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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 |
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RNS Number : 3348C
Strategic Retail PLC
29 August 2008
Strategic Retail Plc
Announcement of results for the 53 weeks ended 1 March 2008
CHAIRMAN'S STATEMENT
It has been another difficult year in the home decorating and home furnishings sectors with pressure on consumer spending. A slowing of
the housing market with rising interest rates, rising fuel costs and increases in food prices have placed a fair amount of strain on non
essential purchases.
The high street businesses which focus predominantly on home decoration have had to trade in a difficult market. The Fads store
locations, which have nationwide coverage, have been carefully reduced to eliminate loss makers or to achieve premiums where appropriate. We
have seen the positive impact of
the portfolio reduction this year with a significant reduction in operating losses.
The Leveys business, which is based in the North East, has been the star performer this year. The poorer performing stores were disposed
of last year leaving a batch of stores which showed strong sales growth.
The Texstyle World business, which is primarily based in Scotland, saw the closure of our store in Elgin offset by a new store in
Manchester. Since the year end we have opened further stores at East Kilbride and Sheffield. These stores also showed like for like growth
in a difficult market. The roll out of further Texstyle World stores has been put on hold due to worsening general retailing conditions. We
feel it is not presently appropriate to launch new stores, with their obvious drain on working capital, whilst the economy is so close to
recession. We will carefully monitor market conditions before pursuing further opportunities.
The Furniture Express store in Carlisle has performed poorly and our results reflect a £90,000 write off of goodwill.
In line with our objectives we continue to review opportunities to acquire other companies.
I thank employees for their continued hard work and commitment to the group.
IW Currie
Chairman
REVIEW OF THE BUSINESS
The year has seen further planned reductions in our store base which may be analysed as follows:
Texstyle Furniture
Fads Leveys World Express
(Trading) (Fads) (Fads) (Fads)
Limited Limited Limited Limited
Total at start of year 39 12 6 1
Closed in the year (7) - (1) -
New in year - - 1 -
Total at end of year 32 12 6 1
Revenues and operating profit, as restated for IFRS, by business segment may be summarised as:
Texstyle Furniture
Fads Leveys World Express
(Trading) (Fads) (Fads) (Fads)
Limited Limited Limited Limited
£000 £000 £000 £000
Revenue 2008 9,113 3,791 6,367 647
Revenue 2007 11,198 3,922 6,268 169
Texstyle Furniture
Fads Leveys World Express
(Trading) (Fads) (Fads) (Fads)
Limited Limited Limited Limited
£000 £000 £000 £000
Operating (loss)/profit 2008 (36) 260 186 (165)
Operating (loss)/profit 2007 (545) 515 351 (19)
Fads (Trading) Limited revenue was down over £2m year on year. This in part was due to the significant number of loss making stores
which have been closed over the past two years. At the start of the 2007 year we traded out of 55 stores which was reduced to 39 stores by
24 February 2007 and to 32 stores by 1 March 2008. Using a simple average, we traded out of an average of 47 stores in 2006/2007 versus 36
in 2007/2008.
Average revenue per store was therefore up from circa £238,000 last year to £253,000 this year. On a like for like basis, our stores
traded some £160,000 or 2% down which was disappointing but not entirely unexpected given the difficult trading conditions described in the
Chairman's Statement.
At operating profit level, we were pleased to show the positive effects of condensing the portfolio down to better performing stores
seeing a significant reduction in operating losses.
Leveys (Fads), like Fads (Trading), operated out of a far larger portfolio in the previous year. At the start of 2006/2007 these stores
operated from 17 locations which was condensed to 12 at 24 February 2007. No further store reductions occurred during 2007/2008.
Average revenue last year was circa £270,000 per store versus £316,000 this year. This bears out in terms of like for like performance
which demonstrated a £261,000 or 6.4% improvement on the previous year. Operating profit of £515,000 last year included £418,000 profit on
stores which are now closed. Taking this into account, an operating profit of £260,000 for this group was quite pleasing.
Texstyle World achieved growth in overall turnover year on year. On a like for like basis, this growth amounted to circa 2.5%. The new
store at Manchester showed strong performance in the period under review and with this model in mind we embarked upon further store
acquisitions.
Furniture Express was an opportunistic acquisition where we took a single store and a block of stock. The stock obtained was cleared
through this store and utilised by other group companies. The previous year's consolidated results contain the first four months of trading
with a full year's trading reflected within the 2007/2008 results. This store did not perform well in the period despite converting it to
the Texstyle World trading format. We found that a major competitor opening in Carlisle led to a dilution of sales which left the store
barely breaking even. As trading conditions have worsened, we have written off goodwill recognised in last year's accounts and we are
pursuing an orderly exit.
Texstyle Furniture
Fads Leveys World Express
(Trading) (Fads) (Fads) (Fads)
Limited Limited Limited Limited
% % % %
Margin 2008 48 48 51 48
Margin 2007 48 44 50 66
Gross margins were strong across the group companies with a notable improvement at Leveys (Fads) Limited. The gross margin for the
single store in Furniture Express (Fads) Limited was strong in the previous year as we were able to sell off stock purchased at a
significant discount from the administrator. This year's margin reflects both the selling off of the tail end of that stock and normal
product margins being achieved.
FINANCIAL KEY PERFORMANCE INDICATORS
The group's key financial performance indicators are revenue, margin and like for like growth rates which are discussed in the Review of
the Business 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 (2007: 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 stores or marginal stores especially where an appropriate premium is available. We are hopeful that
new Texstyle World stores can be opened and have opened East Kilbride and Sheffield since the year end. We will review potential sites and
look for the correct level of incentives before further stores are launched. We continue to look for potential companies which would enhance
the group.
ANNUAL ACCOUNTS
Copies of the annual accounts will be despatched to shareholders on 29 August 2008. 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 and from the company's website at
www.strategicretail.co.uk.
AGM
The Annual General Meeting of Strategic Retail Plc will be held at Nelson House, Park Road, Timperley, Cheshire on 23 September 2008 at
9.30am.
