Shoe Zone plc Annual Report and Accounts 2014
Shoe Zone is the leading
UK Specialist Value Footwear Retailer
“Having successfully listed the business on the Alternative Investment
Market of the London Stock Exchange in May, we have delivered a year of
strong profit growth as we continue to deliver on our core strategic
objectives”
Anthony Smith, CEO.
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Shoe Zone Management Team celebrates the listing of Shoe Zone 23 May 2014
Contents
Strategic Report
Highlights
Chief Executive Officer Report
Financial Review
Key Performance Indicators
Principal Risks and Uncertainties
Governance
Corporate Governance Statement
Board of Directors
Remuneration Report
Directors’ Report
Independent Auditor’s Report
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Financial Statements
Consolidated Income Statement
Consolidated Statement of
Total Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Company Statement of Financial Position
Notes to the Company Financial Statements
Shareholder Information
Directors and Advisers
Notice of Annual General Meeting
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Shoe Zone plc Annual Report and Accounts 2014
Financial Highlights
Revenue
£172.9m
(2013: £193.9m)¹
Profit before tax
²
£11.4m
+124%
(2013: £5.1m)
Net cash
£9.1m
(2013: £6.6m)
New Revenue
Streams
(Launched on
Amazon & eBay)
Admitted
to AIM
23 May 2014
Online
Revenue Growth
+47%
Maiden dividend
3.6p
Product
Gross Margin
61.3%
(2013: 59.4%)
17 New Stores
and 45 refits
¹ Reduction due to planned closure of unprofitable stores
² Before exceptional items
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Shoe Zone plc Annual Report and Accounts 2014
Chief Executive’s report
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Introduction
Product range development
We have continued to make good progress in the
development of our product ranges.
In the past year, we placed a greater emphasis on our
‘Back to School’ and ‘Comfort’ shoe ranges. The 5-9
year old age group is forecast to grow by 12% between
2012 and 2017 and the expected growth in the ageing
population is well documented.
As a consequence, we had an extremely strong ‘Back
to School’ with trading in August being the best in the
Group’s history. We will continue to be more aggressive
on price and marketing in both these areas in the next 12
months.
In addition, we have increased our focus on Men’s
footwear following recent research that shows men are
I am delighted to deliver my first Chief Executive’s
report on a very exciting year for Shoe Zone. Having
successfully listed the business on the Alternative
Investment Market of the London Stock Exchange in May,
we have delivered a year of strong profit growth as we
continue to deliver on our core strategic objectives.
During the year we welcomed a new Non-Executive
Chairman, Ian Filby, and Non-Executive Director, Charlie
Caminada, both of whom have brought a wealth of
experience to the Executive Board.
We are pleased to announce that our results are in line
with market expectations with profit before exceptional
items increasing 160% from £3.5m to £9.0m and earnings
per share at 16.1p.
As a result of this strong performance, our proposed
maiden dividend is 3.6p, in line with our dividend policy.
This final dividend, if approved by shareholders, will be
paid on 11th March 2015 to shareholders on the register
on 13th February 2015. The shares will be ex-dividend on
12th February 2015.
I will now provide an update on the following core strategic
objectives:
● Product range development
● Store portfolio management
● Operational improvements
● Online investment
● New sales opportunities
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Shoe Zone plc Annual Report and Accounts 2014
Chief Executive’s report (continued)
now as likely as women to have bought footwear in the
last three months. Our Men’s multi-buy, ‘2 pairs for £25’
offer which includes selected lines throughout the year
performed very well and has been extended in recent
months.
We are pleased with the progress of our handbag and
shoe care ranges, introduced for the Spring/Summer
2013 season. In 2014, handbag sales growth was up 73%
with annual sales of £2.5m. Sales growth for shoe care
products was up 94% with annual sales of £1.4m. While
constantly reviewing our performance in these areas, we
have amended the ranges to enhance performance in
2014/15 and this strategy is already showing good signs
of further growth. We are also looking to introduce our
handbag range into our Grade 3 stores where we have
recently carried out a successful trial.
The introduction of 200 web exclusive products in the
Spring/Summer 2014 season far exceeded expectations,
accounting for 5% of online sales for that season.
Recognising the potential in this area, we have bought
product for the Autumn/Winter season in greater volume
and are already seeing the benefit of this. We are now
in detailed discussions with our supply partners about
extending our online offer further in 2015.
Store portfolio management
We ended the year operating from 545 stores and
the management of our store portfolio has resulted in
improved profitability in 2014. We have opened 17 new
stores (including six relocations) and completed 45 store
refits, spending £1.9m on capital expenditure to achieve
this. We have closed a number of temporary stores
reducing total sales but helping improve profitability.
We continue to open our largest, most profitable Grade
1 stores while closing smaller Grade 3 stores (see table
below). Our short average lease length provides us with
the flexibility to best manage the portfolio while also
providing plenty of good opportunities, with secondary
locations showing limited signs of rental recovery outside
the M25.
Grade 1 (large)
Grade 2 (medium)
Grade 3 (small)
TOTAL
Grade 1
Increase
Grade 3
Decrease
12 months to
4 October 2014
12 months to
5 October 2013
203
178
164
545
196
188
186
570
2013 196
2014
203
2013 186
2014
164
Operational improvements
In line with our strategy, orders placed directly with
overseas factories increased from 38% in 2013 to 53% in
2014. Where there are margin gains from this approach,
these are being reinvested to ensure we can provide our
customers with the best value product.
We are pleased with the significant progress we have
achieved by following our ‘right price, first time’ strategy,
resulting in a reduction in the amount of markdown
value as a percentage of turnover from 8.2% in 2013 to
6.4% in 2014. This has given us a sensible and realistic
benchmark for future years.
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Shoe Zone plc Annual Report and Accounts 2014
Chief Executive’s report (continued)
Our new promotional material, launched in May 2014, has
modernised the look of the stores and re-emphasised our
strong price message. We are working on a trial evolution
of the store refit due to be implemented in 2015 at our
new Meadowhall (Sheffield) store.
Training is at the heart of what we do – an example of
this is our apprentice scheme, which once again had
a 100% success rate this year. All eighteen trainees
who completed their apprenticeship have gone on
to permanent employment with us, bringing the total
apprentices successfully trained by the Company since
2012 to 37.
Online investment
shoezone.com continues to evolve at a vigorous pace
with considerable focus having been placed on customer
experience in the past year. Significant changes have
been made to the design and the customer journey
including an improved checkout. Alongside the visual
changes, we have ensured that the site is robust to
respond efficiently to the increased traffic which rose
25% year on year. A fully responsive site will be launched
in 2015 following a recent trial that resulted in a 24%
increase in mobile conversion rates.
Our continued emphasis on customer experience has
also resulted in the introduction of enhanced delivery and
returns options.
The addition of two new members to our in-house team
of software developers has increased capacity by 33%
enabling us to further drive multi-channel growth.
Management will continue to focus on online sales growth
in 2015 via shoezone.com, Amazon and eBay.
New sales opportunities
Our promotional links with other value retailers are very
encouraging. During our ‘Back to School’ campaign, we
generated over £800,000 in a seven week period through
such promotions. We are confident that this brings new
customers to Shoe Zone and has good long-term benefits
for both parties. We are looking to develop these links
further with other retailers in 2015.
We have had early success with business to business
transactions and quoting for footwear contracts and our
Customer Services team will continue to develop this
offering in 2015.
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We launched on Amazon in November 2013. This has
been a very successful source of revenue, equating to
8% of online sales in 2014. Following the success of the
Amazon venture, we launched on eBay in July 2014.
We are very impressed with the performance so far and
expect this to be at least as profitable as Amazon in 2015.
Our e-mail club has grown by 52% in 2014, giving us
greater access to our customers and allows us to continue
to further develop our successful email marketing.
The launch of factory outlets in 15 stores in Spring 2014
has been very successful and is selling our clearance
product at a faster rate.
Our investigations into bricks and mortar international
opportunities in Poland and Spain are ongoing but remain
a longer term strategic goal rather than an immediate
sales growth opportunity.
However, online international sales have now commenced
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Shoe Zone plc Annual Report and Accounts 2014
Chief Executive’s report (continued)
and we are working on further developments during 2015
that will improve the delivery options for our international
customers via shoezone.com as well as launching in other
countries via Amazon.
Employees
We are very proud of the effort that our amazing staff have
put in to achieve these results and thank them for their
continued hard work, loyalty and commitment. We are
also extremely proud of the whole team at Shoe Zone for
their commitment throughout the year, in raising £200,000
for our chosen charity BBC Children in Need.
Outlook
Despite the well publicised warm start to the Autumn/
Winter season we believe that 2015 will be a year of
continued growth for the Group.
We have continued to optimise our store portfolio and so
far we have opened six stores (two relocations, four new)
and have agreed terms on 10 stores (seven relocations,
three new).
Our successful multi-channel offering continues to grow
ahead of forecast. The falling oil price is already having
a positive impact on the cost of logistics and should also
impact the price of raw materials.
The Board continues to see significant opportunities
ahead and remains confident that the business will
perform in line with market expectations.
Anthony Smith
Chief Executive Officer
23 January 2015
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Shoe Zone plc Annual Report and Accounts 2014
Financial review
In the 52 weeks to 4 October 2014, Group profit before
tax excluding exceptional items increased by 124% to
£11.4 million (2013: £5.1 million). This was driven by
an improvement in gross margin, strong cost control,
online growth and the continued optimisation of the store
portfolio.
After reflecting exceptional costs of £0.9 million, primarily
relating to the IPO, Group profit before tax was up 106%
to £10.5 million (2013: £5.1 million).
Revenues of £172.9 million (2013: £193.9 million)
declined by 10.8% due to the reduction in store numbers
following the rationalisation programme. Store numbers
reduced by 25 branches to 545 at the year end (2013: 158
branches closed leaving a total of 570).
Online revenues have grown by 47% during the year,
online sales being 3.1% of total sales (2013: 2.2%).
Product gross margin strengthened to 61.3% (2013:
59.4%) reflecting improvements in sourcing.
Operating expenses before exceptional expenses reduced
to £17.1 million (2013: £22.1 million).
The Group has re-calculated deferred tax balances to be
in line with the new lower corporation tax rate of 20%.
Earnings per share are 16.1 pence (2013: 6.9 pence) and
18.0 pence (2013: 6.9 pence) on a pre-exceptional basis.
The Group’s balance sheet has significantly strengthened
during the year with net working capital increasing by
£2.9 million to £20.0 million. The Group has invested £1.9
million in store refit spend during the year. The Group
supports two defined benefit schemes and these have
suffered a net loss of £2.0 million during the year.
The Group’s current bank facilities include a Rolling
Credit Facility for £5.0 million and an on demand overdraft
facility for £1.0 million, both with HSBC. Neither facility
has been used during the year. The business has a debt
free financial structure and generated £13.0 million from
operations, resulting in a net cash position of £9.1 million
(2013: 6.6 million) at the year end.
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A final dividend of 3.6 pence per share is proposed
for shareholders on the register on 13 February 2015,
payable on 11 March 2015 if approved at the Annual
General Meeting to be held on 27 February 2015.
The effective rate of corporation tax for the year was
23.4% on profits after exceptional items (2013: 31.7%).
The Group continues to focus on cash generation giving it
the strength and resource for positive yield and growth.
Nick Davis
Chief Financial Officer
23 January 2015
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Shoe Zone plc Annual Report and Accounts 2014
Key Performance Indicators
The Group uses the following Key Performance Indicators (KPIs) to
measure the performance and position of the business and its progress
against strategic objectives.
Online Participation % Product
Cash Balance
Gross Margin %
Online Sales as a percentage of total
sales.
Product Gross Profit expressed as a
percentage of revenue.
Cash held by the Group at the period
end.
The online participation increased by
90 basis points to 3.1% (2013: 2.2%).
This is an encouraging performance
and we anticipate further growth in
participation for FY15.
The Product Gross Margin increased
by 190 basis points to 61.3% (2013:
59.4%) reflecting the continued
success of increasing our direct
sourcing.
We finished the year with a healthy
cash balance of £9.1m (2013: £6.6m).
This gives us a strong base for FY15.
2013 2.2%
2014
3.1%
2013
2014
59.4%
2013
6.6m
61.3%
2014
9.1m
Earnings per
Share Growth
Rental % of Turnover
The percentage movement in Earnings
per share.
Store rent as a percentage of turnover.
Strong margin growth, online
participation and the continued
optimisation of the property estate
have secured an EPS growth of 132%.
EPS for the year is 16.1p (2013: 6.9p).
The rental % of turnover has reduced
from 14.2% to 13.9% reflecting the
increase in Grade 1 stores and rent
negotiations.
2013 6.9p
2014
16.1p
2013
2014
14.2%
13.9%
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Principal risks and uncertainties
We set out below the principal risks and uncertainties that
the Directors consider could impact the business. The list
highlights the key risks but there may be other risks to
which the business is exposed. The list is not intended to
be exhaustive.
Market and Competition
The value footwear retail market is highly competitive,
particularly with respect to price, product selection, quality
and store location. The markets the Group operates in
are, on a comparative basis, free and open markets with
low barriers to entry. The Group competes at national and
local levels with a diverse group of retailers of varying
sizes and covering different product categories and
geographic markets. These competitors include local,
national and global retailers, including other specialist
footwear retailers, supermarkets, online retailers and
local independent retailers. Some competitors may have
greater market presence, name recognition, financial
resources and economies of scale or lower cost bases
than the Group and may be able to withstand, or respond
more swiftly to, changes in market conditions, any of
which could give them a competitive advantage over the
Group. In addition, like many other retailers, because
the Group does not have exclusive rights to many of
the elements that comprise its in-store experience and
product offering, competitors may seek to copy or improve
on the Group’s business strategy, which could significantly
harm the Group’s competitive position.
The Board monitors competitor activities and discusses
them on a weekly basis. The Group has adopted a
strategy which intends to differentiate itself from its closest
competitors and endeavours to price match on any cross
over product lines. Maintaining price competitiveness is a
key focus of the business.
Identifying fashion and trends
The success of the Group’s business depends in part
on its ability to innovate and to identify, anticipate and
respond to evolving trends in consumer preferences
and demographics and fashion trends, and to translate
these trends into appropriate, saleable products. The
Group seeks to change and refresh its product offering
seasonally in order to drive customer traffic through its
stores and online offering but demand for, and market
acceptance of, these new products is uncertain.
Trends and demands are continually reviewed by
knowledgeable and experienced employees who have a
Shoe Zone plc Annual Report and Accounts 2014
high level of market awareness. The Board monitors on a
weekly basis best sellers and evaluates the performance
of new lines.
Economic factors
Poor economic conditions in the UK, the Republic of
Ireland and globally, as well as economic factors such
as unemployment levels, consumer debt levels, lack of
available credit, energy costs, inflation, interest and tax
rates, may adversely affect the disposable income of the
Group’s customers, which could result in lower sales. In
particular, in times of economic uncertainty or recession
or lack of consumer confidence, there may be a decrease
in discretionary purchases generally, which could have a
material adverse effect on the Group’s business, results
of operations and financial condition. Global economic
conditions and uncertainties may also impact the Group’s
manufacturers and suppliers in ways that could adversely
affect the Group’s business.
