TIDMINST
Chairman's Statement and Chief Executive's Review
CHAIRMAN'S STATEMENT
The first half of the year has seen both continued progress with
previously reported operational initiatives aimed at stabilising the
business and the further integration of the Company into the Crown
Crest Group.
Whilst the reported loss before taxation for the period of GBP3.7
million represents a significant improvement on the GBP7.1 million loss
reported for the same period last year, it would be wrong to
characterise this as evidence of a turnaround in the Company's
fortunes. However, it does demonstrate some degree of stabilisation
and that the correct actions are being taken.
Nevertheless, it is equally true that the discount sector is becoming
ever more competitive in the current economic downturn. Although
there is some evidence of consumers 'trading down' in the general
merchandise sector, this
has not been seen to the same extent as with, for example, food. As a
result the present trading environment remains extremely difficult
with ever increasing pressure on margins.
The Board recognises that Crown Crest's investment in and commitment
to the Company has been, and will continue to be, of vital
importance. Not only is Crown Crest providing material financial
support by way of loan and trade credit facilities, it is also
assisting through initiatives such as joint buying and logistical
support.
While such assistance is provided always on a commercial and 'arm's
length' basis, these are avenues of finance and credit that may well
not have been available to the Company at all from traditional
sources. The Board believes that even when general economic
conditions improve, the Company's substantial dependence on the Crown
Crest Group will continue and that the Company's interests will be
best served by some or all of the Company's indebtedness to Crown
Crest being converted into share capital. If approved, this would
decrease further the proportion of the
Company's shares in public hands and bring into question the
continuing appropriateness of maintaining the Company's listing.
For this and other reasons, the Company will today be separately
announcing a proposal to seek cancellation of the admission of its
shares to the Official List and to their trading on the London Stock
Exchange, and subsequently
the arrangement of a tender offer for its shares and its
re-registration as a private limited company. A Circular setting out
the reasons for and the details of these proposals, together with a
notice convening a general meeting, will be posted to shareholders
shortly. The Board unanimously believes this proposal to be in the
best interests of shareholders as a whole, and is recommending that
shareholders vote in favour.
John Jackson
Chairman
29th October 2009
CHIEF EXECUTIVE'S REVIEW
During the first half of the year we have continued to implement the
changes required to return the business to its heritage as a value
retailer with a reputation for low everyday prices and fantastic
offers.
As a clear signal to consumers of our intentions in this regard we
have pressed ahead with the programme of returning all our core
estate to the 'Poundstretcher' brand, and have converted 58 stores
during the period under review at minimal expense.
To enable customers to be offered the best possible value for money
we have continued to both refine our buying strategy and to review
costs across the business.
With regard to costs, we have continued to successfully achieve
favourable rent and lease renewals and are renegotiating third party
contracts for services wherever possible. I am pleased to report that
our ongoing review
of costs has not resulted in any significant redundancies and our
focus has been to more tightly control staff hours on a store by
store basis.
Unfortunately we have experienced somewhat higher than anticipated
distribution costs in the first half of the year. This has been due
in part to the process of bedding in the logistics support now being
provided by Crown Crest but
principally due to the imperative of filling certain gaps that had
arisen in our stock range. Ensuring that such gaps are eradicated and
that all 'events', such as back-to-school, are fully ranged will be
an area of focus for us going forward.
Despite such stock issues, our sales for the first half remain
broadly in line with our expectations and ahead of last year. The
performance of our 19 store 'Coloroll' estate remains disappointing,
however, although we have seen
some encouraging signs following a review and rationalisation of the
product range. We keep our options for this business under review.
Finally, our property strategy remains one of prudence, keeping the
market under constant review and assessing the relative merits of
opportunities as they arise. During the period we have opened five
new stores, including two former Woolworths sites, and closed four,
giving a total of 329 stores at the half year.
