REG - TheWorks.co.uk PLC - Preliminary results - 52 weeks ended 4 May 2025
Tue 07:00
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RNS Number : 9536R TheWorks.co.uk PLC 22 July 2025
22 July 2025
TheWorks.co.uk plc
("The Works", the "Company" or the "Group")
Preliminary results for the 52 weeks ended 4 May 2025
Finished FY25 in line with recently upgraded market expectations, significant
improvement in profitability underpinned by new strategy, well positioned to
deliver further profit growth in FY26.
TheWorks.co.uk plc, the retailer of affordable, screen-free activities for the
whole family, announces its preliminary results for the 52 weeks ended 4 May
2025 (the "period" or "FY25").
Financial highlights
· Delivered total revenue of £277m, a decrease of 2% from the prior year, which
benefitted from an additional trading week.
· Total like for like (LFL) sales were ahead of the wider non-food retail
market((1)), increasing by 0.8%.
o Store sales, which represent over 90% of total sales, continued to be the
primary driver of growth, increasing 2.3% on a LFL basis, driven by more
customer-focussed events, new products across all categories, improved store
standards and product availability.
o Online sales declined by 12.1%, impacted by temporary capacity constraints
at our third-party provider during peak and a focus on improving the
profitability of this channel.
o Delivered a strong performance post-Christmas, with Q4 total LFL sales up
6.4%.
· Pre-IFRS 16 Adjusted EBITDA rose 58% to £9.5m (FY24: £6m), which was in line
with recently upgraded market expectations. Rising cost headwinds were offset
through ongoing cost-saving action and sustained product margin growth
(+210bps vs. FY24).
· Profit before tax increased 20.3% to £8.3m (FY24: £6.9m).
· Adjusted profit before tax of £4.6m (FY24: £3.2m) after adjusting for a
£3.8m credit (FY24: £3.7m credit)((2)).
· The Group ended FY25 with net cash of £4.1m (FY24: £1.6m).
· The Board is not proposing a final dividend for FY25 with focus on investing
for future growth. Future shareholder distributions will be kept under
consideration as profitability improves further and net cash allows.
· Trading in the first 11 weeks of FY26 has been strong, with LFL sales up 5%
and continued margin growth.
· Further profit growth expected in the year ahead - the Group is comfortable
with recently upgraded market forecasts of pre-IFRS 16 Adjusted EBITDA of
£11.0m in FY26.
FY25 FY24
£m £m
Revenue 277.0 282.6
Revenue growth (2.0%) 0.9%
LFL sales((3)) 0.8% (0.9%)
Pre-IFRS 16 Adjusted EBITDA((2)) 9.5 6.0
Pre-IFRS 16 Adjusted EBITDA margin((2)) 3.4% 2.1%
Profit before tax((2)) 8.3 6.9
Adjusted profit before tax 4.6 3.2
Basic and diluted earnings per share 13.1 10.2
Adjusted basic and diluted earnings per share 7.1 4.2
Net cash at bank((4)) 4.1 1.6
Business highlights
· Launched new strategy in January 2025, 'Elevating The Works', which has
ensured the business has both a clear plan and ambitious targets to deliver a
step-change in performance. The early success of the strategy is evident in
the underlying sales growth, strong store performance and profit growth in
FY25.
· Notable progress against our three strategic drivers:
o Growing brand fame: Launched a new approach to our customer campaigns,
including more customer-focussed events that drove footfall to stores and
increased the all-year-round appeal of The Works, including a "Kids Favourites
Event" featuring popular kids' characters (including Bluey and Peppa Pig) as
well as a "Books are Magic" event, which was timed to coincide with World Book
Day.
o Improved customer convenience: Improved store standards and consistency
across the estate, which has been a key driver of store LFL growth. Continued
optimisation of store estate with 7 openings, 15 closures and 4 relocations,
resulting in a higher quality and more profitable portfolio of 503 stores
(FY24: 511 stores).
o Being a lean and efficient operator: Drove sustained product margin growth
of 210bps by reducing our cost of goods sold through negotiations with
suppliers, reduced markdown activity, more targeted promotional activity and
control of product mix. Delivered significant cost-savings in FY25 due to the
annualised benefit of action taken in FY24. Undertook a cost transformation
project in FY25, with over £2.0m of further annualised cost savings
identified for FY26.
· Strengthened plc board with the appointment of Steve Bellamy as Chair and
Simon Hathway as an Independent Non-Executive Director.
· Placed 10(th) in the 'Best Big Company to Work For', up from 15(th) in the
previous year, showing the strength of our culture and colleague engagement.
Current trading and outlook
The positive trading momentum since Christmas has continued, with total LFL
sales up 5.0% in the first 11 weeks of FY26 and good margin growth. This
performance is in line with our expectations, and ahead of the wider non-food
retail market((5)), reflecting the continued momentum from our strategic and
operational progress building through FY25 and into FY26.
The Board continues to be mindful of significant cost headwinds in FY26,
primarily related to National Living and Minimum Wage inflation, and
employers' National Insurance increases. However, with a clear strategy in
place, the Group is well positioned to navigate these challenges and deliver
further strategic and financial progress in the year ahead.
In light of the strong FY25 performance, positive momentum that has carried
into the new financial year and further cost savings identified for FY26, the
Board expects to deliver pre-IFRS 16 Adjusted EBITDA in line with recently
upgraded external forecasts of £11.0m. We remain on track to deliver sales in
excess of £375m and EBITDA margin of at least 6% within five years.
Gavin Peck, Chief Executive Officer of The Works, commented:
"We are delighted to have ended FY25 in line with recently upgraded market
expectations in a year defined by ongoing uncertainty and fragile consumer
confidence. This encouraging performance is a huge credit to the early success
of our new strategy launched in January 2025, 'Elevating the Works', which is
already delivering tangible results. It is also thanks to the continued hard
work of our dedicated and passionate colleagues, who have worked hard to drive
improvements across the business.
"Guided by our new strategy, we are focusing our efforts on becoming the
favourite destination for affordable, screen-free activities for the whole
family. This has significant relevance, particularly in a digital age when
customers are looking for ways to connect and spend their time away from
screens. We are pleased that the ongoing evolution of our proposition and
newness throughout our ranges, has already resonated so well with customers.
"The strong trading delivered post-Christmas has continued into the start of
our new financial year, with customers clearly loving our new Spring and
Summer product ranges. This positive momentum, guided by our transformative
strategy and energised team, leaves us well placed for further strategic and
financial progress in FY26."
Preliminary results presentation
A copy of the FY25 Preliminary results presentation will shortly be made
available on the Company's website
(https://corporate.theworks.co.uk/investors/
(https://protect.checkpoint.com/v2/r06/___https:/corporate.theworks.co.uk/investors/___.ZXV3Mjp0aGV3b3Jrc3N0b3JlczpjOm86ZTNmMGIwZjhlYzUxODMwODViZTEwZGE2MTQ0MDlhODQ6Nzo3ZjViOjFhYjY1OTZlY2NmOWU0OWY4Mjk2MTM2MzQ1NzdkM2M1ODBjM2E4NGMwMTIwYjEzNWUyNWMyYzczZGQ4ZTk0NDY6cDpUOkY)
).
A presentation and Q&A for all existing and potential shareholders will be
held via Investor Meet Company at 12.30pm. Investors can register here:
https://www.investormeetcompany.com/theworkscouk-plc/register-investor
(https://protect.checkpoint.com/v2/___https:/www.investormeetcompany.com/theworkscouk-plc/register-investor___.bXQtcHJvZC1jcC1ldXcyLTE6dGhld29ya3NzdG9yZXM6YzpvOmFlZjMyYWJmMDE5MDJkNDE3ZDBkODcyYTM4YmNiOTM5OjY6N2VjZTpmOTU0ZDMzYmY3YjgxYTUxOGFjMGM1OTk3ODNiZGYzZjMwMDUwY2UxZmZiNzc4ZTdjNGRjM2M0ZmQ5NjM3MmZlOnA6VDpO)
Enquiries:
TheWorks.co.uk plc
Gavin Peck, CEO via Sanctuary Counsel
Rosie Fordham, CFO
Sanctuary Counsel
Rachel Miller 0207 340 0395 theworks@sanctuarycounsel.com (mailto:theworks@sanctuarycounsel.com)
Hannah Butler
Yasmine Fowler
Singer Capital Markets (Nomad and Broker) 020 7496 3000
Peter Steel
Footnotes:
((1) ) Data from the British Retail Consortium (BRC) showed non-food retail LFL sales
declined 0.1% in the 52-week period.
((2) ) Adjusted profit figures exclude Adjusting items. See Note 2 (Alternative
performance measures) and Note 3 (Adjusting items) of the condensed financial
statements included in this RNS.
((3) ) LFL sales growth is the growth in gross sales from stores which have been
trading for the full financial period (current and previous year), and from
the Group's online store.
((4) ) Net cash at bank excludes finance leases and is stated on a pre-IFRS 16 basis.
((5) ) Data from the British Retail Consortium (BRC) showed flat non-food retail LFL
sales for May and June 2025.