The Board considers very carefully the economic climate
in planning its product ranges and pricing structure. As
the business is focussed on offering low prices it is more
resilient to reductions in consumer expenditure than other
footwear retailers.
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Reliance on overseas suppliers
Like many retailers, the Group is dependent on being able
to source suitable products from manufacturers and other
suppliers at a sufficiently low cost and in a timely manner.
Although the Group enjoys good relationships with a wide
range of manufacturers and other suppliers and is not
overly reliant on any one supplier, there is still potential
for the Group to be exposed to adverse operational
and financial risks should there be a deterioration in
relationships with a number of its key suppliers or if the
Group is unable to identify and develop relationships with
suitable suppliers who can satisfy its standards for price,
quality, safety and its quantity and delivery requirements.
The vast majority of the Group’s retail products are
manufactured overseas by suppliers located in China,
India, Turkey, Italy and Portugal. As a result, the Group
is also subject to the risks associated with international
trade, particularly those risks which are common in the
importation of goods from developing countries, including
the imposition of taxes or other charges on imports,
compliance with and changes to import restrictions and
regulations, and exposure to different legal standards and
the burden of complying with a variety of foreign laws and
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Shoe Zone plc Annual Report and Accounts 2014
Principal risks and uncertainties (continued)
changing foreign government policies.
Data security and IT reliability
The Board are always seeking out new sources of supply
with a clear strategy of diversification. Members of the
Management Team frequently visit overseas suppliers
to ensure that existing factories are being regularly
monitored and new factories are being sourced that meet
our price, quality and safety standards.
Reputational risk
The Group’s sales are dependent in part on the strength
and reputation of the brands it offers, including own label
brands, and are dependent on consumers’ perceptions of
the Group and its products.
The vast majority of the Group’s profits are derived
through sales of its own label brands. Maintaining broad
market acceptance of its own label brands depends on
many factors, including value, quality and consumer
perception. The Group may not in the future achieve or
maintain its expected sales of its own label brands, which
could have a material adverse effect on the Group’s
business, results of operations and financial position.
The Board has sufficient internal processes to ensure
that it receives feedback from stores and customers on
the design and quality of its products. The business’
reputation is carefully managed through internal
procedures by the Board.
Loss of key operating site
The Group has a single distribution centre and its head
office located at premises in Leicester and therefore the
Group is currently entirely dependent on the continued
efficient operation of the Leicester Premises. Any
disruption to the operation of the Leicester Premises
may therefore have an adverse effect upon the Group’s
financial condition, operations and business prospects.
The premises may suffer prolonged power or equipment
failures, failures in its IT systems or networks or damage
from fire, flood, or other disasters or unforeseen events
which may not be covered by, or may be in excess of, its
insurance coverage. Damage resulting from any of these
events may take considerable time to repair. A prolonged
period before rectification could have an adverse effect
upon the Group’s financial condition, operations and
business prospects.
The business has appropriate insurance and business
continuity plans to mitigate the risk of such a loss.
The Group relies to a significant degree on the
uninterrupted operation of its computer and
communications systems and infrastructure, as well as the
equivalent systems and infrastructure of third parties, for
the efficient running of its business, including with respect
to inventory, merchandising, finance, human resources,
distribution and logistics and store operations.
The Group must comply with restrictions on the use of
customer data and ensure that confidential information
(such as credit or debit card numbers) is transmitted in a
secure manner over public networks.
Despite controls to ensure the confidentiality and integrity
of customer data, the Group may breach restrictions or
may be subject to attack from computer programmes
that attempt to penetrate the network security and
misappropriate confidential information. Any such breach
or compromise of security could adversely impact the
Group’s reputation with customers and consumers, lead to
litigation or fines, and as a result, have a material adverse
effect on its business, results of operations and financial
position.
The business has appropriate disaster recovery and
business interruption plans. The IT systems have been
developed significantly in-house reducing the businesses
dependency on any third parties.
Reliance on key personnel
The Group depends on a relatively small senior
management team and the loss of a material number
of such individuals or the inability to attract appropriate
personnel in a timely manner could impact upon the
Group’s future performance.
The Group’s Remuneration Policy is designed to attract,
retain and motivate management. Succession plans are in
place for key roles.
The strategic report as set out on pages 1 - 10, was
approved by the Board.
On behalf of the Board
Anthony Smith
Chief Executive Officer
23 January 2015
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Shoe Zone plc Annual Report and Accounts 2014
Corporate governance statement
Principles of Corporate
Governance
Appointments to the Board
and re-election
The Directors acknowledge the importance of the
principles set out in the UK Corporate Governance Code
(the ‘UK code’). The UK code is not compulsory for
AIM quoted companies; therefore this report does not
describe compliance with or departures from the UK code.
However, the Directors intend to apply certain principles of
the UK code where the Board considers it appropriate for
the size and nature of the Company. The Group supports
the Quoted Companies Alliance Corporate Governance
Code for Small and Mid-Size Quoted Companies 2013
which are widely recognised as the benchmark for
corporate governance of smaller quoted companies and
are therefore most appropriate for the Company.
The Board
The Board comprises three Executive Directors, two
independent Non-Executive Directors (including the
Chairman) and one Non-Executive who is considered to
be non-independent (Jeremy Sharman). Accordingly, the
Board composition meets the recommendations of the
QCA guidelines.
The Board is committed to maintaining high standards of
corporate governance and to being transparent about its
arrangements.
The key responsibilities of the Board are:
the overall management of the Group;
●
● approval of corporate strategy;
● approval of income, expenditure and capital budgets;
● oversight of operations ensuring adequate systems of
internal control and risk management are in place;
to review business performance against the
objectives that it has set;
to monitor the integrity of the financial statements and
approve the annual and interim reports;
●
●
● approval of the dividend policy;
● determining changes to the structure and composition
of the Board;
● determining remuneration policy;
● approval of communications with shareholders and
the market.
Details of each of the Directors is given in their
biographies on pages 12 and 13.
The Company is governed by its Articles of Association
(‘Articles’). Under the Articles the Board has the power
to appoint a Director during the year but any person so
appointed must stand for election at the next Annual
General Meeting (‘AGM’). As the Company was
incorporated in March 2014 at its first AGM all Directors
must retire from office but may be reappointed. At every
subsequent AGM any Directors who were not appointed
or reappointed at one of the preceding two AGMs,
must retire from office and may offer themselves for
reappointment by the members.
Board committees
The Board has established a Remuneration Committee
and an Audit Committee. Due to the nature and size of the
Group, the Directors have decided that issues concerning
the nomination of Directors will be dealt with by the Board
rather than a nomination committee.
Membership of the two Board Committees is comprised of
the two independent Non-executive Directors. Each Board
Committee has approved Terms of Reference setting
out their responsibilities. The Terms of Reference were
approved by the Board during the year. All of the Board
Committees are authorised to obtain, at the Company’s
expense, professional advice on any matter within the
Terms of Reference and to have access to sufficient
resources to carry out their duties.
The Audit Committee is chaired by Ian Filby. The
committee meets as necessary to monitor the Group’s
risk management and internal control systems and is also
concerned with any major accounting and audit related
issues. Executive Directors and senior management are
responsible for managing the risk framework and internal
control systems and must report on their effectiveness to
the Audit Committee.
Details of the duties of the Remuneration Committee are
set out in the Remuneration report on page 14.
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Shoe Zone plc Annual Report and Accounts 2014
Board of Directors
Ian Filby
Chairman
Anthony Smith
Chief Executive Officer
Nick Davis
Chief Financial Officer
Anthony joined Shoe Zone in 1993
as Marketing Manager and held
various roles within Marketing and
Retail divisions before becoming Chief
Executive Officer in 1997. Since his
appointment as Chief Executive Officer,
Shoe Zone has carried out three major
acquisitions and traded successfully
through two recessions. Anthony is
a founder and Trustee of the Shoe
Zone Trust. Anthony is a Trustee of
Uppingham School and Chairman of the
Uppingham School Foundation.
Nick joined Shoe Zone in 2003 as
Management Accountant from PKF
where he had been a Senior Business
Advisor in Audit and Assurance since
1999. Nick became Financial Controller
of Shoe Zone in 2005 and joined the
Board as Finance Director in 2006. As
Chief Financial Officer he is responsible
for all financial operations including
Accounting, Financial Planning,
Treasury, Tax and Financial Strategy.
He is FCA qualified and holds a BSC
in Economics from Loughborough
University. Outside of Shoe Zone Nick
also serves as a Board member and
Trustee of two charities.
Ian has over 30 years’ experience
in retail and is currently the Chief
Executive Officer of DFS Furniture
Company Ltd, a post he has held
since 2010. Prior to this he spent 28
years at The Boots Company plc and
Alliance Boots in various positions
including Executive Director (Retail
Brand Development division), Executive
Trading Director (Boots division),
Executive Director (Beauty & Lifestyle
division), Commercial Director (Lifestyle
division) and Sales and Marketing
Director (Fads/Homestyle division)
amongst others. In 2009 Ian set up IFF
Life & Business Solutions and has acted
as Interim Chief Executive Officer of
Groupe Aeroplan Europe (Nectar) and
a consultant to Alliance Boots Group
and Oliver Wyman. Ian holds an MA in
Chemistry from Cambridge University.
He has recently been appointed as
a member of the BRC (British Retail
Consortium) Board and Chair of the
BRC Policy Board.
12
Shoe Zone plc Annual Report and Accounts 2014
Board of Directors (continued)
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Charles Smith
Chief Operating Officer
Charlie Caminada
Non-Executive Director
Jeremy Sharman
Non-Executive Director
Charles joined Shoe Zone in 1998 and
joined the Board as Retail Director in
2001. Over the past 15 years, Charles
has worked closely with his brother,
Anthony, and other members of the
management team to ensure integration
of acquired businesses with Shoe
Zone’s existing business and the Shoe
Zone culture. As Chief Operating Officer
his main areas of responsibility are
Retail, HR and E-Commerce. Charles
holds a Business Studies degree from
Leicester DeMontfort University. Charles
is a founder and Trustee of Shoe Zone
Trust. Outside of Shoe Zone he is a
Board member and Trustee of three
charities.
Charlie has 20 years’ executive
board experience of brand building
for entertainment, media and retail
organisations, including 16 years’
experience on the boards of London
Stock Exchange traded companies and
12 years’ experience as a COO. Charlie
spent seven years as Chief Operating
Officer at Ludorum plc between 2005
and 2012, heading the company’s listing
on AIM in 2006. Prior to that he was a
founding member and Chief Operating
Officer at HIT Entertainment plc for 15
years. Charlie is currently Non-Executive
Director at Hornby plc, Specialist Advisor
& Member of the Development Board
to the Centre of Social Justice and a
Specialist Advisor to the UK Trade &
Investment (UKTI). He is a Governor of
Heathfield School, Ascot.
Jeremy Sharman has over 25 years of
experience acting as a Non-Executive
Director on the boards of various
companies, primarily in the consumer
and internet sectors. He was one of
the founding partners of HgCapital
where he served from 1990 to 2005.
He now acts as an independent
investing Director. He has served as
chairman or non-Executive Director
on the boards of Premier Marinas,
Park Resorts, Hoseasons, Villarenters.
com, Travelsphere, Page and Moy and
Belfast International Airport amongst
others. Jeremy took up the post
of Non-Executive Director at Shoe
Zone in 2012. Jeremy holds an MA in
Mathematics from Oxford University. He
is founder and chairman of two charities
and chairman of Witham Hall and
Dolphin Preparatory Schools.
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Shoe Zone plc Annual Report and Accounts 2014
Remuneration report
This is the Company’s first Directors’ Remuneration
Report since it listed on AIM in May 2014.
The Committee consists of two independent Non-
executive Directors. Charlie Caminada is the Chairman
and Ian Filby also serves on the Committee.
Anthony Smith, Nick Davis and Charles Smith may attend
the Committee meetings by invitation.
Duties
The main duties of the Remuneration Committee are set
out in its Terms of Reference adopted 25 April 2014 and
include:
●
responsibility for agreeing with the Board, the
framework or broad policy for the remuneration of
all Executive Directors of the Company, including
pension rights, compensation payments bonuses,
incentive payments, share options and benefits in
kind;
● obtain reliable, up-to-date information about
remuneration in other companies of comparable scale
and complexity and market practice generally;
● be exclusively responsible for selecting any
remuneration consultants who advise the Committee;
● approve the design and determine targets for any
performance-related pay schemes operated by the
Company and approve the total annual payments
made under such schemes;
● monitor the level and structure of remuneration
●
for senior management and note annually the
remuneration trends across the Group;
review the design and implementation of all share
incentive plans for approval by the Board and
shareholders. For such plans, determine each year
whether awards will be made, and if so, the overall
amount of such awards;
● ensure the contractual terms on termination, and
any payments made, are fair to the individual and
the Company, and in accordance with any legal and
regulatory requirements;
● oversee any major change in employee benefit
structures throughout the Group;
● agree the policy for authorising claims for expenses
from the Directors
14
Shoe Zone plc Annual Report and Accounts 2014
Remuneration report (continued)
Directors and Directors’ interests
The Directors listed below all served throughout the year, or were appointed on the dates indicated below. Their interests in
the issued share capital of the Company as at the date of this report were as follows:
Date of
appointment
Number of
ordinary shares
Percentage of
issued share capital
Executive Directors
Anthony Smith
26 March 2014
15,282,064 (1)
Charles Smith
26 March 2014
12,217, 936 (1)
Nick Davis
26 March 2014
Non-Executive Directors
Ian Filby
29 April 2014
Charlie Caminada
29 April 2014
Jeremy Sharman
29 April 2014
Nil
Nil
15,625
234,375
30.56%
24.44%
-
-
0.03%
0.47%
(1)
Charles Smith
The registered holder of these shares is Shoe Zone Group Limited, an entity 100% indirectly owned by Anthony Smith and
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Shoe Zone plc Annual Report and Accounts 2014
Remuneration report (continued)
Directors’ Remuneration
Directors’ remuneration information for those individuals who have served as a Director of the Company since 26 March
2014, the date of incorporation, are presented below. The information presented in respect of these Directors is for the full
financial year.
Individual
Basic Salary
and fees
£
Profit Share
(Bonus)
£
Benefits
£
Pension
Contribution
£
Total
£
Executive Directors
Anthony Smith
225,000
Charles Smith
188,000
-
-
30,968
17,188
-
-
255,968
205,188
Nick Davis
136,500
86,620
11,565
16,380
251,065
Non-Executive Directors
Ian Filby
25,000
Charlie Caminada
12,500
Jeremy Sharman
23,100
-
-
-
-
-
-
-
-
-
25,000
12,500
23,100
610,100
86,620
59,721
16,380
772,821
The Company currently does not operate any share option or share award schemes to its employees.
Directors’ Service contracts and employment letters
The Executive Directors have entered into service agreements with the Company at the following annual salaries with effect
from 1 May 2014.
Anthony Smith
Charles Smith
Nick Davis
£
250,000
200,000
142,000
16
Shoe Zone plc Annual Report and Accounts 2014
Remuneration report (continued)
Each Executive Director’s employment will continue until terminated by either party by written notice. The notice periods
applicable are 12 months for Anthony Smith and Charles Smith, 6 months for Nick Davis. Other fixed elements of the
Executive Directors’ remuneration comprise a company car provision, life assurance and private medical insurance. Nick
Davis is entitled to a Pension Contribution of 12% of basic salary.
