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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 | |
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0.00 | 0.00% | 1.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:1424I Strategic Retail PLC 25 August 2006 STRATEGIC RETAIL PLC ANNOUNCEMENT OF RESULTS FOR THE 52 WEEKS ENDED 25 FEBRUARY 2006 CHAIRMAN'S STATEMENT Trading conditions were extremely tough in the year as with most major DIY retailers showing declines in like for like sales and profitability. However, through expansion and acquisition, our overall sales were up nearly thirty five percent. Our overall margin grew by #2.7m, representing a margin percentage of 48.8% (2005: 49.2%). The majority of our growth (#4m turnover from acquisitions) came from the acquisition detailed in an agreement dated 30 August 2005 relating to the purchase of part of the business and assets of Room 2 Limited (in Administration). The Company acquired 9 'Texstyle World Home' stores all based in Scotland, with six situated around Glasgow and three in the far North. These stores have been successfully integrated into the Group's management structure based in Cheshire. One store, based in Falkirk has been closed and we are examining alternative properties in the area. Two of the nine Scottish stores were taken on a one year let basis and we will be vacating them on the expiry of the one year term. The Group has opened a new Fads (Trading) Limited store at Blairgowrie and successfully re-sited to better placed stores at Rutherglen, Bradford and Arbroath. We continue to review the store portfolio with a view to retaining and acquiring stores which can deliver our optimal offer, whilst disposing of suboptimal ones as the opportunity presents itself. We still see expansion opportunities through identifying both appropriate new store locations and companies to acquire. I would conclude by thanking all the employees for their hard work in integrating the new business and for their effort and commitment to the Group. IW Currie Chairman BUSINESS AND FINANCIAL REVIEW Strategic Retail Plc increased its portfolio of stores by the acquisition of 9 Scottish stores situated on retail parks together with part of the business and assets of Room 2 Limited (in Administration). These were acquired at the end of August 2005 by a new company we created, Texstyle World (Fads) Limited, and the last six months trading are included in the consolidated results. Fads (Trading) Limited, acquired in November 2003, includes full year results this year together with full year for prior year comparatives. Leveys (Fads) Limited was acquired in October 2004 and as such only 5 months are included in the prior year comparatives. The relative performance of the stores can be highlighted as follows: Fads (Trading) Limited 52 weeks ended 25 52 weeks ended 26 February 2006 February 2005 #000 #000 Turnover - Continuing operations 12,969 14,132 Turnover - Comparable stores 11,269 12,055 Turnover - Non comparable stores 1,700 2,077 Our comparable sales suffered a six and a half percent decline although margins remained stable at around 49 percent. Gross profit of #6.4m (49.2%) was achieved in the year compared to prior year #7.0m (49.5%). Store costs were reduced from #5.4m in 2005 to #5.2m in the year in line with changes in store numbers as follows: 52 weeks ended 25 52 weeks ended 26 February 2006 February 2005 Number Number Stores traded at any time during year 58 55 Store traded - Comparable stores 45 45 Store traded - Non comparable stores 13 10 At the year end Fads (Trading) Limited operated out of 52 stores. The reduction in central overhead from #1.2m to #0.9m reflects the impact of integrating further companies into the Cheshire head office. 