2016
Annual Report
& Accounts
This document is important and requires your
immediate attention. If you are in any doubt as to
the action you should take, you should contact an
appropriate independent adviser authorised under
the Financial Services and Markets Act 2000 (as
amended) immediately. If you have sold or otherwise
transferred all of your shares in Shoe Zone plc you
should forward this document to the purchaser or
transferee, or to the stockbroker, bank or other agent
through whom the sale or transfer was affected for
transmission to the purchaser or transferee.
Shoe Zone is the leading UK Specialist Value Footwear Retailer
“In August 2016, months of planning and preparation came to fruition as
we opened our first 'Big Box' store, going on to open three by the end of
October. The 'Big Box' stores stock the full Shoe Zone range alongside
some of the best known footwear brands with a new concept store
environment and updated brand image.”
- Nick Davis, C.E.O.
Shoe Zone Big Box in Durham, following the launch of a new concept store 26 August 2016
Contents
Strategic Report
Financial Highlights
Chief Executive’s 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
2
3
7
8
9
11
12
14
18
22
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
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Shareholder Information
Directors and Advisers
Notice of Annual General Meeting
23
24
25
26
27
28
64
65
66
69
70
1
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Financial Highlights
Revenue
£159.8m
(2015: £166.8m)¹
Profit before tax
£10.3m
(2015: £10.1m)
Net cash
£15.0m
(2015: £14.2m)
Product
gross margin
62.0%
(2015: 61.5%)
Earnings
per share
16.9p
(2015: 16.2p)
Interim dividend
3.3p
Final dividend
6.8p
Total dividend
10.1p
Special dividend
8.0p
¹ Reduction due to planned closure of unprofitable stores and difficult trading conditions in H1
2
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Chief Executive’s Report
Introduction
The 2016 financial year was a positive year for Shoe Zone
given the challenging retail environment we faced. We have
continued to make good progress on our core strategy while
maintaining our robust cost control and effective property
portfolio management
The business delivered revenue of £159.8m (2016:
£166.8m) and continues to generate cash effectively from a
sound financial position and a debt free balance sheet. Profit
before tax increased by 1.1% to £10.3m (2015: £10.1m)
while earnings per share increased 4.3% to 16.9p (2015:
16.2p).
Dividends
Following another successful year of cash generation, the
business closed with £15.0m of cash. As a result, the Board
is proposing two dividends to be paid: a final dividend of 6.8p
per share (2015: 6.5p), resulting in a total dividend for the
year of 10.1p (2015: 9.7p) per share, and a special dividend
of 8.0p per share (2015: 6.0p). The total distribution for the
year of 18.1p (2015: 15.7p) represents an increase of 15.3%
over the previous year.
The aim of the special dividend is to distribute any surplus
cash back to shareholders. We continue to believe the
business can operate on an opening/closing cash position
of £11m and any excess above this level will be paid out
to shareholders unless there is a change in business
requirement.
The dividends will be paid to shareholders on the register on
24 February 2017, payable on 15 March 2017 if approved at
the Annual General Meeting to be held on 2 March 2017. The
shares will be ex-dividend on 23 February 2017.
Product
We remain committed to offering our customers the best
value possible and have maintained key price points for
our Core Value Lines despite difficult currency headwinds.
Along with our low prices we have increased the value
proposition by extending the number of lines in multi-buy
deals (e.g. ‘2 for £8’). This, along with range enhancements
has improved average transaction value by 5% during the
year. We have continued to increase our direct sourcing and
as a result, footwear orders placed directly with overseas
factories increased to 72.2% (2015: 62.1%) of total footwear
orders. Working closely with our source of manufacture has
helped maintain gross product margins as well as improving
communication and control across the supply chain.
3
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Chief Executive’s Report (continued)
Non-footwear ranges including handbags, school bags,
lunch boxes, purses and accessories continue to grow with
sales from non-footwear up 26% on the previous year.
Our ‘right price, first time’ strategy which helps control the
amount of markdown value as a percentage of turnover,
continues to ensure we are industry leaders in driving low
markdown. This year was no exception in achieving a level of
7.1%. (2015: 6.3%).
In July 2016 we appointed a new Brands Manager to
develop a range of brands to complement the existing Shoe
Zone range both online and in our new ‘Big Box’ stores.
Our trend of falling rents continues (albeit at a slower pace)
with rents at the lease renewal date in the 12 months falling
by 17% (2015: 27.2%). We expect that rent reductions will
continue to be realised and will be complemented with a
reduction in rates payable following the government’s review
of business rates.
The business continues to benefit from a flexible portfolio
with an average lease length of only 2.6 years. Our lease
structure gives us significant opportunity to respond to
changes in shopping habits in any retail location.
As part of our ongoing investment in updating our store
portfolio we have developed new store branding with a more
contemporary feel. The new modern logo will be rolled out
with future store refits and has already been adopted in all
instore and web marketing.
Project ‘Big Box’
Stores
We closed the year operating from 510 stores with 17 new
store openings (including 10 relocations). We completed
41 refits during the year, at a total capital expenditure of
£3.4m. We will continue to optimise our store portfolio and
close loss making stores to drive profitability. We believe
that approximately 500 stores is the right number for our
standard Shoe Zone offering.
We continue to drive profitability by opening larger Grade
1 stores and closing smaller Grade 3 stores which is
demonstrated in the following table.
Stores at
1 October
2016
Stores at
3 October
2015
Stores at
4 October
2014
Big Box
Grade 1 (large)
Grade 2 (medium)
Grade 3 (small)
TOTAL
2
284
110
114
510
-
231
168
136
535
-
203
178
164
545
We have had a very encouraging start to the launch of our
new trial Project ‘Big Box’. During August and September
we opened two stores, Launceston (Cornwall) and Durham,
followed by Kirkstall Bridge (Leeds) post the period end
in October. These stores on average are twice the size of
a Grade 1 store and benefit from an enhanced branded
product range, driving a higher average transaction value in
an enhanced shopping environment. The three trial stores
are all located out of town and therefore this concept creates
significant opportunity for Shoe Zone in this space with all
future openings being out of town location or in larger high
street units. This new growth opportunity is a key strategic
development for the business, broadening the reach of the
Shoe Zone brand and enabling us to improve our market
share.
4
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Chief Executive’s Report (continued)
E-commerce
In the summer of 2016, the Group’s e-commerce operations
were moved to a dedicated online distribution zone in the
Leicester distribution centre. This segregated area now
holds the majority of online stock with close links to online
administration and customer services. This development
has improved the customer focus creating a cleaner
environment with stronger quality control, more accurate
stock availability with faster processing times. It has also
improved efficiency in the main distribution centre that can
now focus on servicing the store network.
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
5.9%
4.4%
5.6%
5.3%
3.9%
3.6%
3.4%
2.9%
2.6%
2016
2015
2014
Desktop
Tablet
Mobile
Our e-commerce strategy has always been based on driving
profitability while not focusing on turnover growth. On this
basis we have restricted the sale of lower price product on
our Amazon and Ebay platforms that struggled to absorb
postage and commission costs. This has slowed revenue
growth across these channels but resulted in improved cash
margin achieved. Overall multichannel revenue is up 11% on
the prior year.
Employees and Charity
As previously announced, during 2016 Ian Filby stepped
down as Non-Executive Chairman to enable Anthony Smith,
the former CEO, to move to the role of Executive Chairman.
Anthony has led Shoe Zone for 20 years through a series
of acquisitions and the Company’s IPO in 2014. Anthony
will continue to have a hands-on role in the Company and
will have particular responsibility for the property portfolio
and strategy. Following Anthony’s appointment, Nick Davis
was appointed CEO. Nick has been with the business for 13
years and was the natural successor to drive the Company’s
growth plans. Jeremy Sharman became Non-Executive
Deputy Chairman. Jeremy had been a Non-Executive
Director since the IPO and will chair the Audit committee
and sit on the Remuneration committee. Jonathan Fearn
was appointed as Finance Director. Jonathan has extensive
experience in strategic and commercial finance having
worked for Celesio Group (UK) (formally LloydsPharmacy)
since 2002.