Notes for editors:
The Works is one of the UK's leading family-friendly value retailers of arts
and crafts, stationery, toys, and books, offering customers a differentiated
proposition as a value alternative to full price specialist retailers. Our
ambition is to become the favourite destination for affordable, screen free
activities for the whole family. The Group operates a network of over 500
stores in the UK & Ireland, as well as trading online at TheWorks.co.uk
(https://protect.checkpoint.com/v2/___https:/www.theworks.co.uk/___.bXQtcHJvZC1jcC1ldXcyLTE6dGhld29ya3NzdG9yZXM6YzpvOmFlZjMyYWJmMDE5MDJkNDE3ZDBkODcyYTM4YmNiOTM5OjY6NGUxOTpjYzBjMTRkNDkyMThmNDc0YTljNGNiYjY0NTgyYmY0ZTRjYzY3MDMxNjA2NGQ0MGQ3YjJlN2EwNzAzYWJjZTE4OnA6VDpO)
.
Chair report
Introduction
In the 2024 annual report I spoke of the strategy being under review and
action being taken at The Works. The last year can be characterised both by
significant change and progress across the business. I am very pleased that,
under Gavin's leadership and due to the collective efforts of everyone at The
Works, we have a new strategy that is starting to deliver tangible results.
This is not only benefitting our customers but is enhancing the fundamentals
of the business and delivered a significantly improved financial performance
in FY25. Momentum built in the second half of FY25, which has carried forward
into the new financial year, providing confidence that the business is on the
right track to make further gains in the years to come.
FY25 performance
The retail backdrop was challenging throughout FY25, characterised by
geopolitical uncertainty, fragile consumer confidence and rising business
costs, particularly following the UK Government's Autumn Budget. Despite this,
The Works delivered a much-improved FY25 performance by focusing on factors
within our control and driving incremental improvements across the business.
The underlying performance was strong, driven particularly by our stores,
which tracked consistently ahead of the wider market and saw like for like
(LFL) store sales accelerate by 6.9% in Q4.
Although the business faced difficulties fulfilling online orders during peak,
these issues were contained and the online performance improved significantly
in Q4. Decisive action has already been taken, including the appointment of a
new third-party provider, positioning the business well for the remainder of
FY26 and beyond.
The sustained efforts throughout the year to reduce costs and grow product
margins, together with strong sales growth post-Christmas, means The Works
delivered profits in line with recently upgraded market expectations for FY25.
Strategy
Our new strategy, 'Elevating The Works', launched in January 2025, ensures the
business now has a clear plan and ambitious targets to deliver a step-change
in performance.
Excellent initial progress has been made on our three strategic growth
drivers: growing our brand fame, improving customer convenience and being a
lean and efficient operator. This transformation will take time, but momentum
is building. As such, we remain on track to deliver sales in excess of £375m
and EBITDA margin of at least 6% within five years.
Our Board and leadership
There have been a number of changes to the leadership at The Works over the
last year. Our more streamlined Operating Board was embedded at the start of
FY25 and we have also seen changes at PLC Board level.
I joined The Works in July 2024, succeeding Carolyn Bradley as Chair, and have
worked closely with Gavin and the leadership team to develop and ensure
delivery of the new strategic plans and targets.
Three other Board members left The Works in FY25. I would like to thank
Catherine Glickman for her six-year contribution to The Works and John Goold
and Mark Kirkland who joined the Board on a temporary basis to provide
additional guidance during a period of change.
We further strengthened the PLC Board, with Simon Hathway joining as an
Independent Non-Executive Director in November 2024. His retail experience and
counsel has already proved invaluable, including in the development and
roll-out of our new strategy.
Since the period end, Harry Morley announced his intention to step down as
Senior Independent Non-Executive Director at the upcoming AGM. In line with
the Board's succession plans, a recruitment process to identify Harry's
successor is well advanced.
We wish Harry, and all our departed Board members, well and are confident that
our refreshed Board will continue to deliver for the business and
shareholders, in the years ahead.
Capital distributions
We have not declared a final dividend for FY25 as we are focussed on investing
in our business and delivering our new strategy. Future shareholder
distributions, including share buybacks, will continue to be assessed as
profitability further improves, investment priorities develop and funding
allows.
Outlook
The Board is mindful of continued cost headwinds in the year ahead, however,
we are confident that we will see further LFL sales growth, realise further
benefits from action to grow product margins, reduce costs and execute our new
strategy effectively. As such, we expect further profit growth and are
comfortable with external forecasts of pre-IFRS 16 Adjusted EBITDA of £11.0m
in FY26.
Steve Bellamy
Chair
22 July 2025
CEO report
Introduction
We made significant strategic and financial progress in FY25, which was
particularly pleasing given the challenging retail backdrop. Our underlying
performance was strong, with momentum building steadily throughout the year
and our new strategy launched in January 2025, 'Elevating The Works', has
already started to deliver tangible results. Our sustained efforts to reduce
costs and grow product margins, together with strong sales growth
post-Christmas, means we delivered profits in line with recently upgraded
market expectations in FY25.
Everyone at The Works is focussed on fulfilling our ambition to become the
favourite destination for affordable, screen-free activities for the whole
family and this collective drive, coupled with our strong trading momentum,
stands us in good stead to deliver further profit growth and shareholder value
in FY26 and beyond.
FY25 performance
The backdrop to FY25 was challenging, with consumer confidence remaining
fragile throughout, particularly following the government's Autumn Budget,
ongoing geopolitical uncertainty and significant cost headwinds. Despite this,
we made significant financial progress in FY25, particularly in the second
half of the year.
Total revenue was lower by 2.0% at £277m (FY24: £283m) due to the prior year
benefitting from an additional trading week and the continued optimisation of
the store estate (a net 8 store closures in FY25). Our FY25 underlying
performance was strong, with total like for like (LFL) sales up 0.8%, and
ahead of the wider non-food retail market, which saw a LFL sales reduction of
0.1% over the period.
Our stores, which comprise over 90% of sales, saw LFL sales up 2.3%. Store
performance was driven by the execution of our strategic plans, including more
customer-focussed events, new products across all categories, improved store
standards and product availability. Online sales declined by 12.1% due to the
online fulfilment issues experienced during the festive period and our focus
on driving profitable growth through this channel.
Our LFL performance improved throughout the year, with particularly strong
growth post-Christmas, reflecting the momentum from our strategic and
operational progress building through the year. In Q4, total LFL sales grew by
6.4%, store LFL sales by 6.9% and online improved to flat sales, with the
online capacity issues largely resolved post-Christmas.
We faced rising cost headwinds in FY25, which we were able to offset due to
ongoing cost-saving action and sustained product margin growth (+210bps vs.
FY24) driven by supplier negotiations, reduced markdown activity through
better stock management, more targeted promotional activity and control of
product mix. Whilst stocks were higher at year end, the overall quality
improved significantly year-on-year and there was no need for a Spring sale.
This, combined with the improved sales performance in Q4, resulted in pre-IFRS
16 Adjusted EBITDA up 58% to £9.5m (FY24: £6.0m), which was in line with
recently upgraded market expectations of £9.5m.
Strategy
With a new leadership structure in place, including a more streamlined
Operating Board and refreshed plc Board, we took the decision to evolve our
former 'Better, not just Bigger' strategy. We recognised the need for a clear
plan to transform the business with the ambition of driving sales growth,
improving profit margins and delivering strong shareholder returns.
In January 2025 we announced our new strategy, 'Elevating The Works', which is
focussed on The Works becoming the favourite destination for affordable,
screen free activities for the whole family and is underpinned by three
strategic drivers: growing our brand fame, improving customer convenience and
being a lean and efficient operator.
The successful execution of this strategy will have a transformative impact on
the business, enabling us to deliver sales in excess of £375m and an EBITDA
margin of at least 6% within five years. There remains much to do to reach
these targets, however, with the early progress made following the launch of
the new strategy, we have a clear runway to achieve these plans.
Growing brand fame
We know The Works is a favourite destination amongst our loyal customers, but
we want even more people to discover us and love what we do. We have made
great progress on clarifying what we want to be known for as a brand and to
bring this to life with our customers, as outlined below, which has been a key
driver of the strong in-store sales and building momentum post-Christmas.
· Completed a brand project to provide greater clarity on who we are, what we
want to be famous for and the role we can play for customers, culminating in
the creation of our #TimeWellSpent strapline.
· Launched a new approach to our customer campaigns, including more
customer-focussed events, which successfully drove footfall to stores. In
Spring 2025 we held a "Kids Favourites Event" featuring popular kids'
characters (including Bluey and Peppa Pig) as well as a "Books are Magic"
event, which was timed to coincide with World Book Day.
· Ongoing evolution of our product proposition, including refreshing all product
categories, with newness in Spring ranges capturing customers' imaginations
and driving sales. There has been strong sales growth in our Toys & Games
and adult fiction books categories, with the latter driven by the success of
new releases, popular BookTok titles and exclusive editions.
· Taken action to grow the all-year-round attraction of the brand and reduce the
seasonality of the business. This includes improved Back-to-School and
Halloween ranges, as well as cementing our reputation as the go-to destination
for screen-free activities around the school holidays.
Improving customer convenience
We want to attract and retain loyal customers by making it even easier to shop
with us. Progress in FY25 included:
· Improved product availability and better distribution of stock across the
estate, with particularly strong performance in our top turnover stores,
building on progress made since our investment in a new stock allocation
system and our merchandising team.
· Established enhanced space analysis to inform future space planning
opportunities, including utilising larger stores to trial new ranges. Further
trials are planned for H1 FY26, which will inform opportunities for the years
ahead.
· Improved store standards and consistency across the estate, driven by the
retail leadership restructure at the start of FY25. This has significantly
improved consistency of communication, execution and accountability across the
store estate, which has been a key driver of store LFL growth.
