Registered number:
FOR THE YEAR ENDED 30 APRIL 2021
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J. BARBOUR & SONS, LIMITED
COMPANY INFORMATION
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J. BARBOUR & SONS, LIMITED
CONTENTS
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J. BARBOUR & SONS, LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2021
The directors present their strategic report on the Group for the year ended 30 April 2021.
Introduction J. Barbour & Sons, Ltd is a global lifestyle brand whose principal activity is to design, manufacture, licence and distribute clothing and accessories. J. Barbour & Sons, Limited owns subsidiary companies and details of those are shown in the notes to the financial statements. The group operates through the main revenue channels of wholesale, retail, ecommerce and licensing. Founded in 1894, by John Barbour, in South Shields in the North East of England, the company supplied oilskins and other garments to protect the growing community of sailors, fishermen and dockers. Since then, Barbour has continued to thrive on the unique values of the British countryside and offers a full range of wardrobe essentials. Barbour distributes under three brands, Barbour, Barbour International and Barbour Beacon. The Barbour brand, known for its true heritage and country lifestyle, continues to grow and is widely recognised globally for its signature branding, clothing, footwear and accessories. Barbour International, introduced in 1936 by Duncan Barbour and famously worn by Steve McQueen during the International Six Day Trials in 1964, continues to enjoy its long and rich motorcycling heritage. Inspired by the biker look and available across both men’s and women’s ranges, it continues to grow in popularity and has inspired many followers. Barbour Beacon which was launched successfully in 2018, built upon the core roots of the Barbour brand, diversifying the offering through the lens of a slightly younger consumer group.
The impact of the COVID-19 pandemic was felt significantly throughout the year, with revenues and absolute margins down compared to prior year. Our long-term strategy however has not altered, remaining clear and consistent throughout, dedicated to the vision of being recognised as a trusted and the leading British global lifestyle brand with distribution channels via wholesale, retail, ecommerce and licensing.
The business continues to operate in the UK with wholly owned subsidiaries based in Germany and the United States of America. Exclusive, well established distributor partnerships give access to other major markets globally. During the financial year 2020-21 revenues decreased by £24.8m. This result, while a contraction on prior year, does show the strength and resilience of our brands relative to the weaker market performance, the trust that our customers and consumers place in them and the sustainability, in the broadest sense, of our business model and practices. The uncertainty and economic challenge presented by the global pandemic did also impact gross profit by £6.9m. With uncertainty across global markets very high and competition for dwindling demand intense, the marketplace was very difficult to navigate profitably without significant focus on appropriate cost reduction and investment in strong relationships across the end to end product life cycle. Operating profit also increased by £1m, heavily impacted by COVID-19 compounded by the relentless pressure on margins and costs. The profit figure of £29.2m represents a steady performance, supporting our financial resilience and ability to manage costs closely and appropriately. Now more than ever our focus on overhead cost control is crucial, while we strive to deliver excellent customer service complemented by engaging consumer campaigns building on the trust and brand equity we have with our consumers and their valued choices. Despite the challenges of the pandemic the group balance sheet remains relatively strong, with cash held in the business reducing to £95.4m (2020: £97.4m) enabling us to focus on protecting customer service, our long-term objectives and partnerships, investing for the future sustainability of our brands and the trust in our business ethos.
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J. BARBOUR & SONS, LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
Navigating COVID-19 with our core brand values and sustainable business approach has been our central focus, staying close and connected to our consumers and customers, ensuring we invest strategically for the future of our brands and products. We strive to deliver excellent service, remain committed to the heritage and ethics of our brand, supporting sustainable recovery and growth in line with our vision and values over the long term.
Despite the current uncertainty and market contraction, we believe in the sustainable long term growth of our business and as such we will continue to invest in our people, our systems and our service. Having implemented structural changes to prepare for Brexit, we will invest further technology and sustainability. We strongly believe there are many exciting and accessible markets around the world where our brands can add style and quality to consumers lives. As such we will continue to build long term relationships and expand our commercial reach and ambitions. The continuation of our selective approach to strategic product category development remains central to our approach, driving product quality and brand offering, the investment in which we believe will deliver sustainable opportunities for the controlled recovery and growth of our business going forward over the long term.
