EBITDA. Despite widespread difficulties across the UK retail sector, our performance is indicative of the resilience of a certain segment of UK consumers and their willingness to buy products which offer exceptional quality at reasonable price points. Although we are careful not to deviate too far from our core, we believe the Moss Bros brand appeals to an increasingly broad customer base and is capable of further expansions. A high focus and attention has been given to improved optimization of our store estate, cost controls across all areas of the business and continuous improvement in our product range to ensure it stays relevant to our core customers.
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Moss Bros Group Limited
Strategic report (continued)
For the period ended 29 January 2022
Current trading and outlook The business has traded strongly since our stores reopened in April 2021 and the relaxation of Covid rules on the attendance of events and in particular wedding parties. The Directors expect the strong trading performance to continue into the year ending 28 January 2023 as the business and the UK economy gets back to some form of normality as part of the recovery process from the pandemic. Whilst there remains uncertainty around the impact of Covid-19 and the wider macro-economic and geo-political environment, the Directors are increasingly confident about the trading outlook and expect the demand for weddings and other events to be sustained. We are committed to our strategy of “styling individuals for on-form moments”. As well as providing unrivalled in store service levels in our sector, the Group has diversified its product ranges by stretching into smart casual wear which compliments the other formal products and is focused on providing value to our customers by selling exceptional quality at affordable price points. We have transitioned away from promotional discounting to drive sales at full price.
The Company’s business activities, factors likely to affect its future development, performance and position are set out in the principal activities and business review on page 1.
The main financial risks arising from the activities of the Company are set out in this report below, together with the policies and processes to manage these risks. The Directors have reviewed the Company’s forecasts. As described in the current trading and outlook section above, the outlook for the company is expected to be positive for the following year. These forecasts show that the company should be able to operate within its existing working capital facilities. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The directors therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements for the Company.
Moss Bros is an established brand, with a loyal customer following. However, we acknowledge, measure and mitigate the following risks:
Economy - impact on retail Almost all of the Group’s revenue is generated in the UK. A deterioration in the strength of the UK economy would be likely to reduce consumer demand for discretionary items. This could materially and adversely affect the financial position of the Group. The Group is currently funded from its own cash reserves and any prolonged downturn may impact these. We continually focus on maintaining our product quality, customer service and supplier relationships, which will help us retain our competitive position and retain customers. The business has the flexibility to adjust its capital expenditure plans, restrict dividends and review operational expenditure to reduce or defer unnecessary expenditure. These measures will conserve cash and maintain the strength of our balance sheet. Property leases have short remaining lives allowing flexibility to reduce fixed overhead costs should the need arise. The Group is currently debt free and cash generative.
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Moss Bros Group Limited
Strategic report (continued)
For the period ended 29 January 2022
Covid-19 Further disruption to the wider economy due to the re-emergence of the Covid 19 pandemic may adversely affect our performance, however, the directors consider that the business remains in a strong position with the necessary liquidity and operational flexibility to navigate through any potential downside. Supply chain Any disruption to supplier continuity or interruptions to the supply chain may have a significant impact on our ability to meet demand in store and online. As we increase the volume of garments sourced directly from supplier factories we must ensure that the supply chain critical path is closely monitored and proactively managed. The diversification of product buying across a range of suppliers limits the Group’s over reliance upon any individual supplier. We have implemented controls which enable us to identify early any potential deviations from product and supply chain critical paths. In addition, we continuously review the supply base to mitigate potential single source supply issues through a dual sourcing strategy. Foreign currency exposure, principally the US Dollar, is mitigated through the use of forward contracts, typically for expected currency requirements 6 to 9 months in advance.
Brexit
The Group considers that there are no material risks associated with Brexit since it sources the majority of its products from outside of the EU. Brand image Maintaining our store presentation is important for attracting customers and growing our brand and we continually seek to improve the look and feel of our in-store environment and online offering to deliver an improved customer experience.
How the Board of Directors has promoted the success of the Group for the benefit of its members as a whole; whilst having regard to the matters set out in Section 172 of the Companies Act 2006
The Board is mindful of all stakeholders when making decisions of strategic performance. Stakeholder engagement is central to the formulation and execution of the strategy and critical in achieving long-term success. The needs of our stakeholders as well as the consequences of any decision on the long-term are well considered by the Board. A description of the key stakeholders, their engagement and how this influences our decision making is set out below.