The Company may elect to terminate the employment of each Executive Director by making a payment in lieu of notice
equal to their basic salary payable in monthly instalments.
Each of the Executive Directors has agreed to post-termination restrictions in order to protect confidential information, trade
secrets and business connections. These restrictions last for 9 months.
The Non-Executive Directors have entered into appointment letters. Under the terms of these letters, the Non-Executive
Directors are entitled to an annual fee as set out below:
Ian Filby
Charlie Caminada
Jeremy Sharman
£
60,000
30,000
30,000
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The appointments are terminable by either party with one month’s written notice. The Company may pay the
Non-Executive Directors in lieu of their notice period.
Charlie Caminada
Chairman of the Remuneration Committee
23 January 2015
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Shoe Zone plc Annual Report and Accounts 2014
Directors’ report for the 52 weeks ended 4 October 2014
The Directors present their Annual Report and audited
financial statements of the Company and the Group for
the 52 weeks ended 4 October 2014.
The disclosure requirements of the Companies Act 2006
have been met by the contents of this Directors’ Report,
along with the Strategic Report, and the Directors’
Remuneration Report which should therefore be read in
conjunction with this report.
The Company
Shoe Zone plc (the ‘Company’) is a company incorporated
and domiciled in the UK, with the registered company
number 08961190. The Company was incorporated on 26
March 2014 as a private company limited by shares under
the name Shoe Zone (Holdings) Limited. On 30 April
2014, the Company was re-registered as a public limited
company with the name Shoe Zone plc. The business
of the Company, and its principal activity, is to act as the
ultimate holding company of the Group. The Group trades
under the name ‘Shoe Zone’.
On incorporation the Company’s accounting reference
date was 31 March. On 22 April 2014 the Company’s
accounting reference date was changed to 30 September
by shortening its accounting reference period.
Share Capital
The authorised share capital of the Company is unlimited.
The Company was incorporated with an issued share
capital of £1.00 which was issued to Shoe Zone Group
Limited (‘SZGL’) on incorporation.
On 24 April 2014, the Company issued thirteen shares
of £1.00 to SZGL, the entire issued share capital was
then consolidated into one ordinary share of £14.00 and
thereafter subdivided into ten ordinary shares of £1.40.
The Company then issued 49,999,990 ordinary shares
of £1.40 to SZGL in consideration of the acquisition by
the Company of the entire issued share capital of Shoe
Zone Retail Limited, Castle Acres Development Limited
and Zone Group Limited in a share-for-share exchange.
The aggregate premium paid on these shares was
£585,576.54.
entire amount standing to the credit of its share premium
account. Following this reduction, the Company’s issued
share capital was £500,000 comprising 50,000,000
Ordinary Shares.
Directors
The Directors who held office during the year and up to
the date of signing the financial statements were:
Anthony Smith
(appointed 26 March 2014)
Charles Smith
(appointed 26 March 2014)
Nick Davis
Ian Filby
(appointed 26 March 2014)
(appointed 29 April 2014)
Charlie Caminada
(appointed 29 April 2014)
Jeremy Sharman
(appointed 29 April 2014)
Directors’ Interests
Information about the Directors’ interests in the shares of
the Company can be found in the Directors’ Remuneration
Report.
Directors’ Indemnities
As permitted by the Articles of Association, the Directors
have the benefit of an indemnity provision as defined
by s234 of the Companies Act 2006. The indemnity was
in force throughout the financial year and at the date of
approval of the financial statements. The Group maintains
Directors’ and Officers’ liability insurance.
In accordance with the Articles of Association, all the
Directors offer themselves for re-election at the AGM, as
they were appointed during the year.
Employees
On 28 April 2014, the Company undertook a share capital
reduction by way of solvency statement pursuant to which
the Company (i) reduced the amount paid up on each
ordinary share of £1.40 by £1.39; and (ii) reduced the
The Group employed 4,009 employees at the year end.
The Group’s policy is to actively involve its employees
in the business to ensure that matters of concern to
18
Shoe Zone plc Annual Report and Accounts 2014
Directors’ report for the 52 weeks ended
4 October 2014 (continued)
them, including the Group’s aims and objectives and the
financial and economic factors which impact them are
communicated in an open and regular manner.
The Directors are committed to delivering the highest
standards of health and safety for employees, customers
and others that might be affected by the Group’s activities.
The Group is committed to employing the right people,
training them well and promoting from within wherever
possible. Well trained and motivated employees are
key to delivering good service to our customer and are
fundamental to the long-term success of the business.
The Group operates an equal opportunities policy that
aims to treat individuals fairly and not to discriminate on
the basis of sex, race, ethnic origin, disability or any other
basis. Applications for employment are fully considered
on their merits, and employees are given appropriate
training and equal opportunities for career development
and promotion.
Annual general meeting
The Company’s first AGM will be held on Friday, 27
February 2015 at 11a.m. at the Company’s registered
office at Haramead Business Centre, Humberstone Road,
Leicester, Leicestershire LE1 2LH. The Notice of AGM
appears on pages 78 to 81.
Set out below is an explanation of certain of the
resolutions which will be proposed at the AGM.
Re-election of Directors (resolutions 3 to 8)
As this is the Company’s first AGM, each Director will
stand for re-election in accordance with the Company’s
articles of association. Biographical details of each
Director appear on pages 12 and 13. The Board
believes that each Director continues to demonstrate his
commitment to his role and that, collectively; the Directors’
skills complement each other and enhance the overall
operation of the Board.
Dividend
The Directors are proposing a final dividend of 3.6p per
ordinary share, amounting to a total dividend of £1.8m,
which is subject to approval by the shareholders at the
AGM. In line with the requirements of IAS 10 – ‘Events
after the reporting period’, this dividend has not been
recognised as a liability in the financial statements.
Political donations (resolution 11)
The Company is prohibited under the Companies Act
2006 from making donations to EU political parties or
organisations or to independent election candidates in
the EU of over £5,000.00 a year without shareholder
approval. The Companies Act 2006 uses very broad
definitions of political donations and expenditure which
may extend to normal business activities which might
not be thought of as political expenditure in the more
usual sense. Activities which could be caught include
representing the Company in the business community or
at special interest groups which the Company may wish to
support. In addition, the sponsorship of industry forums,
the funding of seminars and other functions to which
politicians are invited may also be caught. The Company
is therefore proposing this resolution to ensure that it does
not inadvertently breach the rules whilst carrying out its
normal business activities.
During its last financial year the Company made no
political donations and incurred no political expenditure.
The Company does not intend to make any such
donations or incur any such expenditure this year.
Authorities to allot shares (resolutions 12 and 13)
By law, the Directors are not permitted to allot new
shares (or to grant rights over shares) unless authorised
to do so by shareholders. Resolution 12 seeks
shareholder authority to allow the Directors to allot shares
having an aggregate nominal value of £166,666.00
representing approximately a third of the Company’s
issued share capital on 31 December 2014. In addition,
shareholder authority is sought to allot further shares
having an aggregate nominal value of £166,666.00 in
connection with a pre-emptive rights issue (representing
approximately a further third of the Company’s issued
share capital on 31 December 2014).
Resolution 13 concerns the dis-application of pre-emption
rights. Under the Companies Act 2006, all shareholders
are entitled to participate on a pre-emptive basis in all
issues of shares for cash, unless shareholders have
authorised the Directors otherwise. Paragraph (a) of
resolution 13 gives the Directors authority to make
arrangements dealing with certain legal, regulatory and
practical matters in connection with a pre-emptive issue of
shares. Paragraph (b) of resolution 13 gives the Directors
the necessary authority to either allot shares or sell shares
held in treasury for cash on a non pre-emptive basis up
to an aggregate nominal amount of £25,000.00 (being
2,500,000 shares). This is equivalent to approximately
5% of the issued share capital of the Company on 31
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19
Shoe Zone plc Annual Report and Accounts 2014
Directors’ report for the 52 weeks ended
4 October 2014 (continued)
December 2014.
The Directors consider that it is appropriate for these
authorities to be granted to preserve maximum flexibility
for the future. However, the Directors currently have no
plans to exercise these powers. The authorities sought
will apply until the conclusion of the next AGM of the
Company to be held in 2016 or 31 March 2016, whichever
is earlier.
Form of Proxy
Shareholders will find enclosed a Form of Proxy for
use at the AGM. For shares held through CREST,
proxy appointments may be submitted via the CREST
proxy voting system. Votes should be lodged as soon
as possible in accordance with the instructions in the
Notice of AGM and on the Form of Proxy, whether or not
shareholders intend to be present at the AGM. Appointing
a proxy will not preclude a shareholder from attending the
AGM and voting in person.
All proxy appointments should be submitted so as to be
received no later than 11 a.m. on 25 February 2015.
Recommendation
The Board considers that the resolutions to be proposed
at the AGM are in the best interests of the Company and
are most likely to promote the success of the Company
for the benefit of its members as a whole. The Directors
recommend that shareholders vote in favour of each
resolution, as the Directors intend to do in respect of their
own shareholdings.
External auditors
BDO LLP have issued their independent report on these
financial statements to the shareholders of Shoe Zone plc.
The report can be found on page 22.
The auditors, BDO LLP, have indicated their willingness
to continue in office and a resolution that they be re-
appointed will be proposed at the AGM.
Financial risk management
The Group’s operations expose it to a variety of financial
risks that include the effects of liquidity risk, foreign
currency risk and interest rate risk. The Group has in
place a risk management programme that seeks to limit
the adverse effects on the financial performance of the
Group by monitoring the management of net cash, and
the related finance income and costs. As the Group
has both interest bearing assets and interest bearing
liabilities, management maintain a close monitoring of
the respective balances to ensure any interest rate risk is
managed.
The Group does not make significant use of derivative
financial instruments but does use forward currency
contracts when management consider this to be
appropriate. External expert advice is sought on the
suitability of these currency contracts in respect of the
timings and rate. The Group has no exposure to equity
securities. Limited credit risk exposure exists given the
high level of cash transactions through the store network.
Where credit risk arises management have procedures in
place to assess the level of risk to be taken, with approval
by the Directors for significant credit transactions.
Environment
The vast majority of our stores in England, Wales and
Scotland have a requirement to ensure that all packaging
and store waste is returned to our distribution centre to be
recycled and re-used.
Going Concern
The Directors consider that the business is a going
concern and that it is appropriate to prepare the financial
statements on a going concern basis. In reaching this
conclusion, the Directors have assessed the Group’s
current performance and position and factors that may
affect the Group’s future prospects.
The Group’s financial position is strong with healthy
positive cash balances at the year end and no debt. It also
has in place a £5.0m Revolving Credit Facility (‘RCF’),
which matures in September 2015. The RCF requires the
Group to comply with certain financial covenants; these
have been met during the year, and since the year-end.
The RCF has not been utilised since inception. The
Directors have reviewed forecasts and projections and
consider that the Group has adequate banking facilities
to meet its operational and capital commitments. The
Directors therefore have a reasonable basis on which to
satisfy themselves that the business is a going concern.
20
Shoe Zone plc Annual Report and Accounts 2014
Directors’ report for the 52 weeks ended
4 October 2014 (continued)
Events after the year-end
Between 4 October 2014 and the date of this report, there
have been no material events.
The Strategic Report, the Directors’ Report and the
Directors’ Remuneration Report were approved by the
Board.
accuracy at any time the financial position of the company
and enable them to ensure that the financial statements
comply with the requirements of the Companies Act
2006. They are also responsible for safeguarding the
assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
Directors’ responsibilities
statement
The Directors are responsible for preparing the strategic
report, the Director’s report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have elected to prepare the group financial
statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union and the company financial statements
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law
the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view
of the state of affairs of the group and company and of the
profit or loss of the group for that period. The Directors
are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange
for companies trading securities on the Alternative
Investment Market.
In preparing these financial statements, the Directors are
required to:
● select suitable accounting policies and then apply
them consistently;
● make judgements and accounting estimates that are
reasonable and prudent;
● state whether they have been prepared in accordance
with IFRSs as adopted by the European Union,
subject to any material departures disclosed and
explained in the financial statements;
● prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable
Website publication
The Directors are responsible for ensuring the annual
report and the financial statements are made available
on a website. Financial statements are published on
the company’s website in accordance with legislation
in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance
and integrity of the company’s website is the responsibility
of the Directors. The Directors’ responsibility also extends
to the on-going integrity of the financial statements
contained therein.
Disclosure of information to
auditors
Each Director in office at the date of approval of this report
has confirmed that:
● So far as he is aware, there is no relevant audit
information of which the Company’s auditors are
unaware; and
● He has taken all reasonable steps that he ought to
have taken as a Director in order to make himself
aware of any relevant audit information and to
establish that the Company’s auditors are aware of
that information.
In accordance with Section 489 of the Companies Act
2006, a resolution will be proposed at the AGM that BDO
LLP be re-appointed as auditors.
Approved by the Board and signed on its behalf:
Anthony Smith
Chief Executive Officer
23 January 2015
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Shoe Zone plc Annual Report and Accounts 2014
Independent auditor’s report to the members of
Shoe Zone plc
We have audited the financial statements of Shoe
Zone plc for the 52 weeks ended 4 October 2014
which comprise the consolidated income statement,
the consolidated statement of total comprehensive
income, the consolidated statement of financial position,
the consolidated statement of changes in equity, the
consolidated statement of cash flows, the related notes
and the company statement of financial position. The
financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable
law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The financial
reporting framework that has been applied in preparation
of the parent company financial statements is applicable
law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company
and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of
Directors and auditors
As explained more fully in the statement of Directors’
responsibilities, the Directors are responsible for
the preparation of the financial statements and for
being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Financial
Reporting Council’s (FRC’s) Ethical Standards for
Auditors.
Scope of the audit of the financial
statements
A description of the scope of an audit of financial
statements is provided on the FRC’s website at www.frc.
org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
●
●
●
●
the financial statements give a true and fair view of
the state of the Group’s and the parent company’s
affairs as at 4 October 2014 and of the Group’s profit
for the 52 weeks then ended;
the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
the parent company’s financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Opinion on other matters
prescribed by the Companies Act
2006
In our opinion the information given in the strategic report
and Directors’ report for the financial period for which the
financial statements are prepared is consistent with the
financial statements.
Matters on which we are required
to report by exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
● adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
the parent company financial statements are not in
agreement with the accounting records and returns;
or
●
● certain disclosures of Directors’ remuneration
specified by law are not made; or
● we have not received all the information and
explanations we require for our audit.