· Ongoing optimisation of the store estate, with 7 new openings, 15 closures and
4 relocations. We ended the year with a smaller, higher quality and more
profitable portfolio of 503 stores (FY24: 511 stores). Over the last five
years, 150 stores (c. 30% of the estate) have either been newly opened,
relocated or refitted, helping to improve the consistency and the overall
profitability of our store estate.
· Further improvements to the online customer journey, including working to
reduce key frictions, such as adding products to basket, and improving product
pages and imagery to enhance customer experience and conversion.
Being a lean and efficient operator
To continue offering customers great value and making sustainable profits, we
need to keep our costs low and be an increasingly lean and efficient business.
Progress includes:
· Significantly reducing our cost of goods sold, through negotiations with
suppliers. Together with reduced markdown activity, more targeted promotional
activity and control of product mix this supported a 210bps improvement in
product margin on FY24.
· Delivered significant cost-savings in FY25 due to the annualised benefit of
action taken in FY24, including restructuring the Distribution Centre (DC)
management and successfully implementing a new way of working in our DC,
ending the Together Rewards loyalty scheme, restructuring the Operating Board
and transferring The Works' stock market listing to AIM.
· Delivered further rent reductions on lease renewals in FY25, ensuring we
remain competitive and profitable at store level.
· In addition to ongoing cost saving action, we undertook a cost transformation
project in FY25, with over £2.0m annualised further cost savings identified
for FY26, which will help to offset ongoing cost headwinds. We expect to
identify further savings in FY26 and beyond.
· Completed rollout of new EPoS software in stores, a key enabler for exploring
new hardware in FY26 and improving efficiency of colleagues on the shop floor.
Board and leadership changes
We embedded our restructured Operating Board at the beginning of the financial
year, strengthening the leadership of the business as we developed, and now
implement, our new strategy. Doing so has enabled more streamlined decision
making and ways of working, supported better cross-functional collaboration
and enabled Senior Leaders to step up, grow and take on more responsibility.
There have also been a number of changes in our PLC Board during FY25. I would
like to take this opportunity to thank those who have departed and to welcome
our new Board members, who bring a wealth of experience.
Colleagues
I am proud that The Works placed 10(th) in the 'Best Big Companies to Work
For', up from 15(th) the previous year. This is particularly impressive given
the significant amount of change the business has undergone over recent years.
It is credit to our leadership and to everyone at The Works for the way in
which colleagues have rallied together during times of difficulty and
delivered such significant financial and strategic progress in FY25. The
unique culture we have at The Works is something we must never take for
granted. It is our collective responsibility to nurture it and ensure it
continues to grow.
ESG
Underpinning our new strategy are our People and Planet commitments - our way
of making positive and sustainable changes for our people, our communities and
our planet. We pride ourselves on being an ethical and efficient business, and
during FY25 expanded our sourcing function to support the continued delivery
of our supplier strategy, engagement and performance. We also rolled out the
next phase of our Ethical Compliance Programme across our entire active
supplier base, which will help to ensure we maintain our commitment to
sourcing our products ethically and in a legally compliant way.
Good progress has also been made against our Diversity and Inclusion (D&I)
strategy. Our wellbeing-related blogs on MyWorks and enhanced D&I training
has been well-received by colleagues, as evidenced by improved results of our
FY25 D&I survey.
Outlook
We are mindful of significant cost headwinds in FY26, primarily due to changes
to employers' National Insurance contributions and higher National Living and
Minimum Wages. However, by maintaining our focus on the factors within our
control, and continuing to execute our new strategy, we expect to offset these
headwinds in the year ahead.
We have fantastic new products landing throughout the year, which, coupled
with the steps we are taking to improve customer experience, will help to
drive further sales growth. Alongside ongoing action to grow margins and
reduce costs, this positions us well to deliver further strategic and
financial progress in the year ahead.
As such, we expect further profit growth and are comfortable with external
forecasts of pre-IFRS 16 Adjusted EBITDA of £11.0m in FY26. Our strong FY25
performance and the forward momentum we have carried into FY26, supported by
early delivery on our new strategy, also gives us confidence that we can
deliver on our five-year targets, transform the business and deliver
shareholder returns.
Gavin Peck
Chief Executive Officer
22 July 2025
Financial Report
Overview
This report covers the 52-week period ended 4 May 2025 ("FY25", or "the
period") and refers to the comparative "FY24" period of the 53 weeks ended 5
May 2024. Significant financial and strategic progress was made during FY25
against a challenging consumer backdrop.
FY25 FY24
£m £m
Revenue 277.0 282.6
Revenue growth (2.0%) 0.9%
LFL sales growth((1)) 0.8% (0.9%)
Pre-IFRS 16 Adjusted EBITDA((2)) 9.5 6.0
Pre-IFRS 16 Adjusted EBITDA Margin((2)) 3.4% 2.1%
Profit before tax 8.3 6.9
Adjusted profit before tax((2)) 4.6 3.2
Net cash at bank((3)) 4.1 1.6
((1) ) LFL sales growth is the growth in gross sales from stores which have been
trading for the full financial period (current and previous year), and from
the Group's online store.
((2) ) Adjusted profit figures exclude Adjusting items. See notes 2 (Alternative
performance measures) and 3 (Adjusting items) of the condensed financial
statements included in this RNS.
((3) ) Net cash at bank excludes finance leases and is stated on a pre-IFRS 16 basis.
Due to rounding, numbers presented throughout this document may not add up
precisely to the totals provided and percentages may not precisely reflect the
absolute figures.
Revenue
Total revenue was lower by 2.0% to £277m (FY24: £283m), due to:
· The prior year benefitting from an additional trading week (53 weeks in FY24
vs 52 weeks in FY25), which accounted for approximately half of the FY25
reduction.
· Our focus on optimisation of the store estate, with 7 new openings, 15
closures and 4 relocations. We ended the year with a smaller, higher quality
and more profitable portfolio of 503 stores (FY24: 511 stores).
Total LFL sales increased by 0.8%, ahead of the wider non-food retail
market((1)), with store LFLs increasing by 2.3% and online sales decreasing by
12.1%.
LFL sales growth Stores Online Total
Q1 (1.6%) 0.4% (1.4%)
Q2 2.9% (21.4%) (0.3%)
H1 0.9% (14.7%) (0.8%)
Q3 1.5% (13.5%) (0.3%)
Q4 6.9% 0.0% 6.4%
H2 3.5% (9.9%) 2.1%
Full year 2.3% (12.1%) 0.8%
((1) ) Data from the British Retail Consortium (BRC) showed a non-food retail LFL
decline of 0.1% for the 52-week period.
· H1 - reported a 0.8% decline in LFL sales, reflecting the challenging external
market, however sales remained ahead of the wider market (BRC reported
non-food retail LFL had declined by 1.3% for the same period). Store LFL sales
growth was strong in Q2, up 2.9% reflecting much improved Back to School and
Halloween ranges and continued strong growth in Adult Fiction books, bringing
store LFL sales growth for H1 to 0.9%. A planned reduction in September sale
activity adversely impacted sales, particularly online, but delivered a much
stronger margin rate. Online sales were also impacted by the operational
challenges experienced at our third-party operated online fulfilment centre
towards the end of the quarter and subsequent action taken to prioritise
improving profitability. As a result, online LFL sales declined 14.7% in H1.
· H2 - reported LFL sales growth of 2.1%, which continued to outperform the
non-food retail market (BRC reported non-food retail LFL average growth of
1.2%). This reflected a resilient store performance over the festive period
with store LFL sales growth of 1.5% in Q3, which was supported by
much-improved Christmas across our stores and in our retail Distribution
Centre. Online sales declined by 13.5% in Q3 as a result of constrained
performance over the festive period due to the aforementioned online
fulfilment issues. We delivered a strong performance post-Christmas, with Q4
store LFL sales growth of 6.9% and online improving to flat LFL sales. This
strong performance was supported by the ongoing evolution of our product
proposition and a new approach to our customer campaigns, including in-store
events which drove increased footfall.
Store numbers
FY25 FY24
Stores at beginning of period 511 526
Opened in the period 7 9
Closed in the period (15) (24)
Relocated (excluded from opened/closed above, NIL net effect on store numbers) 4 5
Stores at End of period 503 511
We traded from 503 stores at the period end (FY24: 511 stores), of which 98%
are profitable on an annual basis. Our store estate represents over 90% of
sales and recorded a strong LFL performance in the period. We continued to
optimise our store estate during FY25, which included closing low-profit and
loss-making stores where we were unable to agree suitable terms with
landlords, whilst continuing to open new stores that fit our profile. The 11
new stores opened in the period (including relocations) performed well overall
and we anticipate that they will see a typical payback of around eighteen
months.
Gross profit
FY25 FY24 Variance Variance
£m % of revenue £m % of revenue £m %
Revenue 277.0 282.6 (5.6) (2.0)
Less: Cost of goods sold (112.5) (120.5) 8.0 6.6
Product gross margin 164.5 59.4 162.1 57.3 2.4 1.5
Store payroll (49.9) (18.0) (50.2) (17.8) 0.3 0.5
Store property and establishment costs (50.3) (18.2) (49.3) (17.4) (1.0) (2.0)
Store PoS and transaction fees (2.5) (0.9) (2.7) (1.0) 0.2 7.4
Online variable costs (13.8) (5.0) (15.8) (5.6) 2.0 12.7
Store depreciation (excluding IFRS 16) (2.7) (1.0) (1.9) (0.7) (0.8) (42.1)
Adjusting items 4.4 1.6 3.7 1.3 0.7 18.9
IFRS 16 impact (excluding Adjusting items) 4.1 1.5 5.8 2.0 (1.7) (29.3)
Gross Profit Per Financial Statements 53.8 19.4 51.8 18.3 2.0 3.9
Product gross margin increased to 59.4% in FY25 (FY24: 57.3%), reflecting
action taken to prioritise margin growth from the end of FY24, with notable
factors as follows:
· Significant growth as a result of negotiations with suppliers, focussed
control of product mix, better stock management and reduced promotional
activity.