Trading Performance and Financial Results
Total sales in the 26 weeks to 29th August 2009 were GBP139.8 million,
an increase of 2.9% against the GBP135.8 million achieved in the same
period last year. Within this total, like-for like
sales showed an increase of 1.3%, reflecting the favourable weather
during the first quarter and strong performances from textiles and
FMCG.
Cost of sales before exceptional items increased to GBP127.7 million
(2008: GBP124.6 million), with savings in payroll and reduced rents
offset by increased energy charges, together with higher than
anticipated distribution costs incurred as
gaps in the stock range were filled.
Nevertheless, gross profit before exceptional items has increased to
GBP12.1 million (2008: GBP11.2 million) increasing gross profit margin
slightly to 8.6% (2008: 8.3%).
After net operating expenses before exceptional items of GBP15.1
million (2008: GBP17.5 million), the business reported a net operating
loss before exceptional items for the period of GBP3.2 million, a GBP3.1
million improvement versus last year's loss for the same period of
GBP6.3 million.
After the exceptional costs of GBP0.4 million, relating to the
impairment of property, plant and equipment and an onerous lease
provision (2008: GBP0.7 million relating to costs of the offer from
Sechem Investments and employee share
movements), and after net interest paid of GBP0.2 million (2008: GBP0.1
million), the total loss before taxation for the period was GBP3.7
million, compared with last year's GBP7.1 million.
The basic loss per share was 1.98p (2008: 3.32p).
Balance Sheet
Capital expenditure in the 26 week period to 29th August 2009 was
GBP0.7 million (2008: GBP0.3 million), partly reflecting the decision to
rebrand the estate to the 'Poundstretcher' fascia. Fixed assets at
the period end had decreased from GBP30.1 million to GBP21.7 million.
Stock amounted to GBP44.4 million, an increase of 11.9% on 2008 levels,
reflecting both the new product lines being brought into the business
and the acquisitions made of ex-Woolworth stock.
At the half-year end, the Group had net cash balances of GBP3.2 million
(2008: GBP6.9 million), after a net decrease in cash of GBP3.7 million
(2008: GBP3.3 million).
Risk and Uncertainties
The Group faces a number of risks and uncertainties, both over the
remainder of the financial year and beyond, and it is Instore's
policy to mitigate these risks to the greatest extent possible.
The Company is, and in the view of the Directors likely to remain,
significantly dependent on the support of the Crown Crest Group. The
financial support from Crown Crest, which takes the form of a loan of
GBP5 million, a guarantee to support the Company's banking facilities
and trade credit facilities amounting to GBP5 million, is carefully
monitored by the Board's Audit Committee to ensure it is provided
always on an 'arm's length' basis and at commercial terms which
reflect those applied to Crown Crest by its own lenders.
In common with most retailers, the Group's performance is affected by
the underlying economic climate. The Board considers that the full
effects of the current recession have yet to be seen, but that the
economic downturn presents opportunities as well as challenges, given
the 'value' nature of Instore's offer and the possibility of that
offer becoming
increasingly attractive to a wider range of customers. Nevertheless,
in such circumstances the value retail sector is likely to become
ever more competitive, and the Group and its management will have to
ensure sourcing remains robust if Instore is to continue to offer its
customers best value.
Group performance in every year is also heavily dependent on the key
Christmas trading period and accordingly management spends a great
deal of time planning for this period and ensuring such plans are
well executed. In addition, sales of our seasonal lines, particularly
our gardening and outdoor living ranges, are to a large extent
dependent on the UK enjoying good, seasonal weather during the spring
and summer months.
As regards sourcing, the Group acquires a significant proportion of
goods for resale from outside the UK, paid for in foreign currency,
and it is the Group's policy to manage the inherent risks from such
currency exposure by entering into forward contracts in respect of
payments to such overseas suppliers.
The day-to-day operation of the business is hugely dependent on the
efficient and uninterrupted operation of Instore's logistics and IT
systems. Given their centralised nature, the Group has invested much
effort in establishing a robust business continuity plan, which it is
hoped will minimise the impact of any major disaster suffered at the
Group's head office location. Nevertheless, these effects cannot be
eradicated fully, and any such disaster would have a significant
short-term impact on the Group's business.