For further information, please contact:
Ian Currie, Strategic Retail plc Tel: 0161 831 1512
David Youngman, WH Ireland Limited Tel: 0161 832 2174
CONSOLIDATED INCOME STATEMENT
For the 53 week period ended 1 March 2008
Note 53 weeks ended 1 52 weeks ended 24
March 2008 February 2007
£000 £000
REVENUE 1 19,918 21,557
Cost of sales (10,150) (11,161)
GROSS PROFIT 9,768 10,396
Distribution costs (7,820) (8,394)
Administrative expenses (1,791) (1,814)
GROUP OPERATING PROFIT 157 188
Profit on sale of property, - 125
plant and equipment
Finance revenue 2 2 3
Finance costs 3 (139) (122)
PROFIT BEFORE TAXATION 1-5 20 194
Taxation 6 (165) -
(LOSS)/PROFIT FOR THE PERIOD
ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT COMPANY
(145) 194
EARNINGS/(LOSS) PER SHARE
- Basic and diluted 8 (0.67p) 1.09p
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 1 March 2008
Note 1 March 24 February
2008 2007
ASSETS £000 £000
NON CURRENT ASSETS
Intangible assets 9 3,731 3,908
Property, plant and equipment 10 1,299 1,115
Deferred tax 15 - 150
5,030 5,173
CURRENT ASSETS
Inventories 13 4,182 4,269
Trade and other receivables 14 1,276 878
Cash and cash equivalents - 194
5,458 5,341
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 16 (2,946) (4,154)
Financial liability 17 (901) -
Provision for liabilities and charges 21 (162) (253)
Corporation tax (15) -
(4,024) (4,407)
NET CURRENT ASSETS 1,434 934
NON CURRENT LIABILITIES
Convertible loan notes 18 (1,353) (1,507)
Provision for liabilities and charges 21 (794) (918)
Accruals and deferred income 19 (780) -
(2,927) (2,425)
NET ASSETS 3,537 3,682
SHAREHOLDERS' EQUITY
Called up share capital 22 108 108
Share premium account 23 3,688 3,688
Shares to be issued 23 21 25
Retained earnings 23 (280) (139)
SHAREHOLDERS' EQUITY 3,537 3,682
CONSOLIDATED CASH FLOW STATEMENT
For the 53 week period ended 1 March 2008
53 weeks ended 52 weeks ended
1 March 2008 24 February
2007
CONSOLIDATED CASH FLOWS FROM £000 £000
OPERATING ACTIVITIES
Operating profit 157 188
Adjusted for:
Depreciation 286 266
Goodwill impairment 177 -
Profit on disposal of property, plant
and equipment (44) -
576 454
CHANGES IN WORKING CAPITAL
Decrease in inventories 87 324
Increase in trade and other receivables (398) (262)
Decrease in trade and other payables (1,208) (179)
Decrease in provisions (215) (887)
Increase in accruals and deferred 780 -
income
Cash generated from operations (378) (550)
Finance costs (68) (15)
NET CASH FROM OPERATING ACTIVITIES (446) (565)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary - (166)
Purchase of property, plant and (426) (260)
equipment
Proceeds from sale of property, plant - 313
and equipment
Finance revenue 2 3
NET CASH USED IN INVESTING ACTIVITIES
(424) (110)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of ordinary shares - 386
Repayment of convertible debt (225) (75)
NET CASH USED IN FINANCING ACTIVITIES
(225) 311
NET DECREASE IN CASH, CASH EQUIVALENTS
AND FINANCIAL LIABILITY (1,095) (364)
Cash, cash equivalents and financial
liability at beginning of period 194 558
CASH, CASH EQUIVALENTS AND FINANCIAL
LIABILITY AT END OF THE PERIOD
(901) 194
GROUP STATEMENT OF CHANGES IN EQUITY
For the 53 week period ended 1 March 2008
Attributable to equity holders of the parent company
Called up share Share premium Shares to be issued Retained earnings Equity
capital account
£000 £000 £000 £000 £000
Balance at 26 February 2006 84 3,025 32 (340) 2,801
Ordinary shares issued 24 677 - - 701
Share issue expenses debited
to share premium - (14) - - (14)
Reserves transfer - - (7) 7 -
Profit for the financial - - - 194 194
period
Balance at 24 February 2007 108 3,688 25 (139) 3,682
Reserves transfer - - (4) 4 -
Loss for the financial period - - - (145) (145)
Balance at 1 March 2008 108 3,688 21 (280) 3,537
COMPANY STATEMENT OF CHANGES IN EQUITY
Called up share Share premium Shares to be issued Retained earnings Equity
capital account
£000 £000 £000 £000 £000
Balance at 26 February 2006 84 3,025 32 (294) 2,847
Ordinary shares issued 24 677 - - 701
Share issue expenses debited
to share premium - (14) - - (14)
Reserves transfer - - (7) 7 -
Loss for the financial period - - - (252) (252)
Balance at 24 February 2007 108 3,688 25 (539) 3,282
Reserves transfer - - (4) 4 -
Loss for the financial period - - - (169) (169)
Balance at 1 March 2008 108 3,688 21 (704) 3,113
COMPANY BALANCE SHEET
At 1 March 2008
Note 1 March 24 February
2008 2007
ASSETS £000 £000
NON CURRENT ASSETS
Investments 11 257 257
Trade and other receivables 14 4,149 4,149
4,406 4,406
CURRENT ASSETS
Trade and other receivables 14 320 433
Cash and cash equivalents 3 2
323 435
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 16 (263) (20)
Corporation tax - (32)
(263) (52)
NET CURRENT ASSETS 60 383
NON-CURRENT LIABILITIES
Convertible loan notes 18 (1,353) (1,507)
NET ASSETS 3,113 3,282
SHAREHOLDERS' EQUITY
Called up share capital 22 108 108
Share premium account 23 3,688 3,688
Shares to be issued 23 21 25
Retained earnings 23 (704) (539)
SHAREHOLDERS' EQUITY 3,113 3,282
COMPANY CASH FLOW STATEMENT
For the 53 week period ended 1 March 2008
53 weeks ended 52 weeks ended
1 March 2008 24 February
2007
£000 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating loss (87) (113)
(87) (113)
CHANGES IN WORKING CAPITAL
Decrease/(increase) in trade and other 113 (161)
receivables
Increase/(decrease) in trade and other 211 (101)
payables
Cash generated from operations 237 (375)
Finance costs (11) -
NET CASH FROM OPERATING ACTIVITIES 226 (375)
CASH FLOWS FROM INVESTING ACTIVITIES
- -
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of ordinary shares - 386
Repayment of convertible debt (225) (75)
NET CASH USED IN FINANCING ACTIVITIES
(225) 311
NET INCREASE/(DECREASE) IN CASH, CASH
EQUIVALENTS AND FINANCIAL LIABILITY
1 (64)
Cash, cash equivalents and financial
liability at beginning of period 2 66
CASH, CASH EQUIVALENTS AND FINANCIAL
LIABILITY AT END OF THE PERIOD
3 2
BASIS OF ACCOUNTING AND GOING CONCERN
The financial statements have been prepared under the historical cost convention and in accordance with International Financial
Reporting Standards as endorsed by the EU (IFRS) for the first time.
This is the first year that the Group has presented its financial statements under IFRS. The last financial statements under UK GAAP
were for the year ended 24 February 2007 and the date of transition to IFRS was therefore 26 February 2006. The disclosures concerning the
transition from UK GAAP to IFRS are given in note 28.
