Annual Report & Financial Statements
for the 52 weeks ended 30 September 2023
2023
Contents
Strategic Report
Directors and Advisers
Chief Executive’s Report
Financial Review
Key Performance Indicators
Principal Risks and Uncertainties
2
3
8
10
11
Governance
15
Corporate Governance Statement
Board of Directors
23
24
Remuneration Report
Directors’ Report
28
Independent Auditor’s Report to the members of Shoe Zone plc 43
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
Notice of Annual General Meeting
49
50
51
52
53
54
96
97
98
102
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 advisor
authorised under the Finanical 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.
Strategic Report
1
Directors and Advisers
Directors
A E P Smith
J C P Smith
T M Boot
M J Collins
V J Norrish
Secretary
C A Bowen
Registered office
Haramead Business Centre
Humberstone Road
Leicester
LE1 2LH
Auditor
Cooper Parry Group Limited
East Midlands Office
Sky View, Argosy Road
East Midlands Airport
Derby
DE74 2SA
Bankers
NatWest
1 Granby Street
Leicester
LE1 9GT
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Solicitors
Dickson Minto
16 Charlotte Square
Edinburgh
EH2 4DF
Corporate broker
Zeus Capital Ltd
125 Broad Street
12th Floor
London
EC2N 1AR
Strategic Report
2
Chief Executive’s Report
Shoe Zone had a very positive year, with strong and
consistent results throughout the key trading periods,
particularly in the second half, with strong peak summer and
Back to School trading. Once again, I thank our incredible
teams for their continued hard work and support.
Revenues in the year were £165.7m (2022: £156.2m), an increase of 6.1%. Within this, stores
were £134.8m (2022: £129.8m), an increase of 3.9% from 37 fewer stores. Digital revenues were
£30.9m (2022: £26.4m), an increase of 17.0%.
Profit before tax increased by 19.1% to £16.2m (2022: £13.6m). On an adjusted (as defined on
page 6) basis profit before tax increased by 47.3% to £16.5m (2022: £11.2m).
Our net cash position at the end of the year was £16.4m (2022: £24.4m).
Our business strategy of investment in our Big Box and Hybrid stores has accelerated, and we
completed 50 refits and relocations in the financial year. We continue to invest in our Digital
Shoehub platform.
Big Box & Hybrid
In total we completed 50 projects in the year, being 15 refits and 35 relocations, reducing our
original Shoe Zone format to 188 (2022: 271).
Big Box numbers are now at 42 (2022: 45). Revenue was £26.1m (2022: £24.3m) with a contribution
of £4.5m (2022: £3.2m).
We have 93 hybrid stores (2022: 44), with a revenue of £38.7m (2022: £19.1m) and a contribution
of £7.9m (2022: £3.4m).
Both of these formats continue to trade extremely well and are key to the property portfolio
transformation over the next 3 years, as we continue to refit and relocate the original Shoe Zone
formats.
Digital
Digital continues to be a key focus of our strategy and has traded strongly over the last 12
months. Revenue increased by 17.0% to £30.9m, ahead of management expectations, driven by
a higher conversion rate, a 30% increase in Amazon revenue and further investment in our online
exclusive range and additional range extensions. We continue to invest in the infrastructure and
gained a full year benefit of the increased productivity and throughput provided by the auto
bagging machines installed last year.
Digital revenue of £30.9m, 18.7% of total revenues (2022: £26.4m, 16.9%) growth of 17.0% on
last year. Operating profit was £8.6m (2022: £7.0m), with gross margin achieved of 60.3% (2022:
58.1%).
The email database grew to 1.32m (2022: 1.21m) of engaged members with conversion rate
growing to 5.1% (2022: 4.8%). Shoezone.com revenue up 11.9% to £18.5m (2022: £16.5m),
Strategic Report
3
Chief Executive’s Report CONTINUED
Amazon up 30.1% to £11.4m (2022: £8.8m), online exclusives up 10.3% to £3.8m (2022: £3.4m)
and range extensions up to £1.0m (2022: Nil).
The returns rate for the year was 11.8% (2022: 11.3%), which is consistent with pre pandemic
levels.
Product
Our new format stores stock approximately 600 styles per season, 50% of which are branded. As
we refit and relocate existing stores to our new formats, the branded mix will continue to form a
higher proportion of overall sales.
Our Digital shoehub platform offers the full store ranges plus approximately 1,500 online
exclusive styles per season which we continue to invest in.
Property
We ended the period trading from 323 stores (2022: 360), having closed 72 and opened 35 and
refitted a further 15 existing stores to our new formats.
Our average lease length is 2.2 years (2022: 1.8 years), the increase is due to the opening speed
of new 5 year leases. The property market remains favourable for us as we continue to maximise
our portfolio over the medium term.
Total capital expenditure was gross £11.4m, and net of rent free’s received £9.6m (2022: £5.2m),
of which £7.3m was for our refit and relocation programme.
We achieved rent reductions on 53 store renewals and re-gears of £0.7m (2022: £0.6m) on an
annualised basis, an average reduction of 31% (2022: 48 reviews with an average 30% reduction).
Dividend
An interim dividend of 2.5 pence per share was paid out in August 2023. It is proposed that a
final dividend of 8.9 pence per share will be paid in March 2024 on the basis of a 40% pay-out
ratio. This represents a total payout of 11.4 pence per share (2022: 8.8 pence per share). The
Board will also propose an additional special dividend of 6.0 pence per share, bringing the total
to 17.4 pence per share (2022: 17.0 pence).
Share Buy-Back
The programme of share buy-backs continued through the year and as at the year-end we had
purchased a total of 3.8m shares at a cost of £8.1m, at an average price paid per share of £2.14.
Strategic Report
4
Chief Executive’s Report CONTINUED
Outlook
We will continue to accelerate our store refit and relocation programme and continue to drive
our online digital strategy on the back of these exceptional set of results.
Capital expenditure
We will spend in the region of £10.0m in the next financial year to include 50 store projects (25
refits and 25 relocations), Head Office infrastructure changes, IT projects and vehicles.
Property
We continue to transform our property portfolio with relocations and new stores being partially
funded by landlords through rent free periods, typically 12 months.
Digital
We will continue to invest in our Digital Shoehub platform and in the next 12 months we will
launch a new mobile App, add further payment options including Apple Pay and Google Pay
and continue to expand our customer offering through expansion of our online exclusive ranges.
Product
We expect product margins to improve as we forecast a full year of lower container rates, and
where possible, we will reduce certain key price points to continue to emphasise our value
offering. Our buying and shipping teams are doing an exceptional job of managing the direct
from factory supply chain, which is still volatile, but are confident that we are performing better
than the market average.
Conclusion
A lot of the work undertaken in the last three years underpins our strategy, and evidenced by the
strong results in the last two years, we will continue to re-model our property portfolio with the
ultimate aim to have no original Shoe Zone stores by the end of 2026.
The pipeline of property projects gives us confidence that our strategic plans can be met over
the next three years.
People form a key part of our business success as we look forward to the next generation of our
strategy. We will continue to invest in our team by increasing training and career development
opportunities.
I would like to thank all of our Shoe Zone Team for their amazing support and commitment over
the last twelve months.
Strategic Report
5
Chief Executive’s Report CONTINUED
Director’s statement of compliance with the duty to promote
the success of the group (Section 172(1) statement)
The Directors have acted in a way that they consider, in good faith, that promotes the success
of the Group for the benefit of its members as a whole, and in doing so have given regard to
(amongst other matters):
External relationships
The vast majority of the Group’s products are manufactured overseas in China and to a lesser
extent in India and Europe. As a result, the Group is subject to the risks associated with
international trade, particularly those common in the importation of goods from developing
countries, including the imposition of taxes or other charges on imports, compliance with and
changes to import restrictions and regulations, and exposure to different legal standards and the
burden of complying with a variety of foreign laws and changing foreign government policies.
The Group’s policy for the payment of suppliers is to agree payment terms in advance and to
abide by such terms.
The Group continually develops strategies to further improve its strong relationship with its
suppliers.
Our people
Our long-term success depends on looking after the best interests of our employees, customers,
shareholders and suppliers.
All employees are able to contribute to the ongoing success of the business through regular
contact between management and employees. We promote equal opportunities and do not
tolerate discrimination of any kind. We operate a non-contractual profit share scheme that
rewards employees based on the overall company profit performance. Details on the number of
people employed can be found in note 7 of the financial statements.
The Board meets regularly and communicates with our people on a regular basis to ensure they
all understand our strategic objectives both short and long-term.
Charity
We donated £820,000 to charitable causes. These donations are mainly targeted at children in
poverty/difficult circumstances locally, nationally and internationally and delivered via The Shoe
Zone Trust and we commit to contributing at least 2% of profits into the trust each year, as well
as all funds received from the sales of carrier bags.
Strategic Report
6
Chief Executive’s Report CONTINUED
Environment
We recognise the impact of our activities on the environment. We continually review our
consumption of single use plastics and have eliminated them in all own label products. We recycle
all cardboard and plastic waste from our stores and Head Office. We use sea transportation to
reduce emissions, the electricity we use comes from 100% renewable sources, our distribution
centre is powered by solar panels, gas boilers are being replaced by heat pumps in a number of
stores, we have replaced old lighting with more efficient LED lighting and our company car fleet
is either hybrid or fully electric. We aim to reduce consumption on everything we use as the best
way to reduce our carbon footprint.
Political donations
During its last financial period the Group made no political donations and incurred no political
expenditure. The Group does not intend to make any such donations or incur any such
expenditure this year.
Strategic Report
7
Financial Review
In the 52 weeks to 30 September 2023, total revenues were
£165.7m (2022: £156.2m) an increase of 6.1%. We ended the
year with 323 stores (2022: 360) having closed 72, opened
35.
Profit before Tax was £16.2m (2022: £13.6m), adjusted by profit on sale of freeholds (£0.3m) and
a foreign exchange loss on revaluation (£0.6m), therefore an adjusted Profit before Tax of £16.5m
(2022: £11.2m) and increase of 47.3%. The year on year increase is primarily due to strong
second half trading, including our key back to school period, strong peak summer sales and the
benefit of lower container prices that started to be realised mid-year. We continue to actively
reduce our cost base in all areas of the business and have reduced our rent bill through proactive
discussions with landlords with further savings on renewals.
Digital revenues stood at £30.9m (2022: £26.4m) an increase of 17.0%, which was ahead of
management expectations and now ahead of the peak during the pandemic. Operating profit
from Digital was £8.6m (2022: £7.0m) in the year.
Product margins (as defined on page 6) were ahead of last year at 62.3% (2022: 61.2%). This
increase is due to the reduction in container prices, a more favourable Sterling to Dollar exchange
rate, less supply chain volatility, continued improvement in stock management, partly offset by a
higher mix of lower margin branded product.
Statutory gross profit increased by £4.5m to £40.9m, with a gross profit margin of 24.7% (2022:
£36.4m 23.3%). The year-on-year cash increase reflects the revenue growth and the percentage
increase is as a result of the higher underlying product margins. Cost of sales increased by
£5.0m, due to sales related cost increases, higher business rates, higher store depreciation and
wage inflation.
Admin expenses increased by £2.2m to £18.8m (2022: £16.6m) due to digital sales related courier
costs £0.9m, additional cost of living and profit share bonuses £0.6m, depreciation £0.5m and
Head Office repairs £0.2m.
Distribution costs increased by £0.2m to £5.3m (2022: £5.1m), due to higher warehouse and
distribution wages due to the National Living Wages increase.
The corporation tax charge through the Income Statement is £3.0m (2022: tax charge of £2.7m).
Earnings per share are 27.79p (2022: 21.74p).
Stock levels increased by £1.6m to £33.8m (2022: £32.2m), which is due to the earlier timing
of deliveries of Winter 2023 product and an increase in the proportion of higher value branded
product we have in stock compared to last year.
Strategic Report
8
Financial Review CONTINUED
Capital expenditure increased to £11.4m (2022: £5.2m) as we accelerated our programme of
store relocations and refits to expand our Hybrid formats. We also invested £1.3m in our central
distribution centre to further improve our Digital efficiency and a further £0.9m on our vehicle
fleet. This total is the gross value expended and is partially offset by c£1.8m of rent-free cash
received via landlords when we opened stores, typically 12 months.
At the year-end the net cash was £16.4m (2022: £24.4m). The decrease in cash was due to
dividends paid £8.2m, further share buy-backs in the year of £7.1m and the increased level of
capital expenditure, offset by the cash generated from profitable operations. We have £5.0m
cash on deposit at the year end until December 2023 and our current account is swept to attract
daily interest.
The Shoe Zone pension scheme is in a surplus of £0.5m (2022: surplus of £7.1m). The reduction
is due to the purchase of the buy-in contract with Rothesay on 2 March 2023. The Shoe Zone
Pension Scheme asset is not recognised in the statement of financial position. The Shoefayre
scheme is now in deficit of £2.1m (2022: surplus of £1.8m). This is firstly due to the scheme’s
assets delivering a lower than expected investment return, driven by a reduction in the hedging
level of the scheme’s Liability Driven Investment (LDI) holdings and secondly, the allowance for
inflation has increased the value placed on the scheme’s liabilities.
An interim dividend of 2.5 pence per share was paid on 14 August 2023. It is proposed that a
final dividend of 8.9 pence per share will be paid in March 2024 based on a 40% pay-out ratio.
The Board is also to propose an additional special dividend of 6.0 pence per share giving a total
dividend of 17.4 pence per share (2022: 17.0).
The Company continued the share buy-back programme that was started in August 2022 and as
at the year-end 2023 had purchased 3,773,170 shares (of which 3,750,000 have been cancelled
with the balance held in treasury) at an average price of £2.14 equating to a total spend of
£8.1m. The buy-back programme will continue for the foreseeable future.
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 in note 1 of the financial statements.
Strategic Report
9
Key Performance Indicators
The Group uses the following performance measures to monitor progress against strategic
objectives.
ONLINE PARTICIPATION %
18.7%
2022: 16.9%
Online sales as a percentage of total sales. Online sales
exclude orders placed in store.
The online participation increased to 18.7% (2022: 16.9%). This performance
reflects the continued investment in the digital platform and is higher than
management expectations.
PRODUCT GROSS MARGIN %
62.3%
2022: 61.2%
Product Gross Profit expressed as a percentage of
revenue.
Product margins were 62.3% (2022: 61.2%). This increase is due to lower
container prices, the impact of which started to be realised halfway through the
financial year, and a more favourable Sterling to Dollar exchange rate.
CASH BALANCE
£16.4m
2022: £24.4m
Cash held by the Group at the period end.
We finished the year with a net cash balance of £16.4m (2022: £24.4m), with no
debt. Main cash outs were share buy-back £7.1m, dividends £8.2m and capex
£11.4m, offset by cash generated from profitable operations.
ADJUSTED PROFIT BEFORE TAX
£16.5m
2022: £11.2m
Profit before tax, excluding profit on sale of freeholds, and
exchange loss on currency revaluation.
Adjusted profit before tax increased by £5.3m to £16.5m (2022: £11.2m) an
increase of 47.3%.
EARNINGS PER SHARE
27.79p
2022: 21.74p
The percentage movement in Earnings per Share.
Earnings per Share increased to 27.79p (2022: 21.74p).
Strategic Report
10
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 footwear 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, 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 best sellers on a weekly basis
and evaluates the performance of new lines.
Strategic Report
11
Principal Risks and
Uncertainties CONTINUED
Economic factors
We continue to see uncertain economic conditions in the UK and globally, as well as economic
factors such as the impact of the war in Ukraine, significant increases in energy costs, high levels of
inflation, increases in the national minimum wage, pressure on currency exchange rates and high
interest rates, all of which 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 materially adverse effect on the Group’s business, results of operations and
financial position. Global economic conditions and uncertainties may also impact the Group’s
manufacturers and suppliers in ways that could adversely affect the Group’s business.
The Board considers very carefully the economic climate in planning its product ranges and pricing
structure. As the business is focussed on offering low prices it is more resilient to reductions in
consumer expenditure than other footwear retailers.
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 and Europe. As a result, the Group is also subject to
the risks associated with international trade, particularly those risks which are common in the
importation of goods from developing countries, including the imposition of taxes or other
charges on imports, compliance with and changes to import restrictions and regulations, and
exposure to different legal standards and the burden of complying with a variety of foreign laws
and changing foreign government policies.