We are incredibly proud of all of our team’s effort that has
gone in to achieve these results and want to thank them
for their ongoing commitment and hard work. We are very
thankful for all of the creativity and enthusiasm that has
resulted in us collectively raising approximately £150,000 for
our chosen charity BBC Children in Need.
shoezone.com has had another successful year with a
significant shift to selling through mobile devices. Mobile and
tablet visits now represent 74.9% (2015: 66%) of all website
visits.
Customer acquisition is a key strategic objective for our
online team and our database has grown by 12% during
the year even after a refining process was undertaken to
concentrate on active users. We have capitalised on this
by sending 12m more emails with greater relevance. Email
campaign sales increased by 36% on the prior year and now
account for 12% of site revenue.
Our conversion rates continue to increase across all devices
and we achieved 4.29% over the full year (2015: 4.06%).
Instilling a ‘mobile first’ design and implementation ethos
has grown mobile conversion to 3.39% (2015: 2.88%).
Conversion rates on mobile phones are always likely to be
lower than desktops, but we believe we can continue to
narrow the gap. The following chart shows the conversion
rates (the percentage of people visiting our website that
place an order) for customers shopping using different
devices:
5
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Chief Executive’s Report (continued)
Current trading and Outlook
The outlook for consumer spending looks challenging with
the current difficult economic conditions likely to continue.
Despite this, we are well positioned given our strong value
proposition that has proven to be robust in challenging
market conditions. We are exposed to fluctuations in the
value of sterling but have put significant work into managing
the risk through foreign currency hedging and re-sourcing.
While we anticipate this pressure may be here for some
time we expect to broadly maintain our gross margin
percentages.
We have continued to manage the store portfolio having
opened six new stores since the year end and refitted four.
Early signs are that the changes we have made to store
rebranding has been favourably received with customers.
There are currently five new stores with provisional opening
dates and a further 39 full refits planned for the remainder of
the year.
We plan to open a further six Big Box stores in 2017 at
various locations across the UK. These stores will be a mix
of out of town and high street locations but will all operate
with the new contemporary format, offering a good brand
mix, extended product range and broad customer appeal. If
the trial continues to be a success through 2017 we will look
to accelerate the opening programme of these stores into
2018 and beyond.
We expect the business will continue to convert cash
effectively but anticipate a small increase in both capital
expenditure and contribution to defined benefit pension
schemes. We anticipate spending an additional £1.0m
more in 2017 on store opening, refits and head office
improvements. We are currently contributing £600k to one
of our pension schemes and are in discussions around the
ongoing funding with the trustees of our two schemes.
Our multichannel offering has had some exciting
developments since the year end and we are now trading
on Amazon marketplaces in France, Germany, Spain and
Italy. We plan to continue to grow into new international
online marketplaces throughout 2017. Following a Google
algorithm change in September we have experienced a
step up in organic search on shoezone.com that is also
very encouraging. Further online growth in 2017 will come
from investment in ‘Personalisation’, implementing new
technology to enable us to enhance our conversion rate
optimisation, giving our customer a more personal shopping
experience.
Shoe Zone has made a solid start to the year and trading
is in line with expectations. We are making good progress
against our strategic objectives and the board remains
positive about the outlook for the Group for the remainder of
the year.
6
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Financial Review
In the 52 weeks to 1 October 2016, Group profit before tax
(‘PBT’) increased to £10.3m (2015: £10.1 m), an increase of
1.1% on last year. PBT margin also increased to 6.4% (2015:
6.1%).
value being placed on the liabilities of the scheme. The
actuarial valuations for the schemes are currently in progress
and the company is in discussions with the trustees on the
options for the future funding of these schemes.
Revenues of £159.8m (2015: £166.8m) declined by 4.2%
due to the planned closure of loss making stores and as
a result of difficult trading conditions in the first half. Store
numbers reduced by a net 25 branches to 510 at the year
end (2015: 10 branches closed leaving a total of 535).
Multi-channel revenues (excluding store orders) have
continued to grow achieving 11.4% during the year (2015:
39.4%), and have developed to 3.9% of total sales (2015:
3.3%).
Product gross margin strengthened to 62.0% (2015:
61.5%) reflecting further increases in direct sourcing and
management of write downs.
Operating expenses increased to £17.4m (2015: £17.0m).
Administration expenses, which increased by £0.7m largely
due to the impact of unhedged foreign exchange differences
were, offset by continuing efficiencies in distribution costs.
The effective rate of corporation tax for the year was 21.8%
on PBT (2015: 24.4%).
Earnings per share increased 4.3% to 16.9p (2015: 16.2p).
During the year we opened 17 new stores and completed 41
refits, spending £3.4m on capital expenditure.
The Group supports two defined benefit schemes. The
accounting valuation as at 1 October 2016 indicates a
deterioration of £7.9m within the year (before deferred tax).
This reflects an increase in the fair value of assets by £7.1m
offset by an increase in the present value of the funded
obligations of £15.0m which is due to significant falls in
corporate bond yields over the year resulting in a higher
The Company continues to utilise a formal financial
derivative hedging policy. The Group uses derivative financial
instruments, typically forward exchange contracts, to hedge
the risk of future foreign currency fluctuations. The hedging
policy enables the effective portion of changes in the fair
value of designated derivatives to be recognised in other
comprehensive income. Historically these movements would
have been recognised in the income statement. Further
information can be seen in accounting policies note 1 of
the financial statements. The Group closed the year with
a derivative financial asset of £0.7m; all of which has been
involved in a formally designated hedge.
The business has a debt free financial structure and
generated £13.9m cash from operations, a year on year
increase of £2.3m resulting in a net cash position of £15.0m
(2015: £14.2m) at the year end, underpinning a strong
balance sheet. The Group’s current bank facilities consist
of an on demand overdraft facility of £5.0m with HSBC. This
facility has not been used within the year.
The Board is proposing two dividends to be paid; a final
dividend of 6.8p (2015: 6.5p) per share and a special
dividend of 8.0p (2015: 6.0p) per share. The special dividend
is being proposed as the business has £4.1m of excess
cash, £11m is currently deemed to be the maximum cash
the business requires to operate effectively. The dividends
will be paid to shareholders on the register on 24 February
2017, payable on 15 March 2017 if approved at the Annual
General Meeting to be held on 2 March 2017.
Nick Davis
Chief Executive Officer
10 January 2017
7
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information 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. Online sales exclude orders
placed in store.
The online participation increased by
60 basis points to 3.9% (2015: 3.3%).
This performance reflects the growth
of our offering on Ebay and Amazon.
Product Gross Profit expressed as a
percentage of revenue.
Cash held by the Group at the period
end.
The Product Gross Margin increased
by 50 basis points to 62.0% (2015:
61.5%) reflecting the continued
success of increasing our direct
sourcing.
We finished the year with a healthy
cash balance of £15.0m (2015:
£14.2m).
3.9%
3.3%
62.0%
61.3%
61.5%
2.3%
14.2m
15.0m
9.1m
2014 2015 2016
2014 2015 2016
2014 2015 2016
Earnings per
Share Growth
Rental % of Turnover
The percentage movement in Earnings
per share.
Store rent as a percentage of turnover.
Earnings per Share made a significant
improvement this year despite the fall
in turnover. EPS for the year is 16.9p
(2015:16.2p).
16.9p
The rental % of turnover has reduced
from 13.0% to 12.9% reflecting the
ongoing focus on rent negotiations.
16.1p
16.2p
13.9%
13.0%
12.9%
2014 2015 2016
2014 2015 2016
8
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 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 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.
In recent months the UK Government has confirmed the aim
to pursue the exit of the UK from the EU. This has caused
some uncertainty in the both the equity and the currency
markets. Shoe Zone operates a hedging policy for US dollar
purchases which protects the business from this exposure in
the short term. It is unclear what the longer term impacts of
Brexit will be on the UK and international economies.
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.
