RNS Number:6013I
Strategic Retail PLC
27 November 2007
STRATEGIC RETAIL PLC
Interim Results
for the six months ended 25 August 2007
Strategic Retail plc, the national retailer of soft furnishings, furniture and
DIY trading out of a mixture of high street locations and retail parks,
announces today its interim results for the six months ended 25 August 2007.
HIGHLIGHTS
* Strong like-for-like sales growth of 5.75% in comparable stores
* Ongoing rationalisation of the high street chain
* New Texstyle World store launched at Trafford Retail Park, Manchester
* Other new store opportunities to roll out the Texstyle World offer
Ian Currie, Chairman commented:
"It has been a pleasing half year in two main respects. Firstly, we have seen
greater stability in the Fads chain after disposing of a significant number of
loss making stores last year. Our comparable sales for the residual Fads stores
have remained fairly consistent and we are close to disposing of the remaining
poor performing stores. Secondly, we have seen significant growth in comparable
sales in the Texstyle World and Leveys chains coupled with opportunities to roll
out the Texstyle World concept. I am optimistic about future prospects with a
larger chain of retail park outlets."
For further information, please contact:
Ian Currie, Strategic Retail plc Tel: 0161 831 1512
David Youngman, WH Ireland Limited Tel: 0161 832 2174
CHAIRMAN'S STATEMENT
Turnover for the smaller more profitable group has fallen from #10.9m for the
six months ended 25 August 2006 to #9.9m for the six months ended 25 August
2007. This reflects the movement away from smaller high street stores to larger
out of town retail parks. This can be summarised as follows:
2007 2006
Turnover for the six month period #9.9m #10.9m
Average number of stores trading in the period 58 73
Average turnover by store #170k #150k
_______ _______
As can be seen, the strategy of exiting smaller stores has been aggressively
pursued with significant reductions in the high street portfolio. This strategy
in itself will improve profitability as we exit loss making stores but our
growth objective is being pursued by securing deals to roll out the Texstyle
World concept in out of town retail parks. We are currently at advanced stages
in negotiations to roll out the Texstyle World concept to several new locations.
In the remaining comparable stores, I am pleased to say that we have achieved on
average 5.75% growth in sales with strong performance at Texstyle World. We are
also near to exiting further loss making high street stores.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
Our results for the year ended 23 February 2008 will be the first set of results
to be published by Strategic Retail plc in accordance with IFRS and consequently
these interim results have been reported in that format.
PROSPECTS
I believe that the roll out of the Texstyle World offer is the key to our future
success and we should see new stores opening in early 2008.
IW Currie
Chairman
27 November 2007
CONSOLIDATED INCOME STATEMENT
For the six months ended 25 August 2007
Six months ended Year ended
25 August 25 August 24 February
2007 2006 2007
#000 #000 #000
(Unaudited) (Unaudited - (Audited -
restated) restated)
REVENUE 9,886 10,938 21,557
Cost of sales (5,023) (5,688) (11,161)
GROSS PROFIT 4,863 5,250 10,396
Distribution costs (3,962) (4,354) (8,393)
Administrative expenses (878) (903) (1,814)
GROUP OPERATING PROFIT 23 (7) 189
Profit on sale of property, plant and equipment - - 125
Finance revenue 1 - 3
Finance costs (8) (11) (15)
PROFIT/(LOSS) BEFORE TAXATION 16 (18) 302
Taxation - - -
PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO EQUITY
SHAREHOLDERS 16 (18) 302
PROFIT FOR THE PERIOD ATTRIBUTABLE TO EQUITY SHAREHOLDERS
INCLUDES:
Loss for the period from discontinued operations - - (23)
Profit on disposal of discontinued operations - - 125
EARNINGS PER SHARE
- Basic and diluted 0.07p (0.10p) 1.73p
CONSOLIDATED BALANCE SHEET
At 25 August 2007
