RNS Number:1692N
Strategic Retail PLC
06 June 2005
6 June 2005
Strategic Retail Plc
Preliminary Results for the 52 week period ended 26 February 2005
The principal activity of the company is that of a holding company providing
management services to its subsidiary companies. The principal activity of the
subsidiary undertakings is the retailing of decorating and home fashion
products.
Key Points
- On 4 October 2004, the Group acquired the entire share capital of Leveys
Limited through its wholly owned subsidiary, Leveys (Fads) Limited.
- Turnover for the period was #16,201,000 (2004: #3,404,000).
- Pre exceptional Profit on ordinary activities before taxation was
#406,000 (2004: loss of #86,000).
- Exceptional costs of #278,000 were incurred on the rationalisation of
the Leveys (Fads) Limited head office and store portfolio.
- Profit on ordinary activities before taxation ( after the exceptional
costs ) was #128,000 (2004: loss of #86,000).
- Pre exceptional Earnings per share are 3.21p and Basic Earnings per
share 1.26p (2004: 0.02p)
- Net assets have increased by 75% to #2,989,000 (2004: #1,704,000).
Directors Registered Office
IW Currie (Chairman) 3 Ralli Courts
R A Gabbie West Riverside
Manchester
Secretary M3 5FT
I W Currie
Chairman's Statement
Strategic Retail has maintained its focus on making opportunistic acquisitions
within the retail sector.
During the year the company created a new subsidiary, Leveys (Fads) Limited,
with a view to acquiring Leveys Limited, a North East based chain of decorating
stores. In October, Leveys (Fads) Limited acquired Leveys Limited and
immediately instigated a program to extend the products which it offered whilst
simplifying its administration functions.
This led to the closure of the old Leveys Limited head office and the transfer
of all administrative responsibility to the Fads (Trading) Limited head offices
in Cheshire and the closure of one store. The re-organisation costs associated
with these closures have been recognised in the year as exceptional items.
Fads (Trading) Limited performed well in the year showing like for like growth
of one per cent on comparable stores.
I now believe that the businesses are better placed to face the difficult
trading conditions and slow down in consumer spending which we have experienced
since the start of 2005.
The company continues to search for new store locations and appropriate
companies to acquire.
I would like to conclude by thanking all the employees for their effort and
commitment to the Group.
IW Currie
Chairman
Operating and Financial Review (extract)
Strategic Retail Plc is the holding company of Fads (Trading) Limited 'Fads' and
Leveys (Fads) Limited 'Leveys'. At the year end Fads operated out of 56 retail
outlets whilst Leveys operated out of 17 retail outlets.
New stores were opened at Streatham, Holloway and Sheerness and the stores at
Camden and Brixton were re-sited to more advantageous positions. Fads continues
to look at potential new sites to open and expects to grow at a similar rate to
this year.
Turnover for Fads fell from #15,943,000 to #14,131,000 which reflects the
previous years inclusion of a batch of underperforming stores which were
disposed of in June 2003. However, the operating profit before exceptional
credit was improved significantly in the year as follows:
Fads (Trading)
Limited
2005 2004
Operating profit as a % of sales 3.25% 1.62%
The strengthening of the Fads operating profit reflects the disposal of
unprofitable stores and Fads expanding its furniture offer.
Group sales were boosted by the acquisition of Leveys Limited in October 2004.
Within three months of the acquisition, the Leveys Head Office at Whitley Bay
was closed and all administration transferred to the Fads Head Office in
Cheshire. The closure costs of circa #0.28m are shown as exceptional items in
the profit and loss account.