IFRS 1 requires that IFRS is applied retrospectively to establish the Group's balance sheet at the date of transition, 24 January 2006
unless a specific exemption is applied. In preparing this IFRS information the Group has adopted the following exemption:- business
combinations completed prior to the date of transition to IFRS have not been restated.
The group is currently experiencing difficult trading patterns which are directly linked to the current UK economic conditions and the
'credit crunch'.
In order to ensure it remains appropriate to prepare the accounts on a going concern basis the directors have carefully considered the
likely working capital requirements for the forthcoming period through to August 2009. They have prepared detailed profit and cash flow
forecasts which, based on conservative assumptions indicate they will be able to operate within the current overdraft facilities agreed with
their bankers.
Bank facilities were renewed on 22 July 2008 and discussions with the companies' bankers indicate that there is no intention to withdraw
the facilities during the period examined. The board continually monitors trading conditions and facility requirements and, should trading
conditions significantly deteriorate further, will endeavour to seek funding from alternative commercial sources where appropriate.
On this basis the directors consider it appropriate to prepare the accounts on a going concern basis. The financial statements do not
include any adjustments that would result from the withdrawal of support by the group's bankers.
The company is incorporated and domiciled in the United Kingdom.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate those of Strategic Retail Plc and all of its subsidiary undertakings for the period.
Subsidiary undertakings are consolidated using the purchase method under IFRS 3. Any excess of the cost of the business combination over the
group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the balance sheet
as goodwill and is annually reviewed for impairment. To the extent that the net fair value of the acquired entity's identifiable assets,
liabilities and contingent liabilities is greater than the cost of investment, a gain is recognised immediately in the income statement.
The consolidated financial statements exclude intra-group transactions and balances.
As permitted by Section 230(4) of the Companies Act 1985, the company has not presented its own Income Statement.
GOODWILL
Goodwill arising on the acquisition of a subsidiary represents the excess of the fair value of the consideration given over the fair
value of the identifiable net assets acquired. Goodwill is recognised as an asset and is reviewed annually for impairment and is carried at
cost less accumulated impairment. On disposal of a subsidiary or cash generating unit, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
ALLOCATION OF GOODWILL
Goodwill has been allocated to profit making stores, or groups of geographically based stores, within the acquired group based on
expected future store contributions and store size.
CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES
No critical judgements, apart from those involving estimations (see below) have been made by management in the process of applying the
entity's accounting policies which would have a significant effect on the amounts recognised in the financial statements.
KEY SOURCES OF ESTIMATION UNCERTAINTY
Preparation of the consolidated financial statements in conformity with IFRS requires that management make certain estimates and
assumptions that affect the reported revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. If in the
future such estimates and assumptions, which are based on management's best judgements at the date of the financial statements, deviate from
actual circumstances, the original estimate and assumptions will be modified as appropriate in the period in which the circumstances change.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
Such estimates include, but are not limited to, goodwill and asset impairment and stock provisioning. These are discussed below.
IMPAIRMENT OF GOODWILL
The group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of
the cash generating unit, being the higher of 'value in use' and 'fair value less costs to sell'.
Value in use is calculated from cash flow projections for five years using data from internal forecasts reviewed by the board. The key
assumptions for the value in use calculations are those regarding discount rates, growth rates and expected changes in margins. The discount
rate used is our expected cost of borrowing. Changes in selling prices and direct costs are based on past experience and expectations of
future changes in the market.
Fair value less costs to sell has been estimated by assessing an average expected store contribution over the next five years and
multiplying this by a P/E ratio. The P/E ratio has been adopted by reference to recent store disposals and managements' assessment of
relevant market data for similar assets in the retail industry.
IMPAIRMENT OF ASSETS
Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may
not be recoverable. When a review for impairment is conducted, the recoverable amount of an asset or a cash generating unit is determined
based on value-in-use calculations prepared on the basis of management's assumptions and estimates.
STOCK PROVISIONING
The Group sells goods which may be subject to changing consumer demands . As a result, it is necessary to consider the recoverability of
the cost of stocks and the associated provisioning required. Stock provisioning is based on the age and condition of stock, as well as
anticipated saleability.
CALCULATION OF DISMANTLING PROVISION
The group has estimated a dismantling provision based on the level of improvement spend incurred at the transition date. Future
dismantling provisions on new stores will be based on average levels of provision by store compared to the magnitude of leases and
managements estimation of the appropriateness of provision required. The adequacy of the provision will be monitored against dismantling
spend actually incurred. Historically dismantling spend has been low as the company utilises an in-house dismantling team.
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED STANDARDS
Effective for the Group for the financial year beginning 2 March 2008
* IFRIC 11 'IFRS 2 - Group and Treasury Share Transactions'
* IFRS 7 - Financial Instruments Disclosures
Effective for the Group for future financial years
* Amendment to IAS 23 'Borrowing costs'
* IFRS 8 'Operating Segments'
* IFRIC 12 'Service Concession Arrangements'
* Revision of IAS 1 'Presentation of Financial Statements'
* Amendments to IFRS 3 'Business Combinations'
* Amendments to IAS 27 'Consolidated and separate financial statements'
* Amendments to IFRS 2 'Share based payment'
* Amendments to IAS 32 'Financial Instruments'
* Amendments to IFRS 1 'First-time adoption of International Financial Reporting Standards'
* IFRIC 13 - Customer Loyalty Programme
* IFRIC 14 - IAS 19 The Limit on a Refund Benefit Asset, Minimum Funding Requirements and their Interaction.
* IFRIC 15 - Agreement for the Construction of Real Estate
* IFRIC 16 - Hedges of a Net Investment in a Foreign Operation
The Group has considered the above new standards, interpretations and amendments to published standards that are not yet effective and
concluded that they are either not relevant to the Group or that they would not have a significant impact on the Group's financial
statements, apart from additional disclosures.
The accounting policies set out below have been applied consistently to all periods presented in the financial statements and have been
applied consistently by the Group and the Company
REVENUE RECOGNITION
Revenue 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.
SEGMENTAL REPORTING
Activities are allocated to a distinct business segment. A business segment is a group of operations engaged in providing products or
services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged
in providing products or services within a particular economic environment that is subject to risks and returns which are different from
those segments operating in other economic environments.
Segments have been identified by reference to mix of products sold, brand name used during trading and geographical location which bear
unique risks and rewards.
FOREIGN CURRENCY TRANSLATION
The consolidated financial statements are presented in pound sterling, which is the Group's functional and presentational currency. The
Group determines the functional currency of each entity and items included in the financial statements of each entity are measured using
that functional currency. Transactions denominated in foreign currencies are translated into sterling at the actual rate of exchange ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at rates ruling at the
balance sheet date. Exchange differences are included in the income statement.