Richard Wilson (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Leicester
23 January 2015
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
22
Shoe Zone plc Annual Report and Accounts 2014
Consolidated income statement for the
52 weeks ended 4 October 2014
Note
Before
Exceptional
items
Exceptional
items
52 weeks
ended 4
October 2014
52 weeks
ended 4
October 2014
52 weeks
ended 4
October 2014
53 weeks
ended 5
October 2013
Revenue
Cost of sales
Gross profit
Administration Expenses
IPO costs
Distribution costs
Profit from operations
Finance income
Finance expense
Profit before taxation
Taxation
1, 4, 8
5
5
5, 6
5
9
9
10
Profit attributable to
equity holders of the parent
Earnings per share - basic and
diluted
27
£’000
172,861
(144,303)
28,558
(11,813)
-
(5,240)
11,505
33
(103)
11,435
(2,459)
8,976
£’000
£’000
£’000
-
-
-
-
(936)
-
(936)
-
-
(936)
-
(936)
172,861
193,882
(144,303)
(166,439)
28,558
27,443
(11,813)
(16,108)
(936)
(5,240)
10,569
33
(103)
10,499
(2,459)
-
(6,028)
5,307
36
(285)
5,058
(1,601)
8,040
3,457
16.08p
6.91p
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Shoe Zone plc Annual Report and Accounts 2014
Consolidated statement of total comprehensive income
for the 52 weeks ended 4 October 2014
Note
52 weeks
ended 4
October 2014
53 weeks
ended 5
October 2013
Profit for the period
Items that will not be reclassified subsequently to the income statement
Remeasurement (losses)/gains on defined benefit pension scheme
Movement in deferred tax on pension schemes
24
24
Other comprehensive (expense)/income for the period
Total comprehensive income for the period attributable to
equity holders of the parent
£’000
8,040
(2,371)
474
(1,897)
6,143
£’000
3,457
3,288
(850)
2,438
5,895
24
Shoe Zone plc Annual Report and Accounts 2014
Consolidated statement of financial position
as at 4 October 2014
Note
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
52 weeks ended
29 September 2012
Assets
Non-current assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Loan and borrowings
Provisions
Derivative financial liabilities
Corporation tax liability
Total current liabilities
Non-current liabilities
Trade and other payables
Loan and borrowings
Provisions
Employee benefit liability
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to equity holders
of the company
Called up share capital
Merger reserve
Retained earnings
Total equity and reserves
12
13
14
15
25
16
17
18
15
16
18
24
20
21
£’000
21,233
-
21,233
29,181
8,377
741
9,114
47,413
68,646
(25,920)
-
(959)
-
(518)
(27,397)
(3,766)
-
(470)
(4,766)
(516)
(9,518)
(36,915)
31,731
500
2,662
28,569
31,731
£’000
Re-stated
£’000
Re-stated
24,636
-
24,636
29,959
8,693
-
6,552
45,204
69,840
(23,889)
(1,668)
(764)
(528)
(1,217)
(28,066)
(4,773)
-
(866)
(2,744)
(343)
(8,726)
(36,792)
33,048
500
2,662
29,886
33,048
28,851
157
29,008
33,416
10,077
-
8,685
52,178
81,186
(31,841)
(2,933)
(3,167)
(189)
(2,041)
(40,171)
(5,561)
(1,000)
(879)
(6,422)
-
(13,862)
(54,033)
27,153
500
2,662
23,991
27,153
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The financial statements were approved and authorised for issue by the Board of Directors.
Anthony Smith
Chief Executive Officer
23 January 2015
shoezone.com
Registered Number 08961190
25
Shoe Zone plc Annual Report and Accounts 2014
Consolidated statement of changes in equity
for the 52 weeks ended 4 October 2014
Share
Capital
Merger
reserve
Retained
earnings
Total
£’000
£’000
£’000
£’000
At 29 September 2012
Profit for the period
Other comprehensive income
Total comprehensive income for the period
500
2,662
23,991
27,153
-
-
-
-
-
-
3,457
2,438
5,895
3,457
2,438
5,895
At 5 October 2013
500
2,662
29,886
33,048
Profit for the period
Other comprehensive expense
Total comprehensive income for the period
Distribution prior to group reorganisation
Dividends paid prior to group reorganisation (note 11)
Total contributions by and distributions to
owners
At 4 October 2014
-
-
-
-
-
-
-
-
-
-
-
-
8,040
8,040
(1,897)
(1,897)
6,143
6,143
(2,458)
(5,002)
(7,460)
(2,458)
(5,002)
(7,460)
500
2,662
28,569
31,731
The distribution prior to group reorganisation was made to enable Shoe Zone Group Limited to repurchase its own shares
prior to the listing on AIM.
The merger reserve is the nominal value of shares that have been repurchased. Retained earnings are all other net gains
and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
26
Shoe Zone plc Annual Report and Accounts 2014
Consolidated statement of cash flows
for the 52 weeks ended 4 October 2014
Operating activities
Profit after taxation
Corporation tax
Finance income
Finance expense
Pension contributions paid
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Decrease in provisions
Cash generated from operations
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Interest received
Net cash used in investing activities
Financing activities
Distribution prior to group reorganisation
Dividends paid prior to group reorganisation (note 11)
Interest paid
Repayment of loans
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (note 25)
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
8,040
2,459
(33)
103
(425)
4,527
108
14,779
329
778
(185)
(200)
722
15,501
(2,512)
12,989
(2,008)
703
33
(1,272)
(2,458)
(5,002)
(27)
(1,668)
(9,155)
2,562
6,552
9,114
3,457
1,601
(36)
285
(600)
6,497
50
11,254
1,722
3,457
(8,577)
(2,416)
(5,814)
5,440
(2,774)
2,666
(2,827)
332
36
(2,459)
-
-
(76)
(2,264)
(2,340)
(2,133)
8,685
6,552
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27
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014
1. Accounting policies
General information
Shoe Zone plc (the ‘Company’) is a public company incorporated and domicile in England and Wales. The registered office is
at Haramead Business Centre, Humberstone Road, Leicester, LE1 2LH. The company registered number of the Company is
8961190.
The Company and its subsidiaries’ (collectively the Group) principal activity is a footwear retailer in the United Kingdom and the
Republic of Ireland.
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been
consistently applied for the 52 weeks ended 4 October 2014.
This financial statements have been prepared in accordance with International Financial Reporting Standards and Interpretations
(collectively IFRSs) issued by the Internal Accounting Standards Board (IASB) as adopted by the European Union (‘adopted
IFRSs’) and those parts of the Companies Act 2006 that are applicable to companies that prepare financial statements in
accordance with IFRS.
The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention, as
modified for the revaluation of financial assets and financial liabilities at fair value.
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise judgement in applying the company’s accounting policies. The areas where significant
judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.
Basis of consolidation
The consolidated financial statements incorporating the financial statements of Shoe Zone plc and its subsidiary undertakings
are all made up to 4 October 2014. The results for all subsidiary companies are consolidated using the acquisition method of
accounting.
Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the
investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that
there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee
without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant
facts and circumstances, including:
● The size of the company’s voting rights relative to both the size and dispersion of other parties who hold voting rights.
● Substantive potential voting rights held by the company and by other parties.
● Other contractual arrangements.
● Historic patterns in voting attendance.
The consolidated financial statements present the results of the company and its subsidiaries (‘the Group’) as if they formed a
single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
28
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
1. Accounting policies (continued)
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the
statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised
at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of
comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control
ceases.
Changes in accounting policies
As these are the first financial statements of the Group under IFRS, the group has applied all IFRSs that are effective for the
52 weeks ended 4 October 2014 and the 53 weeks ended 5 October 2013. The Group has not early adopted the following
new standards, amendments or interpretations that have been issued but are not yet effective. The Directors anticipate
that the adoption of these standards will not result in significant changes to the Group’s accounting policies. The Group has
commenced its assessment of the impact of these standards but is not yet in a position to state whether these standards
would have a material impact on its results of operations and financial position.
● Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32).
● Recoverable amounts disclosures for non-financial assets (Amendments to IAS 36).
● Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39).
● Defined Benefit Plans: Employee Contributions: Amendments to IAS 19.
● Annual Improvements to IFRSs 2010-2012 Cycle.
● Annual Improvements to IFRSs 2011-2013 Cycle.
● Annual Improvements to IFRSs 2012–2014 Cycle.
IFRS 15 Revenue from Contracts with Customers.
●
IFRS 9 Financial Instruments.
●
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Capital reorganisation and the merger reserve
On 26 March 2014 the Company was formed to become the new holding company for the Group. This was put into effect
through a share-for-share exchange as described in note 21.
The accounting treatment for group reorganisations is scoped out of IFRS 3. Accordingly, as required under IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors the Group has referred to current UK GAAP to assist its
judgement in identifying a suitable accounting policy. The introduction of the new holding company has been accounted
for as a capital reorganisation using the merger accounting principles prescribed under current UK GAAP. Therefore
the consolidated financial statements of Shoe Zone plc are presented as if Shoe Zone plc has always been the holding
company for the Group and the share capital treated as if issued in the earliest year presented.
The use of merger accounting principles has resulted in a balance on Group capital and reserves which has been classified
as a merger reserve and included in the Group’s shareholders’ funds. The consolidated financial statements include the
results of the Company and all its subsidiary undertakings made up to the same accounting date.
As part of the reorganisation distributions were made to Shoe Zone Group Limited prior to the reorganisation itself taking
place.
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Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
1. Accounting policies (continued)
Revenue
Revenue is measured at the fair value of consideration received or receivable net of discounts, returns and VAT. Revenue
from the sale of footwear is recognised when the company has transferred the significant risks and rewards of ownership to
the buyer at the point of sale in the shop. At the point of sale a provision is made for the level of expected returns based on
previous experience.
Internet sales are recognised when the goods have been paid for, despatched and received by the customer.
Investments
Investments held as fixed assets are stated at cost, less any provision for impairment.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as purchase price, cost includes directly
attributable costs.
Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over the
expected useful economic lives. It is provided at the following rates:
Leasehold improvements - 5-10 years on a straight line basis
Fixtures and fittings - 5-10 years on a straight line basis
Motor vehicles - 3-5 years on a straight line basis
No depreciation is provided against freehold land. Depreciation is provided against freehold shop properties writing off the
original cost less estimated residual value over the useful economic life of the property which is estimated to be 50 years.
Leased assets
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Shoe
Zone plc Group (a ‘finance lease’), the asset is treated as if it had been purchased outright.
The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the
minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability.
Lease payments are analysed between capital and interest. The interest element is charged to the consolidated income
statement over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The
capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an ‘operating
lease’), the total rentals payable under the lease are charged to the consolidated income statement on a straight-line basis
over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the
lease term on a straight-line basis.
30
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
1. Accounting policies (continued)
Impairment of non-financial assets
The carrying values of non-financial assets are reviewed for impairment when there is an indication that assets might be
impaired. When the carrying value of an asset exceeds its recoverable amount, the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on
the asset’s cash generating unit (i.e. the smallest group of assets in which the asset belongs for which there are separable
identifiable cash flows).
Impairment charges are included in the consolidated income statement, except to the extent they reverse previous gains
recognised in the consolidated statement of comprehensive income.
Inventories
Inventories are initially recognised at cost on a first in first out basis, and subsequently at the lower of cost and net realisable
value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their
present location and condition.
Financial assets
The Group classified its financial assets into the categories, discussed below, due to the purpose for which the asset was
acquired. The Group has not classified any of its financial assets as held to maturity.
Loans and receivables
Loans and receivable assets are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They arise principally through the provision of goods to customers (e.g. trade receivables), but also
incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that
are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment.
The Group’s loans and receivables comprise trade and other receivables and cash and cash equivalents included within the
consolidated statement of financial position.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part
of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts
due under the terms receivable, the amount of such a provision being the difference between the net carrying amount
and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables,
which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised
within administrative expenses in the consolidated income statement. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the associated provision.
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Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
1. Accounting policies (continued)
Financial liabilities
The Group classified its financial liabilities as other financial liabilities which include the following:
● bank loans which are initially recognised at fair value net of any transaction costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are subsequently measured at amortised cost ensuring the interest element
of the borrowing is expensed over the repayment period at a constant rate; and
●
trade payables, other borrowings and other short-term monetary liabilities, which are initially recognised at fair value
and subsequently carried at amortised cost using the effective interest method.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of
financial position differs from its tax base.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available
against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred
tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has legally enforceable or substantially current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
the same taxable group company; or
●
● different company entities which intend to either settle current tax assets and liabilities on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets
and liabilities are expected to be settled or recovered.
Provisions
Provision for dilapidations is made at the best estimate of the expenditure required to settle the obligation at the reporting
date, where material, discounted at the pre-tax rate reflecting current market assessments of the time value of money and
risks specific to the liability. This provision relates to the liability of wear and tear incurred on the leasehold properties and
does not include any removal of shop refits as experience indicates that liabilities do not arise for removal of shop refits.
In case of onerous leases, the provision takes into account the potential that the properties in question may be sublet for
some or all of the remaining lease term.
Derivative financial assets / liabilities
The fair value of any forward foreign exchange contracts is recognised within current assets/liabilities and any movement in
the fair value is recognised through cost of sales.
32
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
1. Accounting policies (continued)
Foreign exchange
Transactions entered into the group entities in a currency other than the functional currency are recorded at the average
rate prevailing during the period. Foreign currency monetary assets and liabilities are translated at the rates ruling at the
reporting date.
Retirement benefits – defined contribution and benefit schemes
The Group operates both defined benefit and defined contribution funded pension schemes. The schemes are administered
by trustees and are independent of the Group.
Contributions to defined contribution schemes are charged to the consolidated statement of comprehensive income in the
year to which they relate.
Defined benefit scheme surpluses and deficits are measured at:
●
the fair value of plan assets at the reporting date; less
● plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on
high quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus
● unrecognised past service costs; less
●
the effect of minimum funding requirements agreed with scheme trustees.
Re-measurements of the net defined obligation are recognised directly within equity. These include actuarial gains and
losses, return on plan assets (interest exclusive), and any asset ceilings (interest exclusive).
Service costs are recognised in the income statement, and include current and past service costs as well as gains and
losses on curtailments.
2. Critical accounting estimates and judgements
The Shoe Zone plc Group makes certain estimates and assumptions regarding the future. Estimates and judgements are
continually evaluated based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and
assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below.
Judgements and accounting estimates and assumptions
Property, plant and equipment
Property, plant and equipment is depreciated over the useful lives of the assets. Useful lives are based on the
management’s estimates of the period that the assets will generate revenue, which are reviewed annually for continued
appropriateness. The carrying values are tested for impairment when there is an indication that the value of the assets
might be impaired. When carrying out impairment tests these would be based upon future cash flow forecasts and these
forecasts would be based upon management judgement. Future events could cause the assumptions to change, therefore
this could have an adverse effect on the future results of the Shoe Zone plc Group.
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Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
2. Critical accounting estimates and judgements (continued)
Defined benefit pension assumptions
The costs, assets and liabilities of the defined benefit schemes operated by the Shoe Zone plc Group are determined using
methods relying on actuarial estimates and assumptions. Details of the key assumptions are detailed in note 24. The Shoe
Zone plc Group takes advice from independent actuaries relating to the appropriateness of the assumptions. Changes
in the assumptions used may have a significant effect on the consolidated statement of comprehensive income and the
statement of financial position.
Dilapidation provisions
Leasehold dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of
the lease in accordance with the lease terms. The main assumption is in relation to the expected costs of rectification of
the wear and tear incurred. The Shoe Zone plc Group has a team managing the property portfolio and uses historical
experience when making a provision.
Onerous leases
The Shoe Zone plc Group reviews its property leasing portfolio at each reporting date in order to assess and consider
the need for onerous lease provisions where the property is either empty or where the rents payable are in excess of the
expected rents on sub-leasing. Inherent uncertainties in measuring the provision relate to estimates of the amount of rent
that will be received in the future on vacant property, and estimating future rents on property where the current sub-lease is
of a shorter duration than the head lease.