· The hedged FX rate on payments made in US dollars was favourable year-on-year.
The FY25 hedged US dollar: GB pound rate was 1.26 versus 1.22 in FY24.
· Adverse FY25 container freight rates versus FY24 rates, which created a
headwind during the year due to the disruption in the Red Sea. Average
container rates paid in FY25 were $4.4k versus FY24 of $1.9k.
Store payroll costs decreased by £0.3m, in part due to 52 weeks of trading in
FY25 (53 weeks in FY24). The one-week shorter period reduced costs by £0.9m
but was partially offset by the impact of the 9.8% increase in the National
Living and Minimum Wage ('NLMW') in April 2024. This created an additional
cost of £4.0m, which was mostly offset by a store labour hours efficiency
programme.
Store property and establishment costs increased by £1.0m. FY24 was a 53-week
period and the underlying increase in costs was £2.1m as a result of:
· Rents increasing by £0.8m. Savings from the renegotiation of leases expiring
in FY25 across the LFL store estate were £0.7m partially offsetting a £1.7m
headwind due to COVID-19 related rent relief credits released in the prior
period.
· An additional £0.8m dilapidation provision recognised with respect to
expected costs for planned store closures as part of the store optimisation
programme.
· Inflationary rates and service charge costs were partially offset by reducing
electricity costs.
Online variable costs decreased by £2.0m. During the first half of the year,
efficiencies were delivered as a result of the move to an automated picking
process for online fulfilment, however, during the second half of the period
our third-party online fulfilment centre faced significant and unexpected
operational challenges. This affected capacity and resulted in significantly
increased costs per order. Due to these operational challenges, we proactively
optimised online sales which resulted in a saving in digital marketing costs,
and lower parcel delivery and packaging costs due to significantly reduced
outbound volumes year-on-year.
£1.2m of exceptional fulfilment costs were incurred in relation to higher
costs per order versus planned levels due to the third-party service
disruption and these have been included as an adjusting item in the period.
See Notes 3 (Adjusting items) of the attached condensed financial statements.
Operating profit
FY25 FY24 Variance Variance
£m % of revenue £m % of revenue £m %
Gross profit per financial statements 53.8 19.4 51.8 18.3 2.0 3.9
Distribution expenses (11.5) (4.2) (12.6) (4.4) 1.1 8.7
Distribution depreciation (0.1) (0.0) (0.2) (0.1) 0.1 50.0
Distribution Costs per financial statements (11.6) (4.2) (12.7) (4.5) 1.1 8.7
Administrative expenses (26.9) (9.7) (25.6) (9.0) (1.3) (5.1)
Administrative depreciation (2.1) (0.8) (2.4) (0.8) 0.3 12.5
Adjusting Items (0.6) (0.2) 0.0 0.0 (0.6) (100.0)
IFRS 16 impact (excluding Adjusting items) 0.6 0.2 0.3 0.1 0.3 100.0
Administrative Costs per financial statements (29.0) (10.5) (27.7) (9.8) (1.3) (4.7)
Operating profit per financial statements 13.1 4.7 11.4 4.0 1.7 14.9
Distribution costs (before depreciation and IFRS 16), comprising picking stock
and delivering it to stores, decreased by £1.1m compared with the prior
period. Efficiencies continued to be driven from implementation of improved
ways of working in the retail Distribution Centre offsetting the April 2024
NLMW increases, with costs also benefiting from 52 weeks of trading in FY25
(53 weeks in FY24).
Administration costs (before depreciation and IFRS 16) increased by £1.3m,
due in part to £0.8m of bonuses payable to colleagues reflecting the improved
performance year-on-year (FY24: nil). The prior period costs were also
flattered by a release of a VAT provision and lower long term incentive
employee share plan charges.
Operating profit reconciliation to pre-IFRS 16 Adjusted EBITDA
FY25 FY24 Variance Variance
£m % of revenue £m % of revenue £m %
Operating profit per financial statements 13.1 4.7 11.4 4.0 1.7 14.9
Add back depreciation, amortisation included in Operating profit 4.9 1.8 4.4 1.6 0.5 11.4
Less IFRS 16 included in Operating profit (excl. Adjusting Items) (4.7) (1.7) (6.0) (2.1) 1.3 21.7
Less Adjusting items((1)) (3.8) (1.4) (3.7) (1.3) (0.1) (2.7)
Pre-IFRS 16 Adjusted EBITDA 9.5 3.4 6.0 2.1 3.5 58.3
((1) ) Adjusted profit figures exclude Adjusting items. See Notes 2 (Alternative
performance measures) and 3 (Adjusting items) of the attached condensed
financial statements.
Depreciation, amortisation and IFRS 16 adjustments
Depreciation and amortisation increased £0.5m year-on-year as a result of
lower impairment charges.
The impact of IFRS 16 adjustments were £1.3m lower year-on-year primarily due
to lower rental charges and therefore a lower IFRS16 adjustment. Refer to Note
2 (Alternative performance measures ("APMs")) of the attached condensed
financial statements for a reconciliation of pre-IFRS 16 EBITDA to operating
profit.
Adjusting items were a £3.8m credit in FY25 (FY24: £3.7m credit) and include
exceptional fulfilment costs of £1.2m (FY24: nil) as noted above. Other
exceptional items include £0.7m of central support centre restructuring costs
as part of the Group's cost saving actions. These costs are more than offset
by a credit of £6.5m (FY24: credit £1.4m), due to the reversal of impairment
charges relating to the notional right-of-use assets created as a result of
application of the IFRS 16 accounting standard and a loss of £0.8m (FY24:
£3.5m profit) on disposal of right-of-use assets and lease liabilities, with
these two items requiring elimination in the calculation of Pre-IFRS 16
Adjusted EBITDA. This is described in note 10 of the condensed financial
statements included in this announcement.
A reconciliation of operating profit to EBITDA can be found in note 2 of the
condensed financial statements included in this announcement.
Net financing expense
Net financing costs in the period were £4.8m (FY24: £4.5m), mostly relating
to IFRS 16 notional interest on the calculated lease liability.
Interest expense relating to bank facilities was £0.7m (FY24: £0.5m) and
included facility availability charges and amortisation of the cost of setting
up the facility. The higher interest charge reflects usage of the rolling
credit facility to manage the timing of stock intake so that trading was not
adversely impacted as a result of longer transit times from China due to the
disruption in the Red Sea.
Profit before tax
Profit before tax was £8.3m (FY24: £6.9m) which includes the £3.8m credit
(FY24: £3.7m credit) for Adjusting items (described above and in Note 3
(Adjusting items)).
Tax
The Group's total income tax charge in respect of the period was £0.2m (FY24:
£0.5m). The effective tax rate on the total profit before tax was 2.0% (FY24:
7.8%) whilst the effective tax rate on the total profit before Adjusting items
was 3.6% (FY24: 17.0%). The difference between the total effective tax rate
and the Adjusted tax rate relates to fixed asset impairment charges and
reversals within Adjusting items being non-deductible for tax purposes.
The current year tax charge recognised is driven by deferred tax movements
related to lease balances.
Earnings per share
The basic and diluted earnings per share for the period were 13.1 pence (FY24:
10.2 pence). Adjusted basic and diluted earnings per share for the period were
7.1 pence (FY24: 4.2 pence).
Capital expenditure
Capital expenditure in the period was £5.0 million (FY24: £5.8m).
FY25 FY24 Variance
£'m £'m £m
New stores and relocations (1.5) (1.6) 0.1
Store refits, lease renewal and maintenance (1.5) (2.3) 0.8
IT hardware and software (1.7) (1.7) -
Warehouse (0.2) (0.1) (0.1)
Other (0.1) (0.1) -
Total capital expenditure (5.0) (5.8) 0.8
· The net investment in new stores and relocations reduced by £0.1m compared
with FY24. 7 new stores were opened and 4 stores relocated to new units (FY24:
9 new stores, 5 relocations), with the higher net investment per store
reflecting reduced landlord contributions and cost inflation.
· The net investment in store refits reduced by £0.8m compared with FY24. The
quantity of refits was lower in FY25 (6 refits) vs FY24 (20 refits),
reflecting the impact of the decision taken at the beginning of FY24 to reduce
refits to conserve cash. This saving was offset, in part, by wider cost
inflation increasing the relative cost per refit.
Inventory
Stock was valued at £35.0m at the end of the period (FY24: £31.4m), an
increase of £3.6m. The increased gross stock level compared to the prior
period reflects investment in new stock across strong performing ranges to
support higher sales and increased freight rates within average cost prices.
The stock value represents a lower stock provision due to the timing of
four-wall stock counts in stores occurring closer to the year-end (which
reduces the shrinkage provision year-on-year) and less terminal stock than the
prior year resulting in a lower obsolescence provision. Increased stock in
transit reflects longer transit times from China due to the continued
challenges in the Red Sea.