PENSIONS
The Group makes payments to a defined contribution scheme. The assets of the scheme are held separately from the Group in independently
administered funds. Contributions made by the Group are charged to the income statement in the period to which they relate. Differences
between contributions payable in the period and contributions actually paid are shown as either accruals or prepayments.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment value. The cost of an asset
includes the estimated costs of dismantling and removing the asset and restoring the site on which the asset was located. The corresponding
obligation is recognised as a provision under IAS 37. Expenditures incurred after equipment has been placed into operation, such as repairs
and maintenance and overhaul costs, are normally charged to the income statement in the period in which the costs are incurred. In
situations where it can be clearly demonstrated that the expenditure has resulted in an increase in future economic benefits expected to be
obtained from use of an item of equipment beyond its original assessed standard of performance, the expenditures are capitalised as an
additional cost of equipment.
Depreciation is provided on all property, plant and equipment at rates calculated to write down each asset to its estimated residual
value over its expected useful life as follows:
Freehold properties - 2% per annum straight line
Short leasehold properties - over life of lease
Fixtures, fittings and equipment - 10-20% per annum straight line
An item of property, plant and equipment is derecognised upon disposal or where no future economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the income statement in the year the asset is derecognised.
The assets residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year
end.
INVESTMENTS
Non-current investments are stated at cost. Provision is made for any impairment in the value of non-current investments.
INVENTORIES
Inventories 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.
TRADE RECEIVABLES
Trade receivables are recognised initially at fair value. A provision for impairment of trade receivables is established when there is
objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of
the provision is the difference between the assets carrying amount and the present value of the estimated future cash flows, discounted at
the effective interest rate. The amount of the provision is recognised in the income statement within administrative expenses.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, deposits held with banks.
FINANCIAL LIABILITY
Financial liabilities include bank overdrafts.
CONVERTIBLE LOAN NOTES
Instruments where the holder has the option to redeem for cash or convert into a pre-determined quantity of equity instruments are
classified as compound instruments in the balance sheet and presented partly as a liability and partly within equity.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar
non-convertible instrument. The difference between the proceeds of issue and the fair value assigned to the liability component,
representing the embedded option to convert the liability into equity of the Group, is included in equity.
Transaction costs are apportioned between the liability and equity components of the convertible loan notes based on their relative
carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.
The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar
non-convertible debt to the instrument. The difference between this amount and the interest paid is added to the carrying value of the
convertible loan note.
FINANCE LEASES
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the lessee. All other leases are classified as operating leases.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight line basis over the
lease term.
TAXATION
The tax expense represents the sum of the current tax expense and deferred tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Group's liability for current tax is calculated by using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the
initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is
settled based upon tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited
in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also
dealt with in equity.
SHORT TERM EMPLOYEE BENEFITS
Liabilities for employee benefits are recognised on the basis of a legal constructive obligation. Liabilities and expenses for employee
benefits, which would include outstanding holidays, are recognised in the period in which the service is rendered.
OPERATING (LOSS)/PROFIT
The operating (loss)/profit represents the (loss)/profit of the Group before accounting for finance costs or revenue and income tax
credits and expense.
NOTES TO THE FINANCIAL STATEMENTS
For the 53 week period ended 1 March 2008
1 SEGMENTAL REPORT
For management purposes, the group is currently organised into four operating business divisions, being Fads (Trading) Ltd, Leveys
(FADS) Ltd, Texstyle World (FADS) and Furniture Express (FADS) Ltd.
The Board has determined that the primary segmental reporting format is business segments, these divisions reflecting the different
brand and product offerings within the Group. As the Group operates solely in the UK the secondary segmental reporting format is
geographical.
PRIMARY REPORT FORMAT - Business segments
2008 FADS Leveys Texstyle World Furniture Express Unallocated Consolidation
£000 £000 £000 £000 £000 £000
Revenue 9,113 3,791 6,367 647 - 19,918
_______ _______ _______ _______ _______ _______
RESULT
Operating profit/(loss) (36) 260 186 (165) (88) 157
Finance revenue 2
Finance costs (139)
_______
Profit before tax 20
_______
Income tax expenses (165)
_______
Loss after tax (145)
_______
Capital additions 26 6 283 67 44 426
Depreciation 122 50 89 9 16 286
Impairment of goodwill
- - 87 90 - 177
_______ _______ _______ _______ _______ _______
Assets 2,393 2,959 4,827 269 40 10,488
Liabilities (3,091) (914) (1,482) (86) (1,378) (6,951)
_______ _______ _______ _______ _______ _______
2007 FADS Leveys Texstyle World Furniture Express Unallocated Consolidation
£000 £000 £000 £000 £000 £000
Revenue 11,198 3,922 6,268 169 - 21,557
_______ _______ _______ _______ _______ _______
RESULT
Operating profit/(loss) (545) 515 351 (19) (114) 188
Unallocated corporation
expenses -
Profit on sale of property,
plant and equipment
125
Finance revenue 3
Finance costs (122)
_______
Profit before tax 194
_______
Income tax expenses -
_______
Profit after tax 194
_______
Capital additions 191 11 51 7 14 274
Depreciation 122 52 77 1 14 266
_______ _______ _______ _______ _______ _______
Assets 3,161 3,164 3,979 227 (17) 10,514
Liabilities (3,367) (1,150) (755) (53) (1,507) (6,832)
_______ _______ _______ _______ _______ _______
SECONDARY REPORTING FORMAT - analysis by origin
The revenue and results are all derived in the UK and all assets are held in the UK.