CUSTOMERS
Our customers are at the heart of everything we do. We seek to understand more about them to ensure our products and services meet their expectations and we deliver a seamless shopping experience whichever channel they choose to shop with us, whether online, in store or via our contact centre. We constantly review whether we are achieving our customer centric aims and ambitions by measuring customer growth and getting feedback via surveys, ratings, and occasional focus groups as well as through our various contact channels. We have regular meetings to review any issues impacting the customer experience and put actions in place to resolve them as quickly as possible. The customer continues to be our focus at all levels in the organization and we have many initiatives on the horizon to adapt to changing requirements, shopping preferences and lifestyle.
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Moss Bros Group Limited
Strategic report (continued)
For the period ended 29 January 2022
SHAREHOLDERS The Directors and particularly the CEO engage with their principal shareholders on a regular basis involving them in all significant decisions and providing regular updates on performance. EMPLOYEES We remain committed to employment policies that do not discriminate between employees or potential employees on the grounds of gender, colour, race, nationality, ethnic origin, national origin, religion, religious beliefs, sexual orientation, disability or age. In line with the change in legislation, we continue to focus on ensuring opportunities are open and fair for both women and men. We continually engage with our employees and have been focused on employee safety, wellbeing and morale throughout the pandemic. Moss Bros also engages with their employees through a workplace intranet, head office, retail communications, and online training module. GOVERNMENT/REGULATORS We are committed to doing business responsibly and regularly have meetings/briefings, consultations, dialogue with trade bodies and specialist advisors to help proactively monitor new regulations and compliance requirements. COMMUNITY The community and wider society are concerned with charitable donations, environmental impact and sustainability. We operate across the UK and so have a presence in many different communities. We do not have a specific social policy, but Moss Bros actively looks for and has taken part in a number of initiatives, at both a national and a local level. Taking part in such initiatives can help promote our brand and mitigates our brand risk as shown on page 3. We have been involved with promotion of charitable initiatives, and we have also supported Prostate Cancer UK in raising awareness and funds. We provide our excess products free of charge to a charity that offers smart formal wear to homeless men seeking employment. Moss Bros also engages by having work/school placements. ENVIRONMENT We do not operate in a sector that creates significant pollution, but our products, logistical operations and stores all impact on the environment to some extent. Whilst we do not have a specific environmental policy, we do strive to minimise our environmental impacts as much as possible and we comply with all applicable environmental laws and regulations. We are continually looking for ways to reduce carbon emissions and to improve the efficiency of our operations, by reducing waste and consolidating deliveries as much as possible. All our recyclable packaging is recycled where commercially viable and our surplus or end of life IT equipment is disposed of via an accredited recycling provider, to help minimise the amount of our waste ending up at landfill sites. We continually monitor our packaging options to seek a reduction in the amount of materials used. We are seeking to reduce our impact anyway we can and we are committed to closing the loop and moving towards sustainable manufacturing processes. We have increased our ranges made from recycled polyester- blend fabric and natural fibers with trims that have been consciously chosen for their low impact on the environment. Moss Bros has selected every element either because it is recycled or because it is made sustainably without compromising on quality. Moss Bros monitors carbon emissions and is engaging with suppliers on product sustainability.
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Moss Bros Group Limited
Strategic report (continued)
For the period ended 29 January 2022
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Moss Bros Group Limited
Strategic report (continued)
For the period ended 29 January 2022
SUPPLIERS It is our policy to maintain the highest standards of ethics, honesty and integrity. To ensure this, we have a zero tolerance approach to bribery and corruption and policies are in place that define the expected standards of our employees and suppliers. We provide guidance to our employees around the giving and receiving of gifts, hospitality and entertainment. Anyone who suspects, is offered or asked to make a bribe is required to report such an incident or concern to the Company Secretary. The Group has established a confidential helpline for raising concerns regarding impropriety in financial or other matters, which is open to all employees and operates independently of line management. There have been no incidents of bribery or corruption identified or notified to the Board in the year. The significant gift register is reviewed by the Board of Directors annually. The Company aims to conduct all its business relationships with integrity and courtesy, and to honour all business agreements. We work closely with producers and our supply chain and have taken measures to prevent modern slavery.
This report was approved by the board on 30 March 2022
and signed on its behalf.
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Moss Bros Group Limited
Directors' report
For the period ended 29 January 2022
The directors present their report and the financial statements for the period ended 29 January 2022.
The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙
select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙
make judgements and accounting estimates that are reasonable and prudent;
∙
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the 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 profit for the period, after taxation, amounted to £
10,405
thousand
(2021 -
loss
£
17,763
thousand)
.
