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Maje Stores Limited
Registered number: 06857179
Annual Report
For the year ended 31 December 2020
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MAJE STORES LIMITED
COMPANY INFORMATION
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Castlegate Secretaries Limited
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Cripps Pemberton Greenish
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Browne Jacobson LLP
Mowbray House
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Castle Meadow Road
Nottingham
NG2 1BJ
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MAJE STORES LIMITED
CONTENTS
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Independent auditor's report
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Statement of comprehensive income
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Statement of financial position
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Statement of changes in equity
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Notes to the financial statements
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MAJE STORES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their Strategic Report for Maje Stores Limited for the year ended 31 December 2020.
Revenue has decreased from £20,354,492 in 2019 to £9,835,659 in 2020. Operating loss was £1,424,473 in 2020 compared to an operating profit £1,115,395 in 2019.
During the year, the company received £436,000 of Government grants which relates to Coronavirus Job Retention Scheme (CJRS), the company also received money from the group which amounted to £4,481,000.
Principal risks and uncertainties
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The directors have identified the general economic downturn and competition in the retail sector as the principal risks facing the company and are keeping costs at a low level throughout the year to minimise the risk of this affecting the company.
The directors also consider changes in fashion trends to pose a significant risk to profitability. Failure to appeal to tastes of the customer base or to identify and respond to changing fashion trends and product demand in a timely manner could lead to a decline in net sales.
There is a risk that the strategy implemented to increase retail points of sale and to enter into new markets may fail or advance at a slower pace than planned.
There is a risk that competitive position, growth strategy and profitability may be negatively affected by costly negotiations, terminations or extensions to store leases or concession contracts with department stores.
The withdrawal of the United Kingdom from the European Union
New trading arrangements between the United Kingdom and the European Union took effect on 31 December 2020. In general, tariffs and quotas on trade have not been introduced, although administrative complications and regulatory restrictions have reduced the freedom of cross-border trade. The company is carefully monitoring the practical application of the new trading arrangements by regulatory authorities, to better understand what the eventual impact on its business will be. The process of determining these effects is ongoing, and has also been delayed by the suspension of certain sectors of economic activity in response to the COVID-19 pandemic.
- 1 -
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MAJE STORES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Due to the effects of the COVID-19 pandemic, Maje Stores Limited recorded about a 52% decrease of sales in 2020 vs 2019, but maintained a positive operating profit thanks to SMCP transfer price policy (roughly 3%).
In this unprecedented context, the Group implemented immediate measures to alleviate the impact of the crisis and protect its cash flow, mainly by:
∙Significantly reducing its capital expenditure by postponing several infrastructure investments, as well as reducing the planned number of store openings.
The reduction of its operating expenses:
∙Renegotiation of commercial leases;
∙Recourse to temporary unemployment for the majority of its network teams in UK since the end of March, supported by local governments;
∙Significant adjustments to SG&A costs; and
∙Adjustments to inventories and collections with a major reduction in purchases for the 2020 Fall/Winter collections and adjustments to the Spring/Summer collections.
Credit risk
The Company's principal financial assets are bank balances and cash, trade and other receivables, and investments.
The Company's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are bank with high credit-ratings assigned by international credit-rating agencies.
The Company has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Company uses a mixture of long-term and short-term intercompany loans.
- 2 -
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MAJE STORES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
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Principal risks and uncertainties (continued)
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Financial instrument risk
The company monitors cash flow as part of the day to day controls. Exposure to exchange rate risk is limited to a small number of overseas suppliers, which the company does not hedge against.
Financial key performance indicators
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The company's main key performance indicators for 2020 was operating profit, % of revenue and fluctuation of revenue year on year.
During the year, the company's operating profit was 3% of turnover (2019: 5% of turnover) and revenue decreased from £20,354,492 in 2019 to £9,835,659 in 2020.
This report was approved by the board and signed on its behalf.
P D D Huyghues Depointes
Director
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- 3 -
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MAJE STORES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their report and the audited financial statements for the year ended 31 December 2020.