2 FINANCE REVENUE 53 weeks ended 1 March 52 weeks ended 24 February 2007
2008
£000 £000
Bank interest 2 3
3 FINANCE COSTS 53 weeks ended 1 52 weeks ended 24 February 2007
March 2008
£000 £000
Bank interest 44 5
Interest expense 82 107
generated by
financial liability
Other finance costs 13 10
139 122
4 PROFIT BEFORE 53 weeks ended 1 52 weeks ended 24
TAXATION March 2008 February 2007
£000 £000
Profit before
taxation is stated
after
charging/(crediting)
:
Depreciation and
amounts written off
property, plant and
equipment:
Charge for the
period
Owned assets 286 266
Impairment of 177 -
goodwill
Premiums achieved on (862) (390)
lease disposals
Operating lease
rentals:
Land and buildings 3,007 3,181
Plant and 126 98
equipment
Net foreign exchange 1 1
losses
Write down of 276 335
inventories during
the year
Cost of inventories 9,958 10,850
recognised as an
expense
Profit on disposal (44) (125)
of property, plant
and equipment
Amounts payable to Baker Tilly UK Audit LLP and their associates in respect of both audit and non-audit services:
53 weeks ended 1 52 weeks ended 24 February 2007
March 2008
£000 £000
Audit services
- Statutory audit 6 3
Other services
- Audit of 31 27
subsidiaries
Baker Tilly Tax and
Advisory Services
LLP
Tax services
- Compliance 10 9
services
Other services 3 4
50 43
5 EMPLOYEES 53 weeks ended 1 52 weeks ended 24
March 2008 February 2007
Number Number
The average monthly number of persons (including directors)
employed by the group during the period was:
Administration and management 40 40
Retailing 318 377
358 417
Staff costs for the 53 weeks ended 1 March 2008 52 weeks ended 24
above persons: February 2007
£000 £000
Wages and salaries 3,918 4,314
Social security 288 303
costs
Other pension costs 71 79
4,277 4,696
DIRECTORS' REMUNERATION 53 weeks ended 1 March 2008 52 weeks ended 24 February 2007
£000 £000
Emoluments 54 73
Money purchase pension contributions - -
Total emoluments 54 73
53 weeks ended 1 March 2008 52 weeks ended 24
February 2007
The number of directors to whom retirement Number Number
benefits are accruing under:
Money purchase schemes was - -
6 TAXATION 53 weeks ended 1 March 2008 52 weeks ended 24 February 2007
£000 £000 £000 £000
Current tax:
UK corporation tax 9 -
on profits of the
period
Adjustments in 6
respect of previous
period
Total current tax 15 -
Deferred tax:
Origination and reversal of timing 150 -
differences
Total deferred tax 150 -
Tax on profit on 165 -
ordinary activities
Factors affecting 53 weeks ended 1 52 weeks ended 24
tax charge for the March 2008 February 2007
period:
£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 20 194
activities before
tax
Profit on ordinary
activities 6 58
multiplied by
standard rate of
corporation tax in
the UK 30% (2007:
30%)
Effects of:
(Income not 17 (370)
taxable)/expenses
not deductible for
tax purposes
Fixed asset (62) 27
temporary
differences
Losses unutilised 16 111
Losses utilised (6) (9)
Chargeable gains - 164
Profit on sale of 16 -
fixed assets in
excess of chargeable
gains
Adjustments in 6 -
respect of previous
period
Other temporary 22 19
differences
Reversal of 150 -
previously
recognised deferred
tax asset
Current tax charge 165 -
for the period
Factors that may
affect future tax
charges:
The group has trading losses of approximately £3,853,000 (2007: £4,133,000) which may be available for offset against trading profit
arising in the future, which would reduce tax payments.
7 LOSS ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY
As permitted by Section 230(4) of the Companies Act 1985 the profit and loss account of Strategic Retail plc has not been presented with
the financial statements.
The results after taxation of the parent undertaking for the year ended 1 March 2008 showed a loss of £169,000 (2007: loss £252,000).
8 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
53 weeks ended 1 53 weeks ended 1 52 weeks ended 24 52 weeks ended 24
March 2008 March 2008 February 2007 February 2007
£000 £000 £000 £000
(Loss)/profit for the financial period (145) (145) 194 194
Weighted average number of shares 53 weeks ended 1 52 weeks ended 24
March 2008 February 2007
Number Number
For basic and diluted earnings per share 21,696,703 17,718,439
Basic Diluted Basic Diluted
53 weeks ended 1 53 weeks ended 1 52 weeks ended 24 52 weeks ended 24
March 2008 March 2008 February 2007 February 2007
Earnings per share (0.67p) (0.67p) 1.09p 1.09p
9 INTANGIBLE ASSETS
Positive goodwill
GROUP
£000
Cost
At 26 February 2006 4,510
Acquisitions 91
Additions - fair value adjustment 30
At 24 February 2007 and 1 March 2008 4,631
Amounts written off
At 26 February 2006 723
Charged for the period -
At 24 February 2007 723
Charged in the period 177
At 1 March 2008 900
Net book value
At 1 March 2008 3,731
At 24 February 2007 3,908
At 26 February 2006 3,787
Impairment testing of goodwill
Goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis or more frequently if there
are indications that goodwill may be impaired. Goodwill acquired in a business combination is allocated to cash generating units according
to the level at which management monitor that goodwill. Cash generating units are defined as stores or group of stores within each business
segment. The business segments are as detailed in note 1 segmental report.
Recoverable amounts for cash generating units are based on the higher of value in use and fair value less costs to sell.
Value in use is calculated from cash flow projections for five years using data from internal forecasts reviewed by the board. The key
assumptions for the value in use calculations are those regarding discount rates, growth rates and expected changes in margins. The discount
rate used is our expected cost of borrowing. Changes in selling prices and direct costs are based on past experience and expectations of
future changes in the market.
Fair value less costs to sell has been estimated by assessing an average expected store contribution over the next five years and
multiplying this by a P/E ratio. The P/E ratio has been adopted by reference to recent store disposals and managements' assessment of
relevant market data for similar assets in the retail industry.
The recoverable amounts were based on fair value less costs to sell.
At the transition date an impairment review at cash generating unit level identified certain cash generating units which in isolation
required separate impairment. The impairments arose where certain stores were not performing in line with original expectations at the time
of their acquisition. Appropriate amounts were duly provided as detailed in the table below.
In 2008 a cash generating unit within Texstyle World was disposed of and the associated goodwill was taken to the income statement as
impairment.
The Furniture Express goodwill identified in 2007 was fully impaired due to expected future negative contributions and management
believing it unlikely that a premium in excess of selling costs could be achieved.
2008 2007 2006
£000 £000 £000
Texstyle World (87) - (277)
Leveys - - (199)
Furniture Express (90) - -
(177) - (476)
These amounts are charged to distribution costs in the years in which the review was carried out.
The carrying value of goodwill of the cash generating units after impairment may be summarised as follows:
2008 2007 2006
£000 £000 £000
Texstyle World 1,638 1,725 1,694
Leveys 2,093 2,093 2,093
Furniture Express - 90 -
3,731 3,908 3,787
10 PROPERTY, PLANT AND EQUIPMENT
Freehold land and Short leasehold Fixtures, fittings and Total
buildings property equipment
GROUP
£000 £000 £000 £000
Cost
At 26 February 2006 171 53 1,613 1,837
Acquisitions - - 2 2
Additions - 13 261 274
Disposals (143)- (16) (283) (442)
At 24 February 2007 28 50 1,593 1,671
Additions - - 426 426
Disposals - (14) (500) (514)
At 1 March 2008 28 36 1,519 1,583
Depreciation
At 26 February 2006 2 14 385 401
Charged in period 2 6 258 266
Disposals - - (195) (195)
Impairment - - 84 84
At 24 February 2007 4 20 532 556
Charged in period 1 6 279 286
Disposals - (13) (545) (558)
At 1 March 2008 5 13 266 284
Net book value
At 1 March 2008 23 23 1,253 1,299
At 24 February 2007 24 30 1,061 1,115
At 26 February 2006 169 39 1,228 1,436
11 INVESTMENTS
Shares in
group
undertakings
£000
COMPANY
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 of shares held
registration
Group Company
Fads (Trading) Limited UK Retailing of 100% ord 100% ord
decorating and home
fashion products
Leveys (Fads) Limited UK Retailing of 100% ord 100% ord
decorating and home
fashion products
Texstyle World (Fads) Limited UK Retailing of 100% ord 100% ord
decorating and home
fashion products
Leveys Limited UK Dormant - In 100% ord -
liquidation
12 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.
