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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Strategic Ret. | LSE:SRR | London | Ordinary Share | GB0033995894 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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RNS Number:4419A
Strategic Retail PLC
18 July 2007
STRATEGIC RETAIL PLC
ANNOUNCEMENT OF RESULTS FOR THE 52 WEEKS ENDED 24 FEBRUARY 2007
CHAIRMAN'S STATEMENT
Our business is currently composed of two main strands: firstly, the retailing
of home decorating products and, secondly, the retailing of home textile
products and furniture.
The retailing of home decorating products business is carried out through Fads
(Trading) Limited and Leveys (Fads) Limited. These companies endured a difficult
year with a long hot summer and the World Cup not being conducive to the
retailing of paint and wallcoverings.
As such, we have carefully monitored the performance of each business on a store
by store basis and have vacated, wherever possible, both loss making and
marginal stores. We have explored premium opportunities as they have arisen.
The retailing of home textile products and furniture is carried out through
Texstyle World (Fads) Limited. This business has shown growth even against a
period which included the sale through of excess and display stocks. We
acquired a store based in Carlisle from the administrators of Furniture Express
and have converted this store to a Texstyle World trading format. During the
year, we also launched a store based in Falkirk and, since the year end, have
launched a store in Manchester.
We are carefully considering other opportunities to roll out the Texstyle World
offer.
By closing loss-making stores and through growth in Texstyle World we have
achieved a small profit in the year. We have shown operations split between
continuing and discontinued to highlight our efforts in maintaining a long-term
business.
We see expansion opportunities through a combined Texstyle World and a limited
home decorating product offer in appropriate retail park locations. We will
also monitor available companies for potential acquisition.
I would conclude by thanking all of the employees for their continued hard work
and commitment to the group.
IW Currie
Chairman
BUSINESS AND FINANCIAL REVIEW
REVIEW OF THE BUSINESS
Due to the difficult trading conditions and our need to eliminate loss-making
stores, we have closed a significant number of stores in the year and movements
in store numbers by our subsidiary companies can be summarised as follows:
52 weeks ended 24 February 2007
Fads Leveys Texstyle Furniture
(Trading) (Fads) World (Fads) Express
Limited Limited Limited (Fads)
Limited
No. No. No. No.
Total number trading in the prior year 55 17 9 -
Total number open at start 49 16 8 -
Closed in the year (11) (4) (2) -
New in the year 1 - - 1
Total at end of year 39 12 6 1
The impact of the closure program on turnover and operating profit is included
within the financial statements and may be summarised as follows:
52 weeks ended 24 February 2007
Fads Leveys Texstyle Furniture
(Trading) (Fads) World (Fads) Express
Limited Limited Limited (Fads)
Limited
#000 #000 #000 #000
Turnover on continued operations 9,350 3,497 5,331 -
Turnover on discontinued operations 1,848 425 937 -
Turnover on acquisitions - - - 169
Turnover 11,198 3,922 6,268 169
Operating (loss) / profit on continued operations (264) (29) 414 -
Operating (loss) / profit on discontinued operations (282) 418 (161) -
Operating (loss) / profit on acquisitions - - - (22)
Operating (loss)/profit (546) 389 253 (22)
Fads (Trading) Limited suffered the most significant operating loss on
continuing operations. Its like for like sales were down 5% as the declining
home decorative market suffered. However a significant proportion of the
operating loss (#282,000 of #546,000) is attributable to the discontinuing
operations.
Leveys (Fads) Limited followed a similar trend to Fads (Trading) Limited up
until November 2006. At this point its main high street competitor went into
administration and we have seen like for like growth of circa 10% since.
Consequently operating losses on continuing operations have been restricted to
#29,000. The significant profit on discontinued operations has been generated
by the release of onerous lease provisions relating to the discontinued stores.
Texstyle World showed the strongest result on continuing operating activities,
achieving an operating profit of #414,000. It enjoyed 2% like for like growth
for the year and, after adjusting for the previous year's excess stock sale
through the period, the true growth rate was in the region of 14%.
FINANCIAL KEY PERFORMANCE INDICATORS
The group's key financial performance indicators are turnover, margin,
like-for-like growth rates and store contribution. The movements on these
indicators are discussed above.