No dividends were paid by the Company to the shareholders (2021: £nil).
The directors who served during the period were:
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Moss Bros Group Limited
Directors' report (continued)
For the period ended 29 January 2022
The way in which the Board engages with its Stakeholders is set out in the s172 Statement on pages 3 - 6 or the Strategic Report.
Corporate social responsibility The Moss Bros family includes people in our shops, our head office, and extends to our customers, our suppliers, our charities and our local communities. Employee engagement and development We pride ourselves at Moss Bros with a culture of having a transparent and open dialogue with our colleagues, and over the past few years having been building up a rhythm of engagement activities which have helped to influence and shape some of our most strategic decisions as a company. We use listening groups, anonymous feedback platforms, as well as employee surveys as tools to engage with colleagues. This includes participation of the Chief Executive Officer as well as other directors. We remain committed to the personal development or our colleagues, and continually look at new and innovative ways to ensure personal development of everyone who works for us. We have continued to conduct & publish our Gender pay analysis and have carried out an equal pay review to ensure equity or pay across similar roles. Diversity and inclusion Whilst Corporate Social Responsibility, sustainability, diversity and equal opportunities have always been a part of the Moss Bros culture, we are now increasing our focus on ensuring diversity and inclusion as a natural part of the working experience at Moss Bros. While we already have robust supporting policies in place, we are focusing on all the different aspects of where we can improve and how we can embed meaningful and lasting diversity and inclusion values in our day to day working experience. It is not our intention to make bold, unrealistic statements, but rather to drive a steady grassroots awareness and improvement across the business.
Applications for employment by persons with disabilities are always fully and fairly considered, focusing on the aptitudes and abilities of the applicant concerned. In the event of an employee becoming disabled during their employment, every effort is made to ensure that their employment with the Company continues and that where appropriate, reasonable adjustments are made and relevant training and education of the wider team is arranged to adjust to continued employment. It is the policy or the Company that the training, career development and promotion or persons with disabilities should, as far as possible, be identical with that or other employees.
All product suppliers who join the Moss Bros family must follow our Ethical Code of Conduct before we do business with them. Our code covers all aspects or Health and Safety and Labor and Wages which is based on a code covering:
• General principles • Non discrimination • Forced labor • Child labor • Wages and hours • Working conditions • Environment • Freedom or association In line with UK legislation, we publish our annual Modern Slavery Statement which explains the steps we have taken so far to address this issue across our business. We have made a commitment to use only sustainably sourced cotton in our products by 2024. Our ongoing training programs continue with our key factories, to train our supplier compliance teams how to ethically audit their own supply base which has helped to increase visibility of our end to end supply chain further down the tiers.
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Moss Bros Group Limited
Directors' report (continued)
For the period ended 29 January 2022
There have been no significant events affecting the Company since the year end.
The auditors, Kreston Reeves LLP, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
This report was approved by the board on
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Moss Bros Group Limited
Independent auditors' report to the members of Moss Bros Group Limited
We have audited the financial statements of Moss Bros Group Limited (the 'Company') for the period ended 29 January 2022, which comprise the Statement of 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.
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.
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Moss Bros Group Limited
Independent auditors' report to the members of Moss Bros Group Limited (continued)
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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Moss Bros Group Limited
Independent auditors' report to the members of Moss Bros 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:
Capability of the audit in detecting irregularities, including fraud Based on our understanding of the company and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, Statement of Recommended Practice, taxation and pension legislation. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, and management bias in accounting estimates and judgemental areas of the financial statements. Audit procedures performed by the engagement team included: • Discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations (including health and safety) and fraud; and • Assessment of identified fraud risk factors; and • Challenging assumptions and judgements made by management in its significant accounting estimates; and • Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and • Reading minutes of meetings of those charged with governance; and • Identifying and testing journal entries, in particular any entries made at the year end for financial statement preparation. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
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.
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Moss Bros Group Limited
Independent auditors' report to the members of Moss Bros Group Limited (continued)
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 Auditor
London
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Moss Bros Group Limited
Statement of comprehensive income
For the period ended 29 January 2022
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Moss Bros Group Limited
Registered number:
00134995
Balance sheet
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 18 to 42 form part of these financial statements.
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Statement of changes in equity
For the period ended
29 January 2022
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Statement of changes in equity
For the period ended
30 January 2021
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
Moss Bros Group Limited is a private company limited by shares and is incorporated in England & Wales with the company number 00134995. The address of the registered office and principal place of business is 8 St Johns Hill, Clapham Junction, London, SW11 1SA.