Notes 25 August 2007 25 August 2006 24 February 2007
#000 #000 #000
(Unaudited) (Unaudited - (Audited -
restated) restated)
ASSETS
NON-CURRENT ASSETS
Intangible assets 4,256 4,135 4,256
Property, plant and equipment 1,235 1,274 1,116
Deferred tax 150 150 150
5,641 5,559 5,522
CURRENT ASSETS
Inventories 4,355 4,568 4,269
Trade and other receivables 483 389 878
Cash and cash equivalents - 5 194
4,838 4,962 5,341
LIABILITIES
CURRENT LIABILITIES
Bank loans and overdrafts (432) - -
Trade and other payables (3,464) (3,715) (4,154)
(3,896) (3,715) (4,154)
NET CURRENT ASSETS 942 1,247 1,187
NON CURRENT LIABILITIES Provisions (1,029) (1,898) (1,171)
NET ASSETS 5,554 4,908 5,538
SHAREHOLDERS' EQUITY
Called up share capital 108 84 108
Share premium account 3,688 3,025 3,688
Shares to be issued 1,339 1,715 1,339
Profit and loss account 419 84 403
SHAREHOLDERS' EQUITY 5,554 4,908 5,538
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended 25 August 2007
Six months ended Year ended
25 August 2007 25 August 2006 24 February 2007
#000 #000 #000
(Unaudited) (Unaudited - (Audited -
restated) restated)
Profit/(loss) for the period 16 (18) 302
New share capital subscribed - - 24
Share premium on allotment during the period - - 677
Share issue expenses - - (14)
Shares to be issued - - (376)
Net addition to shareholders' equity 16 (18) 613
Opening shareholders' equity 5,538 4,925 4,925
Closing shareholders' equity 5,554 4,908 5,538
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 25 August 2007
Six months ended Year ended
25 August 2007 25 August 2006 24 February 2007
#000 #000 #000
(Unaudited) (Unaudited - (Audited -
restated) restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit 23 (7) 189
Adjusted for:
Depreciation 129 147 264
Amortisation of goodwill - - -
Loss on disposal of property, plant and
equipment 16 120 -
168 260 453
CHANGES IN WORKING CAPITAL
Decrease/(increase) in inventories (86) (96) 324
Decrease/(increase) in trade and other receivables 116 220 (262)
Increase/(decrease) in trade and other payables (411) (604) (178)
Decrease in provisions (178) (217) (887)
CASH GENERATED FROM OPERATIONS (391) (437) (550)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary - - (166)
Purchase of property, plant and equipment (227) (105) (260)
Proceeds from sale of property, plant and equipment - - 313
Finance revenue 1 - 3
Finance costs (8) (11) (15)
NET CASH USED IN INVESTING ACTIVITIES (234) (116) (125)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of ordinary shares - - 386
Payment in lieu of shares - - (75)
NET CASH USED IN FINANCING ACTIVITIES - - 311
NET (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS AND
BANK OVERDRAFTS (626) (553) (364)
Cash, cash equivalents and bank overdrafts at
beginning of period 194 558 558
CASH, CASH EQUIVALENTS AND BANK/OVERDRAFTS AT END OF
THE PERIOD (432) 5 194
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 25 August 2007
1. BASIS OF PREPARATION
Prior to 2007 the Group prepared its audited financial statements under UK
Generally Accepted Accounting Principles (UK GAAP). For the year ended 23
February 2008 the Group is required to prepare its annual consolidated financial
statements in accordance with accounting standards adopted for use in the
European Union (International Financial Reporting Standards (IFRS)).
These interim financial statements have been prepared in accordance with the
accounting policies set out below, taking into account the requirements and
options in IFRS 1 'First-time adoption of International Financial Reporting
Standards'. The Group has not adopted the reporting requirements of IAS 34 '
Interim Financial Reporting'. The transition date for the Group's application
of IFRS is 25 February 2006 and the comparative figures for 24 February 2007 and
26 August 2006 have been restated accordingly. Reconciliations of the income
statement (previously profit and loss account), balance sheet and cash flow
statement from previously reported UK GAAP to IFRS are shown in note 3.