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
and to a lesser extent 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
9
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Principal Risks and Uncertainties (continued)
standards and the burden of complying with a variety of
foreign laws and 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.
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. Reputable third party
antivirus, anitspam and web filtering software is in use and its
appropriateness regularly reviewed.
Loss of key operating site
Reliance on key personnel
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.
During the past year the Business Continuity Plan has been
refreshed and key employees briefed on their responsibilities
in the case of the unlikely scenario of disruption to the
Leicester premises. The business retains appropriate
insurance to mitigate the risk of such a loss.
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 was approved by the Board.
On behalf of the Board
N J Davis
Chief Executive Officer
Date: 10 January 2017
10
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Corporate Governance Statement
Principles of Corporate Governance
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.
Appointments to the Board and
re-election
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’). The Articles require that each Director
retires and seeks re-election by the members every three
years. The UK Code recommends that directors should be
subject to annual re-election by members and, in line with
the Company’s intention to apply certain principles of the UK
Code, each Director will stand for re-election at each of the
Company’s AGMs.
The Board
The Board comprises three Executive Directors (including
the Chairman) and three Non-Executive Directors. 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;
ρ
approval of corporate strategy;
ρ
approval of income, expenditure and capital budgets;
ρ
ρ 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;
ρ
ρ determining changes to the structure and
ρ
ρ
composition of the Board;
ρ determining remuneration policy;
ρ
approval of communications with shareholders and
the market.
Details of each of the Directors is given in their biographies
on pages 12 and 13.
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 Jeremy Sharman. 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.
11
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Board of Directors
Anthony Smith
Executive Chairman
Nick Davis
Chief Executive Officer
Charles Smith
Chief Operating 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 was appointed Executive
Chairman in June 2016. 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. Nick
became Financial Controller of Shoe
Zone in 2005 and then joined the
Board as Finance Director in 2006.
As Chief Financial Officer in 2014 he
successfully joint led the company’s
IPO process and has recently in 2016
been appointed as Chief Executive
Officer. 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 three charities.
Charles joined Shoe Zone in 1998
and quickly progressed through Store
Manager and Area Manager, joining 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 and
HR. 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.
12
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Board of Directors (continued)
Jeremy Sharman
Non-Executive Deputy Chairman
Charlie Caminada
Non-Executive Director
Malcolm Collins
Non-Executive Director
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.
Charlie has over 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.
Malcolm Collins joined the Board as a
Non-Executive Director in June 2016.
Malcolm has extensive experience in
retail, most recently as Group Buying
and Design Director for footwear and
accessories at New Look. Malcolm
oversaw the group’s £550m footwear
division which he and his team grew
from a zero base to market leaders,
representing 30% of group turnover.
Prior to Malcolm’s 16 years at New
Look, he spent 23 years at the
international retailer, wholesaler and
manufacturer, Clarks Shoes. Malcolm
worked in a number of roles during his
career at Clarks, including 13 years as
Womens Footwear Buyer.
13
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Remuneration Report
This is the Company’s third Directors’ Remuneration Report
since it listed on AIM in May 2014.
The Committee consists of two Non-executive Directors.
Charlie Caminada is the Chairman and Jeremy Sharman 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:
ρ
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;
ρ obtain reliable, up-to-date information about
remuneration in other companies of comparable
scale and complexity and market practice generally;
ρ be exclusively responsible for selecting any
remuneration consultants who advise the Committee;
ρ
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;
ρ monitor the level and structure of remuneration
for senior management and note annually the
remuneration trends across the Group;
ρ
ρ
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;
ρ oversee any major change in employee benefit
structures throughout the Group;
ρ
agree the policy for authorising claims for expenses
from the Directors
14
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Remuneration Report (continued)
Directors and Directors’ interests
The Directors listed below all served throughout the year. Their interests in the issued share capital of the Company as at the
date of this report were as follows:
Number of ordinary shares
Percentage of issued share capital
Executive Directors
Anthony Smith
13,895,592 (1)
Nick Davis
15,700 (3)
Charles Smith
11,109,408 (2)
Non-Executive Directors
Ian Filby
Nil
Jeremy Sharman
234,375
Charlie Caminada
Malcolm Collins
15,625
Nil
(1)
(2)
(3)
The registered holder of these shares is Slawston Limited, an entity 100% owned by Anthony Smith
The registered holder of these shares is Sheepy Magna Limited, an entity 100% owned by Charles Smith
The registered holder of these shares is the wife of Nick Davis
27.79%
0.03%
22.22%
-
0.47%
0.03%
-
15
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Remuneration Report (continued)
Directors’ Remuneration
Directors’ remuneration information for those individuals who have served as a Director for the year are presented below.
The information presented in respect of these Directors is for the full financial year.
Individual Financial year
Basic Salary
and fees
£
Profit Share
(Bonus)
£
Benefits
£
Pension
Contribution
£
Total
£
Executive
Directors
Anthony Smith
Nick Davis
Charles Smith
Non–Executive
Directors
Ian Filby
Jeremy Sharman
Charlie Caminada
Malcolm Collins
Total
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
FY16
FY15
250,000
250,000
-
-
36,338
35,373
-
-
286,338
285,373
162,657
72,000
10,304
19,000
263,961
143,594
79,269
10,444
17,931
251,238
200,000
200,000
41,666
60,000
30,000
30,000
30,000
30,000
5,493
-
-
-
-
-
-
-
-
-
-
-
29,158
21,354
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
229,158
221,354
41,666
60,000
30,000
30,000
30,000
30,000
5,493
-
719,816
72,000
75,800
19,000
886,616
713,594
79,269
67,171
17,931
877,965
The Company currently does not operate any share option or share award schemes to its employees.
16
Anthony Smith
Nick Davis
Charles Smith
Jeremy Sharman
Charlie Caminada
Malcolm Collins
£
250,000
200,000
160,000
£
30,000
30,000
20,000
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Remuneration Report (continued)
Directors’ Service contracts and employment letters
The Executive Directors have entered into service agreements with the Company with effect from 1 May 2014. Salaries for
the current year are set out below:
Anthony Smith
Nick Davis
Charles Smith
£
250,000
200,000
160,000
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, Charles Smith, and 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:
Jeremy Sharman
Charlie Caminada
Malcolm Collins
£
30,000
30,000
20,000
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.
The remuneration report was approved by the Board.
On behalf of the Board
C J Caminada
Chairman of the Remuneration Committee
Date: 10 January 2017
17
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Directors’ Report for the 52 weeks ended
1 October 2016
The Directors present their Annual Report and audited
financial statements of the Company and the Group for the
52 weeks ended 1 October 2016.
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 is listed on the AIM market
of the London stock exchange.
Share Capital
Details of the share capital of the company are shown in note
20 of the financial statements. The company’s share capital
consists of one class of ordinary shares. As at 1 October
2016 there were 50,000,000 ordinary shares of £0.01 each.
The authorised share capital of the Company is unlimited.
At the AGM held on 4 March 2016, the board was
granted authority to allot shares in the company of up
to approximately a third of the Company’s issued share
capital. The board was also granted authority to allot further
shares having an aggregate nominal value of £166,666 in
connection with a pre-emptive rights issue (representing
approximately a further third of the Company’s issued share
capital). At the 2017 AGM, shareholders will be asked to
renew this authority for a further year.
Directors
The Directors who held office during the year and up to the
date of signing the financial statements were:
Ian Filby (Resigned 21 June 2016)
Anthony Smith
Nick Davis
Charles Smith
Jeremy Sharman
Charlie Caminada
Malcolm Collins (Appointed 21 June 2016)
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
The Group employed 3,561 (3 October 2015: 3,721)
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 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 customers 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 third AGM will be held on Thursday, 2
March 2017 at 11am at the Company’s registered office at
Haramead Business Centre, Humberstone Road, Leicester,
Leicestershire LE1 2LH. The Notice of AGM appears on
pages 70 to74.
Set out below is an explanation of certain of the resolutions
which will be proposed at the AGM.