NON-FINANCIAL KEY PERFORMANCE INDICATORS
The principal non-financial performance measures are summarised below:
Laws and regulations
The group ensures that it is fully compliant with all applicable laws and
regulations such as Health & Safety, Waste Packaging and other environmental
regulations by employing the services of external specialists and service
providers. The group aims to minimise the number of breaches of laws and
regulations. There have been no reported breaches of laws and regulations in
the period (2006: nil).
Employee skills and morale
The group's aim is to recruit and retain sufficient skilled and motivated
employees to meet the needs of the business. The required skills have been
defined and targets set for each employee. These form the basis for recruitment
and training. The training expense in the period is in line with budget. Staff
turnover rates are monitored monthly.
FUTURE DEVELOPMENTS
We will continue to exit loss-making or marginal stores. We will pursue
premiums for the exiting of these stores but may have to incur premiums
ourselves to exit a poor loss-maker. We are currently reviewing potential sites
to roll out the Texstyle World offer having successfully launched the new store
at Falkirk and our store in Manchester. Our new stores combine the furniture
and home textile products historically associated with the company together with
paint and luxury wallcoverings to give a more rounded home offer.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 52 week period ended 24 February 2007
Note 52 weeks ended 24 February 2007 52 weeks
Continuing Discontinued Total ended 25
February
Continuing Acquisitions 2006
#000 #000 #000 #000 #000
TURNOVER 1 18,178 169 3,210 21,557 21,923
Cost of sales 2 (9,196) (61) (1,904) (11,161) (11,227)
GROSS PROFIT 2 8,982 108 1,306 10,396 10,696
Distribution costs 2 (7,450) (95) (1,076) (8,621) (8,830)
Administrative expenses 2 (1,527) (34) (253) (1,814) (1,676)
OPERATING PROFIT/(LOSS) 2 5 (21) (23) (39) 190
Profit/(loss) on sale of
fixed assets 125 (12)
Other interest receivable 3 3 8
Interest payable and similar
charges 4 (15) (8)
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION
1-6 74 178
Taxation 7 - -
PROFIT FOR THE FINANCIAL
PERIOD 74 178
EARNINGS PER SHARE
Basic and diluted 9 0.42p 1.10p
No separate Statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
CONSOLIDATED BALANCE SHEET
At 24 February 2007
Note 24 February 2007 25 February 2006
#000 #000 #000 #000
FIXED ASSETS
Intangible assets 10 4,153 4,263
Tangible assets 11 1,015 1,337
5,168 5,600
CURRENT ASSETS
Stocks 14 4,269 4,472
Debtors 15 1,028 759
Cash at bank and in hand 194 558
5,491 5,789
CREDITORS: Amounts falling due within one
year 17 (4,105) (4,262)
NET CURRENT ASSETS 1,386 1,527
TOTAL ASSETS LESS CURRENT LIABILITIES 6,554 7,127
PROVISIONS FOR LIABILITIES AND CHARGES 19 (987) (1,945)
NET ASSETS 5,567 5,182
CAPITAL AND RESERVES
Called up share capital 20 108 84
Share premium account 21 3,688 3,025
Shares to be issued 21 1,339 1,715
Profit and loss account 22 432 358
EQUITY SHAREHOLDERS' FUNDS 5,567 5,182
COMPANY BALANCE SHEET
At 24 February 2007
Note 24 February 2007 25 February 2006
#000 #000 #000 #000
FIXED ASSETS
Investments 12 257 257
CURRENT ASSETS
Debtors (including #4,149,000 (2006: #4,224,000)
due in more than one year) 15 4,582 4,421
Cash at bank and in hand 2 66
4,584 4,487
CREDITORS: Amounts falling due within one year 17 (52) (121)
NET CURRENT ASSETS 4,532 4,366
NET ASSETS 4,789 4,623
CAPITAL AND RESERVES
Called up share capital 20 108 84
Share premium account 21 3,688 3,025
Shares to be issued 21 1,339 1,715
Profit and loss account 22 (346) (201)
EQUITY SHAREHOLDERS' FUNDS 4,789 4,623
CONSOLIDATED CASH FLOW STATEMENT
For the 52 week period ended 24 February 2007
Note 52 weeks ended 52 weeks ended
24 February 2007 25 February 2006
#000 #000 #000 #000
CASH FLOW FROM OPERATING ACTIVITIES 23 (550) 484
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 3 8
Interest paid (15) (8)
NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (12) -
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (260) (407)
Sale of tangible fixed assets 313 -
NET CASH INFLOW/(OUTFLOW) FOR CAPITAL EXPENDITURE 53 (407)
ACQUISITIONS AND DISPOSALS
Purchase of business (166) (1,002)
NET CASH OUTFLOW FOR ACQUISITIONS AND DISPOSALS 13 (166) (1,002)