52 weeks ended 25 20 weeks ended 26 February 2006 February Leveys (Fads) Limited 2005 #000 #000 Turnover - Continuing operations 4,943 2,070 52 weeks ended 25 20 weeks ended 26 February 2006 February 2005 Number Number Store traded at any time during year 17 18 At the year end Leveys (Fads) Limited operated out of 16 stores. Gross margin of #2.3m (45.6%) was achieved in this year's 52 week period versus #1.0m (46.8%) in the prior year's 20 week period. We are in the process of transferring leases from Leveys Limited into Leveys (Fads) Limited. Certain of these leases we have identified as having an onerous element in that the annual rentals are far in excess of rates we would have pursued if we were taking on new stores. The onerous lease review has been reflected in the goodwill calculation and explains the increase in amortisation charge from #8,000 last year to #239,000 this year. The provision against onerous leases has been made for the life of the leases and discounted to present value. Texstyle World (Fads) Limited Texstyle World (Fads) Limited has faced a difficult first six months. The acquisition of 9 stores from the Administrator of Room 2 Limited (in Administration) meant the closure by the Administrator of other stores and the negative publicity which accrued. Many customers had placed deposits against goods to be imported and we felt that the Administration would have shaken confidence. We have endeavoured to honour all customer deposits and re-establish a good relationship. Problems were experienced with supply, where some suppliers refused to trade with us and some had significant retention of title issues to resolve. In spite of all this we managed to trade and generate in excess of #4.0m turnover and only suffered a small operating loss of #91,000. Management are confident that we are winning back customer confidence and creating a profitable business. CONSOLIDATED PROFIT AND LOSS ACCOUNT For the 52 week period ended 25 February 2006 Note 52 weeks ended 52 weeks ended 25 February 2006 26 February 2005 #000 #000 TURNOVER - Continuing operations 17,912 16,201 - Acquisitions 4,011 - TURNOVER 1 21,923 16,201 Cost of sales 2 (11,227) (8,238) GROSS PROFIT 2 10,696 7,963 Distribution costs 2 (8,842) (6,123) Administrative expenses 2 (1,676) (1,722) OPERATING PROFIT - Continuing operations 2 269 118 - Acquisitions 2 (91) - OPERATING PROFIT 2 178 118 Other interest receivable 3 8 13 Interest payable and similar charges 4 (8) (3) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1-6 178 128 Taxation 7 - 51 RETAINED PROFIT FOR THE PERIOD 22 178 179 EARNINGS PER SHARE - Basic and diluted 9 1.10p 1.26p 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 25 February 2006 Note 25 February 2006 26 February 2005 #000 #000 #000 #000 FIXED ASSETS Intangible assets 10 4,263 368 Tangible assets 11 1,337 610 5,600 978 CURRENT ASSETS Stocks 14 4,472 3,295 Debtors 15 759 879 Cash at bank and in hand 558 1,183 5,789 5,357 CREDITORS: Amounts falling due within one year 17 (4,262) (3,286) NET CURRENT ASSETS 1,527 2,071 TOTAL ASSETS LESS CURRENT LIABILITIES 7,127 3,049 PROVISIONS FOR LIABILITIES AND CHARGES 19 (1,945) (60) NET ASSETS 5,182 2,989 CAPITAL AND RESERVES Called up share capital 20 84 80 Share premium account 21 3,025 2,729 Shares to be issued 21 1,715 - Profit and loss account 22 358 180 EQUITY SHAREHOLDERS' FUNDS 5,182 2,989 COMPANY BALANCE SHEET At 25 February 2006 Note 25 February 2006 26 February 2005 #000 #000 #000 #000 FIXED ASSETS Investments 12 257 257 CURRENT ASSETS Debtors (including #4,224,000 (2005: #2,209,000) due in more than one year) 15 4,421 2,326 Cash at bank and in hand 66 102 4,487 2,428 CREDITORS: Amounts falling due within one year 17 (121) (1) NET CURRENT ASSETS 4,366 2,427 NET ASSETS 4,623 2,684 CAPITAL AND RESERVES Called up share capital 20 84 80 Share premium account 21 3,025 2,729 Shares to be issued 21 1,715 - Profit and loss account 22 (201) (125) EQUITY SHAREHOLDERS' FUNDS 4,623 2,684 CONSOLIDATED CASH FLOW STATEMENT For the 52 week period ended 25 February 2006 Note 52 weeks ended 25 February 52 weeks ended 26 February 2006 2005 #000 #000 #000 #000 CASH FLOW FROM OPERATING ACTIVITIES 23 484 (340) RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 8 13 Interest paid (8) (3) NET CASH INFLOW FOR RETURNS ON INVESTMENTS AND SERVICING OF FINANCE - 10 CAPITAL EXPENDITURE Purchase of tangible fixed assets (407) (156) ACQUISITIONS AND DISPOSALS Purchase of business (1,002) (654) Net cash acquired with business - 118 NET CASH OUTFLOW FOR ACQUISITIONS AND DISPOSALS 13 (1,002) (536) CASH OUTFLOW BEFORE FINANCING (925) (1,022) FINANCING Issue of ordinary share capital 300 1,138 Share issue expenses - (32) NET CASH INFLOW FROM FINANCING 300 1,106 (DECREASE)/INCREASE IN CASH IN THE PERIOD 24 (625) 84 RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS For the 52 week period ended 25 February 