FY25 FY24
£m £m
Gross stock 30.1 28.4
Less: provisions (1.0) (1.9)
Stock net of provisions 29.1 26.5
Stock in transit 5.9 4.9
Stock per balance sheet 35.0 31.4
Cash flow
The Group ended the period with net cash at bank of £4.1m (FY24: £1.6m
cash), The table below shows a summarised pre IFRS 16 presentation of cash
flow. The net cash inflow before exchange rate movements for the period was
£2.9m (FY24: outflow of £7.9m).
FY25 FY24 Variance
£m £m £m
Operating profit 13.1 11.4 1.7
Other operating cashflows((1)) (5.7) (8.3) 2.6
Net movement in working capital 2.2 (4.3) 6.5
Net Cash from Investing Activities (5.1) (5.8) 0.7
Tax paid (0.5) (0.1) (0.4)
Interest and financing costs (0.6) (0.5) (0.1)
Purchase of Shares into the Employee Benefit Trust (0.5) (0.3) (0.2)
Cash Flow before Exchange Rate Movements 2.9 (7.9) 10.8
Exchange rate movements (0.4) (0.7) 0.3
Net increase /(decrease) in cash and cash equivalents 2.5 (8.6) 11.1
Opening net cash balance excluding IAS 17 leases 1.6 10.2
Closing net cash balance excluding IAS 17 leases 4.1 1.6
((1) ) Other operating cashflows relate to pre-working capital movements, excluding
tax and interest. See Condensed consolidated cash flow statement of the
attached condensed financial statements.
Bank facilities and financial position
The Group continues to have a Revolving Credit Facility (RCF) of £20.0m,
which provides ample liquidity and is utilised to support the build of stock
prior to peak trading. The terms of this financing agreement expire on 30
November 2026. We will be seeking a similar facility during FY26.
Capital distributions
The Board is not proposing a final dividend. Future shareholder distributions,
including share buybacks, continue to be assessed as profitability improves
and funding allows.
Employee Benefit Trust funding for the purposes of share schemes
To avoid dilution of existing shareholder interests, the Board's intention is
to continue providing funding to the Company's Employee Benefit Trust. This
will enable the EBT to continue purchasing shares in the market that can
subsequently be used to satisfy the exercise of options under employee share
schemes, as it has done in each of the last two financial years.
Rosie Fordham
Chief Financial Officer
22 July 2025
Consolidated income statement
For the period ended 4 May 2025
52 weeks to 4 May 2025 53 weeks to 5 May 2024
Note Result before Adjusting Total Result before Adjusting Total
Adjusting items items £000 Adjusting items items £000
£000 £000 £000 £000
Revenue 277,039 - 277,039 282,585 - 282,585
Cost of sales 3 (227,697) 4,408 (223,289) (234,505) 3,741 (230,764)
Gross profit 49,342 4,408 53,750 48,080 3,741 51,821
Other operating income 8 - 8 8 - 8
Distribution expenses (11,628) - (11,628) (12,725) - (12,725)
Administrative expenses 3 (28,392) (640) (29,032) (27,685) - (27,685)
Operating profit 4 9,330 3,768 13,098 7,678 3,741 11,419
Finance income 35 - 35 19 - 19
Finance expenses (4,790) - (4,790) (4,520) - (4,520)
Net financing expense (4,755) - (4,755) (4,501) - (4,501)
Profit before tax 4,575 3,768 8,343 3,177 3,741 6,918
Taxation 6 (165) - (165) (541) - (541)
Profit for the period 4,410 3,768 8,178 2,636 3,741 6,377
8 7.1 13.1 4.2 10.2
Basic earnings per share (pence)
Diluted earnings per share (pence) 8 7.1 13.1 4.2 10.2
Profit for the period is attributable to equity holders of the Parent.
Consolidated statement of comprehensive income
For the period ended 4 May 2025
FY25 FY24
£000 £000
Profit for the period 8,178 6,377
Items that may be recycled subsequently into profit and loss
Cash flow hedges - changes in fair value (1,851) 1,664
Cash flow hedges - reclassified to profit and loss 340 134
Cost of hedging - changes in fair value (273) (415)
Cost of hedging - reclassified to profit and loss 366 182
Tax relating to components of other comprehensive income (409) (323)
Other comprehensive (expense)/income for the period, net of income tax (1,827) 1,242
Total comprehensive income for the period attributable to equity shareholders 6,351 7,619
of the Parent
Consolidated statement of financial position
As at 4 May 2025
Note FY25 FY24
£000 £000
Non-current assets
Intangible assets 9 2,168 1,866
Property, plant and equipment 10 12,583 12,358
Right-of-use assets 11 61,830 57,703
Deferred tax assets 12 3,514 4,036
80,095 75,963
Current assets
Inventories 13 34,985 31,354
Trade and other receivables 14 6,149 8,384
Derivative financial assets - 306
Current tax asset 6 1,603 1,189
Cash and cash equivalents 15 4,118 1,619
46,855 42,852
Total assets 126,950 118,815
Current liabilities
Lease liabilities 11 18,646 19,943
Trade and other payables 17 32,851 29,886
Provisions 18 798 543
Derivative financial liabilities 1,879 64
54,174 50,436
Non-current liabilities
Lease liabilities 11,16 56,284 57,817
Provisions 18 650 476
56,934 58,293
Total liabilities 111,108 108,729
Net assets 15,842 10,086
Equity attributable to equity holders of the Parent
Share capital 625 625
Share premium 28,322 28,322
Merger reserve (54) (54)
Share-based payment reserve 2,274 2,583
Hedging reserve (2,122) 129
Retained earnings (13,203) (21,519)
Total equity 15,842 10,086
These financial statements were approved by the Board of Directors on 22 July
2025 and were signed on its behalf by:
Rosie Fordham
Chief Financial Officer
Company registered number: 11325534
Consolidated statement of changes in equity
Attributable to equity holders of the Company
Share Share Merger Share-based Hedging Retained Total
capital premium reserve payment reserve 2,3 earnings equity
£000 £000 £000 reserve1 £000 £000 £000
£000
Balance at 30 April 2023 625 28,322 (54) 2,780 (331) (27,926) 3,416
Total comprehensive income for the period
Profit for the period - - - - - 6,377 6,377
Other comprehensive income - - - - 1,242 - 1,242
Total comprehensive income for the period - - - - 1,242 6,377 7,619
Hedging gains and losses and costs of hedging transferred to the cost of - - - - (492) - (492)
inventory
Transfer to retained earnings - - - - (290) 290 -
Transactions with owners of the Company
Reversal of share-based payment charges - - - (197) - - (197)
Own shares purchased by Employee Benefit Trust - - - - - (260) (260)
Total transactions with owners of the Company - - - (197) - (260) (457)
Balance at 5 May 2024 625 28,322 (54) 2,583 129 (21,519) 10,086
Total comprehensive (expense)/income for the period
Profit for the period - - - - - 8,178 8,178
Other comprehensive expense - - - - (1,827) - (1,827)
Total comprehensive (expense)/income for the period - - - - (1,827) 8,178 6,351
Hedging gains and losses and costs of hedging transferred to the cost of - - - - (424) - (424)
inventory
Transfer to retained earnings - - - (662) - 662 -
Transactions with owners of the Company
Share-based payment charges - - - 353 - - 353
Own shares purchased by Employee Benefit Trust - - - - -
(524) (524)
Total transactions with owners of the Company - - - 353 - (524) (171)
Balance at 4 May 2025 625 28,322 (54) 2,274 (2,122) (13,203) 15,842
1 Share-based payment reserve includes a transfer of £662k (FY24:
£nil) to retained earnings in relation to closed schemes (all shares have
been granted, lapsed or forfeited).
2 Hedging reserve includes £330k (FY24: £410k) in relation to
changes in forward points which are recognised in other comprehensive income
and accumulated as a cost of hedging within the hedging reserve.
3 Hedging reserve contains a £nil (FY24: £290k) transfer from
retained earnings in relation to a historical tax charge for financial
derivatives that had previously been recognised in the consolidated income
statement.