The Board is always seeking out new sources of supply with a clear strategy of diversification.
Members of the Management Team have historically visited 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. We are currently unable to travel to our key sourcing
markets due to COVID restrictions but will restart as soon as we are able.
Strategic Report
12
Principal Risks and
Uncertainties CONTINUED
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 majority of the Group’s profits are derived through sales of its own label brands. Maintaining
broad market acceptance of its own label brands depends on many factors, including value,
quality and consumer perception. The Group may not in the future achieve or maintain its
expected sales of its own label brands, which could have a material adverse effect on the Group’s
business, results of operations and financial position.
The Board has sufficient internal processes to ensure that it receives feedback from stores
and customers on the design and quality of its products. The business’ reputation is carefully
managed through internal procedures by the Board.
Loss of key operating site
The Group has a single Distribution Centre and its head office located at premises in Leicester and
therefore the Group is entirely dependent on the continued efficient operation of the Leicester
premises. Any disruption to the operation of the Leicester premises may have an adverse effect
upon the Group’s financial position, 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 position, operations and business prospects.
The business has developed and maintains a business continuity plan for the unlikely scenario
of long term disruption to the Leicester premises. The business retains appropriate insurance to
mitigate the risk of such a loss.
Data security and IT reliability
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
Strategic Report
13
Principal Risks and
Uncertainties CONTINUED
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 business’s dependency on any third
parties. Reputable third party antivirus, anti-spam and web filtering software are in use and its
appropriateness regularly reviewed.
Reliance on key personnel
The Group depends on a relatively small senior Management Team and the loss of a material
number of such individuals or the inability to attract appropriate personnel in a timely manner
could impact upon the Group’s future performance.
The Group’s Remuneration Policy is designed to attract, retain and motivate management.
Succession plans are in place for key roles.
Product
Shoe Zone continues to review the potential risks and opportunities that the post Brexit
environment presents. Within the Shoe Zone product range, less than 2.5% of all stock is
purchased from within the EU, this limits any potential risks.
The import of finished product from the Far East represents the main areas of risk. There has been
less disruption at ports, a reduction in the price of shipping containers and a more favourable
Sterling to Dollar exchange rate. We have Dollar contracts covering the majority of purchases for
the next financial year.
We continue to monitor all risk factors.
Going concern
Please see page 41 in Director’s report regarding going concern.
The strategic report was approved by the Board.
On behalf of the Board
Anthony Smith
Chief Executive
Date: 9 January 2024
Strategic Report
14
Corporate Governance
Statement
Chairman’s Statement
It is with pleasure that I take the opportunity to outline the approach taken to corporate
governance within Shoe Zone plc.
The Board is committed to maintaining high standards of corporate governance and, with
effect from 1 September 2018, the Board has adopted the Quoted Companies Alliance’s (QCA)
Corporate Governance Code for small and mid-size quoted companies (the “Code”).
The Code was revised in April 2018 to meet the new requirements of AIM Rule 26 and sets
out ten broad principles of corporate governance. The code states what are considered to be
appropriate corporate governance arrangements for companies. It provides an explanation
about how they are meeting the principles through certain prescribed disclosures.
The Chairman leads the Board and is responsible for its overall effectiveness in directing the
Company. He manages the Board agenda and ensures that all Directors receive accurate, timely
and clear information and effectively contribute their various talents and experience in the
development and implementation of the Company’s strategy. He ensures that the nature and
extent of the significant risks the Company is willing to embrace in the implementation of its
strategy are challenged and determined by the Board. The Chairman is responsible for ensuring
that the Board implements, maintains and communicates effective corporate governance
processes and for promoting a culture of openness and debate designed to foster a positive
governance culture throughout the Company.
The Board has considered how each principle is applied and provides below an explanation of
the approach taken in relation to each and how they support the Company’s medium to long-
term success.
The Board considers that it does not depart from any of the principles of the QCA Code and
there have been no corporate governance matters in the previous year.
Charles Smith
Chairman
Date: 9 January 2024
Governance
15
Corporate Governance
Statement CONTINUED
THE TEN PRINCIPLES OF THE QCA CODE
CATEGORY: DELIVER GROWTH
1
CATEGORY: DELIVER GROWTH
2
PRINCIPLE: ESTABLISH A STRATEGY AND
BUSINESS MODEL WHICH PROMOTES LONG-
TERM VALUE FOR SHAREHOLDERS.
• Shoe Zone is a footwear retailer. Its strategy is:
• Town Centre renewal
• Big Box expansion
• Digital Growth
• This business model has been developed over
many years and has proved successful in both
profit performance and cash generation.
• The strategy has been validated in the profit
performance over the last two years.
PRINCIPLE: SEEK TO UNDERSTAND AND MEET
SHAREHOLDER NEEDS AND EXPECTATIONS.
• The Chief Executive and the Finance Director
are primarily responsible for maintaining
dialogue with shareholders, supported by the
Company’s broker.
• The Chief Executive and Finance Director hold
both one-to-one and group meetings with
shareholders and the investing community
following the announcement of the annual and
interim results. The Chairman also attends a
number of these group meetings.
• Following these meetings, the Group’s
brokers provide independent and anonymised
feedback to the Board on shareholders’ views.
Governance
Governance
16
16
Corporate Governance
Statement CONTINUED
CATEGORY: DELIVER GROWTH
3
CATEGORY: DELIVER GROWTH
4
PRINCIPLE: TAKE INTO ACCOUNT WIDER
STAKEHOLDER AND SOCIAL RESPONSIBILITIES
AND THEIR IMPLICATIONS FOR LONG TERM
SUCCESS.
PRINCIPLE: EMBED EFFECTIVE RISK
MANAGEMENT, CONSIDERING BOTH
OPPORTUNITIES AND THREATS, THROUGHOUT
THE ORGANISATION.
• The key risks and the approach taken to
mitigate these is detailed in the Annual Report
and Accounts. The key risks identified are
listed in the Annual Report elsewhere.
• Shoe Zone takes its wider stakeholder
population into account within its decision
making processes.
• Examples of this are:
• The Shoe Zone supplier manual outlines
minimum working practices that we expect
from all our suppliers.
• The buying team, and in some instances the
Chairman and Chief Executive, visit factories
that supply us with manufactured product.
• We hold employee forums.
• We are working with suppliers to eliminate
plastic materials from the supply chain as far as
possible.
• We collect all plastic and cardboard from our
stores. Where possible, we reuse or recycle
cardboard and recycle plastic through a third
party.
• Shoe Zone is committed to eliminating all
forms of slavery and the company website
outlines the actions we are taking to ensure
that we are supportive of the wider movement.
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17
17
Corporate Governance
Statement CONTINUED
5
CATEGORY: MAINTAIN A DYNAMIC
MANAGEMENT FRAMEWORK
6
CATEGORY: MAINTAIN A DYNAMIC
MANAGEMENT FRAMEWORK
PRINCIPLE: MAINTAIN THE BOARD AS A WELL-
FUNCTIONING, BALANCED TEAM LED BY THE
CHAIR.
PRINCIPLE: ENSURE THAT BETWEEN THEM
THE DIRECTORS HAVE THE NECESSARY UP-TO-
DATE EXPERIENCE, SKILLS AND CAPABILITIES.
• The Board consists of three Executive Directors
and two Non-executive Directors.
• Please refer to the Investor Relations section of
the website for further details of the Directors.
• The Executive Chairman is Charles Smith,
who is also a major shareholder with 25.80%
shareholding.
• The remaining Executive board members are
Anthony Smith, Chief Executive and Terry
Boot, Finance Director. Anthony Smith is the
largest shareholder with 32.27%
• The senior Non-Executive Director is Victoria
Norrish, who is the Chair of the Audit
Committee.
• The remaining Non-Executive Director is
Malcolm Collins. He is Chairman of the
Remuneration Committee.
• Within the Executive Directors, Anthony
Smith is a full-time Director. Charles Smith is
employed for four days a week.
• The Non-executive Directors are selected
for the specific skills and expertise that they
contribute to the business. This ranges from
experience of accounting, footwear retail and
supply chain expertise.
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18
Corporate Governance
Statement CONTINUED
7
CATEGORY: MAINTAIN A DYNAMIC
MANAGEMENT FRAMEWORK
8
CATEGORY: MAINTAIN A DYNAMIC
MANAGEMENT FRAMEWORK
PRINCIPLE: EVALUATE BOARD PERFORMANCE
BASED ON CLEAR AND RELEVANT
OBJECTIVES, SEEKING CONTINUOUS
IMPROVEMENT.
PRINCIPLE: PROMOTE A CORPORATE CULTURE
THAT IS BASED ON ETHICAL VALUES AND
BEHAVIOURS.
• The Group seeks to promote an open culture
where all employees feel that they contribute
to the ongoing success of the business.
• We operate a non-contractual profit share
scheme that rewards employees, based on the
overall company profit performance.
• The Executive Board consists of the two main
shareholders, Anthony Smith and Charles
Smith, along with Terry Boot.
• Within the organisation there is also a wider
Trading Team that has functional responsibility
for the business.
• The Board is constantly reviewing its own
performance and that of the Team including
its relevance and constitution as the business
develops and grows. We look to identify those
individuals who excel in their role and develop
them through appointment to the Trading
Team and measure their success as part of the
Group and the wider group.
Governance
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19
19
Corporate Governance
Statement CONTINUED
9
10
CATEGORY: BUILD TRUST
CATEGORY: MAINTAIN A DYNAMIC
MANAGEMENT FRAMEWORK
PRINCIPLE: MAINTAIN GOVERNANCE AND
PROCESSES THAT ARE FIT FOR PURPOSE AND
SUPPORT GOOD DECISION-MAKING BY THE
BOARD.
PRINCIPLE: COMMUNICATE HOW THE
COMPANY IS GOVERNED AND ITS
PERFORMANCE BY MAINTAINING A DIALOGUE
WITH SHAREHOLDERS AND OTHER RELEVANT
STAKEHOLDERS.
• All shareholders are invited to make use of
the Group’s Annual General Meeting to raise
any questions regarding the management or
performance of the Group.
• Following the announcement of results
the Group will also offer the chance for
shareholders to meet the Chairman, Chief
Executive and Finance Director to discuss
performance and future plans.
• All voting results for the Annual General
Meeting on resolutions are available on the
website and the reports of Board Committees
are set out in the Annual Report and Accounts
each year.
• The Board meets around six times per year.
Agendas and papers are issued in advance of
the meeting in order to allow each member
to prepare thoroughly. All Non-Executive
Directors are expected to attend these
meetings.
• The Remuneration Committee and Audit
Committee meet at least once per year and
their reports are contained in the Annual
Report and Accounts.
• Draft minutes are circulated for all meetings
and following feedback, approved by the
various boards at their next meeting.
• Non-Executive Directors are also called on
where their expertise or advice would benefit
the Group, such as pension negotiations,
selection of a new audit partner, product range
reviews or the selection of other advisors.
• Management meetings are also held
periodically with other key senior members of
the Group who hold functional responsibility.
Information is disseminated through this
group to the wider business and updates and
feedback sought on key topics and areas.
Governance
20
Corporate Governance
Statement CONTINUED
The Board
The Board comprises of three Executive Directors (including the Chairman) and two 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;
• approval of corporate strategy;
• approval of income, expenditure and capital budgets;
• oversight of operations ensuring adequate systems of internal control and risk
management are in place;
• to review business performance against the objectives that it has set;
• to monitor the integrity of the financial statements and approve the annual and interim
reports;
• approval of the dividend policy;
• determining changes to the structure and composition of the Board;
• determining remuneration policy; and
• approval of communications with shareholders and the market.
Details of each of the Directors are given in their biographies on page 23.
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 QCA 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.
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21
Corporate Governance
Statement CONTINUED
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 all 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 Group’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 Victoria Norrish. 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 24.
Governance
22
Board of Directors
Chairman
CHARLES SMITH
Charles joined Shoe Zone in 1998, becoming Chief Operating Officer in 2001. He was
appointed Chairman in January 2020. Charles is a founder and Trustee of the Shoe Zone Trust.
Chief Executive
ANTHONY SMITH
Anthony joined Shoe Zone in 1993 as Marketing Manager before becoming Chief Executive in
1997. Anthony was appointed Chairman in June 2016. He was re-appointed as Chief Executive
in August 2019. Anthony is a founder and Trustee of the Shoe Zone Trust.
Finance Director
TERRY BOOT
Terry Joined Shoe Zone in March 2021 as Finance Director. He was most recently the Finance
Director and then CEO at the Company of Master Jewellers, having previous been in the
footwear retailing industry for 26 years. From 1998 to 2016 he was the Finance Director at
Brantano and Jones Bootmaker.
Company Secretary
CATHERINE BOWEN
Catherine joined Shoe Zone in September 2018 as General Counsel and was appointed
Company Secretary in September 2019. Catherine qualified as a solicitor in 2001 and has
extensive legal experience in the retail sector, and is a specialist in landlord and tenant matters.
Catherine also taught, part time, on the Law Degree at the University of Leicester for eight
years, while continuing to practice.
Non-executive Director
MALCOLM COLLINS
Malcolm joined as a Non-Executive Director in June 2016. Malcolm was most recently Group
Buying and Design Director for footwear and accessories at New Look, overseeing the group’s
£550m footwear division. Prior to Malcolm’s 16 years at New Look, he spent 23 years at Clarks
Shoes. Malcolm worked in a number of roles during his career at Clarks, including 13 years as
Women’s Footwear Buyer.
Non-executive Director
VICTORIA NORRISH
Victoria joined as a Non-Executive Director in August 2020. Victoria joined Blue Light Card
Limited in January 2021 as Chief Financial Officer. She was previously at TheWorks.co.uk plc
from 2008 to 2020 as Supply Chain Director (January 2019 to December 2020), Strategic
Development Director (July 2018 to January 2019) and Finance Director (November 2008 to
July 2018). She commenced her accountancy career as an auditor with KPMG and Godkin &
Co.
Governance
23
Remuneration Report
This is the Company’s tenth Directors’ Remuneration
Report since it listed on AIM in May 2014.
The Remuneration Committee consists of the Non-executive Directors. Malcolm Collins is the
Chairman and Victoria Norrish also serves on the Committee.
Anthony Smith and Charles Smith may attend the Committee meetings by invitation.
Duties
The main duties of the Remuneration Committee are set out in its Terms of Reference adopted
25 April 2014 and include:
• responsibility for agreeing, with the Board, the framework or broad policy for the
remuneration of all Executive Directors of the Company, including pension rights,
compensation payments, bonuses, incentive payments, share options and benefits in kind;
• obtain reliable, up-to-date information about remuneration in other companies of
comparable scale and complexity and market practice generally;
• approve the design and determine targets for any performance-related pay schemes
operated by the Group and approve the total annual payments made under such schemes
only for Directors;
• monitor the level and structure of remuneration for Directors.
• ensure the contractual terms on termination, and any payments made, are fair to the
individual and the Group, and in accordance with any legal and regulatory requirements;
and
• agree the policy for authorising claims for expenses from the Directors.
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24
24
Remuneration Report
CONTINUED
Directors and Directors’ interests
The Directors listed below all served through the year. Their interests in the issued share capital of the
Company as at the date of this report were as follows:
Executive Directors
Anthony Smith
Charles Smith
Terry Boot
Non-executive Directors
Victoria Norrish
Malcolm Collins
Number of
ordinary
shares
Percentage
of issued
share capital
14,926,557
(1)
11,933,694
(2)
32,626
Nil
Nil
32.27%
25.80%
0.07%
Nil
Nil
(1)
(2)
The registered holder of these shares is Slawston Investments Limited, an entity jointly owned by Anthony
and Catherine Smith
The registered holder of these shares is Sheepy Magna Investments Limited, an entity jointly owned by
Charles and Sian Smith
Governance
Governance
25
25
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)
LTIP paid
within year
Benefits
Pension
Contribution
£
£
£
Executive Directors
Anthony Smith
FY23
359,250
183,750
FY22
350,000
175,250
Charles Smith
FY23
230,000
117,600
Terry Boot
FY22
224,000
112,250
FY23
FY22
138,000
127,500
70,000
65,250
Non–executive Directors
Malcolm Collins
Victoria Norrish
FY23
FY22
FY23
FY22
20,000
20,000
30,000
30,000
-
-
-
-
Total
FY23
777,250
371,350
FY22
751,500
352,750
-
-
-
-
-
-
-
-
-
-
-
-
17,120
23,306
15,886
15,180
6,310
8,620
-
-
-
-
Total
£
560,120
548,556
363,486
351,430
£
-
-
-
-
16,500
230,810
15,300
216,670
-
-
-
-
20,000
20,000
30,000
30,000
39,316
47,106
16,500
1,204,416
15,300
1,166,656
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26
26
Remuneration Report CONTINUED
Directors’ Service contracts and employment letters
The Executive Directors have entered into service agreements with the Group with effect from
1 May 2017 or in the case of Terry Boot his date of commencement. Salaries for the upcoming
year are set out below:
Anthony Smith
Charles Smith (1)
Terry Boot
(1) 4 days per week.