Directors' responsibilities statement
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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 101 ‘Reduced Disclosure Framework’. 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 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; and
∙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 principal activity of the company during the year was that of clothing retailers.
The loss for the year, after taxation, amounted to £2,051,409 (2019: profit of £303,766).
During the year, no dividends were paid (2019: £nil).
The directors who served during the year and up to the date of this report were:
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P D Y Gautier (resigned 1 November 2020)
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J B Dacquin (resigned 31 March 2020)
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C M B De Montille (appointed 31 March 2020, resigned 15 July 2021)
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N A V Malavoy (appointed 31 March 2020)
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R S P Asaria (appointed 1 January 2019 and resigned 31 March 2020)
P D D Huyghues Despontes (appointed 4 January 2021)
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MAJE STORES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Qualifying third party indemnity provisions
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Maje Stores Limited has provided to all directors limited indemnities in respect of the cost of defending claims against them and third party liabilities. These are all third party indemnity provisions for the purpose of the Companies Act 2006 and are all currently in force.
The financial statements have been prepared on a going concern basis which the directors believe to be appropriate as the directors have a reasonable expectation that the company has adequate resources to continue in operation for the foreseeable future.
The directors have received assurance from Maje SAS that it will continue to support the company for a period of at least 12 months from the date of approval of these financial statements. During the year, the company received an additional loan of £3,500,000 from SMCP SAS.
The recent outbreak of the Omicron variant has seen certain social restrictions again implemented by the government which had previously been lifted. It is not possible to predict how long these social restrictions will remain in place and the company would be reliant on further support from Maje SAS.
As at 31 December 2020, the company had net liabilities of £706,034 (2019: net assets £1,345,375). During 2020 the company's loss after tax was £2,051,409 (2019: profit of £303,766). The directors have based their assessment on the company's projected trading results and cash flows and are therefore satisfied that the company will continue to be a going concern for at least twelve months from the date of approval of the financial statements.
The directors expect to secure their presence in the market during 2021 in the context of the COVID-19 pandemic. They will focus on a like for like expansion, develop more communication and marketing by being present on the UK social network. Furthermore, the existing shops will be monitored to anticipate any low margin direct cost.
Matters covered in the strategic report
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As permitted by paragraph 1A of Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and reports) Regulations 2008 certain matters which are required to be disclosed in the Directors' Report have been omitted as they are included in the Strategic Report. These matters relate to the business review, financial key performance indicators and principal risks and uncertainties.
Provision of information to auditor
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Each of the persons who are directors at the time when this directors' report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware; and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This confirmation is given and should be interpreted with provision of section 418 of Companies Act 2006.
Post balance sheet events
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There have been no significant events affecting the company since the year end.
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MAJE STORES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
The auditor, Constantin, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf by:
P D D Huyghues Depointes
Director
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- 6 -
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MAJE STORES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MAJE STORES LIMITED
Report on the audit of the financial statements
Opinion
In our opinion, the financial statements of Maje Stores Limited (the 'company')
∙give a true and fair view of the state of the company’s affairs as at 31 December 2020 and of its loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice including Financial Reporting Standard 101 “Reduced Disclosure Framework” “The Financial Reporting Standard applicable in the UK and Republic of Ireland”; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of SMCP UK Limited (the ‘company’) which comprise:
• the statement of comprehensive income;
• the balance sheet;
• the statement of changes in equity; and
• the statement of accounting policies; and
• the related notes 1 to 23
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial reporting Council's (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 company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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MAJE STORES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MAJE STORES LIMITED
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 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.
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 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 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.
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 auditor’s report.
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MAJE STORES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MAJE STORES LIMITED
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We considered the nature of the company’s industry and its control environment, and reviewed the company’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities.
We obtained an understanding of the legal and regulatory frameworks that the company operates in, and identified the key laws and regulations that:
• had a direct effect on the determination of material amounts and disclosures in the financial statements. These included UK Companies Act, and Corporation tax legislation; and
• do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty.