CASH OUTFLOW BEFORE FINANCING (675) (925)
FINANCING
Issue of ordinary share capital 386 300
Cash payment in lieu of shares (75) -
NET CASH INFLOW FROM FINANCING 311 300
DECREASE IN CASH IN THE PERIOD 24 (364) (625)
RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the 52 week period ended 24 February 2007
Group Company
52 weeks 52 weeks 52 weeks 52 weeks
ended 24 ended 25 ended 24 ended 25
February February February February
2007 2006 2007 2006
#000 #000 #000 #000
PROFIT/(LOSS) FOR THE FINANCIAL PERIOD 74 178 (145) (76)
74 178 (145) (76)
New share capital subscribed 24 4 24 4
Share premium on allotment during the period 677 296 677 296
Share issue expenses debited to share premium (14) - (14) -
Shares to be issued - conversion of loan notes (376) 1,715 (376) 1,715
NET ADDITION TO SHAREHOLDERS' FUNDS 385 2,193 166 1,939
Opening shareholders' funds 5,182 2,989 4,623 2,684
CLOSING SHAREHOLDERS' FUNDS 5,567 5,182 4,789 4,623
ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention
and in accordance with applicable accounting standards.
The company has taken advantage of the exemption contained in Financial
Reporting Standard 8 and has therefore not disclosed transactions or balances
with entities which form part of the Strategic Retail Plc group.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate those of Strategic Retail Plc
and all of its subsidiary undertakings for the period. Subsidiaries acquired
during the period are consolidated using the acquisition method. Their results
are incorporated from the date that control passes. The difference between the
cost of acquisition of shares in subsidiaries and the fair value of the
separable net assets acquired is capitalised and written off on a straight line
basis over its estimated economic life. Provision is made for impairment. All
financial statements are made up to 24 February 2007.
As permitted by Section 230(4) of the Companies Act 1985, the company has not
presented its own profit and loss account.
PURCHASED GOODWILL
Goodwill representing the excess of the purchase price compared with the fair
value of net assets acquired is capitalised and written off evenly over 20 years
as in the opinion of the directors this represents the period over which the
goodwill is effective.
TANGIBLE FIXED ASSETS
Depreciation is provided on all tangible fixed assets other than freehold land
at rates calculated to write each asset down to its estimated residual value
evenly over its expected useful life, as follows:
Freehold properties - 2% per annum straight line
Short leasehold properties - Over the life of the lease
Fixtures, fittings and equipment - 10-20% per annum straight line
INVESTMENTS
Fixed asset investments are stated at cost. Provision is made for any
impairment in the value of fixed asset investments.
STOCKS AND WORK IN PROGRESS
Stocks are valued at the lower of cost and net realisable value. In determining
the cost of raw materials, consumables and goods purchased for resale the
weighted average purchase price is used. Provision is made where necessary for
obsolete, slow moving stock.
FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are translated at the
rate of exchange ruling at the balance sheet date. Transactions in foreign
currencies are recorded at the rate ruling at the date of the transaction. All
differences are taken to the profit and loss account.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the company's taxable profits and its
results as stated in the financial statements that arise from the inclusion of
gains and losses in tax assessments in periods different from those in which
they are recognised in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which timing differences are expected to reverse, based on tax
rates and laws that have been enacted or substantially enacted by the balance
sheet date. Deferred tax is measured on a non-discounted basis.
LEASED ASSETS AND OBLIGATIONS
Where assets are financed by leasing agreements that give rights approximating
to ownership ("finance leases"), the assets are treated as if they had been
purchased outright. The amount capitalised is the present value of the minimum
lease payments payable during the lease term. The corresponding leasing
commitments are shown as obligations to the lessor.