The principal activity of the company of the consists of the retail, hire and the offer of custom made formal wear for men, predominately in the UK. These financial statements are for the 52 week period ended 29 January 2022. The comparative financial statements were prepared for the 53 week period ended 30 January 2021.
2.
Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The financial statements are rounded to the nearest pound.
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙
the requirements of Section 7 Statement of Cash Flows;
∙
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙
the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
∙
the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Moss Bros Group Holdings Limited as at 29 January 2022 and these financial statements may be obtained from 8 St Johns Hill, Clapham Junction, London, SW11 1SA.
The
Company
is a parent
company
that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of
any part of the United Kingdom
and is therefore exempt from the requirement to prepare consolidated financial statements under
section 400 of the Companies Act 2006
.
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
2.
Accounting policies (continued)
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.
The Directors have reviewed management forecasts, sensitivities and mitigating actions available to management which take into account possible changes in trading. These forecasts show that the Company should be able to operate within the existing working capital facilities. The liquidity requirements of the Company have been assessed by the directors and believe them to be adequate for a period of at least 12 months from the date of signing these financial statements and therefore have adopted the going concern basis in preparation of the financial statements.
Functional and presentation currency
Transactions and balances
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
2.
Accounting policies (continued)
Revenue comprises sales to third parties (excluding VAT) and is derived from the retail sale and hire of clothing and ancillary goods. For store retail purchases, revenue is recognised on exchange of goods. For the hire of clothing, the performance obligations are met when the hire clothing and ancillary goods are collected for use by the customer. For Tailor Me, the exchange of goods occurs upon collection. Franchise revenue is recognised on the day of purchase as the goods are transferred to the customer at this point. Deposits and advances taken in relation to Hire and Tailor Me create contract liabilities until the performance obligations are satisfied at the collection date. E-commence revenue is recognised at despatch date as this is the point where the performance obligations are met. Upon despatch the courier company becomes responsible for successful delivery. The Company offers a full refund on retail sales within 28 days. The estimated value of consideration relating to refunds is excluded from retail revenue. Management estimates the refund liability by considering the products expected to be returned. The liability creates a refund asset and a refund liability, and the cost of the estimated refunds is reflected in cost of sales.
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
2.
Accounting policies (continued)
In accordance with FRS 102, internal development costs are only recognised when the Company is able to demonstrate all of the following: - the technical feasibility of completing the intangible asset so that it will be available for use or sale. - its intention to complete the intangible asset and use or sell it. - its ability to use or sell the intangible asset. - how the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset. - the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. - the ability to measure reliably the expenditure to the intangible asset during its development. The inhouse software developed by the Company is used internally to improve operating procedures, creating probable future economic benefits for the Company. The development software includes costs to relating to the enhancement of the Company's e-commerce capabilities.
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
2.
Accounting policies (continued)
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
2.
Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
Leasehold improvements are written off over the shorter of the period of the lease or the useful
economic life of the assets on a straight-line basis. Location premiums are paid to enter a property which is in a desirable location, stated at cost, net of depreciation and any provision of impairment. Depreciation is calculated on location premiums over the useful economic life on a straight-line basis. Where assets of a store are required to be impaired leasehold improvements are treated as part of the cash-generating unit for impairment. Hire inventory is held as a fixed asset and depreciated over its estimated useful life. The classification differs from other stock held as the assets are retained by the Company and hired to customers on a short-term basis. The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
The Company considers all the assets of a particular store to be one cash generating unit for the purposes of impairment review. Recoverable amount is the higher of fair value less costs to sell and the value in use. In assessing value in use of a store cash generating unit, the estimated cash flows are discounted to their present value. If the recoverable amount of a cash generating unit is estimated to be less than its carrying amount, the carrying amount of the cash generating unit is reduced to the recoverable amount. An impairment loss is recognised as an expense immediately.
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
2.
Accounting policies (continued)
Retail inventory is valued at the lower of cost (weighted average by season) and estimated net realisable value (estimated selling price less costs to be incurred in selling and distribution). Cost includes all direct expenditure and other attributable costs incurred in bringing stock to their present location and condition. obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. Provisions for onerous property lease contracts are recognised when the Company believes that the unavoidable costs of meeting the lease obligations exceed the economic benefits to be received under the lease. Provisions for dilapidations for store operating leases are recognised when the Company believes that the likelihood of incurring costs to rectify the store is probable, due to a contractual obligation when vacating premises at lease expiry, and a reliable estimate can be made for the obligation. Estimates are derived through negotiations, reliable third-party opinion or comparable historical information. When payments are eventually made, they are charged to the provision carried in the Balance sheet.