We discussed among the audit engagement team including relevant internal specialists such as tax, regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
• reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
• enquiring of management concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and
• reading minutes of meetings of those charged with governance.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
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 year 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.
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MAJE STORES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MAJE STORES LIMITED
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 any material misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exemption
Under the Companies Act 2006 we are required to report in respect of the following matters if, in our opinion:
•adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in respect of these matters.
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.
Thierry de Gennes, ACA (Senior statutory auditor)
for and on behalf of Constantin
Chartered Accountants and Statutory Auditor
25 Hosier Lane
London
EC1A 9LQ
28 December 2021
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MAJE STORES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
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Interest payable and similar expenses
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Tax charge on (loss)/profit
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(Loss)/Profit for the financial year
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Other comprehensive income
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Total comprehensive (Loss)/Income for the year
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The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
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The notes on pages 14 to 34 form part of these financial statements.
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MAJE STORES LIMITED
REGISTERED NUMBER: 06857179
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 34 form part of these financial statements.
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MAJE STORES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
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Comprehensive income for the year
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Total comprehensive income for the year
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Total transactions with owners
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Comprehensive expense for the year
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Total comprehensive expense for the year
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Total transactions with owners
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The notes on pages 14 to 34 form part of these financial statements.
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Maje Stores Limited is a private company limited by shares incorporated and registered in England and Wales. The registered number and address of the company is given on the company information page.
The principal activity of the company is included in the directors' report on page 4.
The financial statements have been presented in Pound Sterling as this is the currency of the primary economic environment in which the company operates and is rounded to the nearest pound.
2.Accounting policies
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Basis of preparation of financial statements
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These financial statements have been prepared in accordance with Financial Reporting Standard 101 “Reduced Disclosure Framework” (“FRS 101”) and in accordance with the applicable provisions of the Companies Act 2006. Except for certain disclosure exemptions detailed below, the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the EU (EU-adopted IFRSs) have been applied to these financial statements and, where necessary, amendments have been made in order to comply with the Companies Act 2006 and The Large and Medium-sized Companies and Groups Regulations 2008/410 (‘Regulations’).
The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 2.20).
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New standards, amendments and IFRIC interpretations
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There are no amendments to accounting standards, or IFRIC interpretations that are effective for the year ended 31 December 2020 that have had a material impact on the company.
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Disclosure exemptions applied
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS101 paragraph 8:
i)The requirement of IFRS 7 ‘Financial Instruments: Disclosures’ relating to the disclosure of financial instruments and the nature and extent of risks arising from such instruments;
ii)The requirement of IFRS 13 ‘Fair Value Measurement’ paragraphs 91 to 99 relating to the fair value measurement disclosures of financial assets and financial liabilities that are measured at fair value, such as the available for sale investments and derivative financial instruments;
iii)The applicable requirements of IAS 36 ‘Impairment of Assets’ relating to the disclosures of estimates used to measure recoverable amounts;
iv)The applicable requirements of IAS 1 ‘Presentation of Financial Statements’ relating to the disclosure of comparative information in respect of the number of shares outstanding at the beginning and end of the year (IAS 1.79(a)(iv)), the reconciliation of the carrying amount of property, plant and equipment (IAS 16.73(e)) and the reconciliation of the carrying amount of intangible assets (IAS 18(118)(e));
v)The requirement of IAS 1 ‘Presentation of Financial Statements’ paragraphs 134 to 136 relating to the disclosure of capital management policies and objectives;
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
vi)The requirements of IAS 7 ‘Statement of Cash Flows’ and IAS 1 ‘Presentation of Financial Statements’ paragraph 10(d), 111 relating to the presentation of a Cash Flow Statement;
vii) The requirements of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ paragraphs 30 and 31 relating to the disclosure of standards, amendments and interpretations in issue but not yet effective; and
viii) The requirements of IAS 24 ‘Related Party Disclosures’ paragraph 17 relating to the disclosure of key management personnel compensation and relating to the disclosure of related party transactions entered into between the Company and other wholly-owned subsidiaries of the group.