2006 Group Company 52 weeks 52 weeks 52 weeks 52 weeks ended 25 ended 26 ended 25 ended 26 February February February February 2006 2005 2006 2005 #000 #000 #000 #000 PROFIT/(LOSS) FOR THE FINANCIAL PERIOD 178 179 (76) (91) 178 179 (76) (91) New share capital subscribed 4 15 4 15 Share premium on allotment during the period 296 1,123 296 1,123 Share issue expenses debited to share premium - (32) - (32) Shares to be issued 1,715 - 1,715 - NET ADDITION TO SHAREHOLDERS' FUNDS 2,193 1,285 1,939 1,015 Opening shareholders' funds 2,989 1,704 2,684 1,669 CLOSING SHAREHOLDERS' FUNDS 5,182 2,989 4,623 2,684 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 25 February 2006. 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: Short leasehold properties - Over the life of the lease Fixtures, fittings and equipment - 10-20% per annum straight line Depreciation on freehold buildings is not provided, as any uncharged depreciation for the period and the accumulated uncharged depreciation would be immaterial in aggregate, as a result of the group's policy to maintain the properties in good condition, which substantially prolongs this useful life, and the estimated high residual values of the properties. Tangible fixed assets which are not depreciated will be reviewed for impairment annually by the directors in accordance with Financial Reporting Standard 11. 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 and services provided 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. CHANGES IN ACCOUNTING POLICES AND ESTIMATION TECHNIQUES The following new Financial Reporting Standards (FRS) have been adopted for the first time, in these financial statements: * FRS 21 - Events after the balance sheet date * FRS 25 - Financial instruments: Disclosure and presentation (presentation requirement only) * FRS 28 - Corresponding amounts The above standards have not had a material impact on the group's financial statements. NOTES TO THE FINANCIAL STATEMENTS 1 SEGMENTAL REPORT The group's turnover and profit before taxation were derived entirely from its principal activity of the retail of decorating and home fashion products. The group's operations are wholly within the United Kingdom. 2 ANALYSIS OF CONTINUING OPERATIONS 52 weeks ended 25 February 2006 52 weeks ended 26 February 2005 Continuing Acquisitions Total Continuing Acquisitions Total #000 #000 #000 #000 #000 #000 TURNOVER 17,912 4,011 21,923 16,201 - 16,201 Cost of sales (9,273) (1,954) (11,227) (8,238) - (8,238) GROSS PROFIT 8,639 2,057 10,696 7,963 - 7,963 Distribution costs (7,091) (1,751) (8,842) (6,123) - (6,123) Administrative expenses (1,279) (397) (1,676) (1,722) - (1,722) OPERATING PROFIT/ (LOSS) 269 (91) 178 118 - 118 3 OTHER INTEREST RECEIVABLE 52 weeks ended 52 weeks ended 25 February 26 February 2006 2005 #000 #000 Bank interest 8 13 4 INTEREST PAYABLE AND SIMILAR CHARGES 52 weeks ended 52 weeks ended 25 February 26 February 2006 2005 #000 #000 Bank interest 8 3 5 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 52 weeks ended 52 weeks ended 25 February 26 February 2006 2005 #000 #000 Profit on ordinary activities before taxation is stated after charging: Depreciation and amounts written off tangible fixed assets: Charge for the period Owned assets 240 138 Amortisation of goodwill 239 8 Loss on disposal of tangible fixed assets 14 25 Operating lease rentals: Plant and machinery 86 40 Exceptional items - 278 Amounts payable to Baker Tilly and their associates in respect of both audit and non-audit services: 52 weeks ended 52 weeks 25 February ended 26 2006 February 2005 #000 #000 Audit services - Statutory audit 28 21 Tax services - Compliance services 8 7 Other services 6 23 42 51 Comprising - Audit services - company 3 3 - group 25 18 - Non audit services - company 6 23 - group 8 7 42 51 5 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (continued) Exceptional items On 4 October 2004, the group acquired Leveys (Fads) Limited. Following the acquisition the Leveys operation has been rationalised which has resulted in a number of one off costs. As this rationalisation is not normal recurring trading expenses they have been separately analysed as exceptional items. 