Outlook
Total sales were down 7.7% in the seven weeks ended 17th October
2009, equivalent to an 8.3% like-for-like decrease. As in previous
years the full year outcome will be heavily dependent on the key
Christmas trading period.
Responsibility Statement of the Directors in Respect of the Interim
Financial Report
We confirm that to the best of our knowledge:
* the condensed set of financial statements, which has been
prepared in accordance with the applicable set of accounting
standards, gives a true and fair view of the assets, liabilities,
inancial position and loss of the Group;
* the interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred
during the first six months of the financial year and their impact on
the condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of the
year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place
in the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last
annual report that could do so.
Aziz Tayub
Chief Executive
29th October 2009
Independent Review Report to Instore plc
Introduction
We have been engaged by the Company to review the condensed set of
financial statements in the interim financial report for the 26 weeks
ended 29th August 2009 which comprises the Consolidated Income
Statement, the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Changes in Shareholcers' Equity,
the Consolidated Statement of Financial Position, the Consolidated
Statement of Cash Flows and the related notes. We have read the other
information contained in the interim financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state to
it in this report and
for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Company
for our review work, for this report, or for the conclusions we have
reached.
Directors' Responsibilities
The interim financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the interim financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
As disclosed in note 3, the annual financial statements of the Group
are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of financial statements included in this
interim financial report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting",
as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the interim fi nancial
report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK
and Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us
to believe that the condensed set of financial statements in the
interim financial report for the 26 weeks ended 29th August 2009 is
not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union
and Disclosure and Transparency Rules of the Financial Services
Authority.
PKF (UK) LLP
Nottingham
29th October 2009
Unaudited Consolidated Income Statement
for the 26 weeks ended 29th August 2009
26 weeks ended 29th August 26 weeks ended 30th
2009 August 2008
Before Before
Exceptional Exceptional
exceptional items exceptional items
items (note Total items (note Total
6) 6)
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 139,792 - 139,792 135,821 - 135,821
Cost of sales (127,736) (440) (128,176) (124,580) - (124,580)
Gross profit 12,056 (440) 11,616 11,241 - 11,241
Distribution (8,815) - (8,815) (10,155) - (10,155)
costs
Administrative (6,276) - (6,276) (7,319) (782) (8,101)
expenses
Operating (3,035) (440) (3,475) (6,233) (782) (7,015)
(loss)/profit
Finance income 1 - 1 33 - 33
Finance (183) - (183) (104) - (104)
expenses
Loss before (3,217) (440) (3,657) (6,304) (782) (7,086)
taxation
Taxation 7 (695) - (695) (194) - (194)
Loss for the
period
attributable
to the
equity holders
of the
Parent Company (3,912) (440) (4,352) (6,498) (782) (7,280)
Loss per share
(pence)
- Basic and 8 (1.98) (3.32)
diluted
Unaudited Consolidated Statement of Comprehensive Income
for the 26 weeks ended 29th August 2009
26 weeks 26 weeks
ended ended
29th August 30th August
2009 2008
GBP'000 GBP'000
Loss for the period attributable to the
equity holders of the Parent Company (4,352) (7,280)
Cash flow hedges
- Fair value gains in period 382 3,123
- Transfers to net profit (2,169) (2,013)
Total comprehensive expense for the period
attributable
to the equity holders of the Parent Company (6,139) (6,170)
(net of tax)
Unaudited Consolidated Statement of
Changes in Shareholders' Equity for the 26 weeks ended 29th August
2009
Share Share Other Accumulated
capital premium Reserves losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 2nd March 2008 as
previously reported 28,721 97,794 3,729 (104,089) 26,155
Prior year adjustment
see
notes below - - (219) - (219)
At 2nd March 2008
as restated 28,721 97,794 3,510 (104,089) 25,936
Net loss - - - (7,280) (7,280)
Cash flow hedges
- Fair value gains in - - 3,123 - 3,123
period
- Transfers to net - - (2,013) - (2,013)
profit
At 30th August 2008
as restated 28,721 97,794 4,620 (111,369) 19,766
At 1st March 2009 28,721 97,794 3,184 (114,214) 15,485
Net loss - - - (4,352) (4,352)
Cash flow hedges
- Reclassification to
retained earnings - - (1,787) 1,787 -
- Fair value gains in - - - 382 382
period
- Transfers to net - - - (2,169) (2,169)
profit
At 29th August 2009 28,721 97,794 1,397 (118,566) 9,346
Prior year adjustment
At 1st March 2008 the deferred tax adjustment relating to hedging was
not recognised.