For the disclosure exemptions listed in points (i) to (iii), the equivalent disclosures are included in the consolidated financial statements of the group, SMCP SA, which the company is consolidated into.
This information is included in the consolidated financial statements of SMCP SA as at 31 December 2020 and these financial statements may be obtained from 49, rue Etienne Marcel, 75001 Paris, France.
Basis of measurement
The financial statements have been prepared on the historical cost basis except for derivative financial instruments which are measured at fair value.
The financial statements have been prepared on a going concern basis which the directors believe to be appropriate as the directors have a reasonable expectation that the company has adequate resources to continue in operation for the foreseeable future.
The directors have received assurance from Maje SAS that it will continue to support the company for a period of at least 12 months from the date of approval of these financial statements. During the year, the company received an additional loan of £3,500,000 from SMCP SAS.
The recent outbreak of the Omicron variant has seen certain social restrictions again implemented by the government which had previously been lifted. It is not possible to predict how long these social restrictions will remain in place and the company would be reliant on further support from Maje SAS.
As at 31 December 2020, the company had net liabilities of £706,034 (2019: net assets of £1,345,375). During 2020 the company's loss after tax was £2,051,409 (2019: profit of £303,766). The directors have based their assessment on the company's projected trading results and cash flows and are therefore satisfied that the company will continue to be a going concern for at least twelve months from the date of approval of the financial statements.
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Sale of goods
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
∙the company has transferred the significant risks and rewards of ownership to the buyer;
∙the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of turnover can be measured reliably;
∙it is probable that the company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed five years.
The estimated useful lives range as follows:
Software licenses - 1 year straight line
Development expenditure - 1 year straight line
Amortisation is included within 'administrative expenses'.
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
All leases are accounted for in the same manner:
∙A right of use asset and lease liability is recognised on the statement of financial position, initially measured at the present value of future lease payments;
∙Depreciation of right-of-use assets and interest on lease liabilities are recognised in the statement of comprehensive income; and
∙Depreciation on right-of-use assets is charged using the straight-line method over the term of the lease.
The company has adopted IFRS 16 Leases retrospectively from 1 January 2019. The initial measurement of the right of use asset and lease liability takes into account the value of lease incentives such as rent free periods, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
The company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
- 17 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
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Tangible fixed assets (continued)
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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:
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over the life of the lease
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3 to 5 years straight line
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Assets under construction
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Over the life of the lease
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Once assets have been constructed, they are then transferred into the relevant class in which it relates to.
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.
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Impairment of tangible and intangible assets
|
Impairment testing is carried out at each reporting date to determine whether there has been an indication during the year that an impairment loss may exist. Where an indication of impairment exists, further testing is carried out.
For the purposes of impairment testing, the carrying amounts of the tangible and intangible assets are reviewed and impairment loss is recognised where the carrying amount exceeds the assets recoverable amount.
The recoverable amount is the higher of the assets fair value less the costs to sell and value in use. Value in use is determined by discounting the assets estimated future cash flows to its present value using a discount rate which reflects current market assessments of the time value of money and assets specific risks.
The result of IFRS16 impairment test led MAJE Stores Limited to depreciate an amount of £1,694,000 in the 2020 fiscal year.
Stocks are valued at the lower of cost and net realisable. Finished goods are valued at the net price charged by the brand MAJE SAS. At the end of each cycle all unsold stock is returned to the parent company at original cost therefore no provision for slow moving stock is required.
Cost of stock comprises all costs incurred in bringing each product to its present location and condition, being costs of direct materials and labour plus attributable overheads.
- 18 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
The company recognises financial instruments when it becomes a party to the contractual arrangements of the instrument. Financial instruments are de-recognised when they are discharged or when the contractual terms expire. The company's accounting policies in respect of financial instruments transactions are explained below:
Financial assets
The company classifies all of its financial assets as loans and receivables.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the company will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the statement of comprehensive income. On confirmation that the trade receivable will not be collected, the gross carrying value of the asset is written off against the associated provision.