18
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016
Directors’ Report for the 52 weeks ended 1 October
2016 (continued)
Dividends (resolutions 2 and 3)
Final Dividend
The Directors are proposing a final dividend of 6.8p
per ordinary share, amounting to a total dividend of
approximately £3.4m, 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.
Special Dividend
The Directors are also proposing a special dividend of
8.0p per ordinary share. In light of the continued strong
performance, cash generation and the robustness of
the Company’s balance sheet, the Directors consider it
appropriate to propose a cash return to shareholders of,
in aggregate, approximately £4m (in addition to the final
dividend proposed in resolution 2), which is structured as a
special dividend of 8.0p per ordinary share. The approval of
this resolution is not dependent on the approval of resolution
2, nor is the approval of resolution 2 dependent on the
approval of this resolution.
Re-election of Directors (resolutions 4 to 9)
The UK Corporate Governance Code recommends
that directors should be subject to annual re-election
by shareholders. In line with the Company’s intention to
apply certain principles of the UK Corporate Governance
Code, each Director will stand for election or re-election
(as the case maybe) at the AGM. 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.
Political donations (resolution 12)
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 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 period 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 13,14 and 15)
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 13 seeks shareholder authority
to allow the Directors to allot shares having an aggregate
nominal value of £166,666 representing approximately a
third of the Company’s issued share capital on 10 January
2017. In addition, shareholder authority is sought to
allot further shares having an aggregate nominal value of
£166,666 in connection with a pre-emptive rights issue
(representing approximately a further third of the Company’s
issued share capital on 10 January 2017).
Resolutions 14 and 15 concern 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 14 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 14 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 (being 2,500,000
shares). This is the equivalent to approximately 5% of the
issued share capital of the Company on 10 January 2017.
This resolution also disapplies statutory pre-emption rights
to the extent necessary to facilitate rights issues.
Resolution 15 is being proposed as a separate resolution
to authorise the Directors to allot a further 5% of issued
ordinary share capital of the Company otherwise than in
connection with a pre-emptive offer for the purposes of
financing a transaction (or refinancing within six months
of the transaction) which the Directors determine to be an
acquisition or other capital investment contemplated by
the Pre-emption Group’s Statement of Principles (the ‘Pre-
emption Group Principles’).
These disapplication authorities are in line with the authority
sought at last year’s AGM and with institutional shareholder
guidance, in particular the Pre-emption Group Principles.
The Pre-emption Group Principles were updated in March
2015 and provide the Company with greater flexibility to
undertake non-pre-emptive issuances in connection with
acquisitions and specified capital investments by allowing
19
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Directors’ Report for the 52 weeks ended 1 October
2016 (continued)
the Company to allot shares with a nominal value of up to
£25,000 (representing 5% of the issued share capital of
the Company as at 10 January 2017 for cash where that
allotment is in connection with an acquisition or specified
capital investment (as described in the Pre-emption Group
Principles) which is announced at the same time as the
allotment, or which has taken place in the preceding six-
month period and is disclosed in the announcement of that
allotment.
The Board does not intend to allot shares for cash on a
non-pre-emptive basis above 7.5% of the total issued share
capital of the Company over a rolling three-year period
without consulting shareholders first.
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 2018 or 31 March 2018, 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 11am on 28 February 2017.
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 auditor
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 auditor, 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 from the
Group’s bankers 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. Further information can be found in note 3 to
the financial statements.
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 April 2017. 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 and cash resources 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 2016Shoe Zone plc Annual Report and Accounts 2016 Directors’ Report for the 52 weeks ended 1 October
2016 (continued)
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.
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 auditor
Each Director in office at the date of approval of this report
has confirmed that:
ρ So far as he is aware, there is no relevant audit
information of which the Company’s auditor are
unaware; and
ρ 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 auditor are aware of
that information.
Approved by the Board and signed on its behalf:
N J Davis
Chief Executive Officer
Date: 10 January 2017
Events after the year-end
Between 1 October 2016 and the date of this report, there
have been no material events.
The Strategic Report, the Directors’ Report and the
Remuneration Report were approved by the Board.
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:
ρ
select suitable accounting policies and then apply
them consistently;
ρ make judgements and accounting estimates that are
ρ
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;
ρ 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
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.
21
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information 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 1 October 2016 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)
including FRS “101” ‘Reduced Disclosure Framework’.
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 auditor
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:
ρ
ρ
ρ
ρ
the financial statements give a true and fair view of
the state of the group’s and the parent company’s
affairs as at 1 October 2016 and of the group’s profit
for the 52 week 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:
ρ
ρ
ρ
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
ρ 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
Nottingham
Date: 10 January 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
22
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Consolidated Income Statement for the 52 weeks
ended 1 October 2016
Revenue
Cost of sales
Gross profit
Administration expenses
Distribution costs
Profit from operations
Finance income
Finance expense
Profit before taxation
Taxation
Profit attributable to equity holders of the parent
Earnings per share – basic and diluted
Note
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
1, 4, 8
5
5
5
9
9
10
26
159,834
(132,022)
27,812
(11,657)
(5,769)
10,386
56
(190)
10,252
(1,801)
8,451
166,819
(139,503)
27,316
(10,939)
(6,095)
10,282
44
(186)
10,140
(2,039)
8,101
16.90p
16.20p
23
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Consolidated Statement of Total Comprehensive
Income for the 52 weeks ended 1 October 2016
Note
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
Profit for the period
Items that will not be reclassified subsequently to
the income statement
Remeasurement losses on defined benefit pension scheme
Movement in deferred tax on pension schemes
Effect of change in deferred tax rate on opening liability
23
23
Items that will be reclassified subsequently to the
income statement
Fair value movements on cash flow hedges
Cash flow hedges recognised in inventories
Tax on cash flow hedges
Effect of change in deferred tax rate on opening liability
Other comprehensive expense for the period
Total comprehensive income for the period
attributable to equity holders of the parent
£’000
£’000
8,451
8,101
(8,190)
1,474
(362)
1,683
(1,667)
(3)
6
(7,059)
1,392
(499)
100
-
314
-
(63)
-
(148)
7,953
24
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Consolidated Statement of Financial Position as at
1 October 2016
Note
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
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
Provisions
Corporation tax liability
Total current liabilities
Non-current liabilities
Trade and other payables
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
Cash flow hedge reserve
Retained earnings
Total equity and reserves
12
19
13
14
15
24
16
17
16
17
23
19
20
18,661
1,441
20,102
30,075
7,204
651
15,046
52,976
73,078
(25,348)
(922)
(1,583)
(27,853)
(2,316)
(75)
(13,058)
-
(15,449)
(43,302)
29,776
500
2,662
270
26,344
29,776
18,688
-
18,688
29,172
8,148
553
14,221
52,094
70,782
(23,649)
(802)
(1,373)
(25,824)
(3,037)
(363)
(5,150)
(124)
(8,674)
(34,498)
36,284
500
2,662
251
32,871
36,284
The financial statements were approved and authorised for issue by the Board of Directors.
N J Davis
Chief Executive Officer
Date: 10 January 2017
Registered Number 08961190
25
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Consolidated Statement of Changes in Equity for the
52 weeks ended 1 October 2016
Share
capital
Merger
reserve
Cash flow
hedge
reserve
Retained
earnings
Total
£’000
£’000
£’000
£’000
£’000
At 4 October 2014
Profit for the period
Other comprehensive expense
Total comprehensive income for the period
Dividends paid during the year (note 11)
Total contributions by and distributions to
owners
500
2,662
-
-
-
-
-
-
-
-
-
-
-
-
251
251
-
-
28,569
31,731
8,101
(399)
7,702
8,101
(148)
7,953
(3,400)
(3,400)
(3,400)
(3,400)
At 3 October 2015
Profit for the period
Other comprehensive income
Total comprehensive income for the period
Dividends paid during the year (note 11)
Total contributions by and distributions to
owners
500
2,662
251
32,871
36,284
-
-
-
-
-
-
-
-
-
-
-
19
19
-
-
8,451
8,451
(7,078)
(7,059)
1,373
1,392
(7,900)
(7,900)
(7,900)
(7,900)
At 1 October 2016
500
2,662
270
26,344
29,776
Share capital comprises nominal value of shares subscribed for.