The consolidated interim statements are prepared on the basis of all
International Accounting Standards (IAS) and IFRS published by the International
Accounting Standards Board (IASB) that are currently in issue. An element of
uncertainty still surrounds the application of IFRS as the EU may not endorse
all IASB pronouncements, new interpretations may be issued by the International
Financial Reporting Interpretations Committee (IFRIC) on existing standards and
best practice continues to evolve. It is therefore possible that the accounting
policies set out below may be updated by the time the Group prepares its first
full set of financial statements under IFRS for the year ending 23 February
2008.
The information relating to the six months ended 25 August 2007 and 26 August
2006 is unaudited and does not constitute statutory accounts. The comparative
figures for the year ended 24 February 2007 are not the company's statutory
accounts for that financial year. The statutory accounts for the year ended 24
February 2007, prepared under UK GAAP, have been reported on by the company's
auditors and delivered to the Registrar of Companies. The report of the
auditors was unqualified and did not contain a statement under section 237(2) or
(3) of the Companies Act 1985. The interim financial statements are unaudited
and have not been reviewed by the auditors.
2. ACCOUNTING POLICIES
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's 24 February 2007 annual report other
than the following changes which reflect the implementation of International
Financial Reporting Standards (see note 1):
a) Presentation of financial statements
The primary statements within the financial information contained in this
document have been presented in accordance with IAS 1, 'Presentation of
Financial Statements'.
b) 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 regularly 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.
c) Impairment of goodwill
The group determines whether goodwill is impaired at least on an annual basis.
This requires an estimation of the fair value less cost to sell of the cash
generating unit to which the goodwill is allocated. Estimating a fair value
less cost to sell requires management to make an estimate of the realisable
value of the cash generating unit.
d) 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.
e) Computer software
In accordance with IAS 38 "Intangible Assets" computer software is now required
to be disclosed as a class of intangible assets rather than be included as part
of property, plant and equipment, as was the case under UK GAAP.
f) Lease incentives
In accordance with IAS 17 lease incentives granted under an operating lease are
recognised as a reduction in lease rentals over the lease term.
g) 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.
h) Operating profit
The operating profit represents the profit of the Group before accounting for
finance costs or revenue and income tax credits and expense.
i) Cash flow
The cash flow statement has been restated to explain the movement in short term
cash and cash equivalents, instead of the movement in total short and long term
cash.
j) IFRS comparatives
For a reconciliation from UK GAAP to IFRS for prior period comparatives see note
3.
Management are currently reviewing the useful economic lives of property, plant
and equipment and may make an adjustment at year end which will affect the
following reconciliations.
3. 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:
(i) Amortisation of goodwill has been reversed to restate the full goodwill on
acquisition. This has been reviewed for impairment and where applicable
adjusted.
(ii)Outstanding holiday pay has been reviewed and accrued as appropriate.
(iii)The costs of bringing leased properties back to the state they were
received has been provided and an equivalent amount capitalised in property,
plant and equipment.
a) Consolidated income statement for the six months ended 26 August 2006
Notes UK GAAP IFRS adjustment IFRS