IW Currie
Director
Consolidated Profit and Loss Account
52 weeks ended 26 February 2005 46 weeks
Note Pre-exceptionals Exceptional Total ended 28
February 2004
#000
#000 #000 #000
TURNOVER
- Continuing operations 14,131 - 14,131 3,404
- Acquisitions 2,070 - 2,070 -
TURNOVER 16,201 - 16,201 3,404
Cost of sales (8,238) - (8,238) (1,734)
GROSS PROFIT 7,963 - 7,963 1,670
Distribution costs (6,123) - (6,123) (1,441)
Administrative expenses (1,444) (278) (1,722) (319)
OPERATING PROFIT/(LOSS)
- Continuing operations 366 - 366 (90)
- Acquisitions 30 (278) (248) -
OPERATING PROFIT/(LOSS) 396 (278) 118 (90)
Other interest receivable 13 - 13 4
Interest payable (3) - (3) -
PROFIT/(LOSS) ON ORDINARY ACTIVITIES
BEFORE TAXATION
406 (278) 128 (86)
Taxation 51 - 51 87
RETAINED PROFIT FOR THE PERIOD 457 (278) 179 1
EARNINGS PER SHARE
- Basic and diluted 1 1.26p 0.02p
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
Note 26 February 2005 28 February 2004
#000 #000 #000 #000
FIXED ASSETS
Intangible assets 368 -
Tangible assets 610 449
978 449
CURRENT ASSETS
Stocks 3,295 2,241
Debtors 879 521
Cash at bank and in hand 1,183 1,099
5,357 3,861
CREDITORS: Amounts falling due within one
year (3,286) (2,606)
NET CURRENT ASSETS 2,071 1,255
TOTAL ASSETS LESS CURRENT LIABILITIES 3,049 1,704
PROVISIONS FOR LIABILITIES AND CHARGES (60) -
NET ASSETS 2,989 1,704
CAPITAL AND RESERVES
Called up share capital 3 80 65
Share premium account 4 2,729 1,638
Profit and loss account 4 180 1
EQUITY SHAREHOLDERS' FUNDS 2,989 1,704
Consolidated Cash Flow Statement
Note 52 weeks ended 26 46 weeks ended 28
February 2005 February 2004
#000 #000 #000 #000
CASH FLOW FROM OPERATING ACTIVITIES 5 (340) (1,591)
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest received 13 4
Interest paid (3) -
NET CASH INFLOW FOR RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE 10 4
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (156) -
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary (654) (257)
Net cash acquired with subsidiary 118 1,240
NET CASH (OUTFLOW)/INFLOW FOR ACQUISITIONS
AND DISPOSALS (536) 983
CASH OUTFLOW BEFORE FINANCING (1,022) (604)
FINANCING
Issue of ordinary share capital 1,138 1,864
Share issue expenses (32) (161)
Issue of redeemable shares - 50
Redemption of redeemable shares - (50)
NET CASH INFLOW FROM FINANCING 1,106 1,703
INCREASE IN CASH IN THE YEAR 84 1,099
Reconciliation of Movements in Shareholders' Funds
Group Company
52 weeks 46 weeks 52 weeks 46 weeks
ended 26 ended 28 ended 26 ended 28
February February February February
2005 2004 2005 2004
#000 #000 #000 #000
PROFIT/(LOSS) FOR THE FINANCIAL YEAR 179 1 (91) (34)
179 1 (91) (34)
New share capital subscribed 15 65 15 65
Share premium on allotment during the period 1,123 1,861 1,123 1,861
Share premium utilised on bonus issue - (62) - (62)
Share issue expenses debited to share premium (32) (161) (32) (161)
NET ADDITION TO SHAREHOLDERS' FUNDS 1,285 1,704 1,015 1,669
Opening shareholders' funds 1,704 - 1,669 -
CLOSING SHAREHOLDERS' FUNDS 2,989 1,704 2,684 1,669
Notes to the Preliminary Statement
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 year. Subsidiaries acquired
during the year 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 26 February 2005.
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.