3. Financial instruments – risk management
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The
overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility. The Group reports in Pound Sterling. All funding requirements and financial risks
are managed based on policies and procedures adopted by the Board of Directors. The Group does use forward currency
contracts to mitigate foreign exchange risk but does not apply hedge accounting. The Group does not issue or use financial
instruments of a speculative nature.
The Group is exposed to the following financial risks
● credit risk;
●
●
●
liquidity risk;
foreign exchange risk; and
interest rate risk.
The Group is exposed to risks that arise from its use of financial instruments. The principal financial instruments used by the
Group, from which financial instrument risk arises, are as follows:
trade and other receivables;
●
● cash and cash equivalents;
●
●
●
● bank overdrafts.
forward foreign exchange contracts;
related party loans;
trade and other payables; and
34
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
3. Financial instruments – risk management (continued)
Fair value hierarchy
All financial instruments measured at fair value must be classified into one of the levels below:
Level 1: Quoted prices in active markets;
Level 2: Level 1 quoted prices are not allowable, but fair value is based on observable market data; and
Level 3: Inputs that are not based on observable market data.
the fair value of plan assets at the reporting date; less
●
plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on
●
high quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus
unrecognised past service costs; less
the effect of minimum funding requirements agreed with scheme trustees.
●
●
Re-measurements of the net defined obligation are recognised directly within equity. These include actuarial gains and
losses, return on plan assets (interest exclusive), and any asset ceilings (interest exclusive).
Service costs are recognised in the income statement, and include current and past service costs as well as gains and
losses on curtailments.
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A summary of the financial instruments held by category is provided below:
Financial assets
Trade receivables
Other receivables
Cash and cash equivalents
Total loans and receivables
Derivative financial assets
Total financial assets at fair value through
profit or loss
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
381
119
9,114
9,614
741
741
301
211
6,552
7,064
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35
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
3. Financial instruments – risk management (continued)
Financial liabilities
Trade and other payables
Loans and borrowings
Total financial liabilities at amortised cost
Derivative financial liabilities
Total financial liabilities at fair value through
profit or loss
52 weeks ended 4
October 2014
52 weeks ended 5
October 2013
£’000
£’000
23,811
-
23,811
-
-
21,995
1,668
23,663
528
528
To the extent financial instruments are not carried at fair value in the consolidated statement of financial position, book value
approximates to fair value at 4 October 2014 and 5 October 2013.
Trade and other receivables are measured at book value and amortised cost. Book values and expected cash flows are
reviewed by the Board and any impairment charged to the consolidated statement of comprehensive income in the relevant
period.
Cash and cash equivalents are held in Pound Sterling and placed on deposit in UK banks.
Trade and other payables are measured at book value and amortised cost.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counter-party to a financial instrument fails to meet its
contractual obligations. At 4 October 2014 the Group has trade receivables of £381,000 (5 October 2013: £301,000).
Approximately 50% of the balance is with longstanding suppliers and will be recovered against orders placed for the
upcoming season. The remainder is spread over a number of smaller suppliers with the largest balance below £75,000.
The Directors are unaware of any factors affecting the recoverability of outstanding balances at 4 October 2014 and
previously and consequently no provisions have been made for bad and doubtful debts.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due.
To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of at least 30 days.
Trade payables are repayable within 3 months and loans and borrowings are repayable as disclosed in note 17. The Group
prepares and maintains detailed cash flow forecasts to monitor cash requirements and manage liquidity risk.
36
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
3. Financial instruments – risk management (continued)
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial
liabilities:
At 4 October 2014
Trade and other payables
Loans and borrowings
Total
Up to 3
months
Between
3 and 12
months
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
£’000
£’000
£’000
£’000
£’000
23,811
-
23,811
-
-
-
-
-
-
-
-
-
-
-
-
Up to 3
months
Between
3 and 12
months
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
£’000
£’000
£’000
£’000
£’000
At 5 October 2013
Trade and other payables
Loans and borrowings
Total
21,995
-
21,995
-
1,668
1,668
-
-
-
-
-
-
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37
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
3. Financial instruments – risk management (continued)
Foreign exchange risk
The Group is predominantly exposed to foreign exchange risk on purchases from major suppliers based in the Far East.
Purchases are made on a central basis and the risk is mitigated through using forward foreign currency exchange contracts.
These contracts will be executed within twelve months from the year end.
Interest rate risk
The Group is exposed to interest rate risk which is managed centrally. The Group reviews the exposure periodically and will
manage its interest rate risk by reviewing appropriate facilities.
Capital management
In order to maintain or adjust the capital structure, the Group may adjust the value of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group’s capital is made up of share capital, merger reserve and retained earnings totalling £31,731,000 (5 October
2013: £33,048,000).
The Group’s objectives when maintaining capital are:
●
to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
●
to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement of changes in
equity. All working capital requirements are financed from existing cash resources.
4. Revenue
Revenue arises from:
Sales of goods
38
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
172,861
193,882
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
5. Expenses by nature
Changes in inventories of finished goods
Finished goods
Duty and carriage charges on purchases
Employee benefit expenses
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Operating lease expense:
Plant and machinery
Property
Loss on disposal of property, plant and equipment
Branch running costs
Transportation expenses
Advertising expenses
Financial instruments movement
IPO Costs
Obligation to Shoefayre on liquidation
Accelerated depreciation on closed
Tyler/Shoefayre stores
Release of dilapidation provision on closed
Tyler/Shoefayre stores
Redundancy costs on closed Tyler/Shoefayre stores
Other costs
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
701
61,303
1,639
37,642
4,527
-
725
25,153
108
18,207
1,386
1,297
(1,269)
936
-
-
-
-
9,937
3,406
70,861
1,464
42,383
6,424
73
833
29,171
50
19,723
1,567
1,079
338
-
2,938
382
(1,214)
413
8,684
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162,292
188,575
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39
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
6. Auditor’s remuneration
The audit of the parent company
The audit of the company’s subsidiaries
IPO Costs
7. Employee benefit expenses
Employee benefit expenses (including Directors) comprise:
Wages and salaries
Social security costs
Other pension costs
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
4
51
150
205
4
41
-
45
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
35,017
1,846
779
£’000
39,753
2,041
589
37,642
42,383
The average monthly number of employees during the period was as follows:
52 weeks ended 4
October 2014
53 weeks ended
5 October 2013
No.
3,930
6
156
4,092
No.
4,408
8
144
4,560
Sales and distribution
Directors
Administration
40
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
7. Employee benefit expenses (continued)
Directors’ remuneration, included in staff costs:
Salaries
Pension contributions
Information regarding the highest paid Director is as follows:
Salary
Pension contribution
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
757
16
773
256
-
256
876
116
992
311
50
361
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Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
8. Segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker. The chief operating decision maker has been identified as the management team including the Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer.
The Board considers that each store is an operating segment but there is only one reporting segment as the stores qualify
for aggregation, as defined under IFRS 8. Management reviews the performance of the Group by reference to total results
against budget. The total profit measures are operating profit and profit for the year, both disclosed on the face of the
consolidated income statement. No differences exist between the basis of preparation of the performance measures used
by management and the figures in the Group financial statements.
External revenue by location of customers:
United Kingdom
Republic of Ireland
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
167,146
5,715
172,861
187,562
6,320
193,882
There are no customers with turnover in excess of 10% or more of total turnover.
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
Non-current assets by location:
United Kingdom
21,233
24,636
Non-current assets held in the Republic of Ireland are not disclosed on the grounds of materiality.
42
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
9. Finance income and expenses
Finance income
Interest receivable
Total finance income
Finance expense
Other loans
Other interest payable
Net interest expense on defined benefit pension scheme
Total finance expense
10. Income Tax
Current tax expense
Current tax on profits for the period
Adjustment for under provision in prior periods
Total current tax expense
Deferred tax expense
Origination and reversal of temporary differences (note 20)
Tax charge on profit on ordinary activities
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
33
33
(27)
-
(76)
(103)
36
36
(75)
(1)
(209)
(285)
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
£’000
1,845
(33)
1,812
647
2,459
2,178
(227)
1,951
(350)
1,601
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Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
10. Income Tax (continued)
The reason for the difference between the actual tax charge for the period and the standard rate of corporation tax in the
United Kingdom applied to profit for the period as follows:
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
Profit for the period
Income tax expense
Profit before income taxes
Expected tax charge based on corporation tax rate of 22%
(5 October 2013: 23.5%)
Expenses not deductible for tax purposes
Effective change of rate
Unrecognised deferred tax movement
Adjustments to tax charge in respect of previous period
Taxation on obligation to Shoefayre on liquidation
Total tax expense
Factors that may affect future tax charges:
£’000
8,040
2,459
10,499
2,310
197
(50)
(107)
109
-
2,459
£’000
3,457
1,601
5,058
1,189
(72)
(301)
135
(117)
767
1,601
In addition to the changes in rates of corporation tax disclosed above, further changes to the UK Corporation tax rates were
substantively enacted as part of the Finance Bill 2013 on 2 July 2013. These include reductions to the main rate to reduce
the rate to 21% from 1 April 2014 and to 20% from 1 April 2015. Deferred tax has been calculated at 20% being the rate
applying from April 2015.
11. Dividends
Dividends paid prior to group reorganisation
52 weeks ended
4 October 2014
53 weeks ended
5 October 2013
£’000
5,002
£’000
A final dividend of 3.6 pence per share is proposed for shareholders on the register on 13 February 2015 payable on 11
March 2015 following approval at the Annual General Meeting on 27 February 2015.
44
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
12. Property, plant and equipment
Freehold
properties
Short leasehold
and leasehold
improvements
Motor
vehicles
Fixtures
and fittings
£’000
£’000
£’000
£’000
Total
£’000
11,525
18,423
198
(300)
11,423
-
(756)
10,667
875
-
73
-
948
58
-
721
(2,173)
16,971
691
(751)
16,911
10,034
2,546
-
(2,098)
10,482
1,850
(750)
1,006
11,582
9,661
10,475
10,650
5,329
6,489
8,389
49
-
32,714
62,711
1,748
2,667
(44)
(5,071)
(7,588)
5
-
-
5
43
1
-
29,391
57,790
1,244
(608)
30,027
1,935
(2,115)
57,610
22,908
33,860
3,877
-
6,424
73
(39)
(5,066)
(7,203)
5
-
-
5
-
-
6
21,719
33,154
2,619
(554)
4,527
(1,304)
23,784
36,377
6,243
7,672
9,806
21,233
24,636
28,851
Cost
At 29 September 2012
Additions
Disposals
At 5 October 2013
Additions
Disposals
At 4 October 2014
Depreciation
At 29 September 2012
Charge for the period
Impairment
Disposals
At 5 October 2013
Charge for the period
Disposals
At 4 October 2014
Net book value
At 4 October 2014
At 5 October 2013
At 29 September 2012
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45
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
13. Inventories
Goods for resale
Shop fitting materials and other consumables
14. Trade and other receivables
Trade receivables
Prepayments
Other receivables
4 October 2014
5 October 2013
£’000
29,073
108
29,181
£’000
29,774
185
29,959
4 October 2014
5 October 2013
£’000
381
7,877
119
8,377
£’000
301
8,181
211
8,693
15. Derivative financial instruments
At the balance sheet date, details of the forward foreign exchange contracts that the Group has committed to are
as follows:
Derivative financial assets
Derivatives not designated as hedging instruments
Forward foreign exchange contacts
Derivative financial liabilities
Derivatives not designated as hedging instruments
Forward foreign exchange contacts
4 October 2014
5 October 2013
£’000
£’000
741
-
-
528
The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets/liabilities in the
consolidated statement of financial position.
The notional principal amounts of outstanding forward foreign exchange contracts at 4 October 2014 were $51,000,000
(5 October 2013: $46,500,000). The fair value of the forward foreign exchange contracts are within the level 2 of the fair
value hierarchy and have been valued on the basis of observable market data. The key input into the valuation are market
rates of financial instruments at the balance sheet date.
46
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
16. Trade and other payables
Current
Trade payables
Social security and other taxes
Other payables
Accruals
Non-current
Other payables
17. Loans and borrowings
Current
Related party loans
Total loans and borrowings
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4 October 2014
5 October 2013
£’000
14,351
1,049
123
10,397
25,920
£’000
12,643
1,099
219
9,928
23,889
4 October 2014
5 October 2013
£’000
3,766
3,766
£’000
4,773
4,773
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4 October 2014
5 October 2013
£’000
-
-
£’000
1,668
1,668
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Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
18. Provisions
As at 5 October 2013
Additions
Amounts utilised
Amounts released
As at 4 October 2014
The provisions are aged as follows:
Customer
Returns
Onerous
Leases
Dilapidations
£’000
400
372
(400)
-
372
£’000
36
-
(36)
-
-
£’000
1,194
569
(378)
(328)
1,057
Customer
Returns
Onerous
Leases
Dilapidations
£’000
£’000
£’000
Total
£’000
1,630
941
(814)
(328)
1,429
Total
£’000
959
470
Current
Non-current
As at 4 October 2014
372
-
372
-
-
-
587
470
1,057
1,429
For all products, the Group has incurred an obligation to exchange the item if it is faulty due to a lack of quality or give
the client a refund if they are not satisfied. Revenue from the sale of the products is recognised once the product is sold,
however, a provision for customer returns based on previous experience is recognised at the same time.
Onerous leases relate to the excess of rents payable over rents receivable on sub-let retail space and rents payable
on retail premises which have been closed and not sub-let. Inherent uncertainties in measuring the provision relate to
estimates of the rent that will be received in the future on vacant property, and estimating future rents on property where the
current sub-lease is of a shorter duration than the head lease.
Leasehold dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the
lease in accordance with the lease terms. The main uncertainty relates to estimating the cost that will be incurred at the end
of the lease.
19. Contingent liabilities
The Shoe Zone plc Group and subsidiary undertakings have given a duty deferment guarantee in favour of HM Revenue
and Customs amounting to £1,600,000 (5 October 2013: £1,600,000).
48
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
20. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 20% (5 October
2013: 20%).
The movement on the deferred tax account is as shown below:
4 October 2014
5 October 2013
At beginning of the period
Recognised in income statement:
Tax expense (note 10)
Recognised in other comprehensive income:
Actuarial loss/(gain) on defined benefit pension schemes
At end of the period
The deferred tax has arisen due to the following:
Accelerated capital allowances
Ineligible buildings
Short term timing differences
Defined benefit pension scheme
£’000
(343)
(647)
474
(516)
£’000
157
350
(850)
(343)
4 October 2014
5 October 2013
£’000
1,254
(2,575)
(148)
953
(516)
£’000
1,272
(3,006)
843
548
(343)
The Group has an unrecognised deferred tax asset of £994,000 at 4 October 2014 (5 October 2013: £1,088,000)
21. Share capital
Share capital issued and fully paid
50,000,000 ordinary shares of 1p each
4 October 2014
5 October 2013
£’000
£’000
500
500
500
500
Ordinary shares carry the right to one vote per share at general meetings of the company and the rights to share in any
distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a
winding up.
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49
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
21. Share capital (continued)
Shoe Zone plc authorised share capital is unlimited.
The Company was incorporated on 26 March 2014 as a private company limited by shares under the name Shoe Zone
(Holdings) Limited. On 30 April 2014, the Company was re-registered as a public limited company with the name Shoe Zone
plc.