£
385,875
246,960
150,000
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 and Charles Smith and 6
months for Terry Boot. Other fixed elements of the Executive Directors’ remuneration comprise
a company car provision, life assurance and private medical insurance. Terry Boot is entitled to a
Pension Contribution of 12% 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:
Malcolm Collins
Victoria Norrish
£
20,000
30,000
The remuneration report was approved by the Board.
On behalf of the Board
Malcolm Collins
Chairman of the Remuneration Committee
Date: 9 January 2024
Governance
27
DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023
The Directors present their Annual Report and audited
financial statements of the Company and the Group for
the 52 weeks ended 30 September 2023.
The Directors present their Annual Report and audited financial statements of the Company and
the Group for the 52 weeks ended 30 September 2023.
The disclosure requirements of the Companies Act 2006 have been met by the contents of
this Directors’ Report, apart from the likely future developments in the business and existence
of stores which are included within the Strategic Report which should therefore be read in
conjunction with one another.
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 21 of the financial statements. The
Company’s share capital consists of one class of ordinary shares. As at 30 September 2023 there
were 46,250,000 ordinary shares of £0.01 each. The authorised share capital of the Company is
unlimited.
At the AGM held on 9th March 2023, the Board was granted authority to allot shares in the
Company of up to approximately a third of the Company’s issed share captial. The board was
also granted authority to allot further shares having an aggregate nominal value of £161,682
in connection with a pre-emtive rights issue (representing approximately a further third of the
Company’s issued share capital). At the 2024 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 are listed on the directors and advisors page.
Directors’ Interests
Information about the Directors’ interests in the shares of the Company can be found in the
Directors’ Remuneration Report.
Governance
28
DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
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 2,593 (October 2022: 2,756) 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.
All employees are able to contribute to the ongoing success of the business through regular
contact between management and employees. We promote equal opportunities and do not
tolerate discrimination of any kind.
Annual general meeting
The Company’s tenth AGM will be held on Tuesday 12 March 2024 at 10.00 a.m. at the Company’s
registered office at Haramead Business Centre, Humberstone Road, Leicester, Leicestershire LE1
2LH. The Notice of AGM appears on pages 102 to 105.
Set out below is an explanation of certain resolutions which will be proposed at the AGM.
Final Dividend (resolution 2)
The Directors are proposing a final dividend of 8.9p per ordinary share, amounting to a final
dividend of approximately £4.1m, which is subject to approval by the shareholders at the AGM.
Special Dividend (resolution 3)
The Directors are also proposing a special dividend of 6.0p per ordinary share, amounting to
a special dividend of approximately £2.8m in light of the continued strong performance, cash
generation and robustness of the Company’s balance sheet. When aggregated with the propsed
final dividend in resolution 2 (being £4.1m), and the interim dividend of £1.2m paid in March,
this provides for a total cash return to shareholders of, in aggregate, £8.1m. The approval of this
resolution is not dependant on the approval of resolution 2, nor is the approval of resolution 2
dependent on the approval of this resolution.
Governance
29
DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
Appointment of Directors (resolutions 4 to 8)
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 re-election at the AGM.
Biographical details of each Director appear on page 23. The Board believes that each Director
continues to demonstrate their commitment to their role and that, collectively; the Directors’
skills complement each other and enhance the overall operation of the Board.
Political donations (resolution 11)
The Company is prohibited under the Companies Act 2006 from making donations to political
parties or organisations or to independent election candidates 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 year the Company made no political donations and incurred no political
expenditure. The Company does not intend to make any such donations or incur any such
expenditure this year.
Authority to allot shares (resolution 12)
By law, the Directors are not permitted to allot new shares (or to grant rights over shares)
unless authorised to do so by shareholders. Resolution 12 seeks shareholder authority to allow
the Directors to allot shares having an aggregate nominal value of £154,089.43 representing
approximately a third of the Company’s issued share capital (excluding shares held in treasury) on
31 January 2024. In addition, shareholder authority is sought to allot shares having an aggregate
nominal value of £154,089.43 in connection with a pre-emptive rights issue (representing
approximately a further third of the Company’s issued share capital (excluding shares held in
treasury) on 31 January 2024).
Disapplication of pre-emption rights (resolutions 13 and 14)
Resolutions 13 and 14 concern the disapplication of pre-emption rights. Under the Companies
Act 2006, all shareholders are entitled to participate on a pre-emptive basis in all issues of shares
for cash, unless shareholders have authorised the Directors otherwise.
Paragraph (a) of resolution 13 gives the Directors authority to make arrangements dealing with
certain legal, regulatory and practical matters in connection with a pre-emptive issue of shares.
Paragraph (b) of resolution 13 gives the Directors the necessary authority to either allot shares
Governance
30
DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
or sell shares held in treasury for cash on a non pre-emptive basis up to an aggregate nominal
amount of £23,113.41 (being 2,311,341 ordinary shares). This is equivalent to approximately
5% of the issued share capital of the Company (excluding shares held in treasury) on 31 January
2024. This resolution also disapplies statutory pre-emption rights to the extent necessary to
facilitate rights issues.
Resolution 14 is being proposed as a separate resolution to authorise the Directors to allot a
further approximately 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 12 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 the
March 2015 Pre-emption Group Principles. The Pre-emption Group Principles were updated in
November 2022 to provide companies with greater flexibility to undertake non-pre-emptive
issuances both generally and in connection with acquisitions and specified capital investments
(in each case, representing up to 10% of the company’s issued share capital). However,
notwithstanding the increased flexibility allowed by the revised Pre-emption Group Principles,
the Company has, again, decided to seek disapplication authorities in line with those sought in
previous years.
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 2025 or 11 March 2025, whichever is earlier.
Authorisation for the Company to purchase its own shares
(Resolution 15)
Resolution 15 seeks authority for the Company to make market purchases (within the meaning of
section 693(4) of the Companies Act 2006) of the Company’s ordinary shares on such terms and
in such a manner as the Directors may determine from time to time, subject to the limitations set
out in the resolution. If Resolution 15 is passed, the Company will be authorised to purchase up
to a maximum of 4,622,683 ordinary shares, representing approximately 10% of the Company’s
issued ordinary share capital (excluding shares held as treasury shares) as at 31 January 2024.
Resolution 15 also sets out the minimum and maximum price that the Company may pay for
purchases of its ordinary shares.
If Resolution 15 is passed, the authority for the Company to purchase its ordinary shares will
remain effective until the conclusion of the next AGM of the Company to be held in 2025 or 11
March 2025, whichever is earlier.
The Directors will only exercise this buy-back authority, after careful consideration, when it is
in the best interests of the shareholders generally. Any purchases would be financed out of
distributable profits and shares purchased would either be cancelled (and the number of shares
in issue reduced accordingly) or held as treasury shares, with a view to using any such shares held
in treasury for future distributions to employees.
Governance
31
DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
Form of proxy
Please note you will not receive a form of proxy for the March 2024 AGM in the post. You may vote
online which you can do at www.signalshares.com. To register you will need your Investor Code,
which can be found on your share certificate. For shares held through CREST, proxy appointments
may be submitted via the CREST proxy voting system. Otherwise, you may request a hard copy
proxy form directly from our Registrars, Link Group, by emailing shareholderenquiries@linkgroup.
co.uk or on 0371 664 0300 if calling from the United Kingdom, or +44(0)371 664 0300 if calling
from outside the United Kingdom.
Calls are charged at the standard geographical rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable international rate. Lines are open between
9.00 a.m. – 5.30 p.m. Monday to Friday excluding public holidays in England and Wales.
All online votes or proxy appointments should be submitted so as to be received no later than
10.00 a.m. on 8 March 2024.
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
Cooper Parry Group Limited have issued their independent report on these financial statements
to the shareholders of Shoe Zone plc. The report can be found on pages 43 to 48.
The auditor, Cooper Parry Group Limited has 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 and relevant advisors 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.
Governance
32
DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
Director’s statement of compliance with the duty to
promote the success of the group (Section 172(1)
statement)
The Directors have acted in a way that they consider, in good faith, that promotes the success
of the Group for the benefit of its members as a whole, and in doing so have given regard to
(amongst other matters):
External relationships
The vast majority of the Group’s products are manufactured overseas in China and to a lesser
extent in India and Europe. As a result, the Group is subject to the risks associated with
international trade, particularly those common in the importation of goods from developing
countries, including the imposition of taxes or other charges on imports, compliance with and
changes to import restrictions and regulations, and exposure to different legal standards and the
burden of complying with a variety of foreign laws and changing foreign government policies.
The Group’s policy for the payment of suppliers is to agree payment terms in advance and to
abide by such terms.
The Group continually develops strategies to further improve its strong relationship with its
suppliers.
Our people
Our long-term success depends on looking after the best interests of our employees, customers,
shareholders and suppliers.
All employees are able to contribute to the ongoing success of the business through regular
contact between management and employees. We promote equal opportunities and do not
tolerate discrimination of any kind. We operate a non-contractual profit share scheme that
rewards employees based on the overall company profit performance. Details on the number of
people employed can be found in note 7 of the financial statements.
The Board meets regularly and communicates with our people on a regular basis to ensure they
all understand our strategic objectives both short and long-term.
Charity
We donated over £820,000 to charitable causes. These donations are mainly targeted at children
in poverty/difficult circumstances locally, nationally and internationally and delivered via The
Shoe Zone Trust and we commit to contributing at least 2% of profits into the trust each year.
Environment
We recognise the impact of our activities on the environment. We continually review our
consumption of single use plastics and have eliminated them in all own label products. We recycle
all cardboard and plastic waste from our stores and Head Office. We use sea transportation to
reduce emissions, the electricity we use comes from 100% renewable sources, our distribution
Governance
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DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
centre is powered by solar panels, gas boilers are being replaced by heat pumps in a number of
stores, we have replaced old lighting with more efficient LED lighting and our company car fleet
is either hybrid or fully electric. We aim to reduce consumption on everything we use as the best
way to reduce our carbon footprint.
Political donations
During its last financial period the Group made no political donations and incurred no political
expenditure. The Group does not intend to make any such donations or incur any such
expenditure this year.
Non-financial and sustainability information
Sustainability report
The Group believes that operating in a safe, ethical and responsible manner is at the heart of
creating sustainable value for all our stakeholders.
Environment
As the Group is listed on the LSE AIM market, we fall within the newly introduced Climate-
Related Financial Disclosures (“CRFDs”) regime. The 4 pillars of this regime are governance,
strategy, metrics and targets, and risk management.
This is the first year of CRFD compliance for the business and represents the first stage of our
climate disclosure journey. We are fully committed to providing the disclosures and continual
improvement in climate risk management and reduction of carbon emissions.
Governance
Our Board oversees our approach to sustainability, including climate change. This is an emerging
topic of conversation that the Board takes seriously. The Board meet regularly and identify
current and emerging risks and opportunities, review planning and monitor progress. The Board
are engaged in various tasks to ensure our governance in regard to sustainability is adhered
to which includes but not limited to; engaging a third party to provide us with our energy
consumption and the prioritisation of resource and capital to replace inefficient LED lighting,
install solar panels and invest in electric vehicles. This is a focus for the future.
Strategy
Our strategy comes from the identification of our main impact areas belonging to the categories
of greenhouse gas emissions, waste (packaging) and energy consumption.
Our short-term strategy is to:
1.
2.
3.
Prioritise risk and opportunities where we can make a material impact.
Raise awareness across teams at all levels within the business so their environmental
consideration in day-to-day business decisions is greater.
Build greater transparency in the way we report and monitor progress.
Governance
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DIRECTORS’ REPORT
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Risk management
Our approach to identifying, assessing and managing environmental risks, including climate
related risk, is embedded within our overall approach to risk management outlined in the
Governance section above. Risks and opportunities are identified at both group and subsidiary
level.
Our next steps are to establish a Group Risk Register in which ESG would be classed as a material
‘current’ risk and to refresh this risk identification exercise annually and to canvass a wider pool
of colleagues to review our ESG risk and opportunities fully.
Environmental risks may present as financial or non-financial risks depending on the extent to
which their impacts can be quantified, and how they have been classified.
Climate-related risks and opportunities
The following classification has been used:
A.
B.
C.
Time Horizon – short term (0-3 years), medium term (3-5 years) and long term
(10+ years)
Transition risks are those risks associated with transition to a net zero economy
and can translate into potential financial impacts in the following categories:
policy and legal, technology, market, and reputation.
Physical risks are those climate change risks such as increased frequency of
extreme weather events or sustained impacts from temperature rises.
Transitional risks and opportunities in the short term:
Physical risks and opportunities in the medium term
Risk
Risk
Market
Market volatility across energy and fuel pricing could lead to
fluctuating consumer demand and increases in our store and
warehouse operating costs and the cost of goods.
Policy and legal
Complying with climate related legislation around enhanced
emissions reporting obligations and increased environmental-led
taxation. Potential increase in import tariffs.
Opportunity
Reputation
Our customer proposition reflects changing customer demand and re-
quirements leading to an increase in market share.
Failure to comply could lead to fines and loss of reputation.
Opportunity
Technology
Introducing more efficient equipment across our retail and ware-
house estate such as energy efficient lighting and improving insula-
tion to reduce consumption and cost. Utilising technology through
improved ordering systems to reduce waste, improving reputation.
Requires sufficient capital allocation.
Governance
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DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
Risk
Risk
Business interruption and increased costs due to the failure to
respond and mitigate against climate change and resulting increased
frequency and severity of extreme weather events, for example
increased flooding could directly impact our stores and warehouses,
or indirectly through our wider supply chain partners in terms of
sourcing or shipping product by causing global shipping issues.
Extreme variability in weather patterns could lead to sales uncertainty
making demand planning difficult and having certainty over sales and
profit performance given the seasonable nature of our business.
Scenario analysis
We have conducted peer analysis to understand the number of different scenarios businesses
are modelling. We have found that most peers are modelling 2 scenarios, which are:
• 1.5 C by 2100: Orderly transition to the Paris-aligned goal occurring by 2100, with
temperature rising 1.5 C above pre-industrial levels.
• 4.0C by 2100: Failure of countries to meet their Paris-aligned goals, resulting in higher
emissions and temperatures rising to an average of 4 degrees Celsius above industrial
levels.
Some of our peers have gone further, by analysing higher temperature rises or no rise at all.
Presently we think the 2 scenarios above are sufficient for giving readers an opportunity to
understand the possible transformational effects of climate change. We will continue to assess
the appropriateness of our scenarios and will likely alter them over time to reflect a changing
environmental landscape and to ensure comparability with our peer group.
Our analysis of physical climate risks are aligned with recognised climate scenarios, specifically
the Intergovernmental Panel on Climate Change’s (IPCC) Representative Concentration Pathway
(RCP) scenarios which provide a uniform framework for exploring potential climate changes and
related impacts. RCPs are used globally for climate modelling and give access to a wide range of
peer-reviewed and accepted climate datasets, as well as allowing consistency across territories.
1.5 C Scenario
In this scenario, governments around the world would need to meet and exceed their current
pledges under the Paris Agreement. They would do this through a combination of energy-
demand reductions, decarbonisation of electricity and other fuels, electrification of energy end
use, deep reductions in agricultural emissions, and some form of carbon dioxide removal.
The Group sources a large proportion of product from overseas, changes in climate of 1.5 C may
have a direct impact on the availability of this product through both extended delivery times
and possible regional changes to the locations that currently produce our products, this can be
mitigated by longer lead times on orders and planning earlier deliveries for seasonal products.