An adjustment of GBP219,000 was made between deferred tax and the
equity hedge reserve as per the Company's Statutory accounts for the
52 weeks ended 28th February 2009.
Reclassification to accumulated losses
The reclassification of the hedge reserve is due to the novation of
the forward contracts and options held by the Company as per IAS 39
(see note 14).
Unaudited Consolidated Statement of Financial Position as at 29th
August 2009
29th August 30th August 28th February
2009 2008 2009
As restated
Notes GBP\'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and 9 21,685 30,138 25,222
equipment
Deferred tax - 1,759 -
Other non-current - 50 -
receivables
21,685 31,947 25,222
Current assets
Inventories 44,352 39,635 45,168
Trade and other 8,213 7,751 6,346
receivables
Derivative financial - 4,142 7,345
assets
Cash and cash equivalents 3,152 6,913 6,327
55,717 58,441 65,186
Total assets 77,402 90,388 90,408
Liabilities
Current liabilities
Trade and other payables 11a (53,305) (52,842) (56,432)
Derivative financial - (2,679) (3,316)
liabilities
Current tax payable - (112) -
Provisions 12 (558) (1,618) (1,091)
(53,863) (57,251) (60,839)
Net current assets 1,854 1,190 4,347
Non-current liabilities
Provisions 12 (10,506) (9,710) (10,501)
Other non-current 11b (3,687) (3,659) (3,583)
payables
(14,193) (13,369) (14,084)
Total liabilities (68,056) (70,620) (74,923)
Net assets 9,346 19,768 15,485
Shareholders' equity
Called up share capital 28,721 28,721 28,721
Share premium 97,794 97,794 97,794
Other reserves 1,397 4,622 3,184
Accumulated losses (118,566) (111,369) (114,214)
Total equity 9,346 19,768 15,485
Prior year adjustment - taken to equity hedge reserve
At 1st March 2008 the deferred tax adjustment relating to hedging was
not recognised.
An adjustment of GBP219,000 was made between deferred tax and the
equity hedge reserve as per the Company's Statutory accounts for the
52 weeks ended 28th February 2009.
Unaudited Consolidated Statement of
Cash Flows for the 26 weeks ended 29th August 2009
26 weeks 26 weeks
ended ended
29th August 30th August
2009 2008
Notes GBP'000 GBP'000
Cash flows from operating activities
Cash (absorbed by) operations 10 (2,281) (1,176)
Interest received 1 33
Interest paid (183) (104)
Net cash outflow from operating (2,463) (1,247)
activities
Cash flows from investing activities
Purchase of property, plant and (712) (551)
equipment
Net cash used in investing activities (712) (551)
Net decrease in cash, cash equivalents (3,175) (1,798)
and overdrafts
Cash and cash equivalents at beginning 6,327 8,711
of period
Cash, cash equivalents and overdrafts 3,152 6,913
at end of period
Notes to the Interim Report for the 26 weeks ended 29th August 2009
1 GENERAL INFORMATION
The Company is a limited liability company incorporated and domiciled
in the UK. The address of its registered office is Trident Business
Park, Leeds Road, Huddersfield, HD2 1UA.
The Company has its primary listing on the London Stock Exchange.
This condensed consolidated interim financial information was
approved for issue on 29th October 2009.