The merger reserve has arisen as a result of the application of merger accounting to the group reorganisation of 26 March
2014.
The cash flow hedge reserve comprises of gains/losses arising on the effective portion of hedging instruments and is carried
at fair value in a qualifying cash flow hedge.
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 2016Shoe Zone plc Annual Report and Accounts 2016 Consolidated Statement of Cash Flows for the 52 weeks
ended 1 October 2016
Note
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
Operating activities
Profit after taxation
Corporation tax
Finance income
Finance expense
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Loss on disposal of property, plant and equipment
Pension contributions paid
Decrease in trade and other receivables
Decrease in foreign exchange contract
(Increase)/Decrease in inventories
Increase/(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
Dividends paid during the year
Interest paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
11
Cash and cash equivalents at end of period
24
8,451
1,801
(56)
190
3,153
-
309
(472)
8,101
2,039
(44)
186
3,713
459
46
(300)
13,376
14,200
861
239
(1,224)
821
(168)
529
13,905
(2,041)
11,864
(3,195)
-
56
(3,139)
(7,900)
-
(7,900)
825
14,221
15,046
303
501
9
(3,148)
(264)
(2,599)
11,601
(1,538)
10,063
(1,879)
280
44
(1,555)
(3,400)
(1)
(3,401)
5,107
9,114
14,221
27
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Notes to the Financial Statements for the 52 weeks
ended 1 October 2016
1.
Accounting policies
General information
Shoe Zone plc (the ‘Company’) is a public company incorporated and domiciled 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 1 October 2016.
These consolidated 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 certain 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 1 October 2016. 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:
ρ The size of the company’s voting rights relative to both the size and dispersion of other parties who hold voting rights
ρ Substantive potential voting rights held by the company and by other parties
ρ Other contractual arrangements
ρ 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 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
1.
Accounting policies (continued)
Basis of consolidation (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
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.
There were no significant standards or interpretations effective for the first time for periods beginning on or after 4 October
2015. None of the amendments to Standards that are effective from that date had a significant effect on the Group’s financial
statements.
ρ Annual Improvements to IFRSs 2012–2014 Cycle
IFRS 15 Revenue from Contracts with Customers
ρ
IFRS 9 Financial Instruments
ρ
IFRS 16 Leases
ρ
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.
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
Fixtures and fittings
Motor vehicles
–
–
–
5-10 years on a straight line basis
5-10 years on a straight line basis
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.
29
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
1.
Accounting policies (continued)
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 interest and capital. 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.
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 in cost of sales, 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.
Derivative financial instruments and hedging activities
The Group uses derivative financial instruments such as forward foreign exchange contracts to hedge its risks associated
with foreign currency fluctuations. Such derivative financial instruments are initially measured at fair value and subsequently
remeasured at fair value. The fair value of forward foreign exchange contracts is calculated by reference to current forward
exchange rates for contracts with similar maturity profiles.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in
cost of sales in the income statement.
30
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
1.
Accounting policies (continued)
Derivative financial instruments and hedging activities (continued)
Amounts accumulated in equity are reclassified to inventories in the period when the purchase occurs, matching the hedged
transaction. The cash flows are expected to occur and impact on profit and loss within 12 months from the year end.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss previously recognised in equity is retained in equity and is recognised when the forecast transaction
is ultimately recognised in cost of sales in the income statement. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged
items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
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.
Financial liabilities
The Group classified its financial liabilities as other financial liabilities which include the following:
ρ 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
ρ
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.
31
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
1.
Accounting policies (continued)
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 are offset when the Group has legally enforceable rights to set off current tax assets against current tax
liabilities and the deferred tax liabilities relate to taxes levied by the same tax authority on either:
ρ
the same taxable group company; or
ρ 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. A dilapidation provision is only recognised on those properties which are likely to be exited.
Where such property is identified the full costs expected are recognised. 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.
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.
32
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
1.
Accounting policies (continued)
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:
ρ
the fair value of plan assets at the reporting date; less
ρ 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
ρ
ρ
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.
Net interest expense (income) is recognised in profit or loss, and is calculated by applying the discount rate used to measure
the defined benefit obligation (asset) at the beginning of the annual period to the balance of the net defined benefit obligation
(asset), considering the effects of contributions and benefit payments during the period.
Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in profit or loss.
Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.
33
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
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.
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 23. 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.
34
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
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. The Group does not issue or use financial instruments of a speculative nature.
The Group is exposed to the following financial risks:
ρ
ρ
ρ
ρ
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;
forward foreign exchange contracts;
trade and other payables; and
ρ
ρ
ρ
ρ
ρ bank overdrafts.
Fair value hierarchy
All financial instruments measured at fair value must be classified into one of the levels below:
ρ
ρ
ρ
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.
35
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
3.
Financial instruments – risk management (continued)
A summary of the financial instruments held by category is provided below:
Financial assets at amortised cost
Trade receivables
Other receivables
Cash and cash equivalents
Total receivables
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities at amortised cost
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
333
195
15,046
15,574
321
330
651
313
178
14,221
14,712
239
314
553
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
22,816
22,816
20,851
20,851
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 1 October 2016 and 3 October 2015.
Trade and other receivables are measured at 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 amortised cost.
36
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016
Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
3.
Financial instruments – risk management (continued)
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 1 October 2016 the Group has trade receivables of £333,000 (3 October 2015: £313,000).
Approximately 20% 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 £110,000.
The Directors are unaware of any factors affecting the recoverability of outstanding balances at 1 October 2016 and
previously and consequently no provisions have been made for bad and doubtful debts.
All cash balances and derivative financial instruments are held with reputable banks and the Board monitors its exposure to
counterparty risk on an ongoing basis.
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. The Group prepares and maintains detailed cash flow forecasts to monitor
cash requirements and manage liquidity risk.
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial
liabilities:
At 1 October 2016
Trade and other payables
Total
At 3 October 2015
Trade and other payables
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
22,816
22,816
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
20,851
20,851
-
-
-
-
-
-
-
-
37
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (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.
The fair value of forward foreign exchange contacts has been determined based on discounted market forward currency
exchange rates at the balance sheet date.
Foreign Currency: Sensitivity Analysis
A sensitivity rate of 10% represents the directors’ assessment of a reasonably possible change, based on historic volatility.
The analysis assumes that exchange rate fluctuations on currency derivatives that form part of an effective cash flow
hedge relationship affect the fair value reserve in equity and the fair value of the hedging derivatives. For foreign exchange
derivatives which have ceased to have a hedging relationship, these movements in exchange rates impact the income
statement.
Positive figures represent an increase in profit or equity.
Sterling strengthens by 10%
Sterling weakens by 10%
Income Statement
Equity
2016
£’000
660
(806)
2015
£’000
527
(644)
2016
£’000
1,539
(1,880)
2015
£’000
1,346
(1,645)
Year end exchange rates applied in the above analysis are US Dollar 1.30 (2015: 1.52). Strengthening and weakening of
Sterling may not produce symmetrical results depending on the proportion and nature of foreign exchange derivatives which
cease to qualify for hedge accounting.
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.
38
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
3.
Financial instruments – risk management (continued)
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, cash and retained earnings totalling £29,776,000 (3 October
2015: £36,284,000).
The Group’s objectives when maintaining capital are:
ρ
ρ
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 planned to be financed from existing cash resources whenever possible.
4.
Revenue
Revenue arises from:
Sales of goods
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
159,834
166,819
39
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
5.
Expenses by nature
Inventories recognised as an expense
Carriage charges on purchases
Duty charges on purchases
Employee benefit expenses
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Operating lease expense:
ρ Other
ρ
Land and buildings
Loss on disposal of property, plant and equipment
Branch running costs
Transportation expenses
Advertising expenses
Financial instruments movement
Gain/(Loss) on Foreign Exchange
Other costs
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
54,756
1,726
4,762
36,206
3,153
-
631
21,722
309
17,337
1,251
1,015
239
460
5,881
149,448
57,986
2,099
4,733
36,285
3,713
459
682
23,493
51
17,866
1,287
1,029
502
(163)
6,515
156,537
40
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
6.