An increase in compliance costs and reputational impacts are a potential impact on our business.
As a retail business, our focus is our customers and our reputation is very important to us. We
will ensure we are aware of current and future changes in legislation affecting the Group and will
work with industry bodies to identify changes in legislation and the implications on the business.
Governance
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DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
4.0 C Scenario
Under this scenario, governments fail to meet their pledges under the Paris Agreement. Action
is taken to reduce emissions, however, at a slower rate compared to the 1.5 Celsius scenario.
Consequently, we would see a much slower reduction in energy consumption and a slower shift
towards renewables. The higher temperature increases would lead to a range of physical risks,
including heat waves, colder winters, droughts, flooding, and smog to name just a few.
The Group currently has a portfolio of over 300 stores, in isolation the effects to individual stores
would not have a material impact on Group performance. As the Group operates with a single
central warehouse any impacts on services will have an immediate material effect on trade.
Product and services
The Group sources a large proportion of product from overseas, changes in climate of 4 C may
have a direct impact on the availability of this product through both extended delivery times
and possible regional changes to the locations that currently produce our products, this can be
mitigated by longer lead times on orders and planning earlier deliveries for seasonal products.
The Group may incur additional storage costs for products if the phasing of supply is altered,
this may include, but not limited to, alternative warehousing facilities at a different location,
demurrage charges as product may be held at point of entry and reduced turnover due to delays
distributing product to the stores.
Increased severity of extreme weather events will have an effect on retail locations, especially
those located on the coast or near to flood plains. Increased flooding in the UK is the most
significant physical risk, disrupting our supply chain or causing damage to our assets/stock.
Flood risk
Flooding of warehouse facilities will have an immediate impact on trade, in addition to the
impacts on products and services mentioned above any flooding may compromise a large
quantity of stock. Our main retail distribution centre is in the Midlands which has a lower risk of
being affected by floods than several of our retail locations which are located in high flood risk
areas. Whilst the warehouse contains product stored on multiple floors there are limitations as to
the capacity on each floor and flooding will cause damage to a proportion of stock. Prolonged
denial of access will prevent distribution to the stores and have material impacts on trade.
Mitigations include:
• Business continuity plans to ensure plans are in place and reviewing key infrastructure to
minimise impacts from severe weather events.
• Working with experts to identify issues and risks with changes in climate.
• Working with suppliers to understand their climate resilience plans and their key climate
effected locations.
• Improving data collection to support climate related reporting requirements and to gain
insight.
Governance
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DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
Energy consumption
Despite all current energy saving measures that have been adopted by the Group an increase
of this magnitude would have a significant impact on the Group’s energy consumption, leading
to additional costs. Fluctuations in the market materially increase the cost of electricity, gas and
fuel. We minimise the impact of fluctuations in electricity and fuel costs by providing budget
certainty by engaging with consultants.
Metrics and targets
The Group has adopted the following targets:
• Establish carbon reduction plans at all sites across the Group
• Report energy consumption and carbon emissions annually
In FY24 we will set longer term targets across scope 1 and 2 and will continue to work on
understanding our wider impact and how we can work with our suppliers if there are areas
for collaboration. We recognise the value of regularly tracking progress, are committed to
a transparent reporting process and have used the Greenhouse Gas (GHG) protocol and
normalised metrics when calculating our GHG performance.
Carbon reduction plans
Carbon and energy reduction targets are being established across the business. FY24 targets
will include a reduction to Scope 1 Fuel, and a reduction to Scope 2 Electricity and Gas and to
set longer term targets on both.
Our progress to date includes:
• a 19.7% reduction in intensity ratios since the FY21 baseline.
• We have taken delivery of our first fully electric cars and are moving to hybrid models for
the rest of our company car fleet.
• We use 100% renewable energy sources and part of our distribution centre is powered by
solar panels.
• Gas boilers are being replaced with efficient heat pumps in a number of stores.
• Our Head office and distribution centre is equipped with highly efficient LED lighting and
• We have a programme in place to better insulate stores and to change to LED lighting as
we continue through our refits.
Achieving our FY24 targets includes a number of initiatives including;
• Working with our suppliers to review plastic and cardboard used in packaging and when
labelling our products.
• Reviewing and increasing our recycling strategies including initiatives at all of our retail
outlets as well as our Distribution Centre and Head Office sites.
• Instigate a policy review into single use plastics.
• Review of delivery schedules to all of our stores to further improve efficiency and to
reduce deliveries and idle time.
Governance
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DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
Future
• We are currently exploring the possibility of an instore scheme for recycling end of life
shoes to reduce overall waste. This initiative is in conjunction with two Universities and a
number of footwear retailers.
Reporting energy consumption and carbon emissions
We report greenhouse gas Scope 1, 2 emissions in line with the Streamlined Energy and
Carbon Reporting (SECR) regulations.
Our FY24 target is to collate data and understand suppliers plans to enable us to move
towards reporting our wider emissions across the Group.
Given the Group makes regular disposals and acquisitions we do not consider absolute
carbon emissions to be an appropriate method for tracking emissions, instead we focus on
carbon intensity ratios.
Stores track their energy usage from a number of sources, including meter readings, mileage
reports, and invoices, then converts these inputs to energy (kWh) and carbon emissions
(tCO2e) using relevant conversion factors. Conversion factors are published by the UK
Department for Environment, Food and Rural Affairs and the US Environmental Protection
Agency (EPA).
Our energy usage and carbon emissions are shown on the following page;
Governance
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DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
Streamlined Energy and Carbon Reporting (SECR)
Energy consumption breakdown (kWh):
Electricity
Natural gas
Transport fuel
Totals
Greenhouse gas emissions (Tco2e):
Natural gas
Transport fuel for company vehicles
Total
Total
From Purchased Electricity, Steam, Heat & Cooling
From Other Activities inc. Process & Fugitive
Total gross emissions
Renewable electricity
Total net emissions
Intensity ratios
Annual MWh per £m Turnover
Annual tCO2e per £m Turnover
2023
10,444
2,225
4,177
16,846
407.02
992.02
1,339.04
2,162.74
14.70
2,177.44
3,376.48
(2,036.16)
1,540.32
2022
13,989
2,910
4.373
21,272
531.19
1,047.25
1,578.44
2,705.22
7.82
2,713.04
4,291.48
-
4,291.48
101.69
9.30
136.22
27.48
The intensity ratios indicate an improving position if compared to 2022 and 2021.
SECR
Energy consumption (MWH)
Total Net Emissions
Intensity - MWH per Turnover
Intensity - Tco2e per Turnover
2023
16,846
1,540
101.69
9.30
2022
21,272
4,291
136.22
27.48
2021
15,086
3,192
126.63
26.79
Some of the disclosure requirements of the streamlined energy and carbon reporting regulations
are included in the non-financial and sustainability information statement above.
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DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
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 despite the current retail trading environment. 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 new store and refit programme results, along with the positive digital performance, combined with
the satisfactory cash position gives the Directors a reasonable basis on which to satisfy themselves that the
business is a going concern. The Group has prepared forecasts and budgets which shows the Group has
sufficient cash to meet its day to day liabilities as they fall due. On that basis, the Directors have prepared the
financial statements on a going concern basis.
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 UK adopted International
Financial Reporting Standards (UK adopted IFRSs) and the company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and
applicable law). Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or
loss of the group for that period. The Directors are also required to prepare financial statements in accordance
with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment
Market.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs, subject to any material departures
disclosed and explained in the financial statements; and
• 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. 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.
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DIRECTORS’ REPORT
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023 CONTINUED
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 ongoing 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:
• So far as they are aware, there is no relevant audit information of which the Company’s
auditors are unaware; and
• They have 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:
Anthony Smith
Chief Executive
Date: 9 January 2024
42
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SHOE ZONE PLC
Opinion
We have audited the financial statements of Shoe Zone plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the 52 weeks ended 30th September 2023 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 company statement of financial position,
the company statement of changes in equity and the related notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and UK adopted International Financial Reporting Standards (UK
adopted IFRSs) as adopted by the European Union. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is applicable law and
United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced
Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the
parent company’s affairs as at 30th September 2023 and of the group’s profit for the 52
weeks then ended;
• the group financial statements have been properly prepared in accordance with UK
adopted international accounting standards;
• the parent company 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the statutory financial statements section of our report.
We are independent of the Group and parent company in accordance with the ethical
requirements that are relevant to our audit of the statutory financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director’s use of the going
concern basis of accounting in the preparation of the financial statements is appropriate. Our
evaluation of the director’s assessment of the entity’s ability to continue to adopt the going
concern basis of accounting included:
43
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SHOE ZONE PLC CONTINUED
• reviewing management’s cash flow forecasts for a period of 12 months from the date of
approval of these financial statements;
• applying reasonable “worst case” sensitives to management’s forecasts and assessing
remaining cash headroom within those scenarios; and
• review of results post year end to the date of approval of these financial statements and
assessment against original budgets.
From our work we noted that the Group has significant cash balances and forecasts support
that the Group will continue to be able to meet its liabilities as they fall due. Based on the
work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the Group’s ability
to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue. Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the statutory financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit, and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the statutory financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Carrying value and impairment of Plant and Equipment
and Right of Use Assets in relation to the store portfolio
Matter
The Group has significant plant and equipment and right of use assets in relation to the
portfolio of stores it operates. The Group’s assessment of the carrying value of assets relating
to each store requires significant judgement, in particular regarding cash flows, growth rates
and discount rates.
Response
• We obtained information on performance by store in order to assess for indication of
impairment.
• We considered historical trading performance by comparing recent growth rates of both
revenue and operating profit/loss by store.
• We assessed the appropriateness of the assumptions concerning growth rates and inputs
to the discount rates against latest market expectations.
• We performed sensitivity analysis to determine whether an impairment would be required
if costs increase at a higher than forecast rate.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SHOE ZONE PLC CONTINUED
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that,
individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of these financial statements.
We apply the concept of materiality in planning and performing our audit, in determining the
nature, timing and extent of our audit procedures, in evaluating the effect of any identified
misstatements, and in forming our audit opinion.
The materiality for the group financial statements as a whole was set at £1,214,000. This has
been determined with reference to the benchmark of the group’s profit before tax which we
consider to be an appropriate measure for a group of companies such as these. Materiality
represents 7.5% of group profit before tax.
The materiality for the parent company financial statements as a whole was set at £998,000.
This has been determined with reference to the benchmark of the parent company’s net assets
which we consider to be an appropriate measure for a parent company such as this. Materiality
represents 1.5% of the parent company net assets, which we consider to be an appropriate
measure for a holding company with investments in trading subsidiaries.
An overview of the scope of our audit
We adopted a risk-based audit approach. We gained a detailed understanding of the group’s
business, the environment it operates in and the risks it faces.
The key elements of our audit approach were as follows:
Our Group audit scope focused on the Group’s principal trading subsidiary, Shoe Zone Retail
Limited, which was subject to a full scope audit. Together with the parent company and its
group consolidation, which was also subject to a full scope audit, these entities represent the
principal business units of the Group and account for 100% of the Group’s revenue, 100% of
the Group’s profit before tax and 97% of the Group’s total assets. In performing our testing, we
utilised performance materiality of £1,032,000, equating to 85% of materiality.
In order to address the matters described in the Key audit matters section we performed
focused audit procedures over these areas, including reference to external market data and
publicly available market information in relation to assumptions used.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the annual report, other than the statutory financial statements and our
auditor’s report thereon. Our opinion on the statutory financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
45
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SHOE ZONE PLC CONTINUED
In connection with our audit of the statutory financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there is a material misstatement
in the statutory financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard.
Opinions on other matters prescribed by the Companies
Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year
for which the financial statements are prepared is consistent with the financial statements;
and
• the strategic report and the directors’ report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its
environment obtained in the course of the audit, we have not identified material misstatements
in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have
not been received from branches not visited by us; or
• the group or parent company financial statements are not in agreement with the account-
ing records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 41, the
directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SHOE ZONE PLC
CONTINUED
In preparing the financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularitieS, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is detailed below:
Our assessment focused on key laws and regulations the group has to comply with and areas
of the financial statements we assessed as being more susceptible to misstatement. These key
laws and regulations included but were not limited to compliance with the Companies Act 2006,
International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom, and
relevant tax legislation.
We are not responsible for preventing irregularities. Our approach to detecting irregularities
included, but was not limited to, the following:
• obtaining an understanding of the legal and regulatory framework applicable to the
Group and the parent company and determined that the most significant which are
directly relevant to specific assertions in the financial statements are those related to the
financial reporting framework, being international accounting standards in conformity with
the Companies Act 2006;
• obtaining an understanding of how the Group is complying with those legal and regulato-
ry frameworks by making enquiries of management, those responsible for legal and com-
pliance procedures and the Company Secretary. We corroborated our enquiries through
our review of board minutes;
• obtaining an understanding of the entity’s policies and procedures and how the entity has
complied with these, through discussions and sample testing of controls;
• obtaining an understanding of the entity’s risk assessment process, including the risk of
fraud;
• designing our audit procedures to respond to our risk assessment; and
• performing audit testing over the risk of management override of controls, our audit pro-
cedures involved:
• testing of journal entries and other adjustments for appropriateness, with a focus on
manual journals including those with unusual account combinations and those posted
directly to the consolidation that increased revenue or that reclassified costs from the
47
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SHOE ZONE PLC CONTINUED
profit and loss account to the balance sheet;
• evaluating the business rationale of significant transactions outside the normal course
of business;
• challenging assumptions and judgements made by management in its significant
•
accounting estimates, specifically those in relation to the dilapidation provision, the
defined benefit pension scheme position and the value of the derivative financial instru-
ments.
including testing of journal entries with a focus on material manual journals and other
adjustments for appropriateness, evaluating the business rationale of significant trans-
actions outside the normal course of business, and reviewing accounting estimates for
bias, specifically in relation to the dilapidation provisions, the defined benefit pension
scheme deficit and the value of the derivative financial instruments.
• These audit procedures were designed to provide reasonable assurance that the financial
statements were free from fraud or error. However, detecting irregularities that result from
fraud is inherently more difficult that detecting those that result from error, as those irreg-
ularities that result from fraud may involve collusion, deliberate concealment, forgery, or
intentional misrepresentations. Also, the further removed non-compliance with laws and
regulations is from events and transactions reflected in the financial statement, the less
likely we could become aware of it.
• The engagement partner assessed whether the engagement team collectively had the
appropriate competence and capabilities to identify and recognise non-compliance with
laws and regulations through the following:
• Understanding of, and practical experience with, audit engagement of a similar nature
and complexity, though appropriate training and participation; and
• Knowledge of the industry in which the client operates.
A further description of our responsibilities for the audit of the financial statements is located
on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Use of our report
This report is made solely to the group’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 group’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 group and the group’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Catherine Kelly (Senior Statutory Auditor)
For and on behalf of Cooper Parry Group Limited
Chartered Accountants and Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Castle Donington
Derby
DE74 2SA
48
CONSOLIDATED INCOME STATEMENT FOR THE 52
WEEKS ENDED 30 SEPTEMBER 2023
Note
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
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
4, 8
5
5
5
9
9
10
28
The notes on pages 54 to 95 form part of these financial statements.
£’000
165,657
(124,805)
40,852
(18,791)
(5,311)
16,750
-
(568)
16,182
(2,962)
13,220
27.79p
£’000
156,164
(119,764)
36,400
(16,620)
(5,104)
14,676
-
(1,113)
13,563
(2,718)
10,845
21.74p
Financials
49
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE
INCOME FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023
Note
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
Profit/(Loss) for the period
Items that will not be reclassified subsequently to
the income statement
Remeasurement gains on defined benefit pension
scheme
Movement in deferred tax on pension schemes
Share buy back
Items that will be reclassified subsequently to the
income statement
Fair value movements on cash flow hedges
25
20
21
Tax on cash flow hedges
Other comprehensive income for the period
Total comprehensive income for the year
attributable to equity holders of the parent
The notes on pages 54 to 95 form part of these financial statements.