These interim financial results do not comprise statutory accounts
within the meaning of Section 435 of the Companies Act 2006.
Statutory accounts for the 52 weeks ended 28th February 2009 were
approved by the Board of Directors on 29th June 2009 and delivered to
the Registrar of Companies. The financial information contained in
this interim report in respect of the 52 weeks ended 28th February
2009 has been extracted from the 2009 annual report and financial
statements. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and did
not contain any statement under Section 498 (2) or (3) of the
Companies Act 2006.
2 SEASONALITY OF OPERATIONS
The Company's principal activity is retail within the value sector.
Historically, approximately 55% of sales revenue is generated in the
second half-year, although this is partially offset by a
corresponding rise in variable costs.
3 BASIS OF PREPARATION
This condensed consolidated interim financial information for the
period ended 29th August 2009 has been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Services
Authority and with IAS 34, "Interim financial reporting" as adopted
by the European Union. The half-yearly condensed consolidated
financial report should be read in conjunction with the annual
financial statements for the 52 weeks ended 28th February 2009, which
have been prepared in accordance with IFRSs as adopted by the
European Union.
In view of the Group's ongoing trading losses the Directors have
carried out a detailed review to determine whether the going concern
basis of preparation remains appropriate. In carrying out this review
the Directors have noted the improved results that have been achieved
during the interim period compared to the comparative period in line
with the turnaround plan. The Directors are aware that continued
achievement of the turnaround plan is dependent on the ongoing level
of demand for the Group's products, exchange rate fluctuations
between sterling and dollar, and the availability of bank finance in
the foreseeable future.
During the interim period the Group breached one of its borrowing
covenants. However, the consent of the bank was sought prior to such
breach occurring and the Directors subsequently obtained a formal
waiver by the bank after the period end. There have been no
subsequent breaches.
The Directors have prepared detailed cash flow forecasts which they
consider prudently model trading performance taking account of the
current economic environment and demonstrate that the business should
be able to continue to operate within its current banking facilities
for the foreseeable future. The committed facilities are due for
review on 30th June 2010. The Group will open renewal negotiations
with the bank in due course and has at this stage not sought any
written commitment that the facility will be renewed. However, the
Group has held discussion with its bankers about its future borrowing
needs and no matters have been drawn to its attention to suggest that
renewal may not be forthcoming on acceptable terms.
The Directors recognise that in order to operate within its
facilities the Group is dependent on the ongoing support of Crown
Crest (Leicester) plc, the Company's principal shareholder. The
Directors have obtained written confirmation that Crown Crest
(Leicester) plc will not recall its loan during the next year and
will continue to provide ongoing support in relation to trade credit
facilities and buying and logistic support for the foreseeable future
to ensure the Group can meet its liabilities as they fall due. In
consideration of its ability to provide the ongoing support Crown
Crest (Leicester) plc has reviewed its own funding requirements and
has agreed extended facilities to provide
additional headroom to cover any delays with the ongoing turnaround
of the Group.
Taking the above into consideration the Directors believe that the
preparation of the accounts on a going concern basis is appropriate.
4 ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the
financial statements for the 52 weeks ended 28th February 2009, as
described in those annual financial statements.
There have been no significant changes in the bases upon which
estimates have been determined, compared to those applied at 28th
February 2009 and no change in estimate has had a material effect on
the current period.
These condensed consolidated interim financial statements have been
prepared on the basis of IFRS in issue that are effective or
available for early adoption at the Group annual reporting date as at
27th February 2010.
5 SEGMENT INFORMATION
The Group derives its revenue from a single activity, being variety
discount retailing. This is carried out throughout the UK and
applying IFRS 8 the Directors consider this to be a single operating
segment.
6 EXCEPTIONAL ITEMS
Items that are both material in size and unusual and infrequent in
nature are presented as exceptional items in the income statement.
The Directors are of the opinion that the separate recording of
exceptional items provides helpful information about the Group's
underlying business performance.