The COVID-19 pandemic has had a significant impact on the supply and demand aspects of our business across all of the markets in which we operate. The recovery from this will take time and we are committed to providing a high quality and relevant offering to our consumers, always listening and adapting to changes in consumer demand and choice. Our strategy remains focussed on long-term financial goals, being true to our ethics and values whilst trusting and investing in our brands.
The EEA remains an important market, with well-established long term partnerships, brand heritage and consumer relationships. We will continue to invest and grow in this key market over the long-term. Brexit remains a source of considerable financial and operational challenge. We will continue to review our governance and trading structures to ensure we protect supply into our customers and consumers. We will continue to assess our processes and systems to ensure we can communicate clearly and effectively with customers and suppliers and, if appropriate, will take steps to invest in longer term sustainable solutions with EEA interactions. Their continuity very important to our business. Other principal risks monitored include: • Continued consumer demand. The group's ongoing strategy includes long-term growth in international markets as well as new product introduction and innovation; • Currency exposure fluctuations. The group operates in Sterling, Euro and Dollars and where possible we try to minimise the risk by natural hedging. Given the volitility of Sterling the group will endeavour to manage currency as closely as possible; • Cost increases to facilities, raw materials, payroll and property. We continue to review and refine supplier relationships in all areas of the business and forward contract purchases where possible to mitigate risk and protect supply and quality; • Brand Protection. We engage a protective strategy relating to the brand and its trademarks and actively engage to counteract any exposure to fraudulent activity globally; • Credit exposure is very tightly monitored and although some trading relationships may have been set up for many years, we continue to monitor the exposure before releasing goods to customers; and • Due to the seasonality of the business, and the clear challenges of COVID-19, cash flow is monitored closely to enable the trade cycle to continue to operate smoothly and independently.
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J. BARBOUR & SONS, LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
The group regularly reports on and analyses a number of KPI's to monitor the financial performance of the business. The indicators are focused on the performance and stability of the business and are reviewed and set by the board to be in line with the vision and long term growth plan of the business.
The principal key performance indicators used refer to overall sales growth, profitability and trading stability and include: • Turnover decreased from £242.8m to £218.0m, a decrease of 10.2%; • Gross Profit % increased to 51.8% (2020: 49.3%); • Operating Profit % increased to 16.6% (2020: 14.5%); • Cash (excluding short term investments) reduced to £95.4m (2020: £97.4m); and • Stocks decreased to £36.6m (2020: £38.8m) The KPI’s show a well controlled and balanced performance across the group with decreases in turnover, impacted by foreign exchange, continued margin competition in pandemic-hit global markets and strong cost reduction programs.
Other key performance indicators also include employee engagement in the workplace. Barbour undertakes employee surveys to ensure the employees are trained and actively engaged with their role at Barbour with any development, team management and barriers addressed. The survey completed in December 2018 showed positive improvement in key areas across the group, such as active engagement had increased 3.6% while active disengagement reduced by 5.0%. The next survey is planned for December 2021.
The board of directors believe, in good faith, that they have acted both individually and collectively in accordance with the requirements of Section 172 of the Companies Act 2006, thus most likely to promote the success of the company and its group for the benefit of its members as a whole.
Long-term decision making: The directors have consistently managed the strategy and corresponding investments of the business with a view to long-term financial stability and sustainable growth, as shown in the strength and consistency of the brand offering and the balance sheet. Our people and culture: The directors invest significant time and resource into employee development, recognition and delivery. A culture of data-driven business, departmental and personal objectives structure the business activities and reward process, ensuring all employees are informed, engaged and collectively contributing to the company’s success. This focus and collective employee engagement has been crucial to the business over the period, taking into account employee interests and safety throughout our reaction and working practices associated with the COVID pandemic. Sustainability: The directors have invested in all three pillars of sustainability; financial, environmental and social. Continued long-term financial asset management is well-established. The company has made investments to reduce waste and energy consumption and to ensure the use of high quality raw materials from a socially sustainable source. This is evidenced tangibly by the ISO14001 adherence and BCI Cotton membership. Partnerships: The directors throughout the value chain from supplier to wholesale distributor seek partnerships. They actively seek to establish long term relationships that are mutually beneficial, building an open and honest relationship that seeks to deliver excellent service and product to the consumer in an efficient and collaborative way. The length of partnerships in place with our suppliers and customers provide a base of evidence to this philosophy and have served us consistently throughout a challenging trading period. Business conduct: The directors set high expectations on business conduct and regularly must demonstrate these high standards as privileged and proud holders of three Royal Warrants.