£’000
13,220
(2,054)
513
(7,125)
(295)
54
(8,907)
£’000
10,845
5,798
(1,505)
(966)
1,129
(226)
4,230
4,313
15,075
Financials
50
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
Note
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
Registered Number : 08961190
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Corporation tax liability
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Employee benefit liability
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to equity holders of the Company
Called up share capital
Merger reserve
Capital redemption reserve
Cash flow hedge reserve
Retained earnings
Total equity and reserves
12
13
20
14
15
26
17
13
18
13
18
25
21
£’000
19,178
25,751
529
45,458
33,752
3,219
16,354
53,383
98,841
(24,353)
(13,071)
(1,026)
-
(38,450)
(22,219)
(2,766)
(2,054)
(27,039)
(65,489)
33,352
463
2,662
37
412
29,778
33,352
£’000
12,582
25,581
720
38,883
32,188
6,071
24,427
62,686
101,569
(22,801)
(14,870)
(1,108)
(1,910)
(40,689)
(20,975)
(2,662)
-
(23,637)
(64,326)
37,243
495
2,662
5
653
33,428
37,243
The notes on pages 54 to 95 form part of these financial statements. The financial statements were approved and
authorised for issue by the Board of Directors and were signed on its behalf by:
Anthony Smith, Chief Executive, Date: 9 January 2024
Financials
51
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED 30 SEPTEMBER 2023
Share
capital
Capital
redemption
reserve
Merger
reserve
Cash flow
hedge
reserve
Retained
earnings
Total
£’000
£’000
£’000
£’000
£’000
£’000
At 3 October 2021
Profit for the year
Defined benefit pension movements
Cash flow hedge movements
Share Buy Back
Deferred tax on other comprehensive
income
Total comprehensive income for the
year
Dividends paid during the year (note 11)
Total contributions by and distributions
to owners
At 1 October 2022
At 2 October 2022
Profit for the year
Defined benefit pension movements
Cash flow hedge movements
Share buy back
Deferred tax on other comprehensive
income
Total comprehensive income for the
year
Dividends paid during the year (note 11)
Total contributions by and distributions
to owners
500
-
-
-
(5)
-
-
-
-
495
-
-
-
(32)
-
(32)
-
-
-
-
-
-
5
-
-
-
-
5
-
-
-
32
-
32
-
-
2,662
(250)
20,506
23,418
-
-
-
-
-
-
-
-
10,845
10,845
-
-
1,129
5,798
-
-
(966)
5,798
1,129
(966)
(226)
(1,505)
(1,731)
903
14,172
15,075
-
-
(1,250)
(1,250)
-
-
2,662
653
33,428
37,243
-
-
-
-
-
-
-
-
-
-
13,220
13,220
(2,054)
(2,054)
(295)
-
(295)
-
(7,125)
(7,125)
54
513
567
(241)
4,554
4,313
-
-
(8,204)
(8,204)
-
-
At 30 September 2023
463
37
2,662
412
29,778
33,352
Share capital comprises the nominal value of shares subscribed for. The capital redemption reserve represents share
purchased by the company back from shareholders.
The merger reserve has arisen as a result of the application of merger accounting to the group reorganisation on 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.
Financials
52
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
Note
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Operating activities
Profit after tax
Corporation tax charge
Finance income
Finance expense
Depreciation of property, plant and equipment
Fixed asset impairment and loss on disposal of property,
plant and equipment and right of use asset
Right-of-use asset, depreciation and impairment
Pension contributions paid
Decrease in trade and other receivables
Decrease in foreign exchange contract
Increase in inventories
Increase in trade and other payables
Increase in provisions
Cash generated from operations
Net corporation tax paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds from sale of PPE
Net cash used in investing activities
Share buy-back
Repayments of secured loan
Capital element of lease repayments
Interest paid
Dividends paid during the year
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
12
12
13
25
15
16
14
17
18
10
12
21
11
26
13,220
2,962
-
568
3,929
369
17,484
-
38,532
2,852
(265))
(1,564)
1,552
22
2,567
41,099
(4,171)
36,928
(11,372)
478
(10,894)
(7,125)
-
(18,954)
176
(8,204)
(34,107)
(8,073)
24,427
16,354
10,845
2,718
-
1,113
4,118
(1,075)
13,016
-
30,735
627
(527)
(7,057)
6,361
345
(251)
30,484
(1,214)
29,270
(5,225)
3,590
(1,635)
(966)
(4,400)
(15,584)
(23)
(1,250)
(22,223)
5,412
19,015
24,427
Financials
53
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
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 registered number of the Company is 08961190.
The Company and its subsidiaries’ (collectively the Group) principal activity is footwear retailing.
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 30 September
2023 (2022: 52 weeks ended 1 October 2022).
These consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards and Interpretations (collectively IFRSs) issued by the International
Accounting Standards Board (IASB) as adopted by the UK (‘UK 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 Group’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.
The consolidated financial statements are presented in Sterling, which is also the Group’s
functional currency.
Amounts are rounded to the nearest thousand, unless otherwise stated.
Basis of consolidation
The consolidated financial statements incorporating the financial statements of Shoe Zone
plc and its subsidiary undertakings are all made up to 30 September 2023. 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
Financials
54
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
1. ACCOUNTING POLICIES CONTINUED
relevant activities of the investee without holding the majority of the voting rights. In determining
whether de-facto control exists the company considers all relevant facts and circumstances,
including:
• The size of the Company’s voting rights relative to both the size and dispersion of other
parties who hold voting rights.
• Substantive potential voting rights held by the company and by other parties.
• Other contractual arrangements.
• Historic patterns in voting attendance.
The consolidated financial statements present the results of the Company and its subsidiaries
(‘the Group’) as if they formed a single entity. Intercompany transactions and balances between
group companies are therefore eliminated in full.
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 income statement
from the date on which control is obtained. They are deconsolidated from the date on which
control ceases.
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. 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.
Refitted and relocated store results and our positive digital performance, combined with the
satisfactory cash position gives the Directors a reasonable basis on which to satisfy themselves
that the business is a going concern. The Group has prepared forecasts and budgets which
shows the Group has sufficient cash to meet its day to day liabilities as they fall due. On that
basis, the Directors have prepared the financial statements on a going concern basis.
Revenue
Revenue is measured at the fair value of consideration received or receivable net of discounts,
returns and VAT. Revenue is recognised when the Group 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.
Financials
55
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
1. ACCOUNTING POLICIES CONTINUED
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:
Freehold and long leasehold
Short leasehold and leasehold improvements
Fixtures and fittings
Motor vehicles
-
-
-
-
50 years on a straight line basis
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.
Assets under construction
Whilst held under assets under construction, no depreciation is charged on the assets. Once the
project is completed, the asset will be transferred to the correct fixed asset category.
Impairment of non-financial assets
The carrying values of non-financial assets are reviewed in conjunction with an independent
third party 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 total
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.
Financials
56
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
1. ACCOUNTING POLICIES CONTINUED
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.
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.
Cash and cash equivalents include cash in hand and deposits held at call with banks.
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.
Financials
57
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
1. ACCOUNTING POLICIES CONTINUED
Financial liabilities
The Group classified its financial liabilities as other financial liabilities which include the following:
• Trade payables and other short-term monetary liabilities, which are initially recognised at
fair value and subsequently carried at amortised cost using the effective interest method.
• Bank loan – external loan which is valued at its amortised cost and incurs interest.
• Finance costs are charged to the income statement over the term of the debt using the
effective interest method so that the amount charged is at a constant rate on the carrying
amount. Issue costs are initially recognised as a reduction in the proceeds of the associat-
ed capital instrument.
Derivative financial instruments and hedging activities
Hedge accounting is applied to financial assets and financial liabilities only where all of the
following criteria are met:
At the inception of the hedge there is formal designation and documentation of the hedging
relationship and the Group’s risk management objective and strategy for undertaking the hedge.
• For cash flow hedges, the hedged item in a forecast transaction is highly probable and
presents an exposure to variations in cash flows that could ultimately affect profit or loss.
• The cumulative change in the fair value of the hedging instrument is expected to be
between 80-125% of the cumulative change in the fair value or cash flows of the hedged
item attributable to the risk hedged (i.e. it is expected to be highly effective).
• The effectiveness of the hedge can be reliably measured.
• The hedge remains highly effective on each date tested. Effectiveness is tested quarterly.
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.
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.
Financials
58
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
1. ACCOUNTING POLICIES CONTINUED
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.
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 statement of financial position 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:
• the same taxable group company; or
• different company entities which intend to either settle current tax assets and liabilities on
a net basis, or to realise the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax assets and liabilities are expected to
be settled or recovered.
Provisions
Provision for dilapidations is made at the best estimate of the expenditure required to settle the
obligation at the reporting date, where material, discounted at the pre-tax rate reflecting current
market assessments of the time value of money and risks specific to the liability. 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. Dilapidations
are not included in IFRS 16 as they relate to ‘wear and tear’ and not structural alterations to the
buildings.
Financials
59
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
1. ACCOUNTING POLICIES CONTINUED
Foreign exchange
Transactions entered into the Group entities in a currency other than the functional currency are
recorded at the average monthly rate prevailing during the year. Foreign currency monetary
assets and liabilities are translated at the rates ruling at the reporting date.
Foreign exchange differences are recognised in the income statement.
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 income statement
in the year to which they relate.
Defined benefit scheme surpluses and deficits are measured at:
• the fair value of plan assets at the reporting date; less
• plan liabilities calculated using the projected unit credit method discounted to its present
value using yields available on high quality corporate bonds that have maturity dates
approximating to the terms of the liabilities; plus
• unrecognised past service costs; less
• the effect of minimum funding requirements agreed with scheme trustees.
Re-measurements of the net defined obligation are recognised directly within equity. These
include actuarial gains and losses, return on plan assets (interest exclusive) and any asset ceilings
(interest exclusive).
Service costs are recognised in the income statement, and include current and past service costs
as well as gains and losses on curtailments.
Net interest expense (income) is recognised in the income statement, 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 year.
Gains or losses arising from changes to scheme benefits or scheme curtailments are recognised
immediately in the income statement.
Settlements of defined benefit schemes are recognised in the period in which the settlement
occurs.
A net pension asset may only be recognized when the group has an unconditional right to a
refund or to reductions in future contributions. As a result, no asset has been recognised at year
end.
Financials
60
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
1. ACCOUNTING POLICIES CONTINUED
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends
to equity shareholders, this is when declared by the directors. In the case of final and special
dividends, this is when approved by the shareholders at the AGM.
Lease accounting
The Group leases various properties as well as vehicles under lease agreements. At inception of
a contract the Group assesses whether the contract contains a lease. A lease is present where the
contract grants the right to control the asset for a period of time in exchange for consideration.
Where a lease is identified a right of use asset and a corresponding lease liability is recognised
other than leases classed as “Short term,” less than 12 months, or “Low value,” under the avail-
able exemptions. Where the exemption has been taken advantage of the lease cost are recog-
nised on a straight line basis over the life of the lease within the Consolidated Income Statement.
The lease payments are discounted using the Group’s incremental borrowing rate as 2.94% and
1.82% depending upon the date of lease liability being created.
Lease liability- initial recognition
The lease liability is initially measured at the present value of the lease payments not paid at the
commencement date. If the discount rate isn’t explicitly included in the lease the payments are
discounted at the Group’s incremental borrowing rate.
Lease payments included within the initial recognition include:
• Fixed payments (including in-substance fixed payments)
• Variable lease payments that depend on an index or rate at the commencement date
• Amounts expected to be payable by the lessee under residual value guarantees
• Exercise price of a purchase option if the Group is reasonably certain to exercise that
option
• Payments for penalties for terminating the lease if the lease term reflects the Group exer-
cising the option
Lease liability- subsequent measurement
The lease liability is subsequently measured by increasing the carrying value to reflect interest on
the lease liability and by reducing the carrying value to reflect the lease payments.
Lease liability- remeasurement
The lease liability is remeasured where:
• Change in the assessment of the original lease information; being a change in the lease
term or exercise of a purchase option.
• Lease payments change due to a change in an index or a rate or a change in expected
payment under the residual value guarantee
• The lease contract is modified and the lease modification isn’t treated as a separate lease
Financials
61
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
1. ACCOUNTING POLICIES CONTINUED
Right of use asset- initial recognition
The right of use asset comprises of the following:
• Initial measurement of the lease liability
• Any lease payments made at the commencement date, less any lease incentives received
• Any initial direct costs incurred by the group in taking out the lease
• Estimate of costs to be incurred by the group to restore the underlying asset to the condi-
tion required by the lease
Right of use asset- subsequent measurement
The right of use asset is depreciated over the shorter of the lease term and useful life of the
asset on a straight line basis.
• If a change in contract has been identified, see the “Lease liability- remeasurement” sec-
tion for further information, the right of use asset will also be adjusted.
• An impairment review will be undertaken in-line with the group impairment policy, as
further described in note 1, any identified impairment will be recognised against the right
of use asset.
• Where the lease liability is remeasured an equivalent adjustment is made to the right of
use asset unless its carrying value is reduced to zero, in which case the adjustment is rec-
ognised in the consolidated income statement.
• When the lease liability is remeasured a revised discount rate is used based on the con-
tract, or if none is available the Groups incremental borrowing rate.
Sale and leaseback
A sale and leaseback transaction is where the Group sells an asset and immediately reacquires
the use of the asset by entering into a lease with the counterparty. If a sale and leaseback
meets the criteria for a sale under IFRS 15 the transaction will be accounted for under IFRS
16. The group measures the right-of-use asset arising for the leaseback in proportion to the
carrying balance of the asset directly before the sale and this will be recognised as an addi-
tion to the right of use asset and lease liability. The previous balance held for the asset will be
derecognised in its entirety. For any sales that don’t meet the recognition criteria under IFRS 15
a finance liability will be recognised for the consideration received.
For any sale and leaseback assets that are sold at above the market value of the asset these are
accounted for as additional financing provided by the counterparty and be recognised as an
increased lease liability for the amount.
Financials
62
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
NEW ACCOUNTING STANDARDS, INTERPRETATIONS
AND AMENDMENTS AND STANDARDS IN ISSUE BUT
NOT YET EFFECTIVE
The Group has not early adopted any new accounting standard, interpretation or amendment
that has been issued but is not effective.
The Group has applied for the first time the following new standards:
• Annual Improvements to IFRS Standards 2018-2020 Cycle - amendments to IAS 1, IFRS 9
and IFRS 16
• Amendments to IFRS 3 – Reference to the Conceptual Framework
• Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before intended use
• Amendment to IAS 37 – Onerous Contracts: Cost of Fulfilling a Contract
• Interest Rate Benchmark Reform – Phase 2 – amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
and IFRS 16.
By adopting the above, there has been no material impact on the Financial Statements.
At the date of authorisation of these consolidated Financial Statements, there are no standards
in issue from the International Accounting Standards Board (“IASB”) or International Financial
Reporting Interpretations Committee (“IFRIC”) which are effective for annual accounting peri-
ods beginning on or after 30 September 2023 that will have a material impact on these Finan-
cial Statements.
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.
Accounting estimates and assumptions
Retirement benefits:
The Groups’ defined benefit schemes’ pension surplus/obligation, which is assessed each period
by actuaries, is based on key assumptions including discount rates, mortality rates, inflation,
future salary costs and pension costs. These assumptions, individually or collectively, may be
different to actual outcomes; refer to note 25 for further details. A net pension asset may only
be recognized when the group has an unconditional right to a refund or to reductions in future
contributions. As a result, no asset has been recognised at year end.
Financials
63
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
Estimated impairment of store assets:
The Group tests whether store assets, being IFRS 16 right-of-use assets and associate leasehold
improvements, fixtures and fittings, have suffered any impairment in accordance with the
accounting policies stated in note 1.
The recoverable amount of cash-generating units is determined on a value-in-use calculation.
For impairment testing purposes the Group has determined that each store is a separate CGU.
The recoverable amount is calculated based on the Group’s latest forecast cash flows which are
then extrapolated to cover the period to the break date of the lease taking into account historic
performance and knowledge of the current market, together with the Group’s views of future
profitability of each CGU. The method requires an estimate of future cash flows and the selec-
tion of a suitable discount rate in order to calculate the net present value of cash flows.
The value in use is calculated based on five year cash flow projections. The key assumptions in
the calculations are the sales growth rates, gross margin rates, changes in the operating cost
base and the pre-tax discount rate derived from the Group’s weighted average cost of capital
using the capital asset pricing model, the inputs of which include a risk-free rate, equity risk
premium and a risk adjustment (Beta). Given the number of assumptions used the assessment
involves significant estimation uncertainty.