Auditor’s remuneration
The audit of the parent company
The audit of the company’s subsidiaries
7.
Employee benefit expenses
Employee benefit expenses (including Directors) comprise:
Wages and salaries
Social security costs
Other pension costs
The average monthly number of employees during the period was as follows:
Sales and distribution
Directors
Administration
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
5
53
58
5
53
58
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
33,545
1,729
932
36,206
33,670
1,740
875
36,285
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
No.
3,495
6
155
3,656
No.
3,701
6
154
3,861
41
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
7.
Employee benefit expenses (continued)
The average monthly number of full time equivalent employees during the period was 1,794 (2015: 1,884).
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
868
19
887
286
-
286
860
18
878
285
-
285
Directors’ remuneration, included in staff costs:
Salaries and benefits
Pension contributions
Information regarding the highest paid Director is as follows:
Salary and benefits
Pension contribution
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 Chairman, Chief
Executive Officer and Chief Operating 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.
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
154,463
5,371
159,834
161,761
5,058
166,819
External revenue by location of customers:
United Kingdom
Republic of Ireland
There are no customers with turnover in excess of 10% or more of total turnover.
42
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
8. Segmental information (continued)
Non-current assets by location:
United Kingdom
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
18,661
18,688
Non-current assets held in the Republic of Ireland are not disclosed on the grounds of materiality.
9.
Finance income and expenses
Finance income
Interest receivable
Total finance income
Finance expense
Other interest payable
Net interest expense on defined benefit pension scheme
Total finance expense
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
56
56
-
(190)
(190)
44
44
(1)
(185)
(186)
43
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
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 19)
Tax charge on profit on ordinary activities
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
2,238
12
2,250
(449)
1,801
2,477
(83)
2,394
(355)
2,039
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:
Profit for the period
Income tax expense
Profit before income taxes
Expected tax charge based on corporation tax rate of 20%
(3 October 2015: 20.5%)
Expenses not deductible for tax purposes
Effective change of rate
Adjustments to tax charge in respect of previous period
Total tax expense
Factors that may affect future tax charges:
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
8,451
1,801
10,252
2,050
29
(359)
81
1,801
8,101
2,039
10,140
2,079
57
8
(105)
2,039
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 2015-16 on 26 October 2015. These include a reduction to the main rate to
19% from 1 April 2017 and to 17% from 1 April 2020. Deferred tax has been calculated at 18% being the rate at which the
timing differences are expected to reverse.
44
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
11. Dividends
Dividends paid during the year at 15.8p (2015: 6.8p) per share
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
7,900
£’000
3,400
A final dividend of 6.8p (2015: 6.5p) per share is proposed for shareholders on the register on 24 February 2017 payable on
15 March 2017 following approval at the Annual General Meeting on 2 March 2017.
A special dividend of 8.0p (2015: 6.0p) per share is proposed for shareholders on the register on 24 February 2017 payable
on 15 March 2017 following approval at the Annual General Meeting on 2 March 2017.
45
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
12. Property, plant and equipment
Freehold
properties
Short leasehold
and leasehold
improvements
Motor
vehicles
Fixtures
and
fittings
Total
£’000
£’000
£’000
£’000
£’000
Cost
At 4 October 2014
10,667
16,911
Additions
Disposals
At 3 October 2015
Additions
Disposals
At 1 October 2016
Depreciation
At 4 October 2014
Charge for the period
Impairment
Disposals
At 3 October 2015
Charge for the period
Disposals
At 1 October 2016
Net book value
At 1 October 2016
At 3 October 2015
At 4 October 2014
-
(514)
10,153
-
-
10,153
1,006
57
290
(220)
1,133
56
-
1,189
8,964
9,020
9,661
577
(513)
16,975
913
(1,132)
16,756
11,582
1,522
84
(498)
12,690
1,284
(999)
12,975
3,781
4,285
5,329
5
-
-
5
19
-
24
5
-
-
-
5
1
-
6
18
-
-
30,027
1,377
(856)
30,548
2,504
(1,768)
31,284
57,610
1,954
(1,883)
57,681
3,436
(2,900)
58,217
23,784
36,377
2,134
85
(838)
25,165
1,813
(1,592)
25,386
5,898
5,383
6,243
3,713
459
(1,556)
38,993
3,154
(2,591)
39,556
18,661
18,688
21,233
46
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
13.
Inventories
Goods for resale
Shop fitting materials and other consumables
14. Trade and other receivables
Trade receivables
Prepayments
Other receivables
1 October 2016
3 October 2015
£’000
£’000
29,900
175
30,075
28,991
181
29,172
1 October 2016
3 October 2015
£’000
333
6,676
195
7,204
£’000
313
7,657
178
8,148
47
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
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
Derivatives designated as hedging instruments
1 October 2016
3 October 2015
£’000
£’000
321
330
651
239
314
553
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 1 October 2016 were $22,000,000 (3
October 2015: $22,500,000). 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.
16. Trade and other payables
Current
Trade payables
Social security and other taxes
Other payables
Accruals
Non-current
Accruals
48
1 October 2016
3 October 2015
£’000
£’000
12,845
1,488
580
10,435
25,348
11,950
1,727
115
9,857
23,649
1 October 2016
3 October 2015
£’000
£’000
2,316
2,316
3,037
3,037
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016
Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
17. Provisions
As at 3 October 2015
Additions
Amounts utilised
Amounts released
As at 1 October 2016
The provisions are aged as follows:
Current
Non-current
As at 1 October 2016
Customer Returns
Dilapidations
£’000
48
43
(48)
-
43
£’000
1,117
605
(235)
(533)
954
Customer Returns
Dilapidations
£’000
£’000
43
-
43
879
75
954
Total
£’000
1,165
648
(283)
(533)
997
Total
£’000
922
75
997
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.
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.
18. 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 £800,000 (3 October 2015: £800,000).
49
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
19. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 18% (3 October 2015:
20%).
The movement on the deferred tax account is as shown below:
At beginning of the period
Recognised in income statement:
Tax expense (note 10)
Recognised in other comprehensive income:
Actuarial loss on defined benefit pension schemes
Foreign exchange contract
At end of the period
1 October 2016
3 October 2015
£’000
£’000
(124)
449
1,113
3
1,441
(516)
355
100
(63)
(124)
The deferred tax has arisen due to the following:
1 October 2016
3 October 2015
Accelerated capital allowances
Ineligible buildings
Short term timing differences
Defined benefit pension scheme
£’000
£’000
954
(1,803)
(60)
2,350
1,441
1,204
(2,247)
(111)
1,030
(124)
The Group has an unrecognised deferred tax asset £1,050,000 1 October 2016 (3 October 2015: £1,005,000).
There are estimated losses available to offset against future capital taxable profits amounting to approximately £5,250,000 (3
October 2015: £5,025,000).
50
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016
Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
20. Share capital
Share capital issued and fully paid
50,000,000 ordinary shares of 1p each
1 October 2016
3 October 2015
£’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.
21. 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
1 October 2016
3 October 2015
1 October 2016
3 October 2015
£’000
£’000
£’000
£’000
Not later than one year
Later than one year and not later than five years
Later than five years
20,040
42,359
7,071
69,470
21,292
47,173
10,492
78,957
471
821
-
526
827
-
1,292
1,353
22 Capital Commitments
1 October 2016
3 October 2015
£’000
£’000
Contracted for but not provided
416
422
51
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. Pension costs
Defined contribution scheme
The Group operates a defined contribution pension scheme namely Shoe Zone Worksave Pension Plan contributions
amounted to £932,000 (3 October 2015: £875,000).
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 £2,000 (3 October 2015: £3,000).
The schemes are exposed to a number of risks, including:
ρ
ρ
ρ
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.