52 weeks ended 52 weeks 25 February ended 26 2006 February 2005 #000 #000 Store closure costs - 17 Closure of head office - 85 Redundancy costs - 176 - 278 6 EMPLOYEES 52 weeks ended 52 weeks ended 25 February 26 February 2006 2005 Number Number The average monthly number of persons (including directors) employed by the group during the period was: Administration and management 38 34 Retailing 448 293 486 327 Staff costs for the above persons: 52 weeks ended 52 weeks ended 25 February 26 February 2006 2005 #000 #000 Wages and salaries 3,219 3,395 Social security costs 299 242 Other pension costs 72 89 3,590 3,726 DIRECTORS' REMUNERATION 52 weeks ended 52 weeks ended 25 February 2006 26 February 2005 #000 #000 Emoluments 75 53 Money purchase pension contributions - - Total emoluments 75 53 The emoluments for IW Currie were paid to Zeus Partners. See note 30. 52 weeks ended 52 weeks ended 25 February 26 February 2006 2005 The number of directors to whom retirement benefits are accruing under: Number Number Money purchase schemes was - - 7 TAXATION 52 weeks ended 25 52 weeks ended 26 February 2006 February 2005 #000 #000 #000 #000 Current tax: UK corporation tax on profits of the period - - Adjustments in respect of prior periods - (5) Total current tax - (5) Deferred tax: Origination and reversal of timing differences - (46) Total deferred tax - (46) Tax on profit on ordinary activities - (51) Factors affecting tax charge for the period: 52 weeks 52 weeks ended 25 ended 26 February 2006 February 2005 #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 178 128 Profit on ordinary activities multiplied by standard rate of corporation tax in the UK 30% (2005: 30%) 53 38 Effects of: Expenses not deductible for tax purposes 118 19 Fixed asset timing differences (45) 18 Other timing differences (22) (24) Losses unutilised 21 43 Losses utilised (125) (93) Starting rate relief - (1) Adjustments in respect of prior periods - (5) Current tax charge for the period - (5) Factors that may affect future tax charges: The group has trading losses of approximately #3,200,000 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 #76,000 (2005: loss #91,000). 9 EARNINGS PER ORDINARY SHARE 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 25 ended 25 ended 26 ended 26 February 2006 February 2006 February 2005 February 2005 #000 #000 #000 #000 Profit for the financial period 178 178 179 179 Weighted average number of shares 52 weeks ended 52 weeks 25 February ended 26 2006 February 2005 Number Number For basic and diluted earnings per share 16,169,962 14,245,616 ADDITIONAL EARNINGS PER ORDINARY SHARE Basic Diluted Basic Diluted 52 weeks ended 52 weeks ended 52 weeks ended 52 weeks ended 25 February 25 February 26 February 26 February 2006 2006 2005 2005 Pre-exceptional earnings per share 1.10p 1.10p 3.21p 3.21p 9 EARNINGS PER ORDINARY SHARE (continued) The calculation of pre-exceptional earnings per share is based on the following profits and number of shares: Basic Diluted Basic Diluted 52 weeks 52 weeks 52 weeks ended 52 weeks ended ended 25 ended 25 26 February 26 February February 2006 February 2006 2005 2005 #000 #000 #000 #000 Profit for the financial period 178 178 179 179 Exceptional items Store closure costs - - 17 17 Closure of head office - - 85 85 Redundancy costs - - 176 176 Pre-exceptional profit for the financial period 178 178 457 457 Weighted average number of shares 52 weeks ended 52 weeks ended 25 February 26 February 2006 2005 Number Number For pre-exceptional earnings per share 16,169,962 14,245,616 10 INTANGIBLE FIXED ASSETS Positive goodwill GROUP #000 Cost At beginning of period 376 Acquisitions 2,023 Additions 2,111 At end of period 4,510 Depreciation At beginning of period 8 Charged in the period 239 At end of period 247 Net book value At 25 February 2006 4,263 At 26 February 2005 368 On 30 August 2005 the group acquired part of the trade and assets of Room 2 Limited (in Administration). 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 102 58 611 771 Acquisitions - - 574 574 Additions 69 - 338 407 Disposals - (5) (9) (14) At end of period 171 53 1,514 1,738 Depreciation At beginning of period 1 4 156 161 Charged in period 1 10 229 240 At end of period 2 14 385 401 Net book value At 25 February 2006 169 39 1,129 1,337 At 26 February 2005 101 54 455 610 The net book value of fixtures, fittings and equipment includes #nil (2005: #8,000) in respect of assets held under finance leases and hire purchase contracts. Depreciation for the period on these assets was #nil (2005: #nil). 