Positive goodwill of £91,000, being the difference between the fair value of net assets acquired and consideration paid, arises from
this transaction. This has been fully impaired during the year.
13 INVENTORY Group Company
1 24 February 2007 1 24 February 2007
March 2008 March 2008
£000 £000 £000 £000
Finished goods and 4,182 4,269 - -
goods for resale
14 TRADE AND OTHER Group Company
RECEIVABLES
1 24 February 2007 1 24 February 2007
March 2008 March 2008
£000 £000 £000 £000
Due within one year:
Trade receivables 111 172 - -
Amounts owed by - - 320 433
group undertakings
Other receivables 662 100 - -
Prepayments and 503 606 - -
accrued income
1,276 878 320 433
Due within more than
one year:
Amounts owed by - - 4,149 4,149
group undertakings
1,276 878 4,469 4,582
15 DEFERRED TAXATION ASSET
1 24
March February
2008 2007
£000 £000
GROUP
At beginning of period 150 150
Credit for the period taken to the
income statement (150) -
At end of period - 150
The elements of the deferred tax asset, which is carried within current assets, are as follows:
1 24
March 2008 February 2007
£000 £000
Fixed asset timing differences (64) (84)
Tax losses 64 234
- 150
The deferred tax asset has been recognised based on the directors' view of the group's potential future profitability.
Un-provided deferred tax assets are as 1 24
follows: March February 2007
2008 £000
£000
Other temporary differences 23 36
Tax losses 1,156 1,094
1,179 1,130
16 TRADE AND OTHER
PAYABLES Group Company
1 24 1 24
March 2008 February 2007 March 2008 February 2007
£000 £000 £000 £000
Trade payables 1,294 2,286 - -
Other taxation and 355 545 - -
social security
costs
Other payables 444 341 4 20
Accruals 853 982 3 -
Amounts owed to - - 256 -
other group
companies
2,946 4,154 263 20
17 FINANCIAL LIABILITIES - CURRENT LIABILITIES
Group Company
1 24 1 24
March 2008 February 2007 March 2008 February 2007
£000 £000 £000 £000
Bank overdraft 901 - - -
The bank overdraft is secured by a cross company guarantee and debenture dated 22 May 2007. This constitutes a covenant to pay or
discharge to the bank, upon written notice, all indebtedness due now or in the future by any group company.
The charges created include a legal mortgage over land vested but not registered at HM Registry.
There is a fixed charge over land vested and registered, land which will become our property, the plant and machinery attaching to that
land, rental and other income relating to the land, all securities, all insurance and assurance contracts relating to property covered by
the charge, all goodwill and uncalled share capital, all intellectual property, all trade debts now or in future owing and the benefit of
all instruments guarantees or other rights available as security in respect of any asset subject to the fixed charge.
There is a floating charge over all assets which are not effectively charged by the fixed charge.
18 CONVERTIBLE LOAN NOTES
The company issued two series of convertible loan notes, series A and series B, on 30 August 2005.
Series A
The total principal sum due under the original loan note instrument was £601,286. Against this a total of 886,129 shares of £0.34 were
issued to the A holders on 19 December 2006. The remaining £300,000 was repaid under a variation in terms of the loan note instrument with
£75,000 repaid on 8 January 2007 and £225,000 repaid (with 5% interest) on 29 October 2007.
Series B
The total principal sum due under the original loan note instrument was £1,563,714. Against this £150,000 of this balance was repaid on
8 November 2005 with 882,352 shares of £0.34p issued to the value of £300,000 on 17 November 2005.
According to the terms of Loan Note Instrument, interest will have been payable on these sums at 3% per annum from 30 August 2005 - 30
August 2006, then at 8% per annum from 31 August 2006 - 30 August 2007 and then at 10% per annum from 31 August 2007 until the final
redemption date which is 31 August 2010.
Interest in respect of B shares has been accrued and is repayable upon redemption.
The net proceeds received from the issue of the convertible loan notes have been split between the liability element and an equity
component, representing the fair value of the embedded option to convert the liability into equity of the Group.
GROUP AND COMPANY
Series A Series B Total
£000 £000 £000
Nominal value of 601 1,563 2,164
convertible loan notes
issued
Equity component (11) (29) (40)
Liability component at date 590 1,534 2,124
of issue
Interest charged 17 86 103
Interest paid - (1) (1)
Redemption of loan notes - (150) (150)
for cash
Conversion of loan notes - (300) (300)
Liability component at 25 607 1,169 1,776
February 2006
Interest charge 17 90 107
Redemption of loan notes (75) - (75)
for cash
Conversion of loan notes (301) - (301)
Liability component at 24 248 1,259 1,507
February 2007
Interest charged 18 94 112
Interest paid (11) - (11)
Redemption of loan notes (225) - (225)
for cash
Profit on final redemption (30) - (30)
Liability component at 1 - 1,353 1,353
March 2008
19 ACCRUALS AND
DEFERRED INCOME Group Company
1 24 1 24
March 2008 February 2007 March 2008 February 2007
£000 £000 £000 £000
Accruals and 780 - - -
deferred income
Accruals and deferred income relates solely to the fair value of lease incentives which will be released to the income statement over
the lives of the lease contracts.
20 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:
1 March 2008 24 February 2007
Book value Fair value Book value Fair value
£000 £000 £000 £000
Cash and cash
equivalents/ (901) (901) 194 194
(financial
liabilities)
Convertible loan (1,353) (1,353) (1,507) (1,507)
notes
Maturity. The financial liabilities are repayable on demand. The details of the maturity of the convertible loan notes is set out in
note 18.
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:
1 March 2008 24 February 2007
Fixed rate Floating rate Non interest bearing Total Fixed rate Floating rate Non interest bearing
Total
£000 £000 £000 £000 £000 £000 £000
£000
Sterling - (901) - (901) - 194 -
194
The floating rate cash deposits bear interest based on relevant national
LIBOR equivalents.
The only current risk which is sensitive to exposure is that in respect of interest rate movements. The sensitivity to a one percentage
point increase in interest rates based on the average anticipated bank debt for 2008/09 is £8,000 income loss.