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
2.
Accounting policies (continued)
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
In preparing these financial statements, the Directors have made the following judgements: Tangible fixed assets The Company has recognised tangible fixed assets with a carrying value of £5,231,000 (2021: £7,342,000) at the reporting date (see note 15). These assets are stated at their cost less provision for depreciation and impairment. The Company's accounting policy sets out the approach to calculating depreciation for assets and for subsequent additions. The Company determines at acquisition reliable estimates for the useful life of the asset and its residual value. These estimates are based upon such factors as the expected use of the acquired assets and market conditions. At subsequent reporting dates the Directors consider whether there are any factors such as technological advances or changes in market conditions that indicate a need to reconsider the estimates used. Where there are indicators that the carrying value of tangible assets may be impaired the Company undertakes tests to determine the recoverable value of assets. Recoverable value assessments include consideration of issues such as future market conditions, the remaining life of the asset and disposal values. Lease commitments The Company has entered into a range of lease commitments in respect of property, plant and equipment. The classification of these leases as either financial or operating leases requires Directors to consider whether the terms and conditions of each leases are such that the Company has acquired the risks and rewards associated with the ownership of the underlying assets. The following are the Company's key sources of estimation uncertainty: Store impairment At the end of each reporting period an impairment review is carried out to identify any indicators of impairment for each cash generating unit ("CGU"). Where indicators of impairment are present, the recoverable amount is calculated and an impairment loss recognised to reduce the carrying value of the asset to its recoverable amount. The Company has identified each store to be a separate CGU. The total number of stores at 29 January 2022 was 103 (2021: 103). At CGU level, the assets that are identified for determining the CGU's carrying amount comprises all classes of property, plant and equipment and leasehold improvements, including associated intangibles. Due to the difficult trading year and increased economic uncertainty management have completed a strategic review of the store portfolio during 2020. As a high number of stores exhibited indicators of impairment, discounted cash flows were calculated for all stores to determine their value in use at the year end. Discounted cash flows are calculated until the end of each store's operating lease term. The estimate that is considered to give rise to the most significant risk of material misstatement within the discounted cash flow model is budgeted sales for 2022/23. A decrease in budgeted sales of 1% would give rise to an impairment of £5,568.
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
3.
Judgements in applying accounting policies (continued)
The Company notes that there is subjectivity around the discount rate applied in determining a store's recoverable amount. The Company's policy is to use weighted average cost of capital to determine the discount rate, which is based on several assumptions including the estimation of the Company's appropriate cost of debt in absence of debt within the Company. However, the Company has comfort that a movement in the discount rate of five percentage points would not result in a material difference to the financial statements. Other assumptions that are not considered to be key estimates and do not give significant risk of material misstatement in the next financial period are in relation to future sales growth rates, future gross margin growth rates and cost increases in future years. Based on the results of this analysis, an impairment charge of £339,000 (2020/21: £1,368,000) has been recognised across 12 stores (2020/21:20 stores), 0 of which are due for closure (2020/21: 0). There has also been an impairment reversal of £559,000 recognised across 14 stores. Management will continue to closely monitor trading performance of each store to ensure appropriate assets values are impaired at the earliest point, if required. Provision for dilapidations Provisions for dilapidations for store operating leases are recognised when the Company believes the likelihood of incurring costs to rectify the store is probable, due to a contractual obligation when vacating premises at lease expiry, and a reliable estimate cab be made for the obligation. The provision as at 29 January 2022 is £3,333,000 which relates to 103 stores (30 January 2021: £3,302,000), see note 22. Estimates for dilapidation provisions are based on accurate settlement history against past provisions. The average cost of previous settlements has then been applied to the 103 stores.
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
Analysis of turnover by country of destination:
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
12.
Taxation (continued)
During the 2021 budget announced by the Chancellor, it was reported that the main rate of corporation tax rate from 1 April 2023 will rise to companies with profits over £250,000.
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
Share premium account
Acquisition reserve
Profit and loss account
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
The company currently operates a defined contribution scheme. As at 29 January 2022 there was £62,000 outstanding of contributions relating to the defined contribution scheme (2021: £57,000). The charge for the period was £369,000 (2021: £448,000).
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Moss Bros Group Limited
Notes to the financial statements
For the period ended 29 January 2022
The Company's immediate parent is
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