Operating exceptional items are analysed as follows:
26 weeks 26 weeks
ended ended
29th August 30th August
2009 2008
GBP'000 GBP'000
Cost of sales:
1) Impairment of property, plant and (354) -
equipment
2) Onerous lease provision (86) -
(440) -
Administration expenses:
3) Cost of share offer - (245)
4) Employee share loan provision - (537)
- (782)
(440) (782)
1) As a result of the provisions under IAS 36, the Directors
have conducted an assessment of the future cash flows of all trading
outlets. An impairment charge of GBP0.4 million (2008: GBPnil) has been
recognised on those stores where the anticipated cash flows do not
support the carrying value of the associated assets.
2) During the financial period ended 29th August 2009, the
Directors have conducted an assessment of the future cash flows of
all trading outlets and as result an onerous lease charge of GBP0.1
million (2008: GBPnil) was recognised on those stores where the
anticipated cash flows were not expected to cover the contracted
lease charges.
3) During the period ended 30th August 2008, Seaham Investments
Limited made an offer to the minority shareholders of Instore plc to
buy their shares. The cost of evaluating and effecting this offer was
GBP0.3 million.
4) During the period ended 30th August 2008, an impairment
charge of GBP0.5 million has
been recognised in respect of a potential shortfall on loans made to
employees for the purpose of acquiring shares in the Company.
7 TAXATION
The tax charge for the period is GBP695,000 (2008: GBP194,000). The
effective rate of tax is lower than the prevailing UK statutory rate
of 28% as no deferred tax asset has been recognised in relation to
losses arising in the period. The tax change relates to movements in
deferred tax relating to short-term timing differences.
8 LOSS PER SHARE
Basic loss per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the period, excluding those
held in the employee share trust which are treated as cancelled.
For diluted loss per share, the weighted average number of ordinary
shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares. The Group has one class of potentially
dilutive ordinary shares: those share options granted to employees
where the exercise price is less than the average market price of the
Company's ordinary shares during the period.
Reconciliations of the earnings and weighted average number of shares
used in the calculations are set out below.
2009 2008
Weighted Weighted
average average
number of Per number of Per
share share
Earnings shares amount Earnings shares amount
GBP'000 millions pence GBP'000 millions pence
Basic loss per
share:
Earnings
attributable to
ordinary (4,352) 219.4 (1.98) (7,280) 219.5 (3.32)
shareholders
Effect of
dilutive
securities:
Options - - - - - -
Diluted loss per (4,352) 219.4 (1.98) (7,280) 219.5 (3.32)
share
The dilutive effect of options is disregarded in the current and
prior periods as a loss was incurred.
9 PROPERTY, PLANT AND EQUIPMENT
26 weeks 26 weeks 52 weeks
ended ended ended
29th August 30th August 28th February
2009 2008 2009
GBP'000 GBP'000 GBP'000
Opening net book amount 1st
March 2009/
2nd March 2008/2nd March 2008 25,222 33,987 33,987
Additions at cost 677 259 2,536
Disposals (148) (478) (672)
Depreciation, amortisation and (3,712) (3,630) (8,530)
other movements
Impairment charge (note 6) (354) - (2,099)
Closing net book amount 29th
August 2009/
30th August 2008 21,685 30,138 25,222
Due to indications the properties have been reviewed for impairment
at the balance sheet date. The recoverable amount of each property
has been based on estimated value in use calculations. Value in use
calculations have been based on a subjective discount rate of 8.7%.