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J. BARBOUR & SONS, LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
This report was approved by the board on 16 September 2021
and signed on its behalf.
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J. BARBOUR & SONS, LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2021
The directors present their report and the financial statements for the year ended 30 April 2021.
The directors who served during the year were:
The profit for the year, after taxation, amounted to £
29,166,000
(2020 -
£
28,533,000
)
.
The board recommend the payment of a final dividend of £15m (2020: nil).
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the
consolidated
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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙
select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙
make judgments and accounting estimates that are reasonable and prudent;
∙
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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J. BARBOUR & SONS, LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
Barbour is proud to have achieved the renewal of its accreditation from ISO14001 during the period, covering our UK wax cotton operations. We recognise the importance of minimising the negative impact we have on our environment in all areas of our business and are committed to making further improvements.
Barbour recognises the importance of sustainable raw materials and as such supports BCI Cotton with membership and adoption of BCI Cotton in much of its wax supply chain. The actions that we have taken include but are not restricted to: Wax for Life customer offerings extend the life of our waxed garments by offering Repair and reproofing service, cleaning and the renewal of old garments via our re-loved campaign. Over 100,000 tins of Barbour wax were sold during the year to those customers who wish to rewax their own jackets at home and we support this via instruction videos and media content. BCI Cotton – 100% of our waxed cotton is sourced through the Better Cotton Initiative (BCI). We aim to source 70% of our entire cotton usage more sustainably through BCI by the end of 2021 and 90% by the end of 2024. BCI supports cotton production throughout the world that is better for the environment and for the people who produce it. Packaging – we have made considerable progress in reducing and reusing our packaging. This includes both plastics and Cardboard. This has resulted in an 80 % reduction in Plastic transit hangers The Barbour Streamlined Energy and Carbon Reporting (SECR) summary is provided below. The period covered for the data shown is the calendar year 2020 (01/01/2020 – 31/12/2020). The methodology used to calculate carbon footprint results was the GHG Reporting Protocol – Corporate Standard. We have compared 2020 with last year. The data is sourced from Barbour 2020 energy consumption for all our UK (excluding Eire) premises. In addition the figures cover all fuels purchased for business travel. Note due to various improvement in reporting and to improve accuracy we have restated the 2019 figures previously reported.
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J. BARBOUR & SONS, LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
2020 was an exceptional period covering the COVID pandemic. As a result extraordinary measures were taken by our business some of which reduced our Carbon Footprint (for example wide spread working from home, periodic closure of our retail stores in line with government guidance) and some of which increased our Carbon Footprint (due to staff distancing protocols our warehouse and factory worked extended shift patterns thus driving utility consumption increases).
Barbour undertakes employee surveys to ensure the employees are trained and actively engaged with their role at Barbour with any development, team management and barriers addressed. The surveys are shared throughout the group with feedback for improvement via a working team in each area of the business to ensure the vision for the brand is shared. The results were positive, including a 3.6% increase in active engagement and 5.0% reduction in active disengagement. The next survey is planned for December 2021
The team at J. Barbour & Sons, Ltd are fully committed to the vision and mission of the brand and care passionately in every aspect of their work. All employees take part in a bi annual “Business Briefing” where employees are kept abreast of financial and economical factors impacting the performance of the business as well as developments across the business and are encouraged to feedback and input into company and departmental plans. • to employ people with disabilities in jobs suited to their aptitudes, abilities, and qualifications, making any reasonable adjustments necessary to do so; • to support those that become disabled during the course of their employment making any reasonable adjustments in order that they can continue their employment and on-going training; • to provide employees with disabilities an annual performance review with personal development plan that ensures there is a formal checkpoint and planning process to enable ongoing career development and training of the individual; • to ensure that employees with disabilities are considered for promotion according to their aptitudes, abilities, and qualifications, making any reasonable adjustments necessary to do so; • to ensure that assessments are carried out of the scope of reasonable adjustments which may be made to the workplace and its environment, so as to make it possible to retain an employee with a disability or to recruit a person with a disability; • to make any reasonable alterations to Barbour premises required to ensure that they are accessible and safe for people with disabilities; and • to make reasonable changes to the workplace and to employment arrangements so that a person with a disability is not at any substantial disadvantage compared to a non-disabled person.