Lease payments are treated as consisting of capital and interest elements, and
the interest is charged to the profit and loss account in proportion to the
remaining balance outstanding.
All other leases are "operating leases" and the annual rentals are charged to
profit and loss on a straight line basis over the lease term.
RETIREMENT BENEFITS
The group operates a defined contribution scheme. The amount charged to the
profit and loss account in respect of pension costs and other post retirement
benefits is the contributions payable in the period. Differences between
contributions payable in the period and contributions actually paid are shown as
either accruals or prepayments in the balance sheet.
TURNOVER
Turnover represents the invoiced value, net of Value Added Tax, of goods sold to
customers. Revenue is recognised at the point of sale. A provision for sales
with a right of return is recognised at the year end.
NOTES TO THE FINANCIAL STATEMENTS
For the 52 week period ended 24 February 2007
1 SEGMENTAL REPORT
The analysis of turnover and profit before taxation by class of business and the
geographical analysis of turnover have not been given as, in the opinion of the
directors, such disclosure would be severely prejudicial to the interests of the
group.
2 ANALYSIS OF CONTINUING OPERATIONS
52 weeks ended 24 February 2007 52 weeks ended 25 February 2006
Continuing Discontinued Total Continuing Discontinued Total
#000 #000 #000 #000 #000 #000
TURNOVER 18,347 3,210 21,557 16,400 5,523 21,923
Cost of sales (9,257) (1,904) (11,161) (8,356) (2,871) (11,227)
GROSS PROFIT 9,090 1,306 10,396 8,044 2,652 10,696
Distribution costs (7,545) (1,076) (8,621) (6,324) (2,506) (8,830)
Administrative
expenses (1,561) (253) (1,814) (1,247) (429) (1,676)
OPERATING (LOSS)/
PROFIT (16) (23) (39) 473 (283) 190
3 OTHER INTEREST RECEIVABLE 52 weeks ended 52 weeks ended
24 February 25 February
2007 2006
#000 #000
Bank interest 3 8
4 INTEREST PAYABLE AND SIMILAR CHARGES 52 weeks ended 52 weeks ended
24 February 25 February
2007 2006
#000 #000
Bank interest 15 8
5 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 52 weeks ended 52 weeks ended
24 February 25 February
2007 2006
#000 #000
Profit on ordinary activities before taxation is stated after charging/
(crediting):
Depreciation and amounts written off tangible fixed assets:
Charge for the period
Owned assets 253 240
Amortisation of goodwill 231 239
(Profit)/loss on disposal of tangible fixed assets (125) 12
Profit on sale of rights to car park (323) -
Operating lease rentals:
Plant and machinery 98 86
Amounts payable to Baker Tilly and their associates in respect of both audit and
non-audit services:
52 weeks ended 52 weeks ended
24 February 25 February
2007 2006
#000 #000
Audit services
- Statutory audit 30 28
Tax services
- Compliance services 9 8
Other services 4 6
43 42
Comprising
- Audit services - company 3 3
- group 27 25
- Non-audit services - company 5 6
- group 8 8
43 42
6 EMPLOYEES 52 weeks ended 52 weeks ended
24 February 25 February
2007 2006
Number Number
The average monthly number of persons (including directors) employed by the
group during the period was:
Administration and management 40 38
Retailing 377 448
417 486
Staff costs for the above persons: 52 weeks ended 52 weeks ended
24 February 25 February
2007 2006
#000 #000
Wages and salaries 4,314 4,166
Social security costs 303 299
Other pension costs 79 72
4,696 4,537
DIRECTORS' REMUNERATION 52 weeks ended 52 weeks ended
24 February 2007 25 February 2006
#000 #000
Emoluments 73 75
Money purchase pension contributions - -
Total emoluments 73 75
The emoluments for IW Currie were paid to Zeus Partners. See note 30.