10 CASH FLOW FROM OPERATING ACTIVITIES
Cash absorbed by operations
26 weeks 26 weeks
ended ended
29th August 30th August
2009 2008
GBP'000 GBP'000
Loss for the financial period (4,352) (7,280)
Adjustments for:
Taxation 695 194
Finance income (1) (33)
Finance costs 183 104
Depreciation 3,712 4,125
Impairment of fixed assets 354 (495)
Loss on disposal of property, plant and 148 478
equipment
Share-based payment (credit) - (171)
Fair value movements on derivative financial 1,547 -
instruments
Decrease/(Increase) in inventories 816 (3,929)
(Increase) in trade and other receivables (1,867) (2,420)
Increase/(Decrease) in payables (2,988) 9,047
(Decrease) in provisions (528) (796)
(2,281) (1,176)
11 LIABILITIES
(a) Trade and other payables
29th August 30th August 28th February
2009 2008 2009
GBP'000 GBP'000 GBP'000
Trade payables 35,099 35,369 38,090
Other tax and social security 1,790 2,514 1,001
payable
Other payables 2,073 2,121 1,769
Loan from Crown Crest 5,000 - 5,000
(Leicester) plc (note 14)
Accruals and deferred income 9,343 12,838 10,572
53,305 52,842 56,432
(b) Other non-current
liabilities 29th August 30th August 28th February
2009 2008 2009
GBP'000 GBP'000 GBP'000
Other payables 3,687 3,659 3,583
Other payables represent capital contributions from landlords, lease
premiums and
rent-free periods.
12 PROVISIONS
Dilapidation Closed store Onerous lease
provision provision provision Total
GBP'000 GBP'000 GBP'000 GBP'000
At 2nd March 2008 9,634 690 1,800 12,124
Charged to profit and 112 - - 112
loss account
Utilised during the (57) (583) - (640)
period
Released during the (28) - (240) (268)
period
At 30th August 2008 9,661 107 1,560 11,328
At 2nd March 2008 9,634 690 1,800 12,124
Charged to profit and 260 134 1,085 1,479
loss account
Utilised during the (221) (798) (443) (1,462)
period
Released during the (27) (26) (496) (549)
period
At 28th February 2009 9,646 - 1,946 11,592
At 1st March 2009 9,646 - 1,946 11,592
Charged to profit and 20 - 86 106
loss account
Utilised during the (2) - - (2)
period
Released during the - - (632) (632)
period
At 29th August 2009 9,664 - 1,400 11,064
Provisions have been analysed between current and non-current as
follows:
29th August 30th August 28th February
2009 2008 2009
GBP'000 GBP'000 GBP'000
Current 558 1,618 1,091
Non-current 10,506 9,710 10,501
11,064 11,328 11,592
13 CONTINGENCIES
Liabilities
The Group had guaranteed certain lease obligations of its subsidiary
undertakings, which were disposed of to Tradegro Limited during the
period ended 22nd February 2003.
Tradegro Limited has agreed to indemnify the Company against claims
received under the guarantees. These leases all expire in between 8
and 10 years. The maximum potential annual liability under these
leases is GBP336,000 (2008: GBP336,000).
As at 28th February 2009 the Group had guarantees in respect of
Customs and Excise duty deferment of GBP500,000 (2008: GBP500,000) and
stand-by letters of credit given to suppliers of GBP630,000 (2008:
GBPnil).
Assets
In previous years a compulsory purchase order was issued over one of
the Group's stores.
Subject to final agreement of the value, the minimum compensation is
expected to be GBP650,000 after costs.
14 RELATED PARTY TRANSACTIONS
Crown Crest (Leicester) plc and Seaham Investments Limited are
related parties to Instore plc and its subsidiary undertakings. At
29th August 2009 Seaham Investments owned 56.98% of the ordinary 10p
shares in Instore plc. A A Tayub and A R Tayub are Directors of Crown
Crest (Leicester) plc and A A Tayub is a Director of Seaham
Investments Limited. A A Tayub and A R Tayub are also Directors of
Instore plc.
Material transactions between related parties in relation to Crown
Crest (Leicester) plc and Seaham Investments Limited in the period to
29th August 2009 were:
(a) GBP29.9 million (30th August 2008: GBP8.6 million; 28th February
2009: GBP24.5 million) was payable to Crown Crest (Leicester) plc
during the period for purchases of goods for resale during the
ordinary course of business. As at 29th August 2009 an amount of
GBP14.2 million (30th August 2008: GBP2,635,000; 28th February 2009: GBP5.3
million) was owed to Crown Crest (Leicester) plc in respect of these
purchases.