The Company was incorporated with an issued share capital of £1.00 comprising one ordinary share of £1.00 which was
issued to Shoe Zone Group Limited on incorporation.
The following changes to the issued share capital of the Company have taken place between 26 March 2014 (being the
date of the Company’s incorporation) and 20 May 2014:
1. on 24 April 2014, the Company allotted and issued 13 ordinary shares of £1.00 each, fully paid up, to the SZGL, the
entire issued share capital of the Company immediately following that allotment and issue was consolidated into one
ordinary share of £14.00 and, thereafter, subdivided into 10 ordinary shares of £1.40 each;
2. on 24 April 2014, the Company allotted and issued 49,999,990 ordinary shares of £1.40 each, fully paid up, in
consideration of the acquisition by the Company of the entire issued share capital of Shoe Zone Retail Limited, Castle
Acres Development Limited and Zone Group Limited pursuant to the Share Exchange Agreement. The aggregate
premium paid on such shares was £585,576.54; and
3. on 28 April 2014, the Company undertook a share capital reduction by way of solvency statement pursuant to which the
Company (i) reduced the amount paid up on each ordinary share of £1.40 by £1.39; and (ii) reduced the entire amount
standing to the credit of its share premium account. Following this share capital reduction, the Company’s issued share
capital was £500,000 comprising 50,000,000 Ordinary Shares.
Total issued share capital (number)
Total issued share capital (£)
Ordinary
£1 shares
Ordinary
£1.40 shares
New ordinary
1p shares
Ordinary £1
shares
Ordinary
£1.40 shares
New ordinary
1p shares
Issued share capital on
incorporation
Allocated and issued shares
to the Selling Shareholders
Shares subdivided
Share for share exchange
Capital reduction by £1.39 and
re-designate as new shares
Shoe Zone plc shares as
at 4 October 2014
1
13
(14)
-
-
-
-
-
-
10
49,999,990
50,000,000
-
-
-
-
-
(50,000,000)
50,000,000
-
50,000,000
1
13
(14)
-
-
-
-
-
-
14
69,999,986
70,000,000
-
-
-
-
-
(70,000,000)
500,000
-
500,000
50
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
22. Leases
Operating leases – lessee
The Shoe Zone plc Group has entered into commercial leases on land and buildings. These leases have an
average life of between five and ten years. There are no restrictions placed on the Shoe Zone plc Group by entering
into these leases. The total future minimum lease payments under non-cancellable operating leases for land and
buildings and other items of plant and machinery are as follows:
Land and
buildings
Land and
buildings
Other
Other
4 October
2014
5 October
2013
4 October
2014
5 October
2013
£’000
£’000
£’000
£’000
Not later than one year
Later than one year and not later
than five years
Later than five years
22,866
25,130
59,867
19,516
70,314
30,258
562
798
4
547
668
29
102,249
125,702
1,364
1,244
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23. Capital Commitments
Contracted for but not provided
4 October 2014
5 October 2013
£’000
57
£’000
18
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51
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs
Defined contribution scheme
The Group operates a defined contribution pension scheme namely Zone Executive Pension Scheme which had
contributions during the period of £nil (5 October 2013: £100,000). During the year the Shoe Zone Worksave Pension Plan
contributions amounted to £779,000 (5 October 2013: £217,000).
Defined benefit scheme
The Group operates two other pension schemes in the UK: the Shoe Zone Pension Scheme and the Shoefayre Limited
Pension and Life Assurance Scheme. The Shoe Zone Pension Scheme provided benefits on a defined benefit basis for
service up to 30 September 2001. For service after that date, benefits are provided on a defined contribution basis. The
Shoefayre Limited Pension and Life Assurance Scheme provided benefits on a defined benefit basis but was closed to
future accrual on 30 June 2009. The scheme was acquired on the purchase of Shoefayre Limited on 19 September 2007.
The assets of all schemes are held in separate trustee administered funds. The pension contributions to the Shoe Zone
Pension Scheme defined contribution element was £nil (5 October 2013: £272,000).
The Group also operated a pension scheme in the Republic of Ireland: the Shoe Zone (Ireland) Pension Scheme. Full
disclosure of this scheme is not contained in these financial statements, as the Directors do not consider it to be material
to the financial statements. Full disclosure can be found in the financial statements of Shoe Zone (Ireland) Limited,
Registration Number: 00272480.
On 25 April 2013 Shoe Zone (Ireland) Limited gave notice to the Trustees that all contributions would cease. The Trustees
resolved to proceed with the administration of benefits as required in accordance with the wind-up rules and the Pensions
Act. The historical deficit has been released to the Statement of Other Comprehensive Income to reflect this.
The schemes are exposed to a number of risks, including:
●
●
Investment risk: movement of discount rate used (high quality corporate bonds) against the return from plan assets
Interest rate risk: decreases/increases in the discount rate used (high quality corporate bonds) will increase/decrease
the defined benefit obligation
● Longevity risk: changes in the estimation of mortality rates of current and former employees.
52
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
Amounts recognised in the balance sheet at 4 October 2014
Fair value of assets
Present value of funded obligations
Deficit
Schemes in surplus which have not been recognised
Schemes recognised as a liability
Amounts recognised in other comprehensive income
4 October 2014
5 October 2013
£’000
71,306
(76,072)
(4,766)
-
(4,766)
£’000
67,809
(69,662)
(1,853)
891
(2,744)
4 October 2014
5 October 2013
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Return on plan assets
Actuarial (loss)/gain arising from changes in:
Demographic assumptions
Financial assumptions
Experience
Effect of limiting net defined benefit asset
Total actuarial (loss)/gain
Deferred tax on employee benefit scheme
Shoe Zone (Ireland) historical deficit
£’000
2,592
-
(5,854)
-
891
(4,963)
474
-
Total amount recognised in other comprehensive income
(1,897)
£’000
2,243
4,420
(1,269)
(1,647)
(891)
613
(850)
432
2,438
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53
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
The figures below are based on a full actuarial valuation performed in April 2013 and March 2013 for the Shoe Zone and
Shoefayre schemes respectively which was carried out by a qualified independent actuary. This actuarial valuation has
been updated to 4 October 2014 for the purpose of calculating the pension surplus and disclosures in the current period.
4 October 2014
5 October 2013
%
2.40
3.40
4.00
2.40
3.40
%
2.50
3.50
4.55
2.50
3.50
4 October 2014
5 October 2013
Years
Years
90
92
88
90
90
92
88
90
Financial assumptions
Deferred pension revaluation
Pension increases
Discount rate
Consumer Price Index
Retail Price Index
Post retirement mortality
Life expectancy
Male currently aged 45
Female currently aged 45
Male currently aged 65
Female currently aged 65
54
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
Defined benefit scheme - Shoe Zone Pension Scheme
Assets
The major categories of assets as a percentage of total assets are as follows:
Asset Category
Equities
Property
Gilts/ bonds
Target Return Funds
4 October 2014
5 October 2013
27%
9%
40%
24%
100%
29%
7%
38%
26%
100%
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The actual return on the Scheme’s assets net of expenses over the period to the review date was a gain of £3,349,000 (5
October 2013: £2,845,000).
The assets do not include any investments in shares of the company.
The expected return on assets is a weighted average of the assumed long-term returns available on high quality corporate
bonds in line with the method used to value the liabilities. Equity and property returns are developed based on the selection
of an appropriate risk premium above the risk free rate which is measured in accordance with the yield on the government
bonds. Bond returns are selected by reference to the yields on the government and corporate debt, as appropriate to the
scheme holdings of these instruments. The expected returns on the Target Return Funds are equal to the fund’s targets.
Amounts recognised in the income statement over the period
Interest cost
Expected return on assets
4 October 2014
5 October 2013
£’000
(1,771)
1,811
£’000
(1,806)
1,779
40
(27)
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55
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
Defined benefit scheme - Shoe Zone Pension Scheme (continued)
Amounts recognised in the statement of financial position
Fair value of assets
Present value of funded obligations
(Deficit)/surplus
Schemes in surplus which have not been recognised
Schemes recognised as a liability
Amounts recognised in other comprehensive income
Return on plan assets
Actuarial (loss)/gain arising from changes in:
Demographic assumptions
Financial assumptions
Experience
Effect of limiting net defined benefit asset
Total actuarial (loss)/gain
Deferred tax on employee benefit scheme
Total amount recognised in other comprehensive income
4 October 2014
5 October 2013
£’000
£’000
42,423
(43,217)
(794)
-
(794)
40,513
(39,622)
891
891
-
4 October 2014
5 October 2013
£’000
1,538
-
(3,263)
-
891
(2,372)
167
(667)
£’000
1,066
2,535
(226)
(1,077)
(891)
341
(460)
947
56
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
Defined benefit scheme - Shoe Zone Pension Scheme (continued)
Reconciliation of assets and defined benefit obligation
The change in assets over the period was:
Fair value of assets at the beginning of the period
Expected return on assets
Benefits paid
Actuarial gain
Fair value of assets at the end of the period
4 October 2014
5 October 2013
£’000
40,513
1,811
(1,439)
1,538
42,423
£’000
39,092
1,779
(1,424)
1,066
40,513
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The change in defined benefit obligation over the period was:
Defined benefit obligation at the beginning of the period
Interest cost
Benefits paid
Actuarial loss/(gain)
Defined benefit obligation at the end of the period
4 October 2014
5 October 2013
£’000
39,622
1,771
(1,439)
3,263
43,217
£’000
40,472
1,806
(1,424)
(1,232)
39,622
Shoe Zone Retail Limited expects to make no contributions to the scheme during the following period.
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57
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
Defined Benefit Scheme - Shoe Zone Pension Scheme (continued)
Sensitivity of the value placed on the liabilities:
Adjustments to assumptions
Approximate effect on
liabilities
Discount rate
Plus 0.50%
Minus 0.50%
Inflation
Plus 0.50%
Minus 0.50%
Life Expectancy
Plus 0.50%
Minus 0.50%
-8%
+9%
+2%
-2%
+2%
-2%
Note that the above sensitivities are approximate and only show the likely effect of an assumption being adjusted whilst all
other assumptions remain the same.
Defined benefit scheme - Shoefayre Limited Pension and Life Assurance Scheme
The company operates the Shoefayre Limited Pension and Life Assurance Scheme. The scheme provided benefits on a
defined benefit basis but was closed to future accrual on 30 June 2009.
The major categories of assets as a percentage of total assets are as follows:
Asset Category
Equities
Property
Gilts/ bonds
Target Return Funds
58
4 October 2014
5 October 2013
16%
11%
46%
27%
27%
8%
42%
23%
100%
100%
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
Defined benefit scheme - Shoefayre Limited Pension and Life Assurance Scheme (continued)
The actual return on the Scheme’s assets net of expenses over the period to the review date was a gain of £2,280,000 (5
October 2013: £2,337,000). The assets do not include any investments in shares of the company.
The expected return on assets is a weighted average of the assumed long-term returns available on high quality corporate
bonds in line with the method used to value the liabilities. Equity and property returns are developed based on the selection
of an appropriate risk premium above the risk free rate which is measured in accordance with the yield on the government
bonds. Bond returns are selected by reference to the yields on the government and corporate debt, as appropriate to the
scheme holdings of these instruments. The expected returns on the Target Return Funds are equal to the fund’s targets.
Amounts recognised in the statement of financial position
Fair value of assets
Present value of funded obligations
Net liability
4 October 2014
5 October 2013
£’000
28,883
(32,855)
(3,972)
£’000
27,296
(30,040)
(2,744)
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Amounts recognised in other comprehensive income
4 October 2014
5 October 2013
Return on plan assets
Actuarial (loss)/gain arising from changes in:
Demographic assumptions
Financial assumptions
Experience
Total actuarial (loss)/gain
Deferred tax on employee benefit scheme
Total amount recognised in other comprehensive income
£’000
1,054
-
(2,591)
-
(2,591)
307
(1,230)
£’000
1,177
1,885
(1,043)
(570)
272
290
1,739
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59
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
Defined benefit scheme - Shoefayre Limited Pension and Life Assurance Scheme (continued)
Amounts recognised in the income statement over the period
Interest cost
Expected return on assets
Reconciliation of assets and defined benefit obligation
The change in assets over the period was:
Fair value of assets at the beginning of the period
Expected return on assets
Employer contributions
Benefits paid
Actuarial gain on assets
Fair value of assets at the end of the period
The change in defined benefit obligation over the period was:
Defined benefit obligation at the beginning of the period
Interest cost
Benefits paid
Actuarial loss/(gain)
Defined benefit obligation at the end of the period
4 October 2014
5 October 2013
£’000
(1,342)
1,226
(116)
£’000
(1,342)
1,160
(182)
4 October 2014
5 October 2013
£’000
27,296
1,226
425
(1,118)
1,054
28,883
£’000
25,499
1,160
600
(1,140)
1,177
27,296
4 October 2014
5 October 2013
£’000
30,040
1,342
(1,118)
2,591
32,855
£’000
30,110
1,342
(1,140)
(272)
30,040
Contributions of £300,000 are expected to be made during the year ended 3 October 2015 by Shoe Zone Retail Limited.
60
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
24. Pension costs (continued)
Defined benefit scheme - Shoefayre Limited Pension and Life Assurance Scheme (continued)
Sensitivity of the value placed on the liabilities:
Adjustments to assumptions
Approximate effect on
liabilities
Discount rate
Plus 0.50%
Minus 0.50%
Inflation
Plus 0.50%
Minus 0.50%
Life Expectancy
Plus 0.50%
Minus 0.50%
-8%
+10%
+6%
-5%
+2%
-2%
Note that the above sensitivities are approximate and only show the likely effect of an assumption being adjusted whilst all
other assumptions remain the same.
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61
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
25. Cash and cash equivalents
Cash and cash equivalents for the purpose of the statement of cash flow comprise:
4 October 2014
5 October 2013
£’000
£’000
Cash at banks and in hand
9,114
6,552
Cash and cash equivalents
9,114
6,552
26. Related party transactions
Balances and transactions between the company and its subsidiaries, which are related parties of the company, have been
eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related
parties are disclosed below.
Included within loans and borrowings due within one year are the following loans due to related parties:
Key management personnel
4 October 2014
5 October 2013
£’000
-
£’000
1,688
62
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
26. Related party transactions (continued)
During the period, the Group entities entered into the following trading transactions with key management personnel:
4 October 2014
5 October 2013
£’000
£’000
Interest paid
27
75
During the period, the Group entities entered into the following trading transactions with Group pension schemes:
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Rent paid Zone Executive Pension Scheme
Contributions to the:
Zone Executive Pension Scheme
Shoe Zone Worksave Pension Plan
Shoe Zone Pension Scheme
Shoefayre Limited Pension and Life Assurance Scheme
4 October 2014
5 October 2013
£’000
£’000
152
-
779
-
425
88
100
217
272
600
1,356
1,277
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63
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
26. Related party transactions (continued)
During the period, the Group entities committed and provided for a charitable donation to a trust in which the Directors are
trustees:
Charitable donation
4 October 2014
5 October 2013
£’000
-
£’000
100
During the period, the key management personnel remuneration included within staff costs are as follows:
Short term employee benefits
Post-employment benefit
Employers national insurance
4 October 2014
5 October 2013
£’000
£’000
757
16
83
856
876
116
96
1,088
Key management personnel are considered to be the Directors of Shoe Zone plc.