52 weeks ended 52 weeks ended
24 February 25 February
2007 2006
The number of directors to whom retirement benefits are accruing under: Number Number
Money purchase schemes was - -
7 TAXATION 52 weeks ended 52 weeks ended
24 February 2007 25 February 2006
#000 #000 #000 #000
Current tax:
UK corporation tax on profits of the period - -
Total current tax - -
Deferred tax:
Origination and reversal of timing differences - -
Total deferred tax - -
Tax on profit on ordinary activities - -
Factors affecting tax charge for the period: 52 weeks 52 weeks
ended 24 ended 25
February February
2007 2006
#000 #000
The tax assessed for the period is lower than the standard rate of
corporation tax in the UK (30%). The differences are explained
below:
Profit on ordinary activities before tax 74 178
Profit on ordinary activities multiplied by standard rate of
corporation tax in the UK 30% (2006: 30%) 22 53
Effects of:
(Income not taxable)/expenses not deductible for tax purposes (306) 118
Fixed asset timing differences 23 (45)
Losses unutilised 116 21
Losses utilised (9) (125)
Chargeable gains 164 -
Other timing differences (10) (22)
Current tax charge for the period - -
Factors that may affect future tax charges:
The group has trading losses of approximately #4,133,000 (2006: #3,781,000)
which may be available for offset against trading profit arising in the future,
which would reduce tax payments.
8 LOSS ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY
The loss dealt with in the financial statements of the parent company was
#145,000 (2006: loss #76,000).
9 EARNINGS PER ORDINARY SHARE
GROUP
The calculations of earnings per share are based on the following profits and
number of shares:
Basic Diluted Basic Diluted
52 weeks 52 weeks 52 weeks 52 weeks
ended 24 ended 24 ended 25 ended 25
February 2007 February 2007 February 2006 February 2006
#000 #000 #000 #000
Profit for the financial period 74 74 178 178
Amortisation of goodwill 231 231 239 239
Profit for the financial period before
amortisation of goodwill 305 305 417 417
Weighted average number of shares 52 weeks ended 52 weeks ended
24 February 25 February
2007 2006
Number Number
For basic and diluted earnings per share 17,718,439 16,169,962
Basic Diluted Basic Diluted
52 weeks ended 52 weeks ended 52 weeks ended 52 weeks ended
24 February 24 February 25 February 25 February
2007 2007 2006 2006
Earnings per share 0.42p 0.42p 1.10p 1.10p
Additional earnings per share before amortisation 1.72p 1.72p 2.58p 2.58p
10 INTANGIBLE FIXED ASSETS
Positive
goodwill
GROUP
#000
Cost
At beginning of period 4,510
Acquisitions 91
Additions - fair value update (note 13) 30
At end of period 4,631
Depreciation
At beginning of period 247
Charged in the period 231
At end of period 478
Net book value
At 24 February 2007 4,153
At 25 February 2006 4,263
11 TANGIBLE FIXED ASSETS
Freehold land Short Fixtures, Total
and buildings leasehold fittings and
property equipment
GROUP
#000 #000 #000 #000
Cost
At beginning of period 171 53 1,514 1,738
Acquisitions - - 2 2
Additions - 13 247 260
Disposals (143) (16) (283) (442)
At end of period 28 50 1,480 1,558
Depreciation
At beginning of period 2 14 385 401
Charged in period 2 6 245 253
Disposals - - (195) (195)
Impairment - - 84 84
At end of period 4 20 519 543
Net book value
At 24 February 2007 24 30 961 1,015
At 25 February 2006 169 39 1,129 1,337
12 FIXED ASSET INVESTMENTS
Shares in
group
undertakings
COMPANY #000
Cost and net book value
At beginning and end of period 257
The company holds more than 20% of the equity (and no other share or loan
capital) of the following undertakings:
Subsidiary undertaking Country of Principal activity Class and percentage
registration of shares held
Group Company
Fads (Trading) Limited UK Retailing of decorating and 100% ord 100% ord
home fashion products
Leveys (Fads) Limited UK Retailing of decorating and 100% ord 100% ord
home fashion products
Texstyle World (Fads) Limited UK Retailing of decorating and 100% ord 100% ord
home fashion products
Leveys Limited UK Dormant - In liquidation 100% ord -
13 ACQUISITIONS
On 10 November 2006 the group acquired part of the trade and assets of Furniture
Express Limited (in Administration) for a cash consideration of #166,000. The
fair values will be finalised in the financial statements for the 53 week period
ended 1 March 2008.