1. 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 46 weeks ended 46 weeks ended
ended 26 ended 26 28 February 28 February
February 2005 February 2005 2004 2004
#000 #000 #000 #000
Profit for the financial period 179 179 1 1
Weighted average number of shares 52 weeks ended 46 weeks ended
26 February 28 February
2005 2004
Number Number
For basic and diluted earnings per share 14,245,616 5,739,581
ADDITIONAL EARNINGS PER ORDINARY SHARE
Basic Diluted
52 weeks 52 weeks
ended 26 ended 26
February 2005 February 2005
Pre-exceptional earnings per share 3.21p 3.21p
The calculation of pre-exceptional earnings per share is based on the following
profits and number of shares:
Basic Diluted
52 weeks ended 52 weeks ended
26 February 26 February
2005 2005
#000 #000
Profit for the financial period 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 457 457
1. EARNINGS PER ORDINARY SHARE (continued)
Weighted average number of shares 52 weeks ended
26 February
2005
Number
For basic and diluted earnings per share 14,245,616
2. 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 assets and liabilities of Leveys (Fads) Limited
and Leveys Limited 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 25 February 2006.
Initial book Revaluation Accounting Other Fair value at
value at date policy date of
of alignment acquisition
acquisition
#000 #000 #000 #000 #000
Tangible fixed assets 337 (30) (79) (45) 183
Stocks 731 - (140) 8 599
Debtors 414 - - (8) 406
Cash at bank and in hand 118 - - - 118
TOTAL ASSETS 1,600 (30) (219) (45) 1,306
CREDITORS: Amounts falling
due within one year (944) - (15) - (959)
CREDITORS: Amounts falling
due in more than one year (9) - - - (9)
Provisions for liabilities
and charges - - - (60) (60)
TOTAL LIABILITIES (953) - (15) (60) (1,028)
NET ASSETS 647 (30) (234) (105) 278
Positive goodwill of #376,000, being the difference between the fair value of
net assets acquired and consideration paid, arises from this transaction
2. ACQUISITIONS (continued)
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.
Other items
Other items include the write off of surplus fixed assets and the recognition of
an onerous lease provision.
Leveys (Fads) Limited did not trade prior to its acquisition by the group.
The summarised profit and loss accounts of Leveys Limited are as follows:
1 March 2004 to 1 March 2004 1 March 2003
26 February 2005 to 4 October to 29 February
2004 2004
#000 #000 #000
TURNOVER 3,605 3,605 7,298
OPERATING PROFIT/(LOSS) 186 186 (219)
PROFIT/(LOSS) BEFORE TAXATION 218 218 (196)
Taxation - - 24
PROFIT/(LOSS) AFTER TAXATION 218 218 (172)
The profit and loss accounts shown above have been prepared from the reported 26
February 2005 financial statements for Leveys Limited and use accounting
policies which are consistent with those of Strategic Retail Plc.
2. ACQUISITIONS (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 46 weeks ended
26 February 28 February
2005 2004
#000 #000
Store closure costs 17 -
Closure of head office 85 -
Redundancy costs 176 -
278 -
3. SHARE CAPITAL
26 February 28
2005 February
#000 2004
#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: 15,928,222 (2004: 13,084,472) ordinary shares of 0.5p each 80 65
The following share movements occurred during the year:
* On 30 September 2004 the company issued 2,656,250 ordinary shares
of 0.5p each for a subscription price of 40p each generating share premium of
#1,049,219.
* On 3 November 2004 the company issued 187,500 ordinary shares of
0.5p each for a subscription price of 40p each generating share premium of
#74,062.
4. RESERVES
Share premium
account
#000
GROUP
At beginning of period 1,638
Premium on allotment during the period 1,123
Issue costs (32)
At end of period 2,729
5. RECONCILIATION OF OPERATING PROFIT TO NET CASHFLOW FROM OPERATING ACTIVITIES
52 weeks 46 weeks
ended 26 ended 28
February February 2004
2005 #000
#000
Operating profit/(loss) 118 (90)
Depreciation 138 29
Amortisation of goodwill 8 -
Loss on disposal 25 -
(Increase)/decrease in stocks (454) 414
Decrease/(increase) in debtors 82 (142)
Decrease in creditors (257) (1,802)
CASH FLOW FROM OPERATING ACTIVITES (340) (1,591)
6. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
#000
Increase in cash in the year 84
MOVEMENT IN NET FUNDS IN THE PERIOD
NET FUNDS AT 28 FEBRUARY 2004 1,099
NET FUNDS AT 26 FEBRUARY 2005 1,183
This information is provided by RNS
The company news service from the London Stock Exchange
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