Notes to the Parent Company financial statements
For the 52 weeks ended 28 February 2009
1. General information
Home Retail Group plc is a public limited company incorporated and domiciled in England under the Companies Act 1985 and listed on the London Stock Exchange. The Company’s registered number is 5863533 and the registered office of the Company is Avebury, 489 – 499 Avebury Boulevard, Milton Keynes MK9 2NW.
2. Summary of principal accounting policies
Basis of accounting
These separate financial statements of Home Retail Group plc (‘the Company’) are presented as required by the Companies Act 1985 (‘the Act’), and were approved by the Board on 29 April 2009. They have been prepared on a going concern basis and under the historical cost convention modified for the revaluation of certain financial instruments, and in accordance with the Companies Act 1985 and applicable UK Generally Accepted Accounting Principles (‘UK GAAP’).
The Company is the ultimate parent entity of Home Retail Group (‘the Group’). The Company’s financial statements are included in Home Retail Group plc’s consolidated financial statements for the 52 weeks ended 28 February 2009. As permitted by section 230 of the Act, the Company has not presented its own profit and loss account. The Company has also taken advantage of the exemption from preparing a cash flow statement under the terms of FRS 1 (Revised 1996) ‘Cash Flow Statements’. The Company is also exempt under the terms of FRS 8 ‘Related Party Disclosures’ from disclosing transactions with other members of the Home Retail Group.
The Company has applied the provisions for merger relief under section 131 of the Act; as a consequence no share premium was recorded in respect of the shares issued. The investment in Home Retail Group (UK) Limited has also been recorded at the nominal value of shares issued under the provision of section 133 of the Act (provision supplementing section 131 of the Act).
Financial instruments
The Company classifies its financial instruments in the following categories: financial assets at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition and re-evaluates this position at every reporting date.
Financial assets and liabilities at fair value through profit or loss
Financial assets and liabilities at fair value through profit or loss are so designated by management on initial recognition. Derivatives are generally designated as hedges. Items in this category are classified as current assets or current liabilities if they are either held for trading or are expected to be realised within 12 months of the balance sheet date.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Company provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. Loans and receivables comprise trade and other receivables, cash and cash equivalents and current asset investments in the balance sheet.
Investments
Investments are included in the balance sheet at their cost of acquisition. Where appropriate, a provision is made for any impairment in their value.
Dividend distribution
Final dividends proposed by the Board of Directors and unpaid at the year-end are not recognised in the financial statements, until they have been approved by the shareholders at the Annual General Meeting. Interim dividends are recognised when paid.
Share-based payments
The Company operates a number of equity-settled, share-based compensation plans for the benefit of employees of its subsidiary companies. The fair value of the shares granted is recognised as an expense after taking into account the best estimate of the number of awards expected to vest. The Company revisits the vesting estimate at each balance sheet date. Non-market performance conditions are included in the vesting estimate. Expenses are incurred over the vesting period and are recharged in full to the employing subsidiary companies. Fair value is measured at the date of grant using whichever of the Black-Scholes, Monte Carlo model and closing market price is most appropriate to the award. Market-based performance conditions are included in the fair value measurement on grant date and are not revisited for actual performance.
3. Profit and loss account disclosures
The Company’s loss on ordinary activities was £6.2m (2008: £6.6m loss).
The Company has no employees, other than the Company directors. No directors received any remuneration from the Company during either year. Further information on directors’ remuneration, which forms part of the audited Group financial statements, can be found in the directors’ remuneration report.
There were no non-audit services.
4. Dividends
| Amounts recognised as distributions to equity holders |
52 weeks ended 28 February 2009 £m |
52 weeks ended 1 March 2008 £m |
|---|---|---|
| Final dividend of 10.0p per share (2008: 9.0p) for the prior year | 86.8 | 78.1 |
| Interim dividend of 4.7p per share (2008: 4.7p) for the current year | 40.4 | 40.8 |
| Ordinary dividends on equity shares | 127.2 | 118.9 |
A final dividend in respect of the year ended 28 February 2009 of 10.0p per share, amounting to a total final dividend of £85.6m, has been recommended by the Board of Directors, and is subject to approval by the shareholders at the Annual General Meeting. This would make a total dividend for the year of 14.7p per share, amounting to £126.0m. The recommended dividend has not been included as a liability at 28 February 2009 in accordance with FRS 21 ‘Events after the Balance Sheet Date’. It will be paid on 22 July 2009 to shareholders who are on the register of members at close of business on 22 May 2009. The Home Retail Group Employee Share Trust (‘EST’) has waived its entitlement to dividends in the amount of £1.8m (2008: £1.3m).