The key assumptions, which are equally applicable to each CGU, in the cash flow projections
used to support the carrying amount of store assets were as follows:
Key assumptions FY23
Year 1 Year 2 Year 3 Year 4 Year 5
Sales increase
Existing gross margin movement
Operating cost increase pre annum
Discount rate
Terminal growth rate
2%
2%
1%
1%
2.8%
1.8%
8.5%
8.5%
2%
2%
1%
0%
1.5%
8.5%
2%
1%
0%
1.5%
8.5%
2%
1%
0%
1%
8.5%
2%
Key assumptions FY22
Year 1 Year 2 Year 3 Year 4 Year 5
Sales increase
Existing gross margin movement
Operating cost increase pre annum
Discount rate
Terminal growth rate
0%
0%
2.3%
8%
2%
1%
2%
2%
8%
2%
1%
1%
1%
0%
1%
0%
1.8%
1.8%
1.8%
8%
2%
8%
2%
8%
2%
The Group has performed a sensitivity analysis on the impairment tests for its store portfolio
using various reasonably possible scenarios. An increase of three percentage points in the post-
tax discount rate would have resulted in no increase to the impairment charge. A decrease of
one percentage point in the growth rate after year three would have resulted in no increase to
the impairment charge.
Financials
64
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
Estimated useful life of property, plant and equipment:
At the date of capitalising property, plant and equipment, the Group estimates the useful life of
the asset based on management’s judgement and experience. Due to the significance of capital
investment to the Group, variances between actual and estimated useful economic lives could
impact results both positively and negatively, see note 12.
Judgements
Foreign currency hedge accounting:
Group policy is to adopt hedge accounting for cash flows for the purchase of goods for resale.
Due to the degree of judgement in determining forecast cash flows there is a risk that the as-
sumptions made in the effectiveness testing are inappropriate.
Leases:
Discount rate - The weighted average lessee’s incremental borrowing rate applied to the lease
liabilities on 30 September 2023 was 1.82%. If the discount rate was changed by 1% this would
result in an increase of assets in excess of £300,000.
3. FINANCIAL INSTRUMENTS – RISK MANAGEMENT
The Board has overall responsibility for the determination of the Group’s risk management ob-
jectives 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:
• credit risk;
• liquidity risk; and
• foreign exchange 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; and
• trade and other payables.
Financials
65
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
3. FINANCIAL INSTRUMENTS – RISK MANAGEMENT CONTINUED
Fair value hierarchy
All financial instruments measured at fair value must be classified into one of the levels below:
• Level 1: Quoted prices in active markets;
• Level 2: Level 1 quoted prices are not available, but fair value is based on observable
market data; and
• Level 3: Inputs that are not based on observable market data.
A summary of the financial instruments held by category is provided below:
Financial assets
Financial assets at amortised cost
Trade receivables
Other receivables
Cash and cash equivalents
Total receivables and cash
Financial assets at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Total financial assets
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
411
357
16,354
17,122
56
(309)
16,869
1,250
1,282
24,427
26,959
642
(1,241)
26,360
52 weeks ended
30 September 2023
£’000
52 weeks ended
1 October 2022
£’000
Financial liabilities
Financial liabilities at amortised cost
Trade and other payables
Financial liabilities at fair value through other comprehensive
income
Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through other comprehensive
income
22,950
19,496
-
-
-
-
Total financial liabilities
22,950
19,496
Financials
66
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
3. FINANCIAL INSTRUMENTS – RISK MANAGEMENT CONTINUED
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 30 September 2023 and 1 October
2022.
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 income
statement 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.
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 30 September 2023 the Group has trade
receivables of £411,000 (2022: £1,250,000).
£233,000 of the balance relates to payments due from a single large multinational supplier, no
other balance exceeds £50,000 and these are considered immaterial by the company.
The Directors are unaware of any factors affecting the recoverability of outstanding balances at
30 September 2023 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 service
providers and the Board monitors its exposure to counterparty risk on an on-going 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.
Trade payables are repayable within 3 months. The Group prepares and maintains detailed cash
flow forecasts to monitor cash requirements and manage liquidity risk.
Trade payables are repayable within 3 months. The Group prepares and maintains detailed cash
flow forecasts to monitor cash requirements and manage liquidity risk.
Financials
Financials
67
67
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
3. FINANCIAL INSTRUMENTS – RISK MANAGEMENT CONTINUED
The following table sets out the contractual maturities (representing undiscounted contractual
cash-flows) of financial liabilities:
Up to 3
months
Between
3 and 12
months
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
At 30 September 2023
£’000
£’000
£’000
£’000
£’000
Trade and other payables
Total financial liabilities
22,950
22,950
-
-
-
-
-
-
-
-
Up to 3
months
Between
3 and 12
months
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
At 1 October 2022
£’000
£’000
£’000
£’000
£’000
Trade and other payables
Total
19,496
19,496
-
-
-
-
-
-
-
-
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 using
forward foreign currency exchange contracts.
The fair value of forward foreign exchange contacts has been determined based on discounted
market forward currency exchange rates at the statement of financial position date.
Foreign Currency: Sensitivity Analysis
A sensitivity rate of 10% represents the Directors’ reasonable assessment of a 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.
Financials
Financials
68
68
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
3. FINANCIAL INSTRUMENTS – RISK MANAGEMENT CONTINUED
Income Statement
Equity
2023
£’000
(25)
802
2022
£’000
(867)
(618)
2023
£’000
265
(546)
2022
£’000
436
(1,511)
Sterling strengthens by 10%
Sterling weakens by 10%
Year-end exchange rates applied in the above analysis are US Dollar 1.23 (2022: 1.28).
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.
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, capital redemption reserve,
cash flow hedge reserve and retained earnings totalling £33,352,000 (1 October 2022:
£37,243,000).
The Group’s objectives when maintaining capital are:
• to safeguard the entity’s ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders; and
• to provide an adequate return to shareholders by pricing products and services commen-
surately 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.
Financials
Financials
69
69
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
4. REVENUE
Revenue arises from:
Sales of goods
5. EXPENSES BY NATURE
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
165,657
156,164
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
Inventories recognised as an expense
Employee benefit expenses
Depreciation and impairment charge of property, plant and
equipment
Depreciation and impairment charge of right of use assets
Rentals under operating leases:
Land and buildings
Other
Gain on disposal of property, plant and equipment
Loss/(Profit) on disposal of Right of Use Assets
Administration expenses
Loss/(Gain) on Foreign Exchange
Other costs (see note below)
£’000
62,542
38,784
4,062
12,846
725
6
(282)
(393)
3,791
616
26,210
148,907
£’000
60,763
37,748
4,118
13,016
411
7
(149)
1,224
4,045
(984)
21,289
141,488
Other costs includes increases in digital costs, (postage, packing and payment provider fees) of
£1.6m as qrevenues increased, the cost of rates has also increased to £8.2m (2022: £7.7m).
6. AUDITOR’S REMUNERATION
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
The audit of the parent company
Audit of subsidiary financial statements pursuant to legislation
Other services
£’000
15
66
21
102
£’000
12
65
10
87
Financials
70
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
7. EMPLOYEE BENEFIT EXPENSES
Employee benefit expenses (including Directors) comprise:
Wages and salaries
Social security costs
Other pension costs
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
35,670
2,046
1,068
38,784
34,832
1,903
1,013
37,748
The average monthly number of employees during the year was as follows:
Sales and distribution
Directors
Administration
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
No.
2,440
5
148
2,593
No.
2,612
5
139
2,756
The average monthly number of full time equivalent employees during the period was 1,302 (2022: 1,384).
Shoe Zone plc does not employ any members of staff and has no staff costs during the year (2022: Nil).
Directors’ remuneration, included in staff costs:
Salaries and benefits
Pension contributions
Information regarding the highest paid Director is as follows:
Salary and benefits
52 weeks ended
30 September 2023
£’000
52 weeks ended
1 October 2022
1,187
17
1,204
560
560
£’000
1,151
15
1,166
548
548
Financials
Financials
71
71
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
8. SEGMENTAL INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision-maker. The chief operating decision-maker has been identified as the
management team including the Chairman, Chief Executive and Finance Director.
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. The Directors now consider Digital to
be its own operating segment. 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.
Revenue
United Kingdom stores
Digital
Other
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
134,078
30,966
613
165,657
128,664
26,967
533
156,164
There are no customers with turnover in excess of 10% of total turnover.
Non-current assets by location:
United Kingdom
52 weeks ended
30 September 2023
£’000
52 weeks ended
1 October 2022
£’000
38,163
38,163
44,929
44,929
Digital non-current and current assets have not been disclosed due to the immaterial value. The
contribution is £8.6m (2022: £7.0m)
The deferred tax asset of £529,000 (2022: £720,000) is unallocated.
Financials
Financials
72
72
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
9. FINANCE INCOME AND EXPENSES
Finance expense
Interest expense on lease liability
Interest received on bank deposits
Net interest expense on defined benefit pension scheme
(note 25)
Loan interest
Other finance expense
Total finance expense
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
(744)
182
-
-
(6)
(568)
(976)
-
(116)
(18)
(3)
(1,113)
Financials
Financials
73
73
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
10. INCOME TAX
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Current tax expense
Current tax on profit for the year
Adjustment for (over) provision in prior years
Total current tax
Deferred tax expense
Adjustment for under / (over) provision in prior years
Effect of tax rate changes
Taxation charge
2,664
(511)
2,153
1,295
(486)
2,962
2,188
(61)
2,127
(13)
604
2,718
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 is as follows:
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Profit for the year
Income tax charge
(Profit / (loss) before income taxes
Expected tax charge based on corporation tax rate of 22%
(01 October 2022: 19%)
Expenses not deductible for tax purposes
Effective change of rate
Adjustments to tax charge in respect of previous period
Total tax charge
13,220
2,962
16,182
3,560
399
(486)
(511)
2,962
Factors that may affect future tax charges: on 3 March 2021, the Chancellor of the Exchequer
announced that the corporation tax rate would increase to 25% from 1st April 2023. This was substantively
enacted on 24 May 2021. Deferred tax is calculated at the tax rates that are expected to apply in the
year when the liability is settled, or the asset is realised, based on tax law and the corporation tax rates
that have been enacted, or substantively enacted, at the statement of financial position date. As such,
the deferred tax rate applicable at 30 September 2023 is 25% and deferred tax has been measured at
this rate.
10,845
2,718
13,563
2,577
(389)
604
(74)
2,718
Financials
Financials
74
74
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
11. DIVIDENDS
52 weeks ended
30 September 2023
£’000
52 weeks ended
1 October 2022
Dividends paid during the year
8,204
Of the £8.2m, £7.0m relates to the previous financial year and £1.2m relates to the interim dividend
of 2.5 pence per share that was paid in August 2023.
A final dividend for the year ended 30 September 2023 of 8.9p per share will be paid in March 2024,
giving a total dividend for the financial year of 11.4 pence per share based on a 40% payout ratio
(2022: 8.8 pence per share).
£’000
1,250
Financials
Financials
75
75
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
12. PROPERTY,
PLANT AND
EQUIPMENT
l
d
n
a
d
o
h
e
e
r
F
l
d
o
h
e
s
a
e
l
g
n
o
l
s
e
i
t
r
e
p
o
r
p
l
d
o
h
e
s
a
e
l
d
n
a
s
t
n
e
m
e
v
o
r
p
m
i
l
d
o
h
e
s
a
e
l
t
r
o
h
S
s
e
l
c
i
h
e
v
r
o
t
o
M
s
g
n
i
t
t
fi
d
n
a
s
e
r
u
t
x
F
i
l
a
t
o
T
r
e
d
n
u
s
t
e
s
s
A
n
o
i
t
c
u
r
t
s
n
o
c
£’000
£’000
£’000
£’000
£’000
£’000
Cost
At 2 October 2021
3,554
18,787
-
882
(3,349)
(2,012)
-
499
547
-
-
36,788
3,796
(3,011)
-
17,657
1,046
37,573
3,469
(2,351)
-
870
(20)
-
6,160
(3,394)
-
-
-
-
-
-
873
-
-
59,628
5,225
(8,372)
-
56,481
11,372
(5,970)
-
18,775
1,896
40,339
873
61,883
Additions
Disposals
Impairments
At 1 October 2022
Additions
Disposals
Impairments
At 30 September 2023
Depreciation
At 2 October 2021
Charge for the year
Disposals
Impairments
At 1 October 2022
Charge for the year
Disposals
Impairments
At 30 September 2023
Net book value
At 30 September 2023
At 1 October 2022
At 2 October 2021
-
205
-
(205)
-
0
1,106
26
(1,124)
-
8
1
(9)
-
0
14,936
1,104
(1,810)
168
14,398
999
(2,158)
33
13,272
97
149
-
-
246
361
(7)
-
600
29,262
2,470
(2,470)
201
29,247
2,577
(3,082)
91
28,833
-
-
-
-
-
-
-
-
-
0
197
2,448
5,503
3,259
3,851
1,296
11,506
873
800
402
8,326
7,526
-
-
45,401
3,749
(5,620)
369
43,899
3,938
(5,256)
124
42,705
19,178
12,582
14,227
Financials
76
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
13. LEASES
The majority of the Group’s trading stores are leased under operating leases. The Group also has
a number of non-property operating leases relating to vehicles and an item of equipment in the
Distribution Centre.
Information about leases for which the Group is a lessee is presented below:
Right of us Asset Cost
Balance at 1 October 2022
Additions
Disposals
At 30 September 2023
Right of use Asset Depreciation
Balance at 1 October 2022
Charge for the year
Disposals
Impairment
At 30 September 2023
Net book value
At 30 September 2023
At 1 October 2022
Property
Motor vehicles and
equipment
£’000
£’000
113,956
17,625
(23,834)
107,747
88,620
12,429
(19,197)
233
82,085
25,662
25,336
1,647
29
(462)
1,214
1,402
184
(461)
-
1,125
89
245
Total
£’000
115,603
17,654
(24,296)
108,961
90,022
12,613
(19,658)
233
83,210
25,751
25,581
Financials
77
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
13. LEASES
CONTINUED
The prior year brought forward balances have been restated to reflect historic opening balances.
The table below sets out the maturity analysis of future lease payments:
Maturity analysis – contracted undiscounted cash flows
52 weeks ended
30 September 2023
£’000
52 weeks ended
1 October 2022
Less than one year
Between one and five years
More than five years
Total undiscounted lease liabilities
Carrying value of lease liabilities included in balance sheet
Current
Non-current
Movement of carrying value of lease liabilities
Balance as 1 October 2022
Additions
Repaid
Disposal
Interest
Balance as at 30 September 2023
Operating Leases
10,726
21,726
1,742
34,197
35,290
13,071
22,219
35,845
14,923
(14,459)
(1,800)
781
35,290
The Group has a number of stores on short-term rental and a small number of outlets where a subsec-
tion are sublet to third parties at a contracted rate. The Group has classified these leases as operating
leases because they do not transfer substantially all the risks and rewards of the right-of-use-asset.
In line with IAS36 the carrying value of the right-of-use-asset is assessed for impairment and booked
where necessary.
£’000
13,239
13,239
2,280
34,213
35,845
14,870
20,975
Financials
78
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
14. INVENTORIES
Goods for resale
Shop fitting materials and other consumables
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
32,887
865
33,752
£’000
31,570
618
32,188
15. TRADE AND OTHER RECEIVABLES
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
Trade receivables
Derivative financial instruments (see note 16)
Prepayments
Other receivables
£’000
411
309
2,142
357
3,219
£’000
1,250
1,241
2,298
1,282
6,071
There are no impairment provisions or receivables past due in either year.
16. DERIVATIVE FINANCIAL INSTRUMENTS
At the statement of financial position date, details of the forward foreign exchange contracts that the Group has
committed to are as follows:
Derivative financial asset/(liability)
Derivatives not designated as hedging instruments
Derivatives designated as hedging instruments
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
253
56
309
£’000
642
599
1,241
The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in
the consolidated statement of financial position.
The notional principal amounts of outstanding forward foreign exchange contracts at 30 September
2023 were $24,000,000 (1 October 2022: $13,500,000). 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 is market rates of financial instruments at the
reporting date.