Consolidated cash flow statement
For the period ended 4 May 2025
Note FY25 FY24
£000 £000
Profit for the period (including Adjusting items) 8,178 6,377
Adjustments for:
Depreciation of property, plant and equipment 10 3,854 3,663
Impairment of property, plant and equipment 10 463 1,589
Reversal of impairment of property, plant and equipment 10 (975) (1,272)
Depreciation of right-of-use assets 11 18,385 18,224
Impairment of right-of-use assets 11 2,180 3,394
Reversal of impairment of right-of-use assets 11 (7,807) (4,620)
Amortisation of intangible assets 9 1,213 632
Impairment of intangible assets 9 141 442
Reversal of impairment of intangible assets 9 (471) (850)
Derivative exchange loss 424 494
Financial income (35) (19)
Financial expense 689 536
Interest on lease liabilities 11 4,101 3,984
Loss on disposal of property, plant and equipment and intangibles 9, 10 282 202
Loss/(profit) on disposal of right-of-use asset and lease liability 11 845 (3,537)
Effect of modifications on right-of-use asset (193) -
Share-based payment charges 353 (197)
Taxation 6 165 541
Operating cash flows before changes in working capital 31,792 29,583
(Increase)/decrease in trade and other receivables 2,081 (963)
(Increase)/decrease in inventories (3,396) 1,149
Increase/(decrease) in trade and other payables 3,037 (3,672)
Increase/(decrease) in provisions 18 429 (844)
Cash flows from operating activities 33,943 25,253
Corporation tax paid (466) (97)
Net cash inflow from operating activities 33,477 25,156
Cash flows from investing activities
Acquisition of property, plant and equipment 10 (4,691) (6,078)
Capital contributions received from landlords 10 842 1,460
Acquisition of intangible assets 9 (1,185) (1,208)
Interest received 35 19
Net cash outflow from investing activities (4,999) (5,807)
Cash flows from financing activities
Payment of lease liabilities (capital) 16 (20,330) (22,471)
Payment of lease liabilities (interest) 16 (4,101) (3,984)
Payment of fees from loans and borrowings - (60)
Interest paid (579) (434)
Repayment of bank borrowings 16 (9,000) (6,000)
Proceeds from bank borrowings 16 9,000 6,000
Own shares purchased by Employee Benefit Trust (524) (260)
Net cash outflow from financing activities (25,534) (27,209)
Net increase/(decrease) in cash and cash equivalents 2,944 (7,860)
Exchange rate movements (445) (717)
Cash and cash equivalents at beginning of period 16 1,619 10,196
Cash and cash equivalents at end of period 16 4,118 1,619
Notes to the consolidated financial statements
(Forming part of the financial statements)
1. Accounting policies
Where accounting policies are particular to an individual note, narrative
regarding the policy is included with the relevant note; for example, the
accounting policy in relation to inventory is detailed in Note 13
(Inventories).
(a) General information
TheWorks.co.uk plc is a leading UK multi-channel value retailer of arts and
crafts, stationery, toys, games and books, offering customers a differentiated
proposition as a value alternative to full price specialist retailers. The
Group operates a network of over 500 stores in the UK, Ireland and online.
TheWorks.co.uk plc (the Company) is a UK-based public limited company
(11325534) with its registered office at Boldmere House, Faraday Avenue, Hams
Hall Distribution Park, Coleshill, Birmingham B46 1AL.
These consolidated financial statements for the 52 weeks ended 4 May 2025
(FY25 or the period) comprise the results of the Company and its subsidiaries
(together referred to as the Group) and are presented in pounds sterling. All
values are rounded to the nearest thousand (£000), except when otherwise
indicated.
(b) Basis of preparation
The Group financial statements have been prepared on a historical cost basis,
except for financial assets at fair value through profit and loss including
derivatives. The financial statements are in accordance with UK-adopted
International Accounting Standards.
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the application of policies,
and the reported amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience,
future budgets and forecasts, and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future
periods. The Group's significant judgements and estimates relate to going
concern, fixed asset impairment and inventory; these are described in Note
1(e).
(i) Going concern
The financial statements have been prepared on a going concern basis, which
the Directors consider appropriate for the reasons set out below.
The Directors have assessed the prospects of the Group, taking into account
its current position and the potential impact of the principal risks
documented in the Strategic report on pages 1 to 43 of the Annual Report and
Accounts. The financial statements have been prepared on a going concern
basis, which the Directors consider appropriate having made this assessment.
The Group performed a detailed strategic review during the second half of FY25
and produced a five-year plan to support the new strategy, 'Elevating The
Works'. This five-year plan is referred to as the 'Base Case', from which the
Group has prepared cash flow forecasts for a period of at least 12 months from
the date of approval of these financial statements (the going concern
assessment period). In addition, a 'severe but plausible' 'Downside Case'
sensitivity has been prepared to support the Board's conclusion regarding
going concern, by stress testing the Base Case to indicate the financial
headroom resulting from applying more pessimistic assumptions.
In assessing the basis of preparation, the Directors have considered:
• The external environment.
• The Group's financial position including the quantum and
expectations regarding availability of bank facilities.
• The potential impact on financial performance of the risks
described in the Strategic report.
• The output of the Base Case scenario, which mirrors the
Group's five-year plan and therefore represents its estimate of the most
likely financial performance over the forecast period.
• Measures to maintain or increase liquidity in the event of a
significant downturn in trading.
• The resilience of the Group to these risks having a more
severe impact, evaluated via the Downside Case which shows the impact on the
Group's cash flows, bank facility headroom and covenants.
Going concern and basis of preparation conclusion
The retail backdrop was challenging throughout FY25, characterised by
geopolitical uncertainty, fragile consumer confidence, continued high
inflation and rising business costs. Despite this, the Group delivered a
much-improved FY25 performance by focusing on factors within its control and
driving incremental improvements across the business. The Board is mindful of
continued cost pressures in the year ahead. However, the Group is confident
that it will see further LFL sales growth, realise further benefits from
action to grow product margins and reduce costs and execute the new strategy
effectively. It is expected to offset the significant cost pressures and
deliver further profit growth and strategic development in FY26 which will
continue into the remainder of the five-year plan. There is sufficient cash
headroom within both covenants under both scenarios and therefore the
Directors are confident that the Group will have sufficient funds to continue
to meet its liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and have therefore prepared the
financial statements on a going concern basis.
(ii) New accounting standards
The Group has applied the following new standards and interpretations for the
first time for the annual reporting period commencing 6 May 2024:
· Non-Current Liabilities with Covenants - Amendments to IAS 1 and
Classifications of Liabilities as Current or Non-Current - Amendments to IAS
11.
· Lease Liability in a Sale and Leaseback - Amendments to IFRS 161.
· Supplier Finance Agreements - Amendments to IAS 7 and IFRS 71.
The adoption of the standards and interpretations listed above has not led to
any changes to the Group's accounting policies or had any other material
impact on the financial position or performance of the Group.
As at the date of approval of these financial statements, the following
standards and interpretations, which have not been applied in these financial
statements, were in issue, but not yet effective:
· Amendments to IAS 21 Lack of Exchangeability(2).
· Amendment to IFRS 9 and IFRS 7 Classification and Measurement of
Financial Instruments(3).
· IFRS 18 Presentation and Disclosure in Financial Statements(4).
· IFRS 19 Subsidiaries without Public Accountability:
Disclosures(4).
1 Effective for annual periods commencing after 1 January 2024.
2 Effective for annual periods commencing after 1 January 2025.
3 Effective for annual periods commencing after 1 January 2026.
4 Effective for annual periods commencing after 1 January 2027.
The adoption of the standards and interpretations listed above is not expected
to have a material impact on the financial position or performance of the
Group.
(c) Accounting convention
The consolidated financial statements have been prepared under the historical
cost convention, except for certain financial assets and financial liabilities
(including derivative instruments), which are held at fair value.
(d) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries). Control
is achieved when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to direct the
activities that affect those returns through its power over the entity.
Consolidation of a subsidiary begins from the date control commences and
continues until control ceases. The Company reassesses whether or not it
controls an investee if circumstances indicate that there are changes to the
elements of control detailed above.
An Employee Benefit Trust operated on the Group's behalf (EBT) is acting as an
agent of the Company; therefore, the assets and liabilities of the EBT are
aggregated into the Company balance sheet and shares held by the EBT in the
Company are presented as a deduction from reserves.
(e) Key sources of estimation uncertainty
The preparation of consolidated financial statements requires the Group to
make estimates and judgements that affect the application of policies and
reported amounts.
Critical judgements represent key decisions made by management in the
application of the Group's accounting policies. Where a significant risk of
materially different outcomes exists, this will represent a key source of
estimation uncertainty.
Estimates and judgements are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these estimates.
Key sources of estimation uncertainty which are material to the financial
statements are described in the context of the matters to which they relate,
in the following notes:
Description Note
Going concern 1(b)(i)
Impairment of intangible assets, property, plant and equipment and 9, 10, 11
right-of-use assets
Inventory provisions 13
2. Alternative performance measures (APMs)
Accounting policy
In the reporting of financial information, the Group has adopted various
alternative performance measures (APMs) of financial performance, position or
cash flows other than those defined or specified under International
Accounting Standards (IFRS). APMs should be considered in addition to IFRS
measurements and are not intended to be a substitute for IFRS measurements.
These measures are not defined by IFRS and may not be comparable with
similarly titled performance measures and disclosures by other entities.
The Group believes that these APMs provide stakeholders with additional
helpful information on the performance of the business. They are consistent
with how business performance is planned and reported internally and are also
consistent with how these measures have been reported historically. Some of
the APMs are also used for the purpose of setting remuneration targets, which
are set out below.
The table below sets out the APMs used in this report, with further
information regarding the APM, and a reconciliation to the closest IFRS
equivalent measure, below.
Sales APM Like-for-like (LFL) sales
Profitability APM EBITDA
Adjusted EBITDA pre-IFRS 16
Adjusted profit before tax (PBT)
Adjusted EPS (see Note 8)
Financial position APMs Net debt
Sales APM
Like-for-like (LFL) sales
Closest IFRS equivalent: revenue
LFL sales are defined by the Group as the year-on-year growth in gross sales
from stores which have been trading for a full financial year prior to the
current year and have been trading throughout the current financial period
being reported on, and from the Company's online store, calculated on a
calendar week basis. The measure is used widely in the retail industry as an
indicator of sales performance. LFL sales are calculated on a gross basis to
ensure that fluctuations in the VAT rates of products sold are excluded from
the LFL sales growth percentage figure.