Amounts recognised in the balance sheet at 1 October 2016
Fair value of assets
Present value of funded obligations
Deficit
Amounts recognised in other comprehensive income
Return on plan assets
Actuarial loss arising from changes in:
Experience Loss
Demographic assumptions
Financial assumptions
Total actuarial loss
Deferred tax on employee benefit scheme
Total amount recognised in other comprehensive income
52
1 October 2016
3 October 2015
£’000
79,704
(92,762)
(13,058)
£’000
72,636
(77,786)
(5,150)
1 October 2016
3 October 2015
£’000
£’000
7,297
715
3,969
547
-
-
(20,003)
(1,214)
(15,487)
1,474
(6,716)
(1,214)
100
(399)
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. Pension costs (continued)
The figures below are based on a full actuarial valuation performed in April 2016 and March 2016 for the Shoe Zone and
Shoefayre schemes respectively which was carried out by a qualified independent actuary. This actuarial valuation has been
updated to 1 October 2016 for the purpose of calculating the pension surplus and disclosures in the current period.
Post retirement mortality
Life expectancy
Male currently aged 45
Female currently aged 45
Male currently aged 65
Female currently aged 65
Financial assumptions
Deferred pension revaluation
Pension increases
Discount rate
Consumer Price Index
Retail Price Index
1 October 2016
3 October 2015
Years
Years
90
92
88
90
90
92
88
90
1 October 2016
3 October 2015
%
2.35
3.20
2.40
2.35
3.35
%
2.30
3.30
3.85
2.30
3.30
The weighted average duration of the defined benefit obligation for the Shoe Zone scheme at 1 October 2016 is 16.5 years
(3 October 2015 – 16.5 years).
The weighted average duration of the defined benefit obligation for the Shoefayre scheme at 1 October 2016 is 18.5 years (3
October 2015 – 18.5 years).
53
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. 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
Cash
Diversified Growth Funds
Liability Driven Investment
Target Return Funds
1 October 2016
3 October 2015
29%
9%
20%
1%
33%
8%
-
100%
27%
10%
39%
1%
-
-
23%
100%
The actual return on the Scheme’s assets net of expenses over the period to the review date was a gain of £6,872,000 (3
October 2015: £2,001,000).
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
1 October 2016
3 October 2015
£’000
£’000
(1,658)
1,609
(49)
(1,698)
1,666
(32)
Interest cost
Expected return on assets
54
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. 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
Amounts recognised in other comprehensive income
Return on plan assets
Actuarial loss arising from changes in:
Experience losses
Demographic assumptions
Financial assumptions
Total actuarial loss
Deferred tax on employee benefit scheme
Total amount recognised in other comprehensive income
1 October 2016
3 October 2015
£’000
£’000
47,556
(50,387)
(2,831)
42,899
(44,168)
(1,269)
1 October 2016
3 October 2015
3,044
440
(10,260)
£’000
5,263
(6,776)
272
(1,241)
-
-
(778)
£’000
335
(778)
89
(354)
55
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. 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
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
Defined benefit obligation at the end of the period
1 October 2016
3 October 2015
£’000
£’000
42,899
1,609
(2,215)
5,263
47,556
42,423
1,666
(1,525)
335
42,899
1 October 2016
3 October 2015
£’000
£’000
44,168
1,658
(2,215)
6,776
50,387
43,217
1,698
(1,525)
778
44,168
56
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. Pension costs (continued)
Defined benefit scheme - Shoe Zone Pension Scheme (continued)
Shoe Zone Retail Limited expects to make no contributions to the scheme during the following period.
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 1.0 years
Minus 1.0 years
-8%
+9%
+2%
-2%
+4%
-4%
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.
57
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. Pension costs (continued)
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
Cash
Diversified Growth Funds
Liability Driven Investment
Target Return Funds
1 October 2016
3 October 2015
17%
11%
30%
1%
33%
8%
-
100%
13%
12%
47%
1%
-
-
27%
100%
The actual return on the Scheme’s assets net of expenses over the period to the review date was a gain of £3,164,000 (3
October 2015: £1,522,000). 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
1 October 2016
3 October 2015
£’000
£’000
32,148
(42,375)
(10,227)
29,737
(33,618)
(3,881)
Fair value of assets
Present value of funded obligations
Net liability
58
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. Pension costs (continued)
Defined benefit scheme - Shoefayre Limited Pension and Life Assurance
Scheme (continued)
Amounts recognised in other comprehensive income
Return on plan assets
Actuarial loss arising from changes in:
Experience
Demographic assumptions
Financial assumptions
Total actuarial loss
Deferred tax on employee benefit scheme
Total amount recognised in other comprehensive income
Amounts recognised in the income statement over the
period
Interest cost
Expected return on assets
1 October 2016
3 October 2015
925
107
(9,743)
£’000
2,034
(8,711)
1,202
(5,475)
-
-
(436)
£’000
380
(436)
11
(45)
1 October 2016
3 October 2015
£’000
£’000
(1,271)
1,130
(141)
(1,295)
1,142
(153)
59
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. Pension costs (continued)
Defined benefit scheme - Shoefayre Limited Pension and Life Assurance
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
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 on obligation
Defined benefit obligation at the end of the period
1 October 2016
3 October 2015
£’000
£’000
29,737
1,130
472
(1,225)
2,034
32,148
28,883
1,142
300
(968)
380
29,737
1 October 2016
3 October 2015
£’000
£’000
33,618
1,271
(1,225)
8,711
42,375
32,855
1,295
(968)
436
33,618
Contributions of £595,000 are expected to be made during the year ended 30 September 2017 by Shoe Zone Retail Limited.
60
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
23. 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 1.0 years
Minus 1.0 years
-9%
+10%
+4%
-4%
+3%
-3%
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.
24. Cash and cash equivalents
Cash and cash equivalents for the purpose of the
statement of cash flow comprise:
Cash at banks and in hand
Cash and cash equivalents
1 October 2016
3 October 2015
£’000
£’000
15,046
15,046
14,221
14,221
61
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
25. 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.
During the period, the Group entities entered into the following trading transactions with Group pension schemes:
Rent paid to Zone Executive Pension Scheme
Contributions to the:
Shoe Zone Worksave Pension Plan
Shoe Zone Pension Scheme
Shoefayre Limited Pension and Life Assurance Scheme
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
163
930
2
472
163
872
3
300
1,567
1,338
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
Key management personnel are considered to be the Directors of Shoe Zone plc.
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
868
19
105
992
860
18
104
982
62
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Financial Statements for the 52 weeks
ended 1 October 2016 (continued)
26. 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.
52 weeks
ended 1 October
2016
52 weeks
ended 3 October
2015
£’000
£’000
Numerator
Profit for the year and earnings used in basic and diluted EPS
8,451
8,101
Denominator
Weighted average number of shares used in basic and diluted EPS
50,000,000
50,000,000
1 October 2016
3 October 2015
27. Ultimate controlling party
The company is controlled by the Smith family albeit there is not a single controlling party.
63
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Company Statement of Financial Position as at
1 October 2016
Note
1 October 2016
3 October 2015
£’000
£’000
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
2
3
4
5
6
6
68,644
68,644
17
17
(979)
(962)
67,682
500
586
66,596
67,682
68,644
68,644
14
14
(1,118)
(1,104)
67,540
500
586
66,454
67,540
The financial statements were approved and authorised for issue by the Board of Directors:
N J Davis
Chief Executive Officer
Date: 10 January 2017
Registered Number 08961190
64
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Company Statement of Changes in Equity for the 52
weeks ended 1 October 2016
Share capital
Merger
reserve
Retained
earnings
Total
£’000
£’000
£’000
£’000
At 4 October 2014
Profit for the period
Total comprehensive income for the period
Dividends paid during the year (note 6)
Total contributions by and distributions to
owners
At 3 October 2015
Profit for the period
Total comprehensive income for the period
Dividends paid during the year (note 6)
Total contributions by and distributions to
owners
500
586
68,521
69,607
-
-
-
-
-
-
-
-
1,333
1,333
1,333
1,333
(3,400)
(3,400)
(3,400)
(3,400)
500
586
66,454
67,540
-
-
-
-
-
-
-
-
8,042
8,042
8,042
8,042
(7,900)
(7,900)
(7,900)
(7,900)
At 1 October 2016
500
586
66,596
67,682
Share capital comprises nominal value of shares subscribed for.