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 100% ord - 13 ACQUISITIONS On 4 October 2004 the group acquired 100% of the called up share capital of Leveys (Fads) Limited and its subsidiary, Leveys Limited for a cash consideration of #654,000. The provisional fair values recorded in the previous period have been revisited during 2006 and the final fair value adjustments are as follows: Initial book Revalua-tion Accounting Onerous Other Fair value at value at date policy leases items date of of alignment acquisition acquisition #000 #000 #000 #000 #000 #000 Tangible fixed assets 337 (30) (79) - (57) 171 Stocks 731 - (155) - (2) 574 Debtors 414 - - - (8) 406 Cash at bank and in hand 118 - - - - 118 TOTAL ASSETS 1,600 (30) (234) - (67) 1,269 Creditors: Amounts falling due within one year (877) - - - (67) (944) Creditors: Amounts falling due in more than one year (9) - - - - (9) Provisions for liabilities and charges (67) - - (2,149) 67 (2,149) TOTAL LIABILITIES (953) - - (2,149) - (3,102) NET ASSETS 647 (30) (234) (2,149) (67) (1,833) Positive goodwill of #2,487,000, being the difference between the fair value of net assets acquired and consideration paid, arises from this transaction. FAIR VALUE ADJUSTMENTS Revaluation The revaluation was made to eliminate a prior year revaluation on properties and to reduce the property back to its historic cost, being its estimated fair value. Accounting policy alignments The accounting policy alignments relate to the alignment of depreciation policies on fixed assets and the alignment of stock provision methodologies. 13 ACQUISITIONS (continued) Other items Other items include the write off of surplus fixed assets and the recognition of an onerous lease provision. Onerous leases The onerous lease provision relates to lease costs on loss making stores which are considered to be in excess of market rates. 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 525 Legal fees 177 Shares 300 Consideration paid to date 1,002 Deferred consideration - convertible loan notes (see note 21) 1,715 Total consideration 2,717 The assets and liabilities acquired have been consolidated at their fair values to the group, as set out below. The fair values will be finalised in the financial statements for the 52 week period ended 24 February 2007. Initial book Accounting Impairment Onerous Other Fair value at value at date policy review leases items date of of alignment acquisition acquisition #000 #000 #000 #000 #000 #000 Tangible fixed assets 709 - (135) - - 574 Stocks 1,720 (222) - - - 1,498 TOTAL ASSETS 2,429 (222) (135) - - 2,072 Creditors: Amounts falling due within one year (594) (21) - - - (615) Provisions for liabilities and charges - - - (90) (673) (763) TOTAL LIABILITIES (594) (21) - (90) (673) (1,378) NET ASSETS 1,835 (243) (135) (90) (673) 694 13 ACQUISITIONS (continued) Positive goodwill of #2,023,000 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 depreciation policies on fixed assets and the alignment of stock provision methodologies. 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 leases The onerous lease provision relates to lease costs on loss making stores which are considered to be in excess of market rates. Other items Other items include the write off of surplus fixed assets and the recognition of an onerous lease provision. 14 STOCKS Group Company 25 February 26 February 25 February 26 February 2006 2005 2006 2005 #000 #000 #000 #000 Finished goods and goods for resale 4,472 3,295 - - 15 DEBTORS Group Company 25 February 26 February 25 February 26 February 2006 2005 2006 2005 #000 #000 #000 #000 Due within one year: Trade debtors 220 185 - - Amounts owed by group undertakings - - 181 35 Other debtors 74 249 16 80 Prepayments and accrued income 315 295 - 2 609 729 197 117 Due in more than one year: Amounts owed by group undertakings - - 4,224 2,209 Deferred tax asset 150 150 - - 759 879 4,421 2,326 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: 25 February 26 February 2006 2005 #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. 