A reconciliation of IFRS revenue to sales on an LFL basis is set out below:
FY25 Stores £000 Online Total
£000
£000
£000
Revenue 252,166 24,873 277,039
VAT 33,924 2,541 36,465
Loyalty points (216) - (216)
Total gross sales 285,874 27,414 313,288
Non-LFL store sales (16,192) - (16,192)
LFL sales 269,682 27,414 297,096
FY24 Stores £000 Online £000 Total
£000
£000
Revenue 254,228 28,357 282,585
VAT 33,501 3,098 36,599
Loyalty points 1,228 86 1,314
Total gross sales 288,957 31,541 320,498
Non-LFL store sales (25,209) (342) (26,551)
LFL sales 263,748 31,199 293,947
LFL sales growth 2.3% (12.1)% 0.8%
FY24 was a 53-week period; therefore, the LFL sales APM compares 52 weeks of
FY25 to the equivalent 52 weeks of FY24.
Profit APMs
EBITDA and pre-IFRS 16 Adjusted EBITDA
Closest IFRS equivalent: operating profit(1)
EBITDA is earnings before interest, tax, profit or loss on disposal of fixed
assets, depreciation, amortisation and impairment reversals and charges. The
Group uses EBITDA as a measure of trading performance, as it usually
correlates with the Group's operating cash generation.
Pre-IFRS 16 Adjusted EBITDA is defined by the Group as pre-IFRS 16 earnings
before interest, tax, depreciation, amortisation and profit/loss on the
disposal of fixed assets, after adding back or deducting Adjusting items.
Pre-IFRS 16 EBITDA is used for the bank facility financial covenants.
The table below provides a reconciliation of operating profit to Adjusted
EBITDA and pre-IFRS 16 EBITDA:
FY25 FY24
£000 £000
Operating profit(1) 13,098 11,419
Add back:
Depreciation of property, plant and equipment 3,854 3,663
Depreciation of right-of-use assets 18,385 18,224
Amortisation 1,213 632
Loss on disposal of fixed assets 282 202
Gain on modification of right-of-use assets (193) -
Adjusting items (3,768) (3,741)
Adjusted EBITDA 32,871 30,399
Less:
Income statement rental charges not recognised under IFRS 16 (23,328) (24,426)
Foreign exchange difference on euro leases (36) 69
Pre-IFRS 16 Adjusted EBITDA 9,507 6,042
(1) Whilst operating profit is not defined formally in IFRS, it is considered
a generally accepted accounting measure.
Adjusted profit after tax
Closest IFRS equivalent: profit before tax
Adjusted PBT is profit before tax adjusted to exclude the effect of
transactions that, in the opinion of the Directors, are either one off in
nature and/or are unreflective of the underlying trading performance of the
Group in the period. Adjusted PBT reports a normalised or underlying trading
performance of the Group. The transactions that have been adjusted could
distort the impression of future performance trends based on the current year
results.
The Group uses Adjusted PBT to assess its performance on an underlying basis
excluding these items and believes measures adjusted in this manner provide
additional information about the impact of unusual or one-off items on the
Group's performance in the period.
These adjusted metrics are included within the consolidated income statement
and consolidated statement of other comprehensive income, with further details
of Adjusting items included in Note 3.
FY25 FY24
£000 £000
Adjusted profit after tax 4,410 2,636
Adjusting items (including impairment charges and reversals) 3,768 3,741
Profit after tax 8,178 6,377
Financial position APMs
Net debt
Closest IFRS equivalent: no equivalent; however, it is calculated by combining
IFRS measures for cash and borrowing.
Net debt is calculated by subtracting the Group's cash and cash equivalents
from its gross borrowing. Net debt is utilised in the calculation of leverage,
a covenant in the Group's financing facilities.
The Group presents net debt inclusive and exclusive of lease liabilities,
which is consistent with the definition used for its banking covenant
calculations.
Calculation of net debt FY25 FY24
£000 £000
Current borrowings (18,646) (19,943)
Non-current borrowings (56,284) (57,817)
Gross borrowings (74,930) (77,760)
Add cash 4,118 1,619
Net debt (inc. leases) (70,812) (76,141)
Lease liabilities 74,930 77,760
Net cash (exc. leases) 4,118 1,619
3. Adjusting items
Adjusting items are unusual in nature or incidence and sufficiently material
in size that in the judgement of the Directors they merit disclosure
separately on the face of the financial statements to ensure that the reader
has a proper understanding of the Group's financial performance and that there
is comparability of financial performance between periods.
The Directors believe that the Adjusted profit and earnings per share measures
included in this report provide additional useful information to users of the
accounts. These measures are consistent with how business performance is
measured internally. The profit before tax and Adjusting items measures are
not recognised profit measures under IFRS and may not be directly comparable
with Adjusted profit measures used by other companies.
If a transaction or related series of transactions has been treated as
Adjusting in one accounting period, the same treatment will be applied
consistently year on year.
FY25 FY24
£000 £000
Cost of sales
Impairment charges (2,784) (5,333)
Impairment reversals 9,253 6,742
(Loss)/profit on disposal of right-of-use assets and lease liabilities (845) 3,537
Exceptional fulfilment costs (1,216) -
Other exceptional costs - (1,205)
Administration costs
Other exceptional costs - restructuring (640) -
Total Adjusting items 3,768 3,741
Impairment charges and reversals of prior year impairment charges relate to
fixed assets (see Notes 9, 10 and 11).
Profit on disposal of right-of-use assets and lease liabilities relate to
leases (see Note 11).
Other exceptional items in FY25 comprise £1.2m (FY24: £nil) in relation to
the transition of the online sales Distribution Centre and £0.6m (FY24:
£nil) related to the review of the cost base of the Group, which includes
£0.4m of redundancy costs. In FY24, other exceptional items comprise £0.5m
of professional fees and other costs related to the listing of the Company on
AIM and £0.7m of redundancy costs related to the restructure of the Operating
Board, which were included within cost of sales in the prior year.
4. Operating profit
Operating profit before Adjusting items is stated after charging the following
items:
FY25 FY24
£000 £000
Loss on disposal of property, plant and equipment 282 168
Loss on disposal of intangible assets - 34
Depreciation 22,239 21,887
Amortisation 1,213 632
Net foreign exchange loss 276 170
Cost of inventories recognised as an expense 111,385 120,530
Staff costs 68,590 67,855
Auditor's remuneration
FY25 FY24
£000 £000
Fees payable to the Group's auditor for the audit of the Group's annual 307 300
accounts
Amounts payable in respect of other services to the Company and its
subsidiaries
Audit of the accounts of subsidiaries 43 42
Total 350 342
5. Staff numbers and costs
The average number of people employed by the Group (including Directors)
during the period, analysed by category, were as follows:
Number of employees
FY25 FY24
Store support centre colleagues 284 280
Store colleagues 3,259 3,590
Warehouse and distribution colleagues 154 156
3,697 4,026
The corresponding aggregate payroll costs were as follows:
FY25 FY24
£000 £000
Wages and salaries 62,765 62,367
Social security costs 4,700 4,422
Contributions to defined contribution pension schemes 1,125 1,066
Total employee costs 68,590 67,855
Agency labour costs 1,804 2,977
Total staff costs 70,394 70,832
The Directors' remuneration for the period was as follows:
FY25 FY24
£000 £000
Directors' remuneration 1,012 791
Contributions to defined contribution plans 42 16
1,054 807
The following number of Directors were members of:
FY25 FY24
Company defined contribution scheme 2 2
2 2
The highest paid Director's remuneration and contributions to defined
contribution plans during the year were as follows:
FY25 FY24
£000 £000
Directors' remuneration 478 337
Contributions to defined contribution plans 9 10
487 347
6. Taxation
Accounting policy
The tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised based on tax
laws and rates that have been enacted or substantively enacted at the balance
sheet date. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other
comprehensive income.
The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at
the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they
relate to items that are recognised in other comprehensive income or directly
in equity, in which case the current and deferred tax are also recognised in
other comprehensive income or directly in equity, respectively. Where current
tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business
combination.
Recognised in consolidated income statement
FY25 FY24
£000 £000
Current tax expense
Current year 73 22
Adjustments for prior years (21) 33
Current tax expense 52 55
Deferred tax expense
Origination and reversal of temporary differences (111) 1,286
Adjustments for prior years 224 (800)
Deferred tax expense 113 486
Total tax expense 165 541
The UK corporation tax rate for FY25 was 25.0% (FY24: 25.0%). Taxation for
other jurisdictions is calculated at the rates prevailing in the respective
jurisdictions.
As the deferred tax assets and liabilities should be recognised based on the
corporation tax rate applicable when they are anticipated to unwind, the
assets and liabilities on UK operations have been recognised at a rate of
25.0% (FY24: 25.0%). Assets and liabilities arising on foreign operations have
been recognised at the applicable overseas tax rates.
Reconciliation of effective tax rate
FY25 FY24
£000 £000
Profit for the year 8,343 6,918
Tax using the UK corporation tax rate of 25.0% (FY24: 25.0%) 2,086 1,730
Non-deductible (income)/ expenses (1,027) 195
Effect of tax rates in foreign jurisdictions (86) 14
Tax overprovided in prior periods 202 (767)
Utilisation of unrecognised tax losses brought forward (1,010) (751)
Losses carried forwards - 120
Total tax expense 165 541
Effective tax rate 2.0% 7.8%
The Group's total income tax charge in respect of the period was £165k (FY24:
£541k charge). The effective tax rate on the total profit before tax was 2.0%
(FY24: 7.8%) whilst the effective tax rate on the total profit before
Adjusting items was 3.6% (FY24: 17.0%). The difference between the total
effective tax rate and the Adjusted tax rate relates to fixed asset impairment
charges and reversals within Adjusting items being non-deductible for tax
purposes.