(b) On 25th August 2009, $27.3 million of Forward Contracts and
Options were novated to Crown Crest (Leicester) plc as part of the
strategy of purchasing the Company's previously imported goods
directly from Crown Crest.
(c) In January 2009, the Group received an unsecured short-term
loan of GBP5 million to cover working capital requirements. Interest is
charged at 1.25% above LIBOR until May 2009 when the rate increases
to 2.25% above LIBOR. At 29th August 2009 the amount outstanding
included in current liabilities was GBP5 million (28th February
2009: GBP5 million).
M & S Toiletries Ltd is also a related party to Instore plc and its
subsidiary undertakings. S Tayub, a Director and shareholder of M & S
Toiletries Ltd, is related to A A Tayub and A R Tayub, Directors of
Instore plc.
Material transactions between related parties in relation to M & S
Toiletries Ltd in the period to 29th August 2009 were:
(a) GBP2.0 million (30th August 2008: GBPnil; 28th February 2009:
GBP1.1 million) was payable to M & S Toiletries Ltd during the period
for purchases of goods for resale during the ordinary course of
business. As at 29th August 2009 an amount of GBP149,000 (30th August
2008: GBPnil; 28th February 2009: GBP21,000) was owed to M & S Toiletries
Ltd
in respect of these purchases.
Sert UK plc is another related party to Instore plc and its
subsidiary undertakings. S Tayub, a Director and shareholder of Sert
UK plc, is related to A A Tayub and A R Tayub, Directors of Instore
plc.
Material transactions between related parties in relation to Sert UK
plc in the period to 29th August 2009 were:
(a) GBPnil (30th August 2008: GBP360,000; 28th February 2009:
GBP426,000) was payable to Sert UK plc during the period for purchases
of goods for resale during the ordinary course of business. As at
29th August 2009 an amount of GBPnil (30th August 2008: GBPnil; 28th
February 2009: GBPnil) was owed to Sert UK plc in respect of these
purchases.
(b) GBPnil (29th August 2008: GBPnil; 28th February 2009: GBP152,000)
was receivable from Sert UK plc during the period for purchases of
goods for resale during the ordinary course of business. As at 28th
August 2009 an amount of GBPnil (29th August 2008: GBPnil; 28th February
2009: GBPnil) was receivable from Sert UK plc in respect of these
purchases.
Tradehold Limited, Tradegro Limited and Tradegro (UK) Limited are
related parties to Instore plc and its subsidiary undertakings. At
28th February 2009 Tradegro Limited owned 15.86% of the ordinary 10p
shares in Instore plc.
Material transactions between related parties in relation to
Tradehold Limited, Tradegro Limited and Tradegro (UK) Limited in the
period to 29th August 2009 were:
(a) GBPnil (30th August 2008: GBP35,000; 28th February 2009: GBPnil)
was payable to Tradegro (UK) in respect of the purchase of shares
from Directors of a subsidiary company.
(b) GBPnil (30th August 2008: GBP6,000; 28th February 2009: GBPnil) was
paid to Tradegro (UK) for travel costs incurred during the period.
(c) GBPnil (30th August 2008: GBP56,000; 28th February 2009: GBPnil)
was received from Tradegro (UK) in respect of rental payments
reimbursed in connection with the indemnity arrangements agreed on
the disposal of previously held subsidiaries.
Key management represents the current Executive Directors. Key
management compensation amounted to GBP85,000 for the period to 29th
August 2009 (30th August 2008: GBPnil; 28th February 2009: GBP58,000).
This figure comprises of salaries and other short-term benefits. For
the period to 29th August 2009 an amount of GBP6,000 (30th August 2008:
GBP42,000; 28th February 2009: GBP54,000) was paid to Forrest Burlinson,
a firm of Chartered Accountants, in respect of the services of an
Executive Director.
=--END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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