- 19 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
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Financial instruments (continued)
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Financial liabilities
The company classifies all of its financial liabilities as liabilities at amortised cost.
At amortised cost
Financial liabilities at amortised cost including bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried into the statement of financial position.
Creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Government grants received on capital expenditure are initially recognised within deferred income on the company's statement of financial position and are subsequently recognised in profit or loss on a systematic basis over the useful life of the related capital expenditure.
Grants for revenue expenditure are presented as part of the profit or loss in the periods in which the expenditure is recognised.
The grants monies receivable in the year relate to compensation for staff costs under the furlough scheme, already incurred and recognised as an expense in the profit and loss account.
- 20 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The company's functional and presentation currency is Pound Sterling.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the statement of comprehensive income within 'administrative expenses'.
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Interest payable and similar charges
|
Finance costs are charged to the statement of comprehensive income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the statement of financial position. The assets of the plan are held separately from the company in independently administered funds.
- 21 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
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Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the statement of financial position date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
When preparing the financial statements, the directors make a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant directors judgement
There are no significant management judgements apart from key estimates in applying the accounting policies of the company that have the most effect on the financial statements.
Information about estimates and assumption that have the most significant effect on the recognition of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Right-of-use assets
In calculating the incremental borrowing rate (“IBR”), used to calculate the finance charge on a right of-use asset, several components were considered, these being: risk-free rate, lease specific adjustments. inflation, country risk premium and financing spread. is the same as the interest rate used by the parent company on loans to the company. The resulting incremental borrowing rate of 2.83% is the cost of money to the company if it were to borrow funds to satisfy the lease obligation.
- 22 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
All turnover arose within the United Kingdom in both years.
For management purposes, the company operates as a single segment, which is through the sale of goods in different points of sale.
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Transfer pricing adjustment
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Government grants of relate to Coronavirus Job Retention Scheme (CJRS) the Company received during the year.
The prior year restatement relates to the reclassification of miscellaneous operating income of £149,748 from administrative expenses to other operating income. There is no impact on profit for the year.
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The operating (loss)/profit is stated after charging:
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Depreciation of tangible fixed assets
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Depreciation of right-of-use assets
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Amortisation of intangible assets
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Cost of defined contribution scheme
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- 23 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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The company paid the following amounts to its auditors in respect of the audit of the financial statements and for other services provided to the company:
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Fees for the audit of the company
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Staff costs were as follows:
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Cost of defined contribution scheme
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Directors' remuneration is paid by Maje S.A.S, the immediate parent company of Maje Stores Limited.
The company was not recharged the cost as it is negligible (2019: £nil).
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The average monthly number of employees, including the directors, during the year was as follows:
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Interest payable and similar expenses
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Interest payable on loans from group undertakings
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Interest payable on lease liabilities
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- 24 -
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|
MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Current tax on result for the year
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Adjustment in respect of previous period
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Current tax on result for the year
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Origination and reversal of timing differences
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Effect of tax rate change on opening balance
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Adjustments in respect of prior periods
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Taxation charge on (loss)/profit on ordinary activities
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2019: higher than) the standard rate of corporation tax in the UK of 19% (2019: 19%). The differences are explained below:
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(Loss)/Profit on ordinary activities before tax
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(Loss)/Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019: 19%)
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Expenses not deductible for tax purposes
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Adjustments to tax charge in respect of prior periods
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Adjustments to tax charge in respect of previous periods - deferred tax
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Remeasurement of deferred tax for changes in tax rates
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Total tax charge for the year
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- 25 -
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|
MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
9.Taxation (continued)
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Factors that may affect future tax charges
|
The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
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Intangible assets in progress
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Transfers between classes
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Charge for the year on owned assets
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- 26 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Assets under construction
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Right-of-use asset (note 12)
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Transfers between classes
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Charge for the year on owned assets
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Charge for the year on right-of-use assets
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Included within depreciation charge for the year on right-of-use-assets is an exceptional impairment charge of £1,694,000.