17 CREDITORS: Amounts falling due within one year Group Company 25 February 26 February 25 February 26 February 2006 2005 2006 2005 #000 #000 #000 #000 Obligations under finance leases - 28 - - Trade creditors 1,798 1,478 - - Corporation tax 12 - - - Other taxation and social security costs 597 495 - - Other creditors 995 385 75 - Accruals and deferred income 860 900 46 1 4,262 3,286 121 1 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 value of the group's financial instruments are as follows: 25 February 2006 26 February 2005 Book value Fair value Book value Fair value #000 #000 #000 #000 Cash at bank and in hand 558 558 1,183 1,183 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: 25 February 2006 26 February 2005 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 - 558 - 558 - 1,183 - 1,183 The floating rate cash deposits bear interest based on relevant national LIBOR equivalents. 18 FINANCIAL INSTRUMENTS (continued) CURRENCY ANALYSIS OF NET ASSETS The group's borrowing and net assets by currency are as follows: 25 February 2006 26 February 2005 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 11,389 (6,207) 5,182 6,335 (3,346) 2,989 19 PROVISIONS FOR LIABILITIES AND CHARGES Onerous leases Retention of Other Total title provisions #000 #000 #000 #000 At beginning of period 60 - - 60 Acquisitions 2,179 233 441 2,853 Utilisation (523) (122) (323) (968) At end of period 1,716 111 118 1,945 The onerous lease provision relates to lease costs on loss making stores which are considered to be in excess of market rates. Certain valid retention of title claims existed against stock acquired from Room 2 Limited (in Administration). These have been provided against. 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 25 February 26 February 2006 2005 #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: 16,810,574 (2005: 15,928,222) ordinary shares of 0.5p each 84 80 The following share movements occurred during the year: * On 17 November 2005 the company issued 882,352 ordinary shares of 0.5p each 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 #295,588. 21 RESERVES Shares to be Share premium issued account #000 #000 GROUP AND COMPANY At beginning of period - 2,729 Premium on allotment during the period - 296 Shares to be issued 1,715 - At end of period 1,715 3,025 22 PROFIT AND LOSS ACCOUNT Group Company #000 #000 At beginning of period 180 (125) Profit/(loss) for the period 178 (76) At end of period 358 (201) 23 RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES 52 weeks ended 52 weeks 25 February ended 26 2006 February #000 2005 #000 Operating profit 178 118 Depreciation 240 138 Amortisation of goodwill 239 8 Loss on disposal of tangible fixed assets 14 25 Decrease/(increase) in stocks 321 (454) Decrease in debtors 120 82 Increase/(decrease) in creditors 361 (257) Decrease in provisions (989) - CASH FLOW FROM OPERATING ACTIVITIES 484 (340) 24 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS #000 Decrease in cash in the year (625) MOVEMENT IN NET FUNDS IN THE PERIOD (625) NET FUNDS AT 26 FEBRUARY 2005 1,183 NET FUNDS AT 25 FEBRUARY 2006 558 25 ANALYSIS OF NET FUNDS At 26 Cash flow At 25 February 2005 February 2006 #000 #000 #000 Cash in hand and at bank 1,183 (625) 558 26 CAPITAL COMMITMENTS There were no capital commitments at the end of the financial period (2005: #nil). 27 COMMITMENTS UNDER OPERATING LEASES Group Company 25 February 26 February 25 February 26 February 2006 2005 2006 2005 #000 #000 #000 #000 At 25 February 2006 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 346 28 - - Expiring between two and five years 911 320 - - Expiring after five years 919 594 - - Other Expiring within one year 3 - - - Expiring between two and five years 33 54 - - 2,212 996 - - 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 #72,000 (2005: #89,000). Contributions totalling #7,632 (2005: #9,000) 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 25 February 2006 the VAT liability amounted to #484,609 (2005: #409,000). 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 2006 2005 #000 #000 #000 #000 USI RA Gabbie - Goods for resale director of both companies (273) (26) (373) (37) 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 #50,000 (2005: #nil) were paid to Zeus. 31 Copies of the Financial Statements have been despatched to shareholders on 25 August 2006. Additional copies are 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 FR SEMFIISMSELA
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