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
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