The following matters required for disclosure within the Directors' Report are considered by the Directors to be of strategic importance and are therefore covered in the Strategic Report:
• Future Developments • Principal Risks and Uncertainties Also of note, the Strategic Report includes the Director’s statement regarding Section 172 of Companies Act 2006.
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J. BARBOUR & SONS, LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
There have been no significant events affecting the Group since the year end.
The auditors, Ryecroft Glenton, 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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J. BARBOUR & SONS, LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF J. BARBOUR & SONS, LIMITED
We have audited the financial statements of J. Barbour & Sons, Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 30 April 2021, which comprise the Group Statement of Comprehensive Income, the Group and Company Balance Sheets, the Group Statement of Cash Flows, the Group and Company 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 Group 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 Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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J. BARBOUR & SONS, LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF J. BARBOUR & SONS, LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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J. BARBOUR & SONS, LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF J. BARBOUR & SONS, 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 Group financial statements.
The 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: The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations; We identified the laws and regulations applicable to the Company and its subsidiaries through discussions with directors and other management, and from our commercial knowledge and experience of the sector; We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the Group, including the Companies Act 2006 and taxation legislation. We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and We ensured that the identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
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J. BARBOUR & SONS, LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF J. BARBOUR & SONS, LIMITED (CONTINUED)
We assessed the susceptibility of the Group financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
Making enquiries of management as to where they considered there was susceptibility to fraud and their knowledge of actual, suspected and alleged fraud; and Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. To address the risk of fraud through management bias and override of controls, we: Performed analytical procedures to identify any unusual or unexpected relationships; Tested journal entries to identify unusual transactions; and Assessed whether judgments and assumptions made in determining the accounting estimates were indicative of potential bias. In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: Agreeing financial statement disclosures to underlying supporting documentation; Enquiring of management as to actual and potential litigation and claims; and Reviewing correspondence with HMRC and the Company’s legal expenditure. There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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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J. BARBOUR & SONS, LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF J. BARBOUR & SONS, 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
32 Portland Terrace
NE2 1QP
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J. BARBOUR & SONS, LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2021
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J. BARBOUR & SONS, LIMITED
REGISTERED NUMBER:
00124201
CONSOLIDATED BALANCE SHEET
AS AT
30 APRIL 2021
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J. BARBOUR & SONS, LIMITED
REGISTERED NUMBER:
00124201
CONSOLIDATED BALANCE SHEET
(CONTINUED)
AS AT
30 APRIL 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 16 September 2021
.
The notes on pages 24 to 53 form part of these financial statements.
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J. BARBOUR & SONS, LIMITED
REGISTERED NUMBER:
00124201
COMPANY BALANCE SHEET
AS AT
30 APRIL 2021
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J. BARBOUR & SONS, LIMITED
REGISTERED NUMBER:
00124201
COMPANY BALANCE SHEET
(CONTINUED)
AS AT
30 APRIL 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 24 to 53 form part of these financial statements.
Page 18
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J. BARBOUR & SONS, LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
30 APRIL 2021
Page 19
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J. BARBOUR & SONS, LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
30 APRIL 2021
Page 20
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J. BARBOUR & SONS, LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2021
Page 21
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J. BARBOUR & SONS, LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2021
Page 22
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J. BARBOUR & SONS, LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 30 APRIL 2021
Page 23
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
The company is a private limited company, limited by shares which is incorporated and registered in England and Wales (no. 00124201). The address of the registered office is Simonside Industrial Estate, South Shields, Tyne and Wear, NE34 9PD. The principal activity of the company is the design, manufacture, licence and distribution of clothing and accessories.
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 Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The financial statements are presented in sterling which is the functional currency of the Group. Monetary amounts in these financial statements are rounded to the nearest £'000.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Profit and Loss Account from the date on which control is obtained.
Page 24
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
2.