CREDIT RISK EXPOSURE
Credit risk predominantly arises from trade receivables and cash and cash equivalents. Credit exposure is managed on a group basis and
given the low values involved is deemed to be low risk by the board.
CURRENCY ANALYSIS OF NET ASSETS
The group's borrowing and net assets are all denominated in Sterling.
FAIR VALUE ESTIMATIONS
The carrying values less impairment provisions of trade receivables and payables are assessed to approximate to their fair values.
CAPITAL RISK
The Group's objectives when managing capital are:
* To safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and
benefits for other stakeholders, and
* To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell
assets to reduce debt.
21 PROVISIONS FOR LIABILITIES AND CHARGES
Property, plant and Onerous leases Retention of title Other provisions Total
equipment
de-commissiong/
dismantling
provision
£000 £000 £000 £000 £000
At beginning of 184 901 85 1 1,171
period
Credit for the 52 - - - 52
period
Utilised in the (16) (181) (83) - (280)
period
Increase during the - 13 - - 13
year in the
discounted amount
arising from the
passage of time
At end of period 220 733 2 1 956
1 24 February 2007
March 2008 £000
£000
Current 162 253
Non-current 794 918
956 1,171
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 provision is calculated
using a five year discounted cash flow analysis.
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.
The property, plant and equipment provision relates to amounts that have been accrued to satisfy the legal obligations to bring store
premises back into the condition in which they were originally received at the commencement of the lease.
22 SHARE CAPITAL 1 24
March 2008 February 2007
£000 £000
Authorised:
Equity: 40,000,000 ordinary shares of 0.5p 200 200
each
Non-equity: 50,000 redeemable shares of £1 50 50
each
250 250
Allotted, issued and fully paid:
Equity: 21,696,703 (2007: 21,696,703) 108 108
ordinary shares of 0.5p each
23 RESERVES Shares to be issued Share premium account
£000
£000
GROUP AND COMPANY
Balance at 26 February 2006 32 3,025
Ordinary shares issued - 677
Share premium expenses debited - (14)
to share premium
Transfer to retained earnings (7) -
Balance at 24 February 2007 25 3,688
Transfer to retained earnings (4) -
Balance at 1 March 2008 21 3,688
Share premium account
The share premium account comprises the premium over nominal value on shares. The use of this reserve is restricted by the Companies Act
1985.
Shares to be issued
Shares to be issued reflects the equity component of the convertible loan notes.
RETAINED EARNINGS
This represents accumulated earnings to date.
Group Company
£000 £000
At 26 February 2006 (340) (294)
Transfer from shares to be issued 7 7
Profit/(loss) for the period 194 (252)
At 24 February 2007 (139) (539)
At 24 February 2007 (139) (539)
Transfer from shares to be issued 4 4
Loss for period (145) (169)
At 1 March 2008 (280) (704)
24 COMMITMENTS UNDER OPERATING LEASES
The minimum lease payments under non-cancellable operating lease rentals are in aggregate as follows:
Group Company
1 24 February 2007 1 24
March 2008 March 2008 February
2007
£000 £000 £000 £000
Land and buildings
Within one year 3,150 3,406 - -
In second to fifth 11,026 12,204 - -
year inclusive
After five years 17,267 20,368 - -
Other
Within one year 72 39 - -
In the second to 117 24 - -
fifth year inclusive
31,632 36,041 - -
25 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 £71,000 (2007: £79,000).
Contributions totalling £7,000 (2007: £7,000) were payable to the funds at the period end and are included in creditors.
26 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 1 March 2008 the VAT liability amounted to £273,000 (2007:
£456,000).
27 RELATED PARTY TRANSACTIONS
During the year the company purchased goods for resale of £4,000 (2007: £473,000) from a company in which a director of Strategic Retail
plc is also a director. There are no balances outstanding at the balance sheet date in respect of these transactions.
The company has entered into an agreement with a company of which a director of Strategic Retail Plc is a partner, dated 29 September
2003 and subsequently amended on 28 November 2003 under which the company has agreed to provide the services of the director 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 (2007: £18,000). No amounts were outstanding at the year end.
The company has also entered into an agreement with a company whereby the services of another director are supplied for an annual fee of
£18,000 (2007: £18,000). At the year end £3,000 was outstanding (2007: £3,000).
Remuneration of key management personnel
The remuneration of the other key management personnel who are not directors of the Group, is set out below in aggregate. Further
information about the remuneration of directors is set out in note 5.
53 weeks 52 weeks
ended 1 ended 24
March February
2008 2007
£000 £000
Short term employee benefits 200 196
Post employment benefits 19 19
219 215
Parent company
Other than the settlement of part of inter-company indebtedness there were no transactions between the parent company and its
subsidiaries. The aggregate amount due from fellow subsidiaries to the parent company at 1 March 2008 was £4,179,224 (2007: £4,514,593).
28 IFRS RECONCILIATION OF PRIOR PERIOD COMPARATIVES
The effects of the transition from UK GAAP to IFRS are shown in the reconciliation statements below:
The adjustments relate to the following:
* The first two UK GAAP columns represent a decommissioning/dismantling provision and holiday pay accrual which would not fall to be
adjusted as prior year end adjustments due to their materiality. They have been effected to fully align accounting policies with IFRS.
The third column reflects a changed accounting treatment for certain convertible loan notes which were issued in August 2005. In 2006
these were treated solely as shares to be issued. The directors now believe a more appropriate treatment is to show these as a compound
financial instrument split between financial liabilities and shares to be issued reserve.
* Goodwill at the transition date has been reviewed for impairment and where applicable adjusted. Amortisation in subsequent
periods has been reversed.
* Outstanding holiday pay has been reviewed and accrued as appropriate.
* The costs of bringing leased properties back to the state they were received in has been provided and an equivalent amount
capitalised in property, plant and equipment.
The Group has taken the exemption under IFRS 1 not to restate business combinations completed prior to the date of transition.