Initial book Accounting Other Onerous Fair value at
value at date policy liabilities leases date of
of alignment acquisition
acquisition
#000 #000 #000 #000 #000
Tangible fixed assets 2 - - - 2
Stocks 146 (25) - - 121
TOTAL ASSETS 148 (25) - - 123
Creditors: Amounts falling
due within one year - (2) (11) - (13)
Provisions for liabilities
and charges - - - (35) (35)
TOTAL LIABILITIES - (2) (11) (35) (48)
NET ASSETS 148 (27) (11) (35) 75
Positive goodwill of #91,000, being the difference between the fair value of net
assets acquired and consideration paid, arises from this transaction.
FAIR VALUE ADJUSTMENTS
Accounting policy alignments
The accounting policy alignments relate to the alignment of stock provision
methodologies and other sundry differences.
Other liabilities
The other liabilities relate to amounts due to the landlord.
Onerous leases
The onerous lease provision relates to onerous contracts on stores where rent
commitments are charged at levels above the local market rate.
13 ACQUISITIONS (continued)
On 30 August 2005 the group acquired part of the trade and assets of Room 2
Limited (in Administration) for consideration as follows:
#000 #000
Cash 600
Legal fees 177
Shares 601
Consideration paid to date 1,378
Deferred consideration - convertible loan notes (note 21) 1,339
Total consideration 2,717
The movements on the deferred consideration account during the period are as
follows:
#000
Balance at 25 February 2006 1,715
Loan notes converted to shares during the period (301)
Loan notes converted to cash during the period (75)
Balance at 24 February 2007 1,339
The assets and liabilities acquired have been included at their fair values to
the company, as set out below. The provisional fair values recorded in the
previous period have been revisited during the year. This has resulted in a
decrease to the valuation of tangible fixed assets of #30,000. The final fair
value adjustments are as follows:
Initial book Accounting Impairment Onerous Onerous Fair value at
value at date policy review contracts leases date of
of alignment acquisition
acquisition
#000 #000 #000 #000 #000 #000
Tangible fixed 709 - (186) - 21 544
assets
Stocks 1,720 (222) - - - 1,498
TOTAL ASSETS 2,429 (222) (186) - 21 2,042
Creditors: Amounts
falling due within
one year (594) (21) - - - (615)
Provisions for liabilities and - - - (90) (673) (763)
charges
TOTAL LIABILITIES (594) (21) - (90) (673) (1,378)
NET ASSETS 1,835 (243) (186) (90) (652) 664
13 ACQUISITIONS (continued)
Positive goodwill of #2,053,000 being the difference between the fair value of
net assets acquired and consideration paid arises from this transaction.
FAIR VALUE ADJUSTMENTS
Accounting policy alignments
The accounting policy alignments relate to the alignment of stock provision
methodologies and other sundry differences.
Impairment review
The impairment review was carried out on the carrying value of fixed assets
acquired. Certain assets have been written down to their value in use.
Onerous contracts
The onerous lease provision relates to onerous contracts on stores where rent
commitments are charged at levels above the local market rate.
Onerous leases
Onerous leases relate to future lease costs on closed stores where the group is
unable to exit the store before the end of the lease term.
14 STOCKS Group Company
24 February 25 February 24 February 25 February
2007 2006 2007 2006
#000 #000 #000 #000
Finished goods and goods for resale 4,269 4,472 - -
15 DEBTORS Group Company
24 February 25 February 24 February 25 February
2007 2006 2007 2006
#000 #000 #000 #000
Due within one year:
Trade debtors 172 220 - -
Amounts owed by group undertakings - - 433 181
Other debtors 100 74 - 16
Prepayments and accrued income 606 315 - -
Deferred tax asset 75 - - -
953 609 433 197
Due in more than one year:
Amounts owed by group undertakings - - 4,149 4,224
Deferred tax asset 75 150 - -
1,028 759 4,582 4,421
16 DEFERRED TAXATION ASSET
Deferred
taxation
asset
#000
GROUP
At beginning of period 150
Credit for the period -
______
At end of period 150
______
The elements of the deferred tax asset, which is carried within current assets,
are as follows:
24 February 25 February
2007 2006
#000 #000
Tax losses 150 150
The deferred tax asset has been recognised based on the directors' view of the
group's potential future profitability.