5. Investment in subsidiary
|
2009 £m |
2008 £m |
|
|---|---|---|
| Cost | ||
| At beginning and end of the year | 2,895.6 | 2,895.6 |
The Company’s sole investment is in Home Retail Group (UK) Limited, which is a 100% owned subsidiary incorporated within the UK and is a Group holding company.
6. Debtors
|
2009 £m |
2008 £m |
|
|---|---|---|
| Amounts owed by Group companies | – | 161.6 |
| Taxation | 2.5 | 2.2 |
| 2.5 | 163.8 |
The amounts owed by Group companies were unsecured, repayable on demand and non-interest bearing. The amounts owed by Group companies were repaid in full during the current year.
7. Creditors – amounts falling due in one year
|
2009 £m |
2008 £m |
|
|---|---|---|
| Amounts owed to Group companies | (269.8) | (297.9) |
| Other creditors | (0.5) | – |
| (270.3) | (297.9) |
All amounts owed to Group companies as at 28 February 2009 are unsecured, non-interest bearing and repayable on demand. The amounts owed to Group companies as at 1 March 2008 included an unsecured loan of £191.5m taken out on 10 October 2006 with Stanhope Finance Limited, a Group company. Interest was fixed and charged at 4.91%.
8. Called up share capital
|
2009 Number of shares |
2009 £m |
2008 Number of shares |
2008 £m |
|
|---|---|---|---|---|
| Authorised: | ||||
| Ordinary share capital of 10p each | 2,000,500,000 | 200.1 | 2,000,500,000 | 200.1 |
|
2009 Number of shares m |
2009 £m |
2008 Number of shares m |
2008 £m |
|
|---|---|---|---|---|
| Allotted, called-up and fully paid: | ||||
| Ordinary share capital of 10p each | 877.4 | 87.7 | 877.4 | 87.7 |
9. Reserves
|
Treasury and EST shares £m |
Profit and loss account £m |
Total £m |
|
|---|---|---|---|
| At 2 March 2008 | (6.0) | 2,679.8 | 2,673.8 |
| Loss for the financial year | – | (6.2) | (6.2) |
| Net movement in own shares | (21.1) | (0.4) | (21.5) |
| Equity dividends paid during the year | – | (127.2) | (127.2) |
| Movement in share-based compensation reserve | – | 21.3 | 21.3 |
| Other distributions | – | (0.1) | (0.1) |
| At 28 February 2009 | (27.1) | 2,567.2 | 2,540.1 |
|
Treasury and EST shares £m |
Profit and loss account £m |
Total £m |
|
|---|---|---|---|
| At 4 March 2007 | (6.1) | 2,783.7 | 2,777.6 |
| Loss for the financial year | – | (6.6) | (6.6) |
| Net movement in own shares | 0.1 | – | 0.1 |
| Equity dividends paid during the year | – | (118.9) | (118.9) |
| Movement in share-based compensation reserve | – | 21.6 | 21.6 |
| At 1 March 2008 | (6.0) | 2,679.8 | 2,673.8 |
Other distributions represents dividend equivalent amounts paid to participants in the Group’s share award schemes on exercise of awards under these schemes.
Net movement in own shares represents the purchase, and subsequent utilisation or sale, of shares for the purpose of satisfying obligations arising from the Group’s share-based compensation schemes. Shares in Home Retail Group plc are held in the following trusts which have been established since demerger:
Home Retail Group Employee Share Trust (‘EST’)
The EST provides for the issue of shares to Group employees under share option and share grant schemes (with the exception of the Share Incentive Plan). At 28 February 2009, the EST held 20,082,708 shares with a market value of £42.7m. The shares in the EST are held within equity of the Group at a cost of £21.5m. During the year 11,398,812 shares were acquired for a cost of £21.6m, with the remaining shares in the EST having been acquired as part of the demerger from GUS plc in 2006 at no cost. Dividends on these shares are waived.
Home Retail Group Share Incentive Scheme Trust
The Home Retail Group Share Incentive Scheme Trust provides for the issue of shares to Group employees under the Share Incentive Plan. At 28 February 2009, the Trust held 1,345,240 shares with a market value of £2.9m. These shares are held within equity of the Group at a cost of £5.6m. No additional shares were purchased during the year.
10. Commitments
On 12 July 2006, Argos Limited, a subsidiary of the Company, entered into a five-year multi-currency revolving loan facility of £700m with a syndicated group of banks. This facility has since been extended by one year and then subsequently £685m of this facility has been extended a further year. On 27 October 2006 the Company acceded to this facility as a borrower and a guarantor. As at the balance sheet date there were no drawings made under this facility.
There are no capital or operating lease commitments.