The merger reserve has arisen as a result of the application of merger accounting to the group reorganisation of 26 March
2014.
Retained earnings are all other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
65
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Notes to the Company Financial Statements for the 52
weeks ended 1 October 2016
1.
Accounting policies
Basis of preparation
The Company’s financial period is 1 October 2016. 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 profit dealt with in the accounts of the Company was £8,042,000 (3 October
2015: loss of £1,333,000)
The financial statements have been prepared in accordance with Financial Reporting Standard 100 ‘Application of Financial
Reporting Requirements’ and Financial Reporting Standard 101 “Reduced Disclosure Framework”. The principal accounting
policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied
to all the years presented, unless otherwise stated.
As permitted by FRS 101, the company has taken advantage of all the disclosure exemptions available under that standard.
Accounting policies have been applied consistently throughout the period.
Investments
Investments held as fixed assets are stated at cost, less any provision for impairment.
66
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notes to the Company Financial Statements for the 52
weeks ended 1 October 2016 (continued)
2.
Fixed Asset Investments
Cost
Impairment of investment in Castle Acres Development Limited
Total
1 October 2016
3 October 2015
£’000
£’000
70,586
(1,942)
68,644
70,586
(1,942)
68,644
The subsidiaries of the company, all of which have been included in the consolidated financial statements, are as follows:
Name of investment Place of
Principal activity
Ownership
incorporation
Castle Acres Development England & Wales
Limited
Non-trading company
100% owned by company
Shoe Zone Retail Limited
England & Wales
Trading company
100% owned by company
Zone Property Limited
England & Wales
Property holding company 100% owned by company
Zone Group Limited
England & Wales
Non-trading company
100% owned by company
Shoe Zone (Ireland) Limited England & Wales
Non-trading company
100% owned by Shoe Zone Retail Limited
Shoe Zone Pension Trustees England & Wales
Limited
Non-trading company
100% owned by Castle Acres
Development Limited
Stead & Simpson Limited
England & Wales
Non-trading company
100% owned by Zone Group Limited
Zone Footwear Limited
England & Wales
Non-trading company
100% owned by Zone Group Limited
Zone Retail
England & Wales
Non-trading company
100% owned by Zone Group Limited
Walkright Limited
England & Wales
Non-trading company
100% owned by Zone Group Limited
67
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Notes to the Company Financial Statements for the 52
weeks ended 1 October 2016 (continued)
3.
Debtors
Prepayments
1 October 2016
3 October 2015
£’000
17
£’000
14
4.
Creditors: amounts falling due within one year
Amounts owing to group undertakings
Accruals
5.
Share capital
Allotted, called up and fully paid:
50,000,000 ordinary shares of 1p each
6.
Reserves
At 3 October 2015
Profit for the financial period
Dividends paid during the year
At 1 October 2016
1 October 2016
3 October 2015
£’000
973
6
979
£’000
1,104
14
1,118
1 October 2016
3 October 2015
£’000
£’000
500
500
500
500
Merger reserve
Profit and loss
account
£’000
£’000
586
-
-
586
66,454
8,042
(7,900)
66,596
7.
Related party transactions
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.
68
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Directors and Advisers
Directors
I F Filby (resigned 21 Jun 2016)
A E P Smith
N J Davis
J C P Smith
J W Sharman
C J Caminada
M J Collins (appointed 21 Jun 2016)
Secretary
N J Davis (resigned 21 Jun 2016)
L S Hennell (appointed 21 Jun 2016)
Registered office
Haramead Business Centre
Humberstone Road
Leicester
LE1 2LH
Auditor
BDO LLP
Regent House
Clinton Avenue
Nottingham
NG5 1AZ
Bankers
HSBC Bank plc
2-6 Gallowtree Gate
Leicester
LE1 1DA
Registrar
Capita Asset Services
The Registry
34 Beckenham Road
Kent
BR3 4TU
Solicitors
Dickson Minto W.S.
Broadgate Tower
20 Primrose Street
London
EC2A 2EW
Corporate broker
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
69
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
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 Thursday, 2 March
2017 at 11am to consider and, if thought fit, pass the reso-
lutions set out below. Resolutions 1 to 13 will be proposed
as ordinary resolutions and Resolutions 14 and 15 will be
proposed as special resolutions.
1. To receive and adopt the Company’s annual accounts
for the financial period ended 1 October 2016 and the
associated reports of the Directors of the Company and
the auditors of the Company.
2. To declare a final dividend of 6.8p per ordinary share for
the financial period ended 1 October 2016.
3. To declare a special dividend of 8.0p per ordinary share.
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.
c.
incur political expenditure, not exceeding
£50,000.00 in total,
such authority to expire on the earlier of 31 March 2018
and the conclusion of the annual general meeting of the
Company to be held in 2018. 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.
13. 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
7. To re-elect Charlie Caminada as a Director.
b. up to an aggregate nominal amount of
8. To re-elect Jeremy Sharman as a Director.
9. To elect Malcolm Collins as a Director.
10. 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 2018.
11. To authorise the Directors of the Company to determine
the remuneration of BDO LLP as auditors of the
Company.
12. 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
£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,
70
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Notice of Annual General Meeting (continued)
provided that this authority shall expire on the earlier of
31 March 2018 and the conclusion of the annual general
meeting of the Company to be held in 2018, save that
the Company may before such expiry make an offer or
enter into an agreement which would or might require
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.
14. That, subject to the passing of resolution 13 proposed at
the annual general meeting of the Company convened
for 2 March 2017 (‘Resolution 13’) 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 13 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 13, 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 2018 and
the conclusion of the annual general meeting of the
Company to be held in 2018, 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.
15. That, subject to the passing of resolution 13 proposed
at the annual general meeting of the Company
convened for 2 March 2017 (‘Resolution 13’) and in
addition to any authority granted pursuant to resolution
14 proposed at the annual general meeting of the
Company convened for 2 March 2017, 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
13 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:
a.
limited to the allotment of equity securities and
the sale of treasury shares for cash up to an
aggregate nominal amount of £25,000.00; and
71
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information
Notice of Annual General Meeting (continued)
b. used only for the purposes of financing (or
refinancing, if the authority is to be used within
six months after the original transaction) a
transaction which the Directors of the Company
determine to be an acquisition or other capital
investment of a kind contemplated by the
Statement of Principles on Disapplying Pre-
Emption Rights most recently published by the
Pre-Emption Group prior to the passing of this
resolution,
and shall expire on the earlier of 31 March 2018 and the
conclusion of the annual general meeting of the Company
to be held in 2018, 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 pursu-
ance of such an offer or agreement as if the power conferred
hereby had not expired.
By order of the Board
L S Hennell
Company Secretary
Date: 10 January 2017
Registered Office
Haramead Business Centre
Humberstone Road
Leicester
Leicestershire
LE1 2LH
72
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 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 4TU or by telephone on 0871 664
0300. Calls cost 12p per minute plus your phone company’s
access charge. If you are outside the United Kingdom,
please call +44 371 664 0300. Calls outside the United
Kingdom will be charged at the applicable international
rate. Lines are open 9.00 a.m. to 5.30 p.m. (London time)
Monday to Friday excluding public holidays in England and
Wales. 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 4TU
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.
73
Shoe Zone plc Annual Report and Accounts 2016GovernanceStrategic ReportFinancialsShareholder Information Notice of Annual General Meeting (continued)
Notes (continued)
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 28 February 2017 (or,
if the Annual General Meeting is 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 10 January 2017 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 10 January 2017 were 50,000,000 votes.
4. Appointment of a proxy through CREST
(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.
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.
74
Shoe Zone plc Annual Report and Accounts 2016Shoe Zone plc Annual Report and Accounts 2016 Shoe Zone plc
Annual Report & Accounts 2016
www.shoezone.com
email: investorrelations@shoezone.com