Financials
Financials
79
79
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
17. TRADE AND OTHER PAYABLES
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Current
Trade payables
Social security and other taxes
Other payables and finance lease liability
Accruals
18. PROVISIONS
As at 1 October 2022
Additions
Amounts utilised
Amounts released
As at 30 September 2023
The provisions are aged as follows:
Current
Non-current
As at 30 September 2023
15,676
1,403
476
6,798
24,353
Customer Returns
Dilapidations
£’000
3
243
(3)
-
243
£’000
3,767
812
(196)
(834)
3,549
Customer Returns
Dilapidations
£’000
243
-
243
£’000
783
2,766
3,549
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. In the prior year a stock loss provision was included which
is now included in inventories.
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.
13,336
3,305
442
5,718
22,801
Total
£’000
3,770
1,055
(199)
(834)
3,792
Total
£’000
1,026
2,766
3,792
Financials
Financials
80
80
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
19. CONTINGENT LIABILITIES
Shoe Zone plc and its subsidiary undertakings have given a duty deferment guarantee in favour of HM
Revenue and Customs amounting to £800,000 (1 October 2022: £800,000).
20. DEFERRED TAX
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of
25% (1 October 2022: 25%).
The movement on the deferred tax account is as shown below:
At beginning of the year
Recognised in income statement:
Tax expense (note 10)
Recognised in other comprehensive income:
Actuarial gain / loss on defined benefit pension schemes
Cashflow hedge
At end of the period
The deferred tax has arisen due to the following:
Accelerated capital allowances
Short term timing differences
Derivatives
IFRS 16 Leases
Defined benefit pension scheme
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
720
(809)
513
105
529
£’000
3,220
(592)
(1,506)
(402)
720
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
(177)
54
(116)
254
514
529
756
(150)
(336)
450
-
720
The Group has a recognised deferred tax asset £529,000 as at 30 September 2023 (1 October 2022:
£720,000).
There are estimated losses available to offset against future capital taxable profits amounting to
approximately £nil (1 October 2022: £nil).
Financials
81
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
21. SHARE CAPITAL
Share capital issued and fully paid
46,250,000 (2022:49,500,000) ordinary shares of 1p each
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
463
463
495
495
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.
On 23 August 2022 the company bought back 14,663 ordinary 1p shares, on 24 August bought back
34,999 1p shares, on 8 September bought back 24,559 1p shares, on 9 September bought back 1,654
1p shares, on 12 September bought back 34,300 1p shares, on 21 September bought back 35,502 1p
shares, on 23 September bought back 73,597 1p shares, on 26 September bought back 76,256 1p
shares, on 27 September bought back 50,000 1p shares, on 28 September bought back 10,000 1p
shares, on 29 September bought back 67,783 1p shares, on 30 September bought back 32,500 1p
shares.
On 3 October bought back 10,000 1p shares, on 7 October bought back 25,000 1p shares, on 13
October bought back 44,655 1p shares, on 19 October bought back 22,765 1p shares, on 21 October
bought back 12,270 1p shares, on 24 October bought back 15,000 1p shares, on 25 October bought
back 25,000 1p shares, on 26 October bought back 8,000 1p shares, on 28 October bought back 8,837
1p shares, on 31 October bought back 10,000 1p shares, on 2 November bought back 32,505 1p
shares and on 4 November bought back 5,000 1p shares, on 7 November bought back 10,000 ordinary
1p shares, on 10 November bought back 6,813 1p shares, on 15 November bought back 7,354 1p
shares, on 17 November bought back 10,447 1p shares, on 18 November bought back 17,219 1p
shares, on 23 November bought back 23,065 1p shares, on 9 December bought back 19,398 1p shares,
on 12 December bought back 19,506 1p shares, on 13 December bought back 19,367 1p shares, on
14 December bought back 20,277 1p shares, on 16 December bought back 22,122 1p shares, on
28 December bought back 10,209 1p shares, on 4 January 2023 bought back 27,192 1p shares on
5 January bought back 26,560 1p shares, on 6 January bought back 24,989 1p shares, on 9 January
bought back 26,189 1p shares, on 10 January bought back 29,731 ordinary 1p shares, on 23 January
bought back 30,000 1p shares, on 30 March bought back 12,000 1p shares, on 4 April bought back
37,000 1p shares, on 5 April bought back 108,791 1p shares, on 6 April bought back 15,000 1p shares,
on 11 April bought back 50,000 1p shares, on 14 April bought back 27,000 1p shares, on 17 April
bought back 19,498 1p shares, on 18 April bought back 30,000 1p shares, on 19 April bought back
5,374 1p shares, on 24 April bought back 46,000 1p shares, on 28 April bought back 11,000 1p shares,
on 2 May bought back 350,000 1p shares, on 11 May bought back 60,000 1p shares, on 12 May bought
back 425,000 1p shares, on 15 May bought back 35,000 1p shares, on 16 May bought back 15,869 1p
shares, on 31 May bought back 995,024 1p shares and on 5 June bought back 5,331 1p shares, for a
total consideration of £7,126,000.
500,000 shares were cancelled on 27 October 2022, 500,000 shares were cancelled on 10 March 2023,
500,000 shares were cancelled on 11 May 2023, 750,000 shares were cancelled on 17 May 2023 and
1,000,000 shares were cancelled on 5 June 2023.
Financials
82
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
22. LEASES
Operating leases – lessee
The Shoe Zone plc Group has entered into commercial leases on land and buildings. These leases have
an average life of between five and ten years. There are no restrictions placed on the Shoe Zone plc
Group by entering into these leases. The total future minimum lease payments under non-cancellable
operating leases for land and buildings and other items of plant and machinery are as follows:
Property
Property
30 September 2023
1 October 2022
£’000
£’000
Expense relating to short-term leases
The majority of leases are now included within IFRS 16 (note 13)
-
-
9
9
23. LEASES
Finance leases
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.
Motor Vehicle
Motor Vehicle
30 September 2023
1 October 2022
£’000
£’000
Not later than one year
Later than one year and not later than five years
Later than five years
27
22
-
49
Finance leases are secured on the assets to which they relate to. The net book value of assets held
under finance lease is £70,000 (2022: £101,000).
27
49
-
76
Financials
83
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
24. CAPITAL COMMITMENTS
Contracted for but not provided
25. PENSION COSTS
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
Nil
£’000
Nil
The Group operates two 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. There have been no contributions to the
scheme this year.
The schemes are exposed to a number of risks, including:
• Investment risk: movement of discount rate used (high quality corporate bonds) against the
return from plan assets,
• Interest rate risk: decreases/increases in the discount rate used (high quality corporate bonds)
will increase/decrease the defined benefit obligation,
• Longevity risk: changes in the estimation of mortality rates of current and former employees.
The following figures are based on a full actuarial valuation performed in April 2022 and March
2022 for the Shoe Zone and Shoefayre schemes respectively which was carried out by a qualified
independent actuary. This actuarial valuation has been updated to 30 September 2023 for the
purpose of calculating the pension deficit and disclosures in the current year. The Trustees of the
Shoe Zone scheme entered into a buy in contract with Rothesay in March 2023
Post retirement mortality
Life expectancy
Male currently aged 45
Female currently aged 45
Male currently aged 65
Female currently aged 65
30 September 2023
1 October 2022
Years
Years
87.7
89.7
86.0
88.2
88.3
90.2
86.5
88.6
Financials
84
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
CONTINUED
Financial assumptions
Deferred pension revaluation - Shoe Zone Scheme
Deferred pension revaluation - Shoefayre Scheme
Pension increases
Discount rate
Consumer Price Index - Shoe Zone Scheme
Consumer Price Index - Shoefayre Scheme
Retail Price Index
30 September 2023
1 October 2022
%
2.95
3.05
3.45
5.55
2.95
3.05
3.60
%
3.15
3.35
3.70
5.55
3.15
3.35
3.95
The weighted average duration of the defined benefit obligation for the Shoe Zone scheme at 30 Sep-
tember 2023 is 10 years (1 October 2022: 10 years).
The weighted average duration of the defined benefit obligation for the Shoefayre scheme at 30 Sep-
tember 2023 is 12 years (1 October 2022: 12 years).
Defined benefit scheme - Shoe Zone Pension Scheme Assets
Assets
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 major categories of assets as a percentage of total assets are as follows:
Financials
Financials
85
85
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
CONTINUED
Asset category
Equities
Fixed Income
Alternatives
Cash
Insured assets
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
-
-
-
3.0%
97.0%
100%
£’000
15%
45%
3.0%
15%
-
100%
The pension scheme has recently changed investment managers who provide a different classification
for investments.
The pension scheme has recently changed investment managers who provide a different classification
for investments.
The actual return on the Scheme’s assets net of expenses over the year to the review date was a loss of
£5,289,000 (1 October 2022: loss of £14,030,000).
The assets do not include any investments in shares of the Group.
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.
Financials
Financials
86
86
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
CONTINUED
Amounts recognised in the income statement over the year
Interest cost
Expected return on assets
Administration costs
Interest on asset restriction
Amounts recognised in the statement of financial position
Fair value of assets
Present value of funded obligations
Surplus
Impact of asset ceiling
Net defined benefit liability
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
(1,562)
1,942
(561)
(380)
(561)
(882)
995
(220)
(113)
(220)
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
34,753
(34,206)
547
(547)
-
36,159
(29,040)
7,119
(7,119)
-
Financials
Financials
87
87
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
CONTINUED
Defined benefit scheme - Shoe Zone Pension Scheme (continued)
Amounts recognised in other comprehensive income
Return on plan assets
Actuarial (loss) / gains arising from changes in:
Demographic assumptions
Financial assumptions
Total actuarial gain / (loss)
Changes in effect of asset ceiling
Deferred tax on employee benefit scheme
Total amount recognised in other comprehensive expense
Reconciliation of assets and defined benefit obligation
The change in assets over the year was:
Fair value of assets at the beginning of the period
Expected return on assets
Recognition of historic buy-in policies
Administration costs
Benefits paid
Actuarial (loss)
Fair value of assets at the end of the period
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
(7,231)
(15,025)
1,078
(238)
840
6,952
-
561
478
15,850
16,328
(1,083)
-
220
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
36,159
1,942
6,264
(561)
(1,820)
(7,231)
34,753
51,874
995
-
(220)
(1,465)
(15,025)
36,159
Financials
Financials
88
88
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
CONTINUED
Defined benefit scheme - Shoe Zone Pension Scheme (continued)
The change in defined benefit obligation over the year was:
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
29,040
6,264
1,562
(1,820)
(840)
34,206
45,951
-
882
(1,465)
(16,328)
29,040
Defined benefit obligation at the beginning of the period
Recognition of historic buy-in policies
Interest cost
Benefits paid
Actuarial loss
Defined benefit obligation at the end of the 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
-4.0%
4.0%
1.0%
-1.0%
6.0%
-6.0%
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.
Financials
Financials
89
89
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
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
Fixed Income
Cash
Alternatives
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
34%
43%
1%
22%
100%
£’000
51%
29%
6%
14%
100%
The pension scheme has recently changed investment managers who provide a different classification for
investments.
The actual return on the Scheme’s assets net of expenses over the year to the review date was a loss of £2,791,000
(1 October 2022: loss of £10,164,000). The assets do not include any investments in shares of the company.
The expected return on assets is a weighted average of the assumed long-term returns available on high quality
corporate bonds in line with the method used to value the liabilities. Equity and property returns are developed
based on the selection of an appropriate risk premium above the risk free rate which is measured in accordance with
the yield on the government bonds. Bond returns are selected by reference to the yields on the government and
corporate debt, as appropriate to the scheme holdings of these instruments. The expected returns on the Target
Return Funds are equal to the fund’s targets.
Amounts recognised in the statement of financial position
Fair value of assets
Present value of funded obligations
Net liability
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
22,107
(24,161)
(2,054)
26,081
(24,308)
1,773
Financials
Financials
90
90
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
CONTINUED
Defined benefit scheme - Shoefayre Limited Pension and Life Assurance Scheme (continued)
Amounts recognised in other comprehensive income
Gain on plan assets
Actuarial gains / (loss) / gains arising from changes in:
Demographic assumptions
Financial assumptions
Total actuarial gain
Changes in effect of ceiling
Deferred tax on employee benefit scheme
Total amount recognised in other comprehensive income
Amounts recognised in the income statement over the period
Interest cost
Interest on effect of asset ceiling
Expected return on assets
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
(4,206)
656
(375)
281
1,871
513
(1,541)
(10,885)
352
18,331
18,683
(1,773)
29
6,054
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
(1,317)
(98)
1,415
-
(837)
-
721
(116)
Financials
Financials
91
91
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
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 year was:
Fair value of assets at the beginning of the year
Expected return on assets
Employer contributions
Benefits paid
Actuarial (loss)/ gain on assets
Fair value of assets at the end of the period
The change in defined benefit obligation over the year was:
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
26,081
1,415
-
(1,183)
(4,206)
22,107
37,734
721
-
(1,489)
(10,885)
26,081
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Defined benefit obligation at the beginning of the year
Interest cost
Benefits paid
Actuarial gain / (loss) on obligation
Defined benefit obligation at the end of the period
24,308
1,317
(1,183)
(281)
24,161
43,643
837
(1,489)
(18,686)
24,308
Financials
Financials
92
92
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
25. PENSIONS
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
-6.0%
6.0%
2.0%
-2.0%
4.0%
-4.0%
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.
26. CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purpose of the statement of cash flow comprise:
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Cash at banks and in hand
Cash and cash equivalents
16,354
16,354
24,427
24,427
Financials
Financials
93
93
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
27. 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 year the group donated £820,000 to the Shoe Zone Trust for distribution to a variety of
charities, this derives from carrier bag sales and a donation equivalent to 2% of profits.
During the year, 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
Shoefayre Limited Pension and Life Assurance Scheme
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
138
1,033
-
1,171
£’000
178
971
-
1,149
During the year, the key management personnel remuneration included within staff costs are as follows:
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
Short term employee benefits
Post-employment benefit
Employers national insurance
Key management personnel are considered to be the Directors of Shoe Zone plc.
£’000
1,183
17
165
1,365
£’000
1,134
15
110
1,259
Financials
Financials
94
94
NOTES TO THE FINANCIAL STATEMENTS FOR THE
52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
28. 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
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Numerator
Profit for the year and earnings used in basic and diluted EPS
27,79p
21,74p
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
Denominator
Weighted average number of shares used in basic and diluted
EPS
46,250,000
49,500,000
29. ANALYSIS OF NET CASH
1 October
2022
Cashflows
30 September
2023
Cash at bank and in hand
24,427
(8,073)
16,354
Bank loan
-
-
-
24,427
(8,073)
16,354)
30. ULTIMATE CONTROLLING PARTY
The company is controlled by the Smith family albeit there is not a single controlling party.
Financials
95
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
Registered Number 08961190
Note
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’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
Capital redemption reserve
Profit and loss account
Total shareholders’ funds
2
3
4
5
6
6
68,644
68,644
8
8
(10,179)
(10,171)
58,473
463
586
37
57,387
58,473
The Company made a profit during the year of £8,058,000 (2022: profit of £1,138,000).
The financial statements were approved and authorised for issue by the Board of Directors and were
signed on its behalf by:
Anthony Smith
Chief Executive
Date: 9 January 2023
68,644
68,644
1,025
1,025
(3,963)
(2,938)
65,706
495
586
5
64,620
65,706
Financials
Financials
96
96
COMPANY STATEMENT OF CHANGES IN EQUITY FOR
THE 52 WEEKS ENDED 30 SEPTEMBER 2023
Share
capital
Capital
Redemption
Reserve
Merger
reserve
Retained
earnings
Total
At 2 October 2021
Profit for the year
Capital Redemption Reserve
Share buy back
Total comprehensive income for the year
Dividends paid during the year
Total contributions by and distributions to
owners
At 1 October 2022
Profit for the year
Capital Redemption Reserve
Share buy back
Total comprehensive income for the year
Dividends paid during the year
Total contributions by and distributions to
owners
£’000
500
-
(5)
-
(5)
-
495
-
(32)
-
(32)
-
-
£’000
£’000
£’000
£’000
-
-
5
-
5
-
5
-
32
-
32
-
-
586
65,732
66,818
-
-
-
-
-
1,138
1,138
-
-
(1,000)
(1,000)
138
138
(1,250)
(1,250)
586
64,620
65,706
-
-
-
-
-
-
8,058
8,058
-
-
(7,087)
(7,087)
971
971
(8,204)
(8,204)
-
-
At 30 September 2023
463
37
586
57,387
58,473
Share capital comprises nominal value of shares subscribed for. The capital redemption reserve
represents share purchased by the company back from shareholders.