26 August 26 August
2006 2006
#000 #000
REVENUE 10,938 - 10,938
Cost of sales (5,688) - (5,688)
GROSS PROFIT 5,250 - 5,250
Distribution costs (i)(ii) (4,454) 100 (4,354)
(iii)
Administrative expenses (903) - (903)
GROUP OPERATING PROFIT (107) 100 (7)
Finance revenue - - -
Finance costs (11) - (11)
PROFIT BEFORE TAXATION (118) 100 (18)
Taxation - - -
PROFIT FOR THE PERIOD ATTRIBUTABLE TO EQUITY
SHAREHOLDERS (118) 100 (18)
EARNINGS PER SHARE
- basic and diluted (0.70p) (0.10p)
b) Consolidated statement of recognised income and expense for the period ended 26 August 2006
Notes UK GAAP IFRS adjustment IFRS
26 August 26 August
2006 2006
#000 #000 #000
PROFIT/(LOSS) FOR THE PERIOD (i)(ii) (118) 100 (18)
(iii)
TOTAL RECOGNISED NET INCOME FOR THE PERIOD (118) 100 (18)
c) Consolidated income statement for the year ended 24 February 2007
Notes UK GAAP IFRS adjustment IFRS
24 February 24 February
2007 2007
#000 #000 #000
REVENUE 21,557 - 21,557
Cost of sales (11,161) - (11,161)
GROSS PROFIT 10,396 - 10,396
Distribution costs (i)(ii) (8,621) 228 (8,393)
(iii)
Administrative expenses (1,814) - (1,814)
GROUP OPERATING PROFIT (39) 228 189
Profit on sale of property, plant and
equipment
125 - 125
Finance revenue 3 - 3
Finance costs (15) - (15)
PROFIT BEFORE TAXATION 74 228 302
Taxation - - -
PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY
SHAREHOLDERS 74 228 302
PROFIT FOR THE PERIOD ATTRIBUTABLE TO EQUITY
SHAREHOLDERS INCLUDES:
Loss for the period from discounted operations (23) - (23)
Profit on disposal of discontinued operations 125 - 125
EARNINGS PER SHARE
- basic and diluted 0.42p 1.73p
d) Consolidated statement of recognised income and expense for the year ended 24 February 2007
Notes UK GAAP IFRS adjustment IFRS
24 February 24 February
2007 2007
#000 #000 #000
PROFIT/(LOSS) FOR THE PERIOD 74 228 302
TOTAL RECOGNISED NET INCOME FOR THE PERIOD 74 228 302
e) Consolidated balance sheet as at 25 February 2006
Notes UK GAAP IFRS adjustment IFRS
25 February 25 February
2006 2006
#000 #000 #000
ASSETS
NON-CURRENT ASSETS
Intangible assets (i) 4,263 (128) 4,135
Property, plant and equipment (iii) 1,337 99 1,436
Deferred tax 150 - 150
5,750 (29) 5,721
CURRENT ASSETS
Inventories 4,472 - 4,472
Trade and other receivables 609 - 609
Cash and cash equivalents 558 - 558
5,639 - 5,639
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (ii) (4,250) (58) (4,308)
Corporation tax payable (12) - (12)
(4,262) (58) (4,320)
NET CURRENT ASSETS 1,337 (58) 1,319
NON-CURRENT LIABILITIES
Provisions (iii) (1,945) (170) (2,115)
NET ASSETS 5,182 (257) 4,925
SHAREHOLDERS' EQUITY
Called up share capital 84 - 84
Share premium account 3,025 - 3,,025
Shares to be issued 1,715 - 1,715
Profit and loss account 358 (257) 101
SHAREHOLDERS' EQUITY 5,182 (257) 4,925
f) Consolidated balance sheet as at 26 August 2006
Notes UK GAAP IFRS adjustment IFRS
26 August 26 August
2006 2006
#000 #000 #000
ASSETS
NON-CURRENT ASSETS
Intangible assets (i) 4,151 (16) 4,135
Property, plant and equipment (iii) 1,181 93 1,274
Deferred tax 150 - 150
5,482 77 5,559
CURRENT ASSETS
Inventories 4,568 - 4,568
Trade and other receivables 389 - 389
Cash and cash equivalents 5 - 5
4,962 - 4,962
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (ii) (3,652) (63) (3,715)
NET CURRENT ASSETS 1,310 (63) 1,247
NON-CURRENT LIABILITIES
Provisions (iii) (1,728) (170) (1,898)
NET ASSETS 5,064 (156) 4,908
SHAREHOLDERS' EQUITY
Called up share capital 84 - 84
Share premium account 3,025 - 3,,025
Shares to be issued 1,715 - 1,715
Profit and loss account 240 (156) 84
SHAREHOLDERS' EQUITY 5,064 (156) 4,908
g) Consolidated statement of changes in shareholders' equity as at 26 August 2006
UK GAAP IFRS IFRS
26 August adjustment 26 August
2006 2006
#000 #000 #000
Profit/(loss) for the period (118) 100 (18)
Revaluation of property, plant and equipment - - -
New share capital subscribed - - -
Share premium on allotment during the period - - -
Shares to be issued - - -
Net addition to shareholders' equity (118) 100 (18)
Opening shareholders' equity 5,182 (257) 4,925