16 DEFERRED TAXATION ASSET (continued)
Unprovided deferred tax assets/(liabilities) are as follows: 24 25
February February
2007 2006
#000 #000
Difference between accumulated depreciation and capital allowances 5 14
Other timing differences 7 6
Tax losses 1,090 795
1,102 815
17 CREDITORS: Amounts falling due within one year Group Company
24 February 25 February 24 February 25 February
2007 2006 2007 2006
#000 #000 #000 #000
Trade creditors 2,286 2,175 - -
Corporation tax - 12 32 -
Other taxation and social security costs 545 597 - -
Other creditors 341 508 20 75
Accruals 933 970 - 46
4,105 4,262 52 121
18 FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS USED FOR RISK MANAGEMENT
It is the policy of the group to seek to reduce the risks arising from currency
exposure. Speculation is not part of the group's treasury activities. Where
appropriate, the net position relating to foreign currency exposure, if
material, would be hedged using forward contracts.
The fair values of the group's financial instruments are as follows:
24 February 2007 25 February 2006
Book value Fair value Book value Fair value
#000 #000 #000 #000
Cash at bank and in hand 194 194 558 558
CURRENCY AND INTEREST RATE EXPOSURE OF FINANCIAL ASSETS AND LIABILITIES
The currency and interest rate exposure of the financial assets of the group are as follows:
24 February 2007 25 February 2006
Fixed Floating Non Total Fixed Floating Non Total
rate rate interest rate rate interest
bearing bearing
#000 #000 #000 #000 #000 #000 #000 #000
Sterling - 194 - 194 - 558 - 558
The floating rate cash deposits bear interest based on relevant national LIBOR equivalents.
CURRENCY ANALYSIS OF NET ASSETS
The group's borrowing and net assets by currency are as follows:
24 February 2007 25 February 2006
Net operating Net operating Total net Net operating Net operating Total net
assets, liabilities assets assets, liabilities assets
dividends and dividends and
tax balances tax balances
#000 #000 #000 #000 #000 #000
Sterling 10,689 (5,122) 5,567 11,389 (6,207) 5,182
19 PROVISIONS FOR LIABILITIES AND CHARGES
Onerous leases Retention of Other Total
title provisions
#000 #000 #000 #000
At beginning of period 1,716 111 118 1,945
Acquisitions - - 35 35
Credit for the period (533) - - (533)
Utilised in the period (282) (5) (152) (439)
Fair value adjustment - (21) - (21)
At end of period 901 85 1 987
The onerous lease provision relates to onerous contracts on stores where rent
commitments are charged at levels above the local market rate. This provision
was established as a fair value provision on the acquisition of certain
subsidiaries. The onerous lease provision is calculated using a five year
discounted cash flow analysis. The release of #533,000 in the year relates to
the unwinding of provisions established in earlier years and the full release of
provisions on stores where the group has negotiated an early exit.
Certain valid retention of title claims existed against stock acquired from Room
2 Limited (in Administration). These have been provided, in full. This
provision is expected to be utilised within the next three years.
The costs of closing unwanted stores held by the administrator together with
certain other pre-administration liabilities were also provided as other
provisions.
20 SHARE CAPITAL 24 February 25 February
2007 2006
#000 #000
Authorised:
Equity: 40,000,000 ordinary shares of 0.5p each 200 200
Non-equity: 50,000 redeemable shares of #1 each 50 50
250 250
Allotted, issued and fully paid:
Equity: 21,696,703 (2006: 16,810,574) ordinary shares of 0.5p each 108 84
20 SHARE CAPITAL (continued)
The following share movements occurred during the year:
* On 19 December 2006 the company issued 886,129 ordinary shares of 0.5p
each (as settlement of the deferred consideration) to acquire part of the
trade and assets of Room 2 Limited (in Administration) at a value of 34p per
share generating share premium of #296,853 (note 21).
* On 18 December 2006 the company issued 4,000,000 new ordinary shares
of 0.5p at a subscription price of 10p per share.