Accounting policies (continued)
A review of the Group's business activities is provided within the strategic report. In addition, the strategic report discloses the Group's principal risks and uncertainties, including exposures to competitive, legislative and financial risk. The directors' risk assessment includes consideration of the impacts of the Covid-19 pandemic and the potential effects on the Group's ability to trade successfully in the future. While the pandemic has already had a significant impact on the Group's revenue and cash flow generation from operations, especially following the enforced temporary closure of retail stores in the United Kingdom during 2020 and into 2021, the directors consider that the effect has not been of enough significance to affect going concern, particularly as the restrictions to trade are now being eased.
The Group has considerable financial resources which have helped them manage the impact of Covid-19 on the business to date and, as a consequence of these financial resources being maintained, the directors believe that the Group is well placed to manage its business risks successfully and continue in existence for the foreseeable future. For this reason the directors continue to adopt the going concern basis of preparation for these financial statements.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Consolidated Statement of Comprehensive Income over its useful economic life.
The estimated useful life of intangible assets is as follows:-
Goodwill - 15 years
Page 25
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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 either the straight line or reducing balance method as appropriate.
Depreciation is provided on the following 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.
At each balance sheet date, stocks are assessed for impairment and provision is made for obsolete, slow-moving or defective items where appropriate. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Page 26
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
2.
Accounting policies (continued)
Current asset investments are fixed term deposits with maturity dates greater than three months from the date of inception. They are measured at amortised cost.
The Group only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities such as trade and other debtors and creditors and loans from related parties.
Debt instruments (other than those wholly repayable or receivable within one year), including accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income. Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income in the same period as the related expenditure.
Page 27
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
2.
Accounting policies (continued)
Functional and presentation currency
The Group's presentational currency is GBP. The Company's functional currency is GBP. The functional currency of certain subsidiaries is the currency of the economic area in which the subsidiary operates. Transactions and balances Foreign currency transactions of the Group 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 of the Group 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 of the Group 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 the profit and loss account. Translation of group companies For the purpose of presenting consolidated financial statements, the assets and liabilities of the group's foreign operations are translated from their functional currency to GBP using the closing exchange rate. Income and expenses are translated using the average rate for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of transactions are used. Exchange differences arising on the translation of group companies are recognised in other comprehensive income.
Page 28
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
2.
Accounting policies (continued)
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations. The contributions are recognised as an expense in the Consolidated Profit and Loss Account when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Group in independently administered funds. Defined benefit pension plan The Group operates a defined benefit plan for certain employees. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including but not limited to age, length of service and remuneration. A defined benefit plan is a pension plan that is not a defined contribution plan. The asset or liability recognised in the Balance Sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the balance sheet date less the fair value of plan assets at the balance sheet date (if any) out of which the obligations are to be settled. The defined benefit obligation is calculated using the projected unit credit method. Annually the company engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating to the estimated period of the future payments ('discount rate'). The fair value of plan assets is measured in accordance with the FRS 102 fair value hierarchy and in accordance with the Group's policy for similarly held assets. This includes the use of appropriate valuation techniques. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income. These amounts together with the return on plan assets, less amounts included in net interest, are disclosed as 'actuarial gain or loss on defined benefit schemes'. The cost of the defined benefit plan, recognised in profit or loss as employee costs, except where included in the cost of an asset, comprises: a) the increase in net pension benefit liability arising from employee service during the period; and b) the cost of plan introductions, benefit changes, curtailments and settlements. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is recognised in profit or loss as a 'finance expense'.
Page 29
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
2.
Accounting policies (continued)
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income. Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet 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; • Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and • They are not recognised where they relate to timing differences in respect of interests in subsidiaries and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future. 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 balance sheet date.
When preparing the financial statements for the year ended 30 April 2021, the Group has amended the classification of certain items of expenditure as either Revenue, Cost of sales, Distribution costs or Administration expenses, as they believe this will provide more reliable and relevant financial information by moving these expenses to an accounts heading which more accurately reflects the nature of the cost incurred.