Closing shareholders' equity 5,064 (156) 4,908
h) Consolidated balance sheet as at 24 February 2007
Notes UK GAAP IFRS adjustment IFRS
24 February 24 February
2007 2007
#000 #000 #000
ASSETS
NON-CURRENT ASSETS
Intangible assets (i) 4,153 103 4,256
Property, plant and equipment (iii) 1,015 101 1,116
Deferred tax 150 - 150
5,318 204 5,522
CURRENT ASSETS
Inventories 4,269 - 4,269
Trade and other receivables 878 - 878
Cash and cash equivalents 194 - 194
5,341 - 5,341
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (ii) (4,105) (49) (4,154)
NET CURRENT ASSETS 1,236 (49) 1,187
NON-CURRENT LIABILITIES
Provisions (iii) (987) (184) (1,171)
NET ASSETS 5,567 (29) 5,538
SHAREHOLDERS' EQUITY
Called up share capital 108 - 108
Share premium account 3,688 - 3,688
Shares to be issued 1,339 - 1,339
Profit and loss account 432 (29) 403
SHAREHOLDERS' EQUITY 5,567 (29) 5,538
i) Consolidated statement of changes in shareholders' equity as at 24 February 2007
UK GAAP IFRS IFRS
24 February adjustment 24 February
2007 2007
#000 #000 #000
Profit/(loss) for the period 74 228 302
New share capital subscribed 24 - 24
Share premium on allotment during the period 677 - 677
Share issue expenses (14) - (14)
Shares to be issued (376) - (376)
Net addition to shareholders' equity 385 228 613
Opening shareholders' equity 5,182 (257) 4,925
Closing shareholders' equity 5,567 (29) 5,538
j) Consolidated cash flow statement for the six months ended 26 August 2006
Notes UK GAAP IFRS adjustment IFRS
26 August 26 August
2006 2006
#000 #000 #000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit (107) 100 (7)
Adjusted for:
Depreciation (iii) 141 6 147
Amortisation of goodwill (i) 112 (112) -
Loss on disposal of property, plant and equipment 120 - 120
266 (6) 260
CHANGES IN WORKING CAPITAL
Decrease/(increase) in inventories (96) - (96)
Decrease in trade and other receivables 220 - 220
Increase/(decrease) in trade and other payables (ii) (610) 6 (604)
Decrease in provisions (217) - (217)
CASH GENERATED FROM OPERATIONS (437) - (437)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary (105) - (105)
Finance costs (11) - (11)
NET CASH USED IN INVESTING ACTIVITIES (116) - (116)
NET (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS
AND BANK OVERDRAFT (553) - (553)
Cash, cash equivalents and bank overdrafts at
beginning of period 558 - 558
CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS AT END
OF THE PERIOD 5 - 5
k) Consolidated cash flow statement for the 12 months ended 24 February 2007
Notes UK GAAP IFRS adjustment IFRS
24 February 24 February
2007 2007
#000 #000 #000
CONSOLIDATED CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit (39) 228 189
Adjusted for:
Depreciation (iii) 253 11 264
Amortisation of goodwill (i) 231 (231) -
445 8 453
CHANGES IN WORKING CAPITAL
Decrease/(increase in inventories 324 - 324
Decrease in trade and other receivables (262) - (262)
Increase/(decrease) in trade and other payables (ii) (170) (8) (178)
Decrease in provisions (887) - (887)
CASH GENERATED FROM OPERATIONS (550) - (550)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary (166) - (166)
Purchase of property, plant and equipment (260) - (260)
Proceeds from sale of property, plant and equipment 313 - 313
Finance revenue 3 - 3
Finance costs (15) - (15)
NET CASH USED IN INVESTING ACTIVITIES (125) - (125)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of ordinary shares 386 - 386
Payment in lieu of shares (75) - (75)
NET CASH USED IN FINANCING ACTIVITIES 311 - 311
NET (DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS
AND BANK OVERDRAFT (364) - (364)
Cash, cash equivalents and bank overdrafts at
beginning of period 558 - 558
CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS AT END
OF THE PERIOD 194 - 194
INTERIM REPORT
The Interim Report will be sent to shareholders on 30 November 2007 and will
also be available from the Company's website www.strategicretail.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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