21 RESERVES Shares to be Share premium
issued account
#000 #000
GROUP AND COMPANY
At beginning of period 1,715 3,025
Premium on allotment during the period - 677
Share issue expenses - (14)
Shares to be issued - conversion of loan notes (note 13) (301) -
Shares to be issued - fair value adjustment (note 13) (75) -
At end of period 1,339 3,688
22 PROFIT AND LOSS ACCOUNT Group Company
#000 #000
At beginning of period 358 (201)
Profit/(loss) for the period 74 (145)
At end of period 432 (346)
23 RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES
52 weeks ended 24 February 2007 52 weeks
Continuing Dis-continued Total ended 25
February
2006
#000 #000
#000 #000
Operating (loss)/profit (15) (24) (39) 190
Depreciation 245 8 253 240
Amortisation of goodwill 214 17 231 239
Decrease in stocks 324 - 324 321
(Increase)/decrease in debtors (262) - (262) 120
(Decrease)/increase in creditors (170) - (170) 363
Decrease in provisions (269) (618) (887) (989)
CASH FLOW FROM OPERATING ACTIVITIES 67 (617) (550) 484
24 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS #000
Decrease in cash in the year (364)
MOVEMENT IN NET FUNDS IN THE PERIOD (364)
NET FUNDS AT 25 FEBRUARY 2006 558
NET FUNDS AT 24 FEBRUARY 2007 194
25 ANALYSIS OF NET FUNDS
At 25 Cash flow At 24
February 2006 February 2007
#000 #000 #000
Cash in hand and at bank 558 (364) 194
26 CAPITAL COMMITMENTS
There were no capital commitments at the end of the financial period (2006:
#nil).
27 COMMITMENTS UNDER OPERATING LEASES
Group Company
24 February 25 February 24 February 25 February
2007 2006 2007 2006
#000 #000 #000 #000
At 24 February 2007 the group was committed to
making the following payments during the next
year under non-cancellable operating leases as
follows:
Land and buildings
Expiring within one year 52 346 - -
Expiring between two and five years 557 911 - -
Expiring after five years 1,887 919 - -
Other
Expiring within one year 33 3 - -
Expiring between two and five years 3 33 - -
2,532 2,212 - -
28 PENSION COMMITMENTS
The group operates a defined contribution pension scheme whose assets are held
separately from those of the group in an independently administered fund. The
pension cost charge represents contributions payable by the group and amounted
to #79,000 (2006: #72,000). Contributions totalling #7,000 (2006: #8,000) were
payable to the funds at the period end and are included in creditors.
29 CONTINGENT LIABILITIES
COMPANY
The company is a member of a group registration for Value Added Tax purposes.
Under the terms of this registration, each member is jointly and severally
liable for the VAT liability for all members. As at 24 February 2007 the VAT
liability amounted to #456,000 (2006: #485,000).
30 RELATED PARTY TRANSACTIONS
During the financial year the group had the following transactions with related
parties as defined by Financial Reporting Standard 8:
Name of Description of Description of Aggregate Net amount Aggregate Net amount
related relationship transactions value for owed to/(by) value for owed to/(by)
party financial the group financial the group
year year
2007 2006
#000 #000 #000 #000
USI Group RA Gabbie - Goods for resale
Limited director of both
companies and has
control of USI (473) - (273) (26)
The company has entered into an agreement with Zeus Partners ("Zeus"), of which
IW Currie is a partner, dated 29 September 2003 and subsequently amended on 28
November 2003 under which Zeus has agreed to provide the services of IW Currie
as executive chairman of the company and specifically to monitor the performance
of the company from a shareholder perspective. The services are provided on a
non-exclusive "ad-hoc" basis for an annual fee of #18,000 exclusive of Value
Added Tax and payable in twelve equal monthly instalments.
During the period fees for corporate finance work totalling #nil (2006: #50,000)
were paid to Zeus.
Copies of the Financial Statements will be despatched to shareholders by 3
August 2007. Additional copies will be available to the public, free of charge,
from the company's registered office: 3 Ralli Courts, West Riverside, Manchester
M3 5FT.
For further information, please contact:
Ian Currie, Strategic Retail plc Tel: 0161 831 1512
David Youngman, WH Ireland Limited Tel: 0161 832 2174
This information is provided by RNS
The company news service from the London Stock Exchange
END
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