64
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
27. Earnings per share
Earnings per share is calculated by dividing profit for the year by the weighted average number of shares outstanding during
the year.
Numerator
Profit for the year and earnings used in basic and diluted EPS
4 October 2014
5 October 2013
£’000
8,040
£’000
3,457
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Denominator
Weighted average number of shares used in basic and diluted EPS
50,000,000
50,000,000
4 October 2014
5 October 2013
28. Ultimate controlling party
The company is controlled by Shoe Zone Group Limited. Shoe Zone Group Limited is controlled by the Smith family albeit
there is not a single controlling party.
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Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
29. First time adoption of IFRS
The Shoe Zone plc Group has prepared financial statements which comply with IFRS applicable for period ending on or
after 4 October 2014, together with the comparative period data as at and for the year ended 5 October 2013, as described
in the summary of significant accounting policies. In preparing the financial statements, the Group’s opening balance sheet
was prepared as at 30 September 2012, the Group’s date of transition to IFRS. This note explains the principal adjustments
made by the Shoe Zone plc Group in restating its UK GAAP financial statements, including the balance sheet as at 29
September 2012 and the financial statements as at and for the year ended 5 October 2013.
IFRS 1 allows first time adopters certain exemptions from the retrospective application of certain requirements under IFRS.
The Shoe Zone plc Group has applied the following exemptions:
●
●
IFRS 3 Business Combinations has not been applied to acquisitions of subsidiaries which are considered businesses
for IFRS or of interest in joint ventures that occurred before 29 September 2012. Use of this exemption means that the
UK GAAP carrying amounts of assets and liabilities, that are to be recognised under IFRS, is their deemed cost at the
date of acquisition. After the date of acquisition, measurement is in accordance with IFRS. Assets and liabilities which
do not qualify for recognition under IFRS are excluded from the opening IFRS balance sheet. The Shoe Zone plc Group
did not recognise or exclude any previously recognised amounts as a result of IFRS recognition requirements; and
the estimates at each period end are consistent with those made for the same dates in accordance with UK GAAP
(after adjustments to reflect any differences in accounting policies). The estimates used by the Shoe Zone plc Group
to present these amounts in accordance with IFRS reflect conditions as at 29 September 2012, the date of transition to
IFRS and as of 5 October 2013.
66
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
29. First time adoption of IFRS (continued)
Reconciliation of equity as at 5 October 2013
Note
UK GAAP
Adjustments
IFRS as at
5 October 2013
£’000
£’000
£’000
A
A, B
E, F
D
C
F
D, E
H
B, H
Assets
Non-current assets
Property, plant and equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Loan and borrowings
Provisions for liabilities and charges
Derivative financial liabilities
Corporation tax liability
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions for liabilities and charges
Employee benefit liability
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Issued capital and reserves
attributable to owners of the parent
Called up share capital
Merger reserve
Retained earnings
Equity attributable to equity holders of
the parent
Non-controlling interest
Total equity and reserves
24,960
24,960
29,959
9,659
6,552
46,170
71,130
(23,970)
(1,668)
-
-
(1,217)
(26,855)
(1,728)
(1,762)
(2,196)
-
(5,686)
(32,541)
38,589
500
2,662
35,427
38,589
-
38,589
(324)
(324)
-
(966)
-
(966)
(1,290)
81
-
(764)
(528)
-
(1,211)
(3,045)
896
(548)
(343)
(3,040)
(4,251)
(5,541)
-
-
(5,541)
(5,541)
-
(5,541)
24,636
24,636
29,959
8,693
6,552
45,204
69,840
(23,889)
(1,668)
(764)
(528)
(1,217)
(28,066)
(4,773)
(866)
(2,744)
(343)
(8,726)
(36,792)
33,048
500
2,662
29,886
33,048
-
33,048
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67
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
29. First time adoption of IFRS (continued)
Reconciliation of total comprehensive income for the year ended 5 October 2013
Note
UK GAAP
Adjustments
IFRS as at
5 October 2013
£’000
193,882
(165,713)
28,169
(16,108)
(6,028)
6,033
(76)
36
537
6,530
(2,711)
3,819
3,819
3,819
2,543
(701)
1,842
5,661
5,661
5,661
£’000
-
(726)
(726)
-
-
(726)
(209)
-
(537)
(1,472)
1,110
(362)
(362)
(362)
745
(149)
596
234
234
234
£’000
193,882
(166,439)
27,443
(16,108)
(6,028)
5,307
(285)
36
-
5,058
(1,601)
3,457
3,457
3,457
3,288
(850)
2,438
5,895
5,895
5,895
C, F, G
G
G
G
G
Revenue
Cost of sales
Gross profit
Administration expenses
Distribution expenses
Operating profit
Finance expense
Finance income
Other finance income
Profit before tax from continuing
operations
Income tax expenses
Profit for the year
Attributable to:
Equity holders of the parent
Other comprehensive income
Actuarial gain/(loss) on pension schemes
Movement on deferred tax relating to pension
schemes
Total other comprehensive income
Total comprehensive income for the year
Total comprehensive income
attributable to:
Equity holders of the parent
68
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
29. First time adoption of IFRS (continued)
Notes to the reconciliation of equity and income statement for the 53 week period ended 5 October
2013:
A. Property, plant and equipment – long leasehold properties of £324,000 was previously included under UK GAAP
within property, plant and equipment which has been reclassified under IFRS under trade and other receivables as a
prepayment.
B. Deferred tax – a deferred tax asset of £1,290,000 previously included under UK GAAP within trade and other
receivables in current assets has been transferred to deferred tax liabilities within non-current liabilities. The total
deferred tax asset has been reduced by £2,182,000 as a result of the recognition of deferred tax on IFRS adjustments
and as a result of recognising deferred tax on temporary differences arising from, in the main, the Group’s property
portfolio.
C. Other derivative financial assets – under IFRS the fair value of the foreign exchange contracts in existence but not
settled have been included on the statement of financial position within derivative financial liabilities. Included within
current liabilities is £528,000 which has resulted in a reduction in profit for the year recognised in the income statement
of £338,000 after the release of the opening position of £190,000.
D. Provisions – under UK GAAP all provisions were included as a non-current liability. Under IFRS a provision for
£764,000 is considered to be due within one year and is included as due within current liabilities. There is no change in
profit for the year.
E. Trade and other payables – as a result of the transfer to IFRS the Group has reclassified its holiday pay accrual of
£132,000 from provisions to trade and other payables. There is no change in profit for the year.
F. Trade and other payables – under UK GAAP the Group has recognised rent free periods on operating leases within
trade and other payables and has released this through to the income statement over the period up to the first break
clause. Under IFRS the release period is required to be the term of the lease. This has resulted in an increase in trade
and other payables of £2,830,000 and a reduction in the amount released to the income statement by £388,000.
G. Defined benefit pension schemes/finance income/finance expense – under IFRS the expected return of assets of
pension scheme assets recognised is based upon the discount rate which differs to the treatment under UK GAAP.
As a result an additional charge of £745,000 has been recognised within the income statement and a corresponding
reduction has been made within other comprehensive income. The associated deferred tax movement of £149,000
has increased the value of other comprehensive income and has increased income tax expenses within the income tax
expense.
Under UK GAAP the other finance income, which relates through to the expected return on pensions assets less the in-
terest cost on pension liabilities, is included separately on the face of the income statement. Under IFRS this is included
net within either finance income or finance expense.
This has resulted in an increase in the finance expense of £537,000 and a reduction in other finance income of
£537,000. There is no profit effect.
H. Defined benefit pension schemes – Under IFRS, the deferred tax asset/(liability) in relation to the employee benefit
pension scheme is not netted off against the employee benefit asset/(liability).
Instead, it is included within the deferred tax balance. This has resulted in an increase to the employee benefit liability
within non-current liabilities and a reduction to the deferred tax liability within non-current liabilities of £548,000.
Statement of cash-flows – the transition from UK GAAP to IFRS has not had a material impact on the statement of
cash-flows.
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69
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
29. First time adoption of IFRS (continued)
Reconciliation of equity as at 29 September 2012
Note
UK GAAP
Adjustments
IFRS as at 29
September 2012
£’000
£’000
£’000
Assets
Non-current assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Loan and borrowings
Provisions for liabilities and charges
Derivative financial liabilities
Corporation tax liability
Total current liabilities
Non-current liabilities
Loans and borrowings
Trade and other payables
Provisions for liabilities and charges
Employee benefit liability
Total non-current liabilities
Total liabilities
Net assets
Issued capital and reserves
attributable to owners of the parent
Called up share capital
Merger reserve
Retained earnings
Equity attributable to equity holders of the parent
Total equity and reserves
70
A
B, H
A, B
E, F
D
C
F
D, E
H
29,175
-
29,175
33,416
11,576
8,685
53,677
82,852
(31,999)
(2,933)
-
-
(2,041)
(36,973)
(1,000)
(2,769)
(4,236)
(4,946)
(12,951)
(49,924)
32,928
500
2,662
29,766
32,928
32,928
(324)
157
(167)
-
(1,499)
-
(1,499)
(1,666)
158
-
(3,167)
(189)
-
(3,198)
-
(2,792)
3,357
(1,476)
(911)
(4,109)
(5,775)
-
-
(5,775)
(5,775)
(5,775)
28,851
157
29,008
33,416
10,077
8,685
52,178
81,186
(31,841)
(2,933)
(3,167)
(189)
(2,041)
(40,171)
(1,000)
(5,561)
(879)
(6,422)
(13,862)
(54,033)
27,153
500
2,662
23,991
27,153
27,153
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
29. First time adoption of IFRS (continued)
Reconciliation of total comprehensive income for the year ended 29 September 2012
Note
UK GAAP
Adjustments
IFRS as at 29
September 2012
Revenue
Cost of sales
Gross profit
Administration expenses
Distribution expenses
Operating profit
Finance expense
Finance income
Other finance income
Profit before tax from continuing operations
Income tax expenses
Profit for the year
Attributable to:
Equity holders of the parent
Other comprehensive income
Actuarial gain/(loss) on pension schemes
Movement on deferred tax relating to pension schemes
Total other comprehensive income
Total comprehensive income for the year
Total comprehensive income attributable to:
Equity holders of the parent
F
C, G
G
G
G
£’000
221,114
(197,130)
23,984
(12,391)
(6,530)
5,063
(203)
7
439
5,306
(2,067)
3,239
3,239
3,239
(4,649)
1,034
(3,615)
(376)
(376)
(376)
£’000
-
(496)
(496)
(1)
-
(497)
(845)
-
(439)
(1,781)
1,575
(206)
(206)
(206)
973
(224)
749
543
543
543
£’000
221,114
(197,626)
23,488
(12,392)
(6,530)
4,566
(1,048)
7
-
3,525
(492)
3,033
3,033
3,033
(3,676)
810
(2,866)
167
167
167
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71
Shoe Zone plc Annual Report and Accounts 2014
Notes to the financial statements for the 52 weeks
ended 4 October 2014 (continued)
29. First time adoption of IFRS (continued)
Notes to the reconciliation of equity and income statement for the 52 week period ended 29 September
2012:
A. Property, plant and equipment – long leasehold properties of £324,000 was previously included under UK GAAP
within property, plant and equipment which has been reclassified under IFRS under trade and other receivables as a
prepayment.
B. Deferred tax – a deferred tax asset of £1,823,000 previously included under UK GAAP within trade and other
receivables in current assets has been transferred to deferred tax asset within non-current assets. The total deferred
tax asset has been reduced by £3,143,000 as a result of the recognition of deferred tax on IFRS adjustments and as a
result of recognising deferred tax on temporary differences arising from, in the main, the Group’s property portfolio.
C. Other derivative financial assets – under IFRS the fair value of the foreign exchange contracts in existence but not
settled have been included on the statement of financial position. Included within current liabilities is £189,000 which
has resulted in a reduction in profit for the year recognised in the income statement of £311,000 after the release of the
opening position of £121,000.
D. Provisions – under UK GAAP all provisions were included as a non-current liability. Under IFRS a provision for
£3,167,000 is considered to be due within one year and is included as due within current liabilities. There is no change
in profit for the year.
E. Trade and other payables – as a result of the transfer to IFRS the Group has reclassified its holiday pay accrual of
£190,000 from provisions. There is no change in profit for the year.
F. Trade and other payables – under UK GAAP the Group has recognised rent free periods on operating leases within
trade and other payables and has released this through to the income statement over the period up to the first break
clause. Under IFRS the release period is required to be the term of the lease. This has resulted in an increase in trade
and other payables of £2,443,000 and a reduction in the amount released to the income statement by £496,000.
G. Defined benefit pension schemes/finance income/finance expense – under IFRS the expected return of assets of
pension scheme assets recognised is based upon the discount rate which differs to the treatment under UK GAAP. As a
result an additional charge of £973,000 has been made within the income statement and a corresponding reduction has
been made within other comprehensive income. The associated deferred tax movement of £224,000 has reduced the
value of other comprehensive income and has increased income tax expenses within the income tax expense.
Under UK GAAP the other finance income, which relates through to the expected return on pensions assets less the in-
terest cost on pension liabilities, is included separately on the face of the income statement. Under IFRS this is included
net within either finance income or finance expense.
This has resulted in an increase in the finance expense of £439,000 and a reduction in other finance income of
£439,000. There is no profit effect.
H. Defined benefit pension schemes – under IFRS the deferred tax asset/(liability) in relation to the employee benefit
pension scheme is not netted off against the employee benefit liability/(asset).
Instead it is included within the deferred tax balance. This has resulted in an increase to the employee benefit liability
within non-current liabilities and an increase in the deferred tax asset within non-current assets of £1,476,000.
Statement of cash-flows – the transition from UK GAAP to IFRS has not had a material impact on the statement of
cash-flows.
72
Shoe Zone plc Annual Report and Accounts 2014
Company statement of financial position as at 4 October
2014
Fixed assets
Investments
Current assets
Debtors
Creditors: amounts falling due within one year
Net current liabilities
Net assets
Capital and reserves
Called up share capital
Merger reserve
Profit and loss account
Total shareholders’ funds
Note
4 October
2014
£’000
2
3
4
5
6
6
70,586
70,586
7
7
(986)
(979)
69,607
500
586
68,521
69,607
The financial statements were approved and authorised for issue by the Board of Directors.
Anthony Smith
Chief Executive Officer
23 January 2015
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73
Shoe Zone plc Annual Report and Accounts 2014
Notes to the company financial statements for the 52 weeks
ended 4 October 2014 (continued)
1. Accounting policies
Basis of preparation
The Company’s financial period is the period from incorporation on 23 May 2014 to 4 October 2014. The financial
statements are prepared on the going concern basis, under the historical cost convention and in accordance with the
Companies Act 2006 and applicable accounting standards in the United Kingdom.
The Company has taken advantage of the exemption contained in Section 408(4) of the Companies Act 2006 from
presenting its own profit and loss accounts. The loss dealt with in the accounts of the Company was £978,900.
The company has elected to adopt early the new accounting framework issued by the Financial Reporting Council. The
company meets the definition of a qualifying entity under FRS 100 ‘Application of Financial Reporting Requirements’.