There is no impact on profit in either the current or prior period and no impact on earlier periods either, as the change in policy is a reclassification between profit and loss account codes only. The impact on the current period figures is an increase in Distribution costs of £3,501,000 and a decrease in Administration expenses of £3,501,000. The impact on the comparative figures is an increase in revenue of £14,000, an increase in Cost of sales of £124,000 an increase in Distribution costs of £4,707,000 and a decrease in Administration expenses of £4,816,000 in the Consolidated Profit and Loss account.
Trademark applications and renewals are charged to the Profit and Loss Account.
Page 30
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
The value of stocks, including raw materials, work in progress and finished goods, has been reduced by a provision for slow-moving or obsolete stock. The provision applies assumptions based on the age, category and predicted future use of the stock, such that no value is carried if it is over a certain age in the case of finished goods or is not expected to be utilised in the manufacture of future seasons ranges in the case of raw materials. Defined Benefit Pension Scheme The group has obligations to pay pension benefits to certain employees. The cost of those benefits and the present value of the obligations depend on a number of factors, including life expectancy, salary increases, asset valuations, and the discount rate used on certain investments. Estimates are required in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends. Recoverability of debtors The group makes allowances for doubtful debts based on an assessment of the recoverability of debtors. Allowances are applied to debtors where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses historical bad debts and current economic trends when making a judgement to evaluate the adequacy of the bad debt provision. Where expectation is different from the original estimate, such difference will impact the carrying value of debtors.
Page 31
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 32
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 33
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 34
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 35
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
12.
Taxation (continued)
There were no factors that may affect future tax charges.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was £
23,800,000
(2020 -
£
29,336,000
)
.
Page 36
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 37
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
15.
Intangible assets (continued)
Page 38
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 39
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
16.
Tangible fixed assets (continued)
Page 40
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 41
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 42
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 43
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 44
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Page 45
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
24.
Provisions (continued)
Page 46
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
Capital redemption reserve
Foreign exchange reserve
Profit and loss account
Page 47
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
The Group operates a defined contribution pension scheme for UK employees.
The assets of the scheme are held separately from those of the Group in independently administered funds. The pension cost charge represents contributions payable by the Group to the funds and amounted to £445,000 (2020 - £574,000). Contributions totalling £66,000 (2020 - £67,000) were payable to the fund at the balance sheet date.
The Group operates a defined benefit pension scheme.
The Group previously operated two defined benefit pension schemes, the J Barbour & Sons Limited Works Pensions and Life Assurance Scheme, and the J Barbour & Sons Limited Pension Fund Scheme which were both wound up on 26 July 2018. With effect from 5 October 2017 the assets and liabilities of both Schemes were transferred to the J Barbour & Sons Limited 2015 Pension Scheme (established 27 October 2015) which has assumed liability for paying the benefits accrued in both of the former Schemes.
Both the J Barbour & Sons Limited Works Pensions and Life Assurance Scheme, and the J Barbour & Sons Limited Pension Fund Scheme were closed to new entrants from 31 May 2002. Employed members continue to accrue benefits that are linked to final pensionable salary and service at retirement (or earlier date of leaving) in the J Barbour & Sons Limited 2015 Pension Scheme. The accompanying disclosures set out below are based on calculations carried out as at 30 April 2021 by a qualified independent actuary on the J Barbour & Sons Limited 2015 Pension Scheme. The assets of the scheme are held in separate trustee-administered funds to meet long-term pension liabilities to past and present employees. The trustees of the scheme are required to act in the best interest of the scheme’s beneficiaries. The appointment of members of the trustee board is determined by the trust documentation. The liabilities of the defined benefit scheme are measured by discounting the best estimate of future cash flows to be paid out of the scheme using the projected unit method. This amount is reflected in any deficit in the balance sheet. The projected unit method is an accrued benefits valuation method in which the scheme’s liabilities make allowance for projected earnings. The liabilities set out in this note have been calculated based on the data supplied for the triennial valuation of the J Barbour & Sons Limited 2015 Pension Scheme at 30 April 2018 updated to 30 April 2021. The results of the calculations and the assumptions adopted are shown below.
Page 48
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
29.
Pension commitments (continued)
Page 49
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
29.
Pension commitments (continued)
Page 50
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
29.
Pension commitments (continued)
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
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J. BARBOUR & SONS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2021
In the opinion of the members, no individual member has outright control of the Group. The Group is controlled by members of the Barbour family.
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