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- 27 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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(i) Amounts recognised in the Statement of Financial Position
The Statement of Financial Position shows the following amounts relating to leases:
Net carrying value of Right-of-use assets
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Lease liabilities
The following lease liabilities have been recognised in the Statement of Financial Position in relation to the right-of-use assets.
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- 28 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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(ii) Amounts recognised in the Statement of Comprehensive Income
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(iii) The company’s leasing activities and how these are accounted for
The company leases various retail stores. Rental contracts are typically made for fixed periods of 11 years.
Contracts may contain both lease and non-lease components. The company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
∙fixed payments (including in-substance fixed payments), less any lease incentives receivable;
∙amounts expected to be payable by the company under residual value guarantees;
∙the exercise price of a purchase option if the company is reasonably certain to exercise that option; and
∙payments of penalties for terminating the lease, if the lease term reflects the company exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
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- 29 -
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|
MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the company, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the company:
∙where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received.
The company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
∙the amount of the initial measurement of lease liability.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the company is reasonably certain to exercise a purchase option, the right-of use asset is depreciated over the underlying asset’s useful life. The company has chosen not to revalue its right-of-use assets.
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Finished goods and goods for resale
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There is no material difference between the carrying value of inventories and replacement costs.
During the year, a stock provision of £177,889 (2019: £91,953) was recognised.
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- 30 -
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|
MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Due after more than one year
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Prepayments and accrued income
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Amounts owed by group undertakings are unsecured, interest free and repayable on demand.
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Cash and cash equivalents
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- 31 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
|
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Taxation and social security
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Lease liabilities (note 12)
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
Included within amounts owed to group undertakings is a loan of £nil (2019: £4,111,400) from SMCP SAS. The interest rate charged on the loan before repayment was 2.830% (2019: 2.785%) per year. The loan was repaid in full on 28 December 2020.
Included within amounts owed to group undertakings is a new loan of £3,500,000 from SMCP SAS. The interest rate charged on the loan before repayment is 2.830% per year. The loan is due to be repaid in full on 28 December 2022.
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Creditors: Amounts falling due after more than one year
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Lease liabilities (note 12)
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Government grants received
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- 32 -
|
|
MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Charged to statement of comprehensive income
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The deferred tax asset is made up as follows:
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Decelerated capital allowances
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Short term timing differences
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The amounts have been classified in the statement of financial position as follows:
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Non-current deferred tax asset
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Current deferred tax asset
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Allotted, called up and fully paid
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1,000 (2019: 1,000) ordinary shares of £10.00 each
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The company has one class of ordinary shares; each share carries one voting right per share but no right to fixed income.
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- 33 -
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MAJE STORES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £37,829 (2019: £38,965). Contributions totalling £nil (2019: £9,340) were payable to the fund at the reporting date.
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Related party transactions
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The company has taken advantage of exemption offered by FRS 101 from the requirements of paragraph 17 of IAS 24 Related Party Disclosures not to disclose key management personnel compensation and from the requirements in IAS 24 Related Party Disclosures not to disclose related party transactions entered into between two or more members of a group.
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Transactions and balances with other related parties
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There were no transactions with other related parties during the year (2019: £nil).
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Post balance sheet events
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There have been no significant events affecting the company since the year end.
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Immediate and ultimate parent company
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At the year end, the immediate parent undertaking was Maje SAS, and the ultimate parent undertaking was SMCP SA. Both companies are registered and incorporated in France.
There are several individuals and private equity funds, which collectively own SMCP SA. Therefore in the opinion of the directors, there is no ultimate controlling party.
The smallest and largest group into which the results of the company are consolidated is SMCP SA. The financial statements of SMCP SA is available at the following address: 49, rue Etienne Marcel, 75001 Paris, France.
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