Accordingly, in the 52 weeks ended 4 October 2014, the company has adopted FRS 101 ‘Reduced Disclosure Framework’
and has ceased to apply all UK Accounting Standards issued prior to FRS 100. Therefore the recognition and measurement
requirements of EU-adopted IFRS have been applied, with amendments where necessary in order to comply with the
Companies Act 2006 and The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008
(SI 2008/410) as these are Companies Act 2006 accounts.
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard in
relation to the presentation of a cash flow statement and related party transactions.
Accounting policies have been applied consistently throughout the period.
Investments
Investments held as fixed assets are stated at cost, less any provision for impairment.
Share-based payments
Share-based payments are measured at fair value at the date of grant.
The charge relating to grants to employees of the Company is recognised on a straight-line basis as an expense in the profit
and loss account, spread over the vesting period, based on the Company’s estimate of the shares that will eventually vest
and adjusted for the effect of nonmarket-based vesting conditions.
74
Shoe Zone plc Annual Report and Accounts 2014
Notes to the company financial statements for the 52 weeks
ended 4 October 2014 (continued)
2. Fixed Asset Investments
Cost at reorganisation prior to flotation
4 October
2014
£’000
70,586
The principal subsidiaries of the company, all of which have been included in the consolidated financial statements,
are as follows:
Name of investment
Place of
incorporation
Principal activity
Ownership
Shoe Zone Retail Limited
England & Wales
Trading company
100% owned by company
Castle Acres Development Limited
England & Wales
Property holding company
100% owned by company
Zone Property Limited
England & Wales
Property holding company
100% owned by company
Shoe Zone (Ireland) Limited
England & Wales
Non-trading company
100% owned by Shoe Zone
Retail Limited
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Shoe Zone plc Annual Report and Accounts 2014
Notes to the company financial statements for the 52 weeks
ended 4 October 2014 (continued)
3. Debtors
Prepayments
4. Creditors: amounts falling due within one year
Amounts owing to group undertakings
Accruals
5. Share capital
Allotted, called up and fully paid:
50,000,0000 ordinary shares of 1p each
Details of share capital transactions are provided in note 21 to the consolidated financial statements.
6. Reserves
4 October 2014
£’000
7
4 October 2014
£’000
982
4
986
4 October 2014
£’000
500
500
At 5 October 2013
Loss for the financial period
Capital reduction
Premium paid on share exchange agreement
At 4 October 2014
7. Related party transactions
Merger reserve
Profit and loss
account
£’000
-
-
-
586
586
£’000
-
(979)
69,500
-
68,521
Transactions between the Company and its 100% owned subsidiaries, which are related parties of the Company, are
not disclosed in this note due to the advantage being taken of the exemption provided by FRS 101 ‘Reduced Disclosure
Framework’. There have been no other related party transactions during the year.
76
Shoe Zone plc Annual Report and Accounts 2014
Directors and Advisers
Directors
I A Filby (Non-Executive Chairman)
A E P Smith (Chief Executive Officer)
J C P Smith (Chief Operating Officer)
N J Davis (Chief Financial Officer)
C J Caminada (Non-Executive Director)
J W Sharman (Non-Executive Director)
Secretary
N J Davis
Registered office
Haramead Business Centre
Humberstone Road
Leicester
LE1 2LH
Auditors
BDO LLP
Pannell House
159 Charles Street
Leicester
LE1 1LD
Bankers
HSBC Bank plc
2-6 Gallowtree Gate
Leicester
LE1 1DA
Registrars
Capita Asset Services Limited
The Registry
34 Beckenham Road
Kent
BR3 4TU
Solicitors
Dickson Minto W.S.
Broadgate Tower
20 Primrose Street
London
EC2A 2EW
Corporate Brokers
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
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77
Shoe Zone plc Annual Report and Accounts 2014
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting
of Shoe Zone plc (the ‘Company’) will be held at
its registered office at Haramead Business Centre,
Humberstone Road, Leicester, Leicestershire LE1 2LH
on Friday, 27 February 2015 at 11a.m. to consider and, if
thought fit, pass the resolutions set out below. Resolutions
1 to 12 will be proposed as ordinary resolutions and
Resolution 13 will be proposed as a special resolution.
1. To receive and adopt the Company’s annual accounts
for the financial period ended 4 October 2014 and the
associated reports of the Directors of the Company and
the auditors of the Company.
2. To declare a final dividend of 3.6 pence per ordinary
share for the financial period ended 4 October 2014.
3. To re-elect Ian Filby as a Director.
4. To re-elect Anthony Smith as a Director.
5. To re-elect Charles Smith as a Director.
6. To re-elect Nick Davis as a Director.
7. To re-elect Charlie Caminada as a Director.
8. To re-elect Jeremy Sharman as a Director.
9. To re-appoint BDO LLP as auditors of the
Company to hold office from the conclusion of the annual
general meeting until the conclusion of the annual general
meeting of the Company to be held in 2016.
10. To authorise the Directors of the Company to
determine the remuneration of BDO LLP as auditors of the
Company.
11. That, in accordance with section 366 of the
Companies Act 2006 (the ‘Act’), the Company and its
subsidiaries be and are hereby authorised, in aggregate,
to:
(a) make political donations to political parties and/or
independent election candidates, not exceeding
£50,000.00 in total;
(b) make political donations to political organisations
other than political parties, not exceeding
£50,000.00 in total; and
incur political expenditure, not exceeding
£50,000.00 in total,
(c)
such authority to expire on the earlier of 31 March 2016
and the conclusion of the annual general meeting of the
Company to be held in 2016. For the purposes of this
resolution the terms ‘political donation’, ‘political parties’,
‘independent election candidates’, ‘political organisation’
and ‘political expenditure’ have the meanings given by
sections 363 to 365 of the Act.
12. That, in substitution for any existing authority but
without prejudice to the exercise of any such authority
prior to the date of the passing of this resolution, the
Directors of the Company be and are hereby generally
and unconditionally authorised pursuant to and in
accordance with section 551 of the Companies Act 2006
(the ‘Act’) to exercise all the powers of the Company
to allot shares in the Company and to grant rights to
subscribe for, or to convert any security into, shares in the
Company:
(a) up to an aggregate nominal amount of
£166,666.00; and
(b) up to an aggregate nominal amount of
£333,332.00 (such amount to be reduced by any
shares allotted, or rights to subscribe for or to
convert any security into shares granted, under
paragraph (a) of this resolution) in connection
with an offer by way of a rights issue:
(i) to holders of ordinary shares of £0.01 each
in the capital of the Company in proportion
(as nearly as may be practicable) to their
existing holdings; and
(ii) to holders of other equity securities as
required by the rights of those securities
or as the Directors otherwise consider
necessary or permitted by the rights of
those securities, and so that the Directors
may impose any limits or restrictions
and make any arrangements which they
consider necessary or appropriate to deal
with treasury shares, fractional entitlements
or securities represented by depositary
receipts, record dates, legal, regulatory or
practical problems in, or under the laws
of, any territory or the requirements of any
regulatory body or stock exchange or any
other matter,
provided that this authority shall expire on the earlier of
31 March 2016 and the conclusion of the annual general
meeting of the Company to be held in 2016, save that
the Company may before such expiry make an offer or
enter into an agreement which would or might require
78
Shoe Zone plc Annual Report and Accounts 2014
Notice of Annual General Meeting (continued)
shares to be allotted, or rights to subscribe for or to
convert securities into shares to be granted, after such
expiry and the Directors may allot shares or grant such
rights in pursuance of such an offer or agreement as if the
authority conferred hereby had not expired.
13. That, subject to the passing of resolution 12 proposed
at the annual general meeting of the Company convened
for 27 February 2015 (‘Resolution 12’) and in substitution
for any existing authority but without prejudice to the
exercise of any such authority prior to the date of the
passing of this resolution, the Directors of the Company
be and are hereby generally empowered pursuant to
sections 570 and 573 of the Companies Act 2006 (the
‘Act’) to allot equity securities (within the meaning of
section 560(1) of the Act) (including the grant of rights to
subscribe for, or to convert any securities into, ordinary
shares of £0.01 each in the capital of the Company
(‘Ordinary Shares’) for cash pursuant to the authorities
conferred by Resolution 12 and/or by way of a sale of
treasury shares (within the meaning of section 560(3) of
the Act), as if section 561(1) of the Act did not apply to any
such allotment or sale, provided that this power shall be
limited to:
(a)
the allotment of equity securities and the sale of
treasury shares for cash in connection with an
offer of, or invitation to apply for, equity securities
(but in the case of the authority granted under
paragraph (b) of Resolution 12, by way of a rights
issue only):
(i) to holders of Ordinary Shares in proportion
(as nearly as may be practicable) to their
existing holdings; and
(ii) to holders of other equity securities as
required by the rights of those securities
or as the Directors otherwise consider
necessary or permitted by the rights of
those securities,
and so that the Directors may impose
any limits or restrictions and make any
arrangements which they consider
necessary or appropriate to deal with any
treasury shares, fractional entitlements,
record dates, legal, regulatory or practical
problems in, or under the laws of, any
territory or the requirements of any
regulatory body or stock exchange or any
other matter (including any such problems
arising by virtue of equity securities being
represented by depositary receipts); and
(b)
the allotment of equity securities and the sale of
treasury shares (other than under paragraph (a)
of this resolution) up to an aggregate nominal
amount of £25,000.00,
and shall expire on the earlier of 31 March 2016 and
the conclusion of the annual general meeting of the
Company to be held in 2016, save that the Company
may before such expiry make an offer or enter into an
agreement which would or might require equity securities
to be allotted after such expiry and the Directors may
allot equity securities in pursuance of such an offer or
agreement as if the power conferred hereby had not
expired.
By order of the Board
Nick Davis
Company Secretary
23 January 2015
Registered Office
Haramead Business Centre
Humberstone Road
Leicester
Leicestershire
LE1 2LH
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Shoe Zone plc Annual Report and Accounts 2014
Notice of Annual General Meeting (continued)
Notes
1. Attending the Annual General Meeting in person
If you wish to attend the Annual General Meeting in
person, you should arrive at the venue for the Annual
General Meeting in good time to allow your attendance
to be registered. It is advisable to have some form of
identification with you as you may be asked to provide
evidence of your identity to the Company’s registrar,
Capita Asset Services Limited (the ‘Registrar’), prior to
being admitted to the Annual General Meeting.
2. Appointment of proxies
Members are entitled to appoint one or more proxies
to exercise all or any of their rights to attend, speak
and vote at the Annual General Meeting. A proxy need
not be a member of the Company but must attend the
Annual General Meeting to represent a member. To be
validly appointed, a proxy must be appointed using the
procedures set out in these notes and in the notes to
the accompanying Form of Proxy. If members wish their
proxy to speak on their behalf at the meeting, members
will need to appoint their own choice of proxy (not the
Chairman of the Annual General Meeting) and give their
instructions directly to them.
Members can only appoint more than one proxy where
each proxy is appointed to exercise rights attached to
different shares. Members cannot appoint more than
one proxy to exercise the rights attached to the same
share(s). If a member wishes to appoint more than one
proxy, they should contact the Registrar at The Registry,
34 Beckenham Road, Beckenham, Kent BR3 4ZF or by
telephone on 0871 664 0321. Calls cost 10p per minute
from a BT landline. Other network providers’ costs may
vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time)
Monday to Friday. Different charges may apply to calls
from mobile telephones and calls may be recorded and
randomly monitored for security and training purposes.
A member may instruct their proxy to abstain from voting
on any resolution to be considered at the Annual General
Meeting by marking the ‘Vote Withheld’ option when
appointing their proxy. It should be noted that a vote
withheld is not a vote in law and will not be counted in the
calculation of the proportion of votes ‘For’ or ‘Against’ the
resolution.
The appointment of a proxy will not prevent a member
from attending the Annual General Meeting and voting in
person if they wish.
3. Appointment of a proxy using a Form of Proxy
A Form of Proxy for use in connection with the Annual
General Meeting is enclosed. To be valid, a Form of
Proxy or other instrument appointing a proxy, together
with any power of attorney or other authority under which
it is signed or a certified copy thereof, must be received
by post or (during normal business hours only) by hand
by the Registrar at The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4ZF no later than 48 hours
before the time of the Annual General Meeting or any
adjournment of that meeting.
If you do not have a Form of Proxy and believe that you
should have one, or you require additional Forms of
Proxy, please contact the Registrar.
4. Appointment of a proxy through CREST
CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment
service may do so by using the procedures described in
the CREST Manual and by logging on to the following
website: www.euroclear.com/CREST. CREST personal
members or other CREST sponsored members, and
those CREST members who have appointed (a) voting
service provider(s), should refer to their CREST sponsor
or voting service provider(s) who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made
using the CREST service to be valid, the appropriate
CREST message (a ‘CREST Proxy Instruction’) must be
properly authenticated in accordance with Euroclear UK
& Ireland Limited’s specifications and must contain the
information required for such instruction, as described
in the CREST Manual. The message, regardless of
whether it constitutes the appointment of a proxy, or is
an amendment to the instruction given to a previously
appointed proxy must, in order to be valid, be transmitted
so as to be received by the Registrar (ID RA10) no later
than 48 hours before the time of the Annual General
Meeting or any adjournment of that meeting. For this
purpose, the time of receipt will be taken to be the time
(as determined by the timestamp applied to the message
by the CREST Application Host) from which the Registrar
is able to retrieve the message by enquiry to CREST in
the manner prescribed by CREST. After this time any
change of instructions to proxies appointed through
CREST should be communicated to the appointee
through other means.
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Shoe Zone plc Annual Report and Accounts 2014
Notice of Annual General Meeting (continued)
CREST members and, where applicable, their CREST
sponsors or voting service provider(s) should note that
Euroclear UK & Ireland Limited does not make available
special procedures in CREST for any particular message.
Normal system timings and limitations will, therefore,
apply in relation to the input of CREST Proxy Instructions.
adjourned, at 6.00 p.m. on the day two days (excluding
non-working days) prior to the adjourned meeting).
Changes to the register of members after the relevant
deadline will be disregarded in determining the rights
of any person to attend and vote at the Annual General
Meeting.
8. Voting rights
As at 31 December 2014 the Company’s issued share
capital consisted of 50,000,000 ordinary shares of £0.01
each carrying one vote each. No shares are held by the
Company in treasury. Therefore, the total voting rights in
the Company as at 31 December 2014 were 50,000,000
votes.
It is the responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed (a)
voting service provider(s), to procure that their CREST
sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message
is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and,
where applicable, their CREST sponsors or voting system
providers are referred, in particular, to those sections of
the CREST Manual concerning practical limitations of the
CREST system and timings.
The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001
(as amended).
5. Appointment of a proxy by joint holders
In the case of joint holders, where more than one of the
joint holders purports to appoint one or more proxies, only
the purported appointment submitted by the most senior
holder will be accepted. Seniority shall be determined by
the order in which the names of the joint holders stand in
the Company’s register of members in respect of the joint
holding.
6. Corporate representatives
Any corporation which is a member can appoint one
or more corporate representatives. Members can only
appoint more than one corporate representative where
each corporate representative is appointed to exercise
rights attached to different shares. Members cannot
appoint more than one corporate representative to
exercise the rights attached to the same share(s).
7. Entitlement to attend and vote
To be entitled to attend and vote at the Annual General
Meeting (and for the purpose of determining the votes
they may cast), members must be registered in the
Company’s register of members at 6.00 p.m. on 25
February 2015 (or, if the Annual General Meeting is
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