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.
Financials
Financials
97
97
NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR
THE 52 WEEKS ENDED 30 SEPTEMBER 2023
1. ACCOUNTING POLICIES
Basis of preparation
The Company’s financial year is 52 weeks ended 30 September 2023. 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 £8,058,000 (1 October 2022: profit of £1,138,000).
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.
The Company has taken advantage of all the disclosure exemptions available under FRS 101.
Accounting policies have been applied consistently throughout the year.
Investments
Investments held as fixed assets are stated at cost, less any provision for impairment
The Directors review the forecast and budgets of the subsidiaries held and review any necessary
impairments.
Financials
Financials
98
98
NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR
THE 52 WEEKS ENDED 30 SEPTEMBER 2023
CONTINUED
2. FIXED ASSET INVESTMENTS
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Cost
Impairment of investment in Castle Acres Development Limited
Total
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
incorporation
Principal activity
Ownership
Castle Acres Development Limited
England & Wales Non-trading company
100% owned by company
Shoe Zone Retail Limited
England & Wales Trading company
100% owned by company
Zone Property Limited*
England & Wales Non-trading 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
Shoe Zone Pension Trustees Limited England & Wales Non-trading company
Shoe Fayre Pension Trustees Limited England & Wales Non-trading company
Stead & Simpson Limited*
England & Wales Non-trading company
Zone Footwear Limited*
England & Wales Non-trading company
Zone Retail*
England & Wales Non-trading company
Walkright Limited*
England & Wales Non-trading company
100% owned by Shoe
Zone Retail Limited
100% owned by Zone
Group Limited
100% owned by Zone
Group Limited
100% owned by Zone
Group Limited
100% owned by Zone
Group Limited
100% owned by Zone
Group Limited
100% owned by Zone
Group Limited
*Liquidated during the year
The registered address of all of the above subsidiaries is Haramead Business Centre, Humberstone
Road, Leicester, LE1 2LH.
Financials
Financials
99
99
NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR
THE 52 WEEKS ENDED 30 SEPTEMBER 2022 CONTINUED
3. DEBTORS
Prepayments
Other debtors
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
-
8
8
17
8
25
4. CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
Amounts owing to group undertakings
Accruals
5. SHARE CAPITAL
£’000
10,175
4
10,179
£’000
3,943
20
3,963
52 weeks ended
30 September 2023
52 weeks ended
1 October 2022
£’000
£’000
Allotted, called up and fully paid:
46,250,000 (2022:49,500,000) ordinary shares of 1p each
463
463
495
495
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.
On 23 August 2022 the company bought back 14,663 ordinary 1p shares, on 24 August bought back
34,999 1p shares, on 8 September bought back 24,559 1p shares, on 9 September bought back 1,654
1p shares, on 12 September bought back 34,300 1p shares, on 21 September bought back 35,502 1p
shares, on 23 September bought back 73,597 1p shares, on 26 September bought back 76,256 1p
Financials
Financials
100
100
NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR
THE 52 WEEKS ENDED 30 SEPTEMBER 2022 CONTINUED
shares, on 27 September bought back 50,000 1p shares, on 28 September bought back 10,000 1p shares, on 29
September bought back 67,783 1p shares, on 30 September bought back 32,500 1p shares.
On 3 October bought back 10,000 1p shares, on 7 October bought back 25,000 1p shares, on 13 October bought
back 44,655 1p shares, on 19 October bought back 22,765 1p shares, on 21 October bought back 12,270 1p shares,
on 24 October bought back 15,000 1p shares, on 25 October bought back 25,000 1p shares, on 26 October bought
back 8,000 1p shares, on 28 October bought back 8,837 1p shares, on 31 October bought back 10,000 1p shares,
on 2 November bought back 32,505 1p shares and on 4 November bought back 5,000 1p shares, on 7 November
bought back 10,000 ordinary 1p shares, on 10 November bought back 6,813 1p shares, on 15 November bought
back 7,354 1p shares, on 17 November bought back 10,447 1p shares, on 18 November bought back 17,219 1p
shares, on 23 November bought back 23,065 1p shares, on 9 December bought back 19,398 1p shares, on 12
December bought back 19,506 1p shares, on 13 December bought back 19,367 1p shares, on 14 December bought
back 20,277 1p shares, on 16 December bought back 22,122 1p shares, on 28 December bought back 10,209 1p
shares, on 4 January 2023 bought back 27,192 1p shares on 5 January bought back 26,560 1p shares, on 6 January
bought back 24,989 1p shares, on 9 January bought back 26,189 1p shares, on 10 January bought back 29,731
ordinary 1p shares, on 23 January bought back 30,000 1p shares, on 30 March bought back 12,000 1p shares, on 4
April bought back 37,000 1p shares, on 5 April bought back 108,791 1p shares, on 6 April bought back 15,000 1p
shares, on 11 April bought back 50,000 1p shares, on 14 April bought back 27,000 1p shares, on 17 April bought
back 19,498 1p shares, on 18 April bought back 30,000 1p shares, on 19 April bought back 5,374 1p shares, on 24
April bought back 46,000 1p shares, on 28 April bought back 11,000 1p shares, on 2 May bought back 350,000 1p
shares, on 11 May bought back 60,000 1p shares, on 12 May bought back 425,000 1p shares, on 15 May bought
back 35,000 1p shares, on 16 May bought back 15,869 1p shares, on 31 May bought back 995,024 1p shares and
on 5 June bought back 5,331 1p shares, for a total consideration of £7,126,000.
500,000 shares were cancelled on 27 October 2022, 500,000 shares were cancelled on 10 March 2023, 500,000
shares were cancelled on 11 May 2023, 750,000 shares were cancelled on 17 May 2023 and 1,000,000 shares were
cancelled on 5 June 2023.
6. RESERVES
At 1 October 2022
Loss for the financial period
Dividends paid during the year
Share buy back
At 30 September 2023
Merger reserve
Profit and loss account
£’000
£’000
586
-
-
-
586
64,620
8,058
(8,204)
(7,087)
57,387
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.
Financials
101
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 Tuesday, 12 March
2024 at 10.00 a.m. to consider and, if thought fit, pass
the resolutions set out below. Resolutions 1 to 12 will be
proposed as ordinary resolutions and Resolutions 13 to 15
will be proposed as special resolutions.
1.
To receive and adopt the Company’s annual accounts for the financial year ended 30
September 2023 and the associated reports of the Directors of the Company and the
auditors of the Company.
2.
To declare a final dividend of 8.9p per ordinary share for the financial year ended 30
September 2023.
3.
To declare a special dividend of 6.0p per ordinary share.
4.
To re-elect Charles Smith as a Director.
5.
To re-elect Anthony Smith as a Director.
6.
To re-elect Terry Boot as a Director.
7.
To re-elect Malcolm Collins as a Director.
8.
To re-elect Victoria Norrish as a Director.
9.
To re-appoint Cooper Parry Group Limited 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 2025.
10. To authorise the Directors of the Company to determine the remuneration of Cooper
Parry Group Limited as auditors of the Company.
11. That, in accordance with section 366 of the Companies Act 2006 (the ‘Act’), the
Company and its subsidiaries be and are hereby authorised, in aggregate, to:
(a) make political donations to political parties and/or independent election candidates,
not exceeding £50,000 in total;
(b) make political donations to political organisations other than political parties, not
exceeding £50,000 in total; and
Financials
102
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
(c) incur political expenditure, not exceeding £50,000 in total, such authority to expire
on the earlier of 11 March 2025 and the conclusion of the annual general meeting
of the Company to be held in 2025. For the purposes of this resolution the terms
‘political donation’, ‘political parties’, ‘independent election candidates’, ‘political
organisation’ and ‘political expenditure’ have the meanings given by sections 363 to
365 of the Act.
12. That, in substitution for any existing authority but without prejudice to the exercise of
any such authority prior to the date of the passing of this resolution, the Directors of
the Company be and are hereby generally and unconditionally authorised pursuant
to and in accordance with section 551 of the Companies Act 2006 (the ‘Act’) to
exercise all the powers of the Company to allot shares in the Company and to grant
rights to subscribe for, or to convert any security into, shares in the Company:
(a) up to an aggregate nominal amount of £154,089.43; and
(b) up to an aggregate nominal amount of £308,178.86 (such amount to be reduced by
any shares allotted, or rights to subscribe for or to convert any security into shares
granted, under paragraph (a) of this resolution) in connection with an offer by way of
a rights issue:
(i)
to holders of ordinary shares of £0.01 each in the capital of the Company in
proportion (as nearly as may be practicable) to their existing holdings; and
(ii)
to holders of other equity securities as required by the rights of those securities
or as the Directors otherwise consider necessary or permitted by the rights of
those securities,
and so that the Directors may impose any limits or restrictions and make any arrangements
which they consider necessary or appropriate to deal with treasury shares, fractional
entitlements or securities represented by depositary receipts, record dates, legal,
regulatory or practical problems in, or under the laws of, any territory or the requirements
of any regulatory body or stock exchange or any other matter, provided that this authority
shall expire on the earlier of 11 March 2025 and the conclusion of the annual general
meeting of the Company to be held in 2025, 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.
13. That, subject to the passing of resolution 12 proposed at the annual general meeting of
the Company convened for 12 March 2024 (‘Resolution 12’) and in substitution for any
existing authority but without prejudice to the exercise of any such authority prior to the
date of the passing of this resolution, the Directors of the Company be and are hereby
generally empowered pursuant to sections 570 and 573 of the Companies Act 2006 (the
‘Act’) to allot equity securities (within the meaning of section 560(1) of the Act) (including
the grant of rights to subscribe for, or to convert any securities into, ordinary shares of
£0.01 each in the capital of the Company (‘Ordinary Shares’)) for cash pursuant to the
authorities conferred by Resolution 12 and/or by way of a sale of treasury shares (within
the meaning of section 560(3) of the Act), as if section 561(1) of the Act did not apply to
Financials
103
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
any such allotment or sale, provided that this power shall be limited to:
(a)
the allotment of equity securities and the sale of treasury shares for cash in
connection with an offer of, or invitation to apply for, equity securities (but in the
case of the authority granted under paragraph (b) of Resolution 12, by way of a
rights issue only):
(i)
to holders of Ordinary Shares in proportion (as nearly as may be practicable) to
their existing holdings; and
(ii)
to holders of other equity securities as required by the rights of those securities
or as the Directors otherwise consider necessary or permitted by the rights of
those securities,
(iii)
(iv) 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 matters (including 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 £23,113.41,
and shall expire on the earlier of 11 March 2025 and the conclusion of the annual general
meeting of the Company to be held in 2025, 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.
14. That, subject to the passing of Resolution 12, proposed at the annual general meeting
of the Company convened for 12 March 2024 (‘Resolution 12’) and in addition to any
authority granted pursuant to resolution 13 proposed at the annual general meeting
of the Company convened for 12 March 2024, the Directors of the Company be and
are hereby generally empowered pursuant to sections 570 and 573 of the Companies
Act 2006 (the ‘Act’) to allot equity securities (within the meaning of section 560(1) of
the Act) (including the grant of rights to subscribe for, or to convert any securities into,
ordinary shares of £0.01 each in the capital of the Company (‘Ordinary Shares’)) for
cash pursuant to the authorities conferred by Resolution 12 and/or by way of a sale of
treasury shares (within the meaning of section 560(3) of the Act), as if section 561(1) of
the Act did not apply to any such allotment or sale, provided that this power shall be:
(a)
limited to the allotment of equity securities and the sale of treasury shares for cash
up to an aggregate nominal amount of £23,113.41; and
(b) used only for the purposes of financing (or refinancing, if the authority is to be used
within 12 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,
Financials
104
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
and shall expire on the earlier of 11 March 2025 and the conclusion of the annual general
meeting of the Company to be held in 2025, 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, the Company be and is hereby generally authorised pursuant to section
701 of the Companies Act 2006 (the ‘Act’) to make market purchases (within
the meaning of section 693(4) of the Act) of ordinary shares of £0.01 each in the
capital of the Company (‘Ordinary Shares’) on such terms and in such manner as
the Directors of the Company may from time to time determine, provided that:
(a)
the aggregate number of such Ordinary Shares hereby authorised to be acquired by
the Company shall not exceed 4,622,683;
(b) the price that may be paid by the Company for any of its Ordinary Shares shall not
be less than £0.01, being the nominal value of each Ordinary Share, and shall not be
greater than the higher of, exclusive of expenses:
(i) an amount equal to 105% of the average trading price of the Ordinary Shares
as derived from the middle market quotations for an Ordinary Share on the
London Stock Exchange Daily Official List for the five trading days immediately
preceding the date on which a share is contracted to be purchased; and
(ii)
the higher of the price of the last independent trade and the highest current
independent bid on the trading venue where the purchase is carried out, and
unless previously revoked, renewed, extended or varied, the authority hereby conferred shall
expire on the earlier of 11 March 2025 and the conclusion of the annual general meeting of
the Company to be held in 2025, save that the Company may before such expiry make an
offer or enter into an agreement which would or might require such purchases of Ordinary
Shares to be carried out after such expiry and the Directors may carry out such purchases in
pursuance of such an offer or agreement as if the power conferred hereby had not expired.
By order of the Board
Catherine Bowen
Company Secretary
Date: 31 January 2024
Registered Office: Haramead Business Centre, Humberstone Road, Leicester, Leicestershire,
LE1 2LH
Financials
105
NOTES
1. ATTENDANCE AT THE MEETING
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, Link Group (the ‘Registrar’), prior to being admitted
to the Annual General Meeting.
2. ONLINE VOTING
Members may vote online at www.signalshares.com. To register for this service, members will
need their Investor Code, which can be found on their share certificate. To be valid, an online
vote must be submitted no later than 48 hours (excluding non-working days) before the time of
the Annual General Meeting or any adjournment of that meeting.
The submission of an online vote will not prevent a member from attending the Annual General
Meeting and voting in person.
3. 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. 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 Link Group, Central Square, 29 Wellington Street, Leeds LS1 4DL,
by emailing shareholderenquiries@linkgroup.co.uk or by telephone on 0371 664 0300 if calling
from the United Kingdom, or +44 (0) 371 664 0300 if calling from outside the United Kingdom.
Calls are charged at the standard geographical rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable international rate. Lines are open between
9.00 a.m. – 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. Unless otherwise indicated
on the proxy form, CREST voting or any other electronic voting channel, the proxy will vote as
they think fit, or at their discretion, or withhold from voting.
The appointment of a proxy will not prevent a member from attending the Annual General
Meeting and voting in person if he or she wishes.
Financials
106
NOTES
CONTINUED
4. APPOINTMENT OF A PROXY USING A FORM OF PROXY
Members may request a hard copy proxy form directly from the Registrar by emailing
shareholderenquiries@linkgroup.co.uk or on 0371 664 0330. (Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United Kingdom will be charged
at the applicable international rate. Lines open between 9.00 a.m. – 5.30 p.m. (London Time),
Monday to Friday excluding public holidays in England and Wales).
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 Link Group, Central
Square, 29 Wellington Street, Leeds LS1 4DL, no later than 48 hours before the time of the
Annual General Meeting or any adjournment of that meeting. If these arrangements change,
members will be notified by the Company via Regulatory Information Service.
5. 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 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 & International 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.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should
note that Euroclear UK & International 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).
Financials
107
NOTES CONTINUED
6. 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.
7. 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).
8. 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 8 March 2024 (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.
9. VOTING RIGHTS
As at 31 January 2024 (being the latest practicable date prior to circulation of this Notice) the
Company’s issued share capital consisted of 46,250,000 ordinary shares of £0.01 each carrying one
vote each and the Company held 23,170 ordinary shares of £0.01 each in treasury. Accordingly,
the total voting rights were 46,226,830.
Financials
108
Shoe Zone plc
Annual Report & Accounts 2023
shoezone.com
email: investorrelations@shoezone.com