The current year tax charge recognised above is predominantly driven by
deferred tax movements related to lease balances.
There is also a tax charge of £409k (FY24: £323k) shown in the statement of
comprehensive income for fair value movements on derivatives which impacts the
deferred tax balance (Note 12).
Consolidated statement of financial position
Included in the consolidated statement of financial position is a current tax
debtor of £1,603k (FY24: £1,189k) resulting from the overpayment of taxation
in prior periods.
7. Dividends
Accounting policy
At the balance sheet date, dividends are only recognised as a liability if
they are appropriately authorised and are no longer at the discretion of the
Company. Unpaid dividends that do not meet these criteria are disclosed in the
notes to the financial statements.
The Board has not recommended the payment of a dividend in respect of FY25
(FY24: nil).
8. Earnings per share
Basic earnings per share is calculated by dividing the profit or loss for the
period, attributable to ordinary shareholders, by the weighted average number
of ordinary shares in issue during the period.
Diluted earnings per share is based on the weighted average number of shares
in issue for the period, adjusted for the dilutive effect of potential
ordinary shares. Potential ordinary shares represent shares that may be issued
in connection with employee share incentive awards.
The Group has chosen to present an Adjusted earnings per share measure, with
profit adjusted for Adjusting items (see Note 3 for further details) to
reflect the Group's underlying profit for the period.
FY25 FY24
Number Number
Number of shares in issue 62,500,000 62,500,000
Number of dilutive share options - -
Number of shares for diluted earnings per share 62,500,000 62,500,000
£000 £000
Total profit for the financial period 8,178 6,377
Adjusting items (3,768) (3,741)
Adjusted profit for Adjusted earnings per share 4,410 2,636
Pence Pence
Basic earnings per share 13.1 10.2
Diluted earnings per share 13.1 10.2
Adjusted basic earnings per share 7.1 4.2
Adjusted diluted earnings per share 7.1 4.2
9. Intangible assets
Accounting policy
Goodwill
Goodwill arising on consolidation represents any excess of the consideration
paid and the amount of any non-controlling interest in the acquiree over the
fair value of the identifiable assets and liabilities (including intangible
assets) of the acquired entity at the date of the acquisition. After initial
recognition, goodwill is measured at cost less any accumulated impairment
losses. Goodwill is recognised as an asset and assessed for impairment
annually or as triggering events occur. Any impairment in value is recognised
within the income statement. Goodwill was fully impaired in FY20.
Software
Where computer software is not an integral part of a related item of computer
hardware, the software is treated as an intangible asset. Capitalised software
costs include external direct costs of goods and services (such as
consultancy), as well as internal payroll related costs for employees who are
directly working on the project. Internal payroll related costs are
capitalised if the recognition criteria of IAS 38 Intangible Assets are met or
are expensed as incurred otherwise.
Capitalised software development costs are amortised on a straight-line basis
over their expected economic lives, normally between three and seven years.
Computer software under development is held at cost less any recognised
impairment loss. Any impairment in value is recognised within the income
statement and treated as an Adjusting item.
Goodwill Software Total
£000 £000 £000
Cost
At 5 May 2024 16,180 10,299 26,479
Additions - 1,185 1,185
Disposals - (550) (550)
At 4 May 2025 16,180 10,934 27,114
Amortisation and impairment
At 5 May 2024 16,180 8,433 24,613
Amortisation charge - 1,213 1,213
Impairment charge - 141 141
Impairment reversals - (471) (471)
Disposals1 - (550) (550)
At 4 May 2025 16,180 8,766 24,946
Net book value
At 5 May 2024 - 1,866 1,866
At 4 May 2025 - 2,168 2,168
1 During FY25 the Group reviewed assets on the fixed asset register
with a £nil net book value. Following this review intangible assets with a
cost and accumulated depreciation of £550k were deemed to no longer be in use
by the Group and have therefore been disposed of.
Goodwill Software Total
£000 £000 £000
Cost
At 30 April 2023 16,180 9,310 25,490
Additions - 1,208 1,208
Disposals - (219) (219)
At 5 May 2024 16,180 10,299 26,479
Amortisation and impairment
At 30 April 2023 16,180 8,394 24,574
Amortisation charge - 632 632
Impairment charge - 442 442
Impairment reversals - (850) (850)
Disposals2 - (185) (185)
At 5 May 2024 16,180 8,433 24,613
Net book value
At 30 April 2023 - 916 916
At 5 May 2024 - 1,866 1,866
2 During FY24 the Group reviewed assets on the fixed asset register
with a £nil net book value. Following this review intangible assets with a
cost and accumulated depreciation of £207k were deemed to no longer be in use
by the Group and have therefore been disposed of.
10. Property, plant and equipment
Accounting policy
Items of property, plant and equipment are stated at their cost of acquisition
or production, less accumulated depreciation and accumulated impairment
losses.
Depreciation is charged on a straight-line basis over the estimated useful
lives as follows:
· Leasehold improvements: over the life of the lease.
· Fixtures and fittings: 15% per annum straight line or depreciated
on a straight-line basis over the remaining life of the lease, whichever is
shorter.
· Plant and equipment: 25% to 50% per annum straight line.
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date, with the effect of any changes in
estimate accounted for on a prospective basis. An asset's carrying amount is
written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of
the asset. The gain or loss arising on the disposal or scrappage of an asset
is determined as the difference between the sale proceeds and the carrying
amount of the asset and is recognised in profit or loss.
Impairment of tangible and intangible assets
The carrying amounts of the Group's tangible and intangible assets with a
measurable useful life are reviewed at each balance sheet date to determine
whether there is any indication of impairment to their value. If such an
indication exists, the asset's recoverable amount is estimated and compared to
its carrying value. Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of
the cash generating unit (CGU) to which the asset belongs. The Directors
consider an individual retail store to be a CGU, as well as the Company's
trading website.
The recoverable amount of an asset is the greater of its fair value less
disposal cost and its value in use (the present value of the future cash flows
that the asset is expected to generate). In determining value in use, the
present value of future cash flows is discounted using a discount rate that
reflects current market assessments of the time value of money in relation to
the period of the investment and the risks specific to the asset concerned.
The carrying value represents each CGU's specific assets, as well as the
right-of-use assets, plus an allocation of corporate assets where these assets
can be allocated on a reasonable and consistent basis.
Where the carrying value exceeds the recoverable amount an impairment loss is
established with a charge being made to the income statement. When the reasons
for a write down no longer exist, the write down is reversed in the income
statement up to the net book value that the relevant asset would have had if
it had not been written down and if it had been depreciated.
Measuring recoverable amounts
The Group estimates the recoverable amount of each CGU based on the greater of
its fair value less disposal cost and its value in use (VIU), derived from a
discounted cash flow model which excludes IFRS 16 lease payments. In assessing
the fair value less disposal cost the ability to sublease each store has been
considered and it is concluded that this is not applicable for the majority of
the store estate. Where it is deemed reasonable to assume the ability to
sublet, the potential cash inflows generated are insignificant; therefore, the
VIU calculation is used for all stores. A proportion of click & collect
sales are included in store cash flows to reflect the contribution stores make
to fulfilling such orders. The key assumptions applied by management in the
VIU calculations are those regarding the growth rates of sales and gross
margins, medium-term growth rates, central overhead allocation and the
discount rate used to discount the assumed cash flows to present value.
Projected cash flows for each store are limited to the useful life of each
store as determined by its current lease term unless a lease has already
expired or is due to expire within 19 months of 4 May 2025 where the intention
is to remain in the store and renew the lease. For these leases, the average
portfolio lease term is used for cash flow projections.
Projected cash flows for the trading website are limited to 60 months as this
is in line with the average useful economic life of the assets assigned to the
web CGU.
Impairment triggers
Due to the challenging macroeconomic environment and the existence of a
material brought forward impairment charge, all CGUs other than stores which
have been open for less than 12 months have been assessed for impairment.
Change in accounting policy: During the period, due to the maturity curve of
new stores, the directors made an amendment to the accounting policy so that
stores that were open between 12 and 24 months before the period end date, are
reviewed for indicators of impairment and an assessment made should such
indicators be present.
Key assumptions
The key financial assumptions used in the estimation of the recoverable amount
are set out below. The values assigned to the key assumptions represent
management's assessment of current market conditions and future trends and
have been based on historical data from external and internal sources.
Management determined the values assigned to these financial assumptions as
follows:
The post-tax discount rate is derived from the Group's weighted average cost
of capital, which has been estimated using the capital asset pricing model,
the inputs of which include a Company risk-free rate, an equity risk premium,
a Group size premium, a forecasting risk premium and a risk adjustment (beta).
The discount rate is compared to the published discount rates of comparable
businesses and relevant industry data prior to being adopted.
FY25 FY24
Post-tax discount rate 10.80% 10.50%
Medium-term growth rate 2.0% 2.0%
While the online CGU is in a different stage of establishment to that of the
store CGUs, the same pre-tax discount rate has been used in the impairment
assessment. Given that the website is not performing in line with
expectations, all assets relating to the web CGU are fully impaired; as such
an increase in the pre-tax discount rate used for the web assessment would not
increase the impairment charge recognised.
Cash flow forecasts are derived from the most recent Board-approved corporate
plans that form the Base Case on which the VIU calculations are based. These
are described in Note 1(b)(i) (Going concern).
The assumptions used in the estimation of future cash flows are:