Consolidated income statement for the year ended 24 February 2007
UK GAAP UK GAAP Adjustments UK GAAP UK GAAP Revised UK IFRS 3 Business
IFRS
24 February Property, Adjustments Adjustment GAAP combinations 24
February
2007 plant and equipment Employee Financial 24 February
2007
benefits Instruments 2007
£000 £000 £000 £000 £000 £000
£000
REVENUE 21,557 - - - 21,557 -
21,557
Cost of sales (11,161) - - - (11,161) -
(11,161)
GROSS PROFIT 10,396 - - - 10,396 -
10,396
Distribution costs (8,621) (13) 9 - (8,625) 231
(8,394)
Administrative (1,814) - - - (1,814) -
(1,814)
expenses
GROUP OPERATING (39) (13) 9 - (43) 231
188
PROFIT/(LOSS)
Profit on sale of - - - 125 -
property, plant and 125
125
equipment
Finance revenue 3 - - - 3 -
3
Finance costs (15) - - (107) (122) -
(122)
PROFIT BEFORE 74 (13) 9 (107) (37) 231
194
TAXATION
Taxation - - - - - -
-
PROFIT FOR THE YEAR (13) 9 (107) (37) 231
ATTRIBUTABLE TO
EQUITY SHAREHOLDERS
74
194
EARNINGS PER SHARE
- basic and diluted 0.42p
1.09p
Consolidated balance sheet as at 25 February 2006
UK GAAP UK GAAP adjustment UK GAAP UK GAAP Revised UK GAAP IAS36 Impairment
IAS1 Presentation IFRS
25 February Property, plant and adjustment Employee adjustments 24 February of assets
of financial 25 February
2006 equipment benefits Financial 2007
statements 2006
instruments
ASSETS £000 £000 £000 £000 £000 £000
£000 £000
NON-CURRENT ASSETS
Intangible assets 4,263 - - - 4,263 (476)
- 3,787
Property, plant and 1,337 99 - - 1,436 -
- 1,436
equipment
Deferred tax 150 - - - 150 -
- 150
5,750 99 - - 5,849 (476)
- 5,373
CURRENT ASSETS
Inventories 4,472 - - - 4,472 -
- 4,472
Trade and other 609 - - - 609 -
- 609
receivables
Cash and cash 558 - - - 558 -
- 558
equivalents
5,639 - - - 5,639 -
- 5,639
LIABILITIES
CURRENT LIABILITIES
Trade and other (4,250) - (58) - (4,308) -
- (4,308)
payables
Corporation tax (12) - - - (12) -
- (12)
payable
Provisions for - - - - - -
(550) (550)
liabilities and
charges
(4,262) - (58) - (4,320) -
(550) (4,870)
NET CURRENT ASSETS 1,377 - (58) - 1,319 -
(550) 769
NON-CURRENT - - - (1,776) (1,776) -
- (1,776)
LIABILITIES
Financial liability
Provisions for
liabilities and
charges (1,945) (170) - - (2,115) -
550 (1,565)
NET ASSETS 5,182 (71) (58) (1,776) 3,277 (476)
- 2,801
SHAREHOLDERS'
EQUITY
Called up share 84 - - - 84 -
- 84
capital
Share premium 3,025 - - - 3,025 -
- 3,025
account
Shares to be issued 1,715 - - (1,683) 32 -
- 32
Profit and loss 358 (71) (58) (93) 136 (476)
- (340)
account
SHAREHOLDERS' EQUITY 5,182 (71) (58) (1,776) 3,277 (476)
- 2,801
Consolidated balance sheet as at 24 February 2007
UK GAAP UK GAAP UK GAAP UK GAAP Revised UK GAAP IAS38 Intangible
IAS36 IAS 37 IFRS
24 February adjustments adjustments adjustments 24 February assets
Impairment Provisions 24 February
2007 Property, Employee Financial 2007 of
assets 2007
plant and benefits Instruments
equipment
£000 £000 £000 £000 £000 £000
£000 £000 £000
ASSETS
NON-CURRENT ASSETS
Intangible assets 4,153 - - - 4,153 231
(476) - 3,908
Property, plant and equipment 1,015 100 - - 1,115 -
- - 1,115
Deferred tax 150 - - - 150 -
- - 150
5,318 100 - - 5,418 231
(476) - 5,173
CURRENT ASSETS
Inventories 4,269 - - - 4,269 -
- - 4,269
Trade and other receivables 878 - - - 878 -
- - 878
Cash and cash equivalents 194 - - - 194 -
- - 194
5,341 - - - 5,341 -
- - 5,341
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (4,105) - (49) - (4,154) -
- - (4,154)
Provisions for liabilities and - - - - -
- (253) (253)
charges -
(4,105) - (49) - (4,154) -
- (253) (4,407)
NET CURRENT ASSETS 1,236 - (49) - 1,187 -
- (253) 934
NON-CURRENT LIABILITIES
Financial liability - - - (1,507) (1,507) -
- - (1,507)
Provisions for liabilities and (184) - - (1,171) -
- 253 (918)
charges (987)
NET ASSETS 5,567 (84) (49) (1,507) 3,927 231
(476) - 3,682
SHAREHOLDERS' EQUITY
Called up share capital 108 - - - 108 -
- - 108
Share premium account 3,688 - - - 3,688 -
- - 3,688
Shares to be issued 1,339 - - (1,314) 25 -
- - 25
Profit and loss account 432 (84) (49) (193) 106 231
(476) - (139)
SHAREHOLDERS' EQUITY 5,567 (84) (49) (1,507) 3,927 231
(476) - 3,682
Consolidated cash flow statement for the 12 months ended 24 February 2007
Notes UK GAAP UK GAAP adjustments UK GAAP Revised UK GAAP
IAS38 IFRS
24 February Property, adjustments 24 February 2007
Intangible 24 February
2007 plant and Employee
assets 2007
equipment benefits
CONSOLIDATED CASH £000 £000 £000 £000 £000
£000
FLOWS FROM OPERATING
ACTIVITIES
Operating profit (39) (13) 9 (43) 231
188
Adjusted for:
Depreciation (iii) 253 13 - 266 -
266
Amortisation of goodwill (i) 231 - - 231 (231)
-
Finance revenue 3 - - 3 -
3
Finance costs (15) - - (15) -
(15)
433 - 9 442 -
442
CHANGES IN WORKING CAPITAL
Decrease/(increase in 324 - - 324 -
324
inventories
Decrease in trade and other (262) - - (262) -
(262)
receivables
Increase/(decrease) in trade (ii) (170) - (9) (179) -
(179)
and other payables
Decrease in provisions (887) - - (887) -
(887)
CASH GENERATED FROM OPERATIONS (562) - - (562) -
(562)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary (166) - - (166) -
(166)
Purchase of property, plant (260) - - (260) -
(260)
and equipment
Proceeds from sale of property, 313 - - 313 -
313
plant and equipment
NET CASH USED IN INVESTING ACTIVITIES (113) - - (113)
- (113)
CASH FLOWS FROM FINANCING
ACTIVITIES
Issue of ordinary shares 386 - - 386 -
386
Payment in lieu of shares (75) - - (75) -
(75)
NET CASH USED IN FINANCING ACTIVITIES 311 - - 311
- 311
NET (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS
- (364)
AND BANK OVERDRAFT (364) - - (364)
Cash, cash equivalents and
bank overdrafts at beginning 558 - - 558 -
558
of period
CASH, CASH EQUIVALENTS AND
BANK OVERDRAFTS AT END OF THE 194 - - 194 -
194
PERIOD
This information is provided by RNS
The company news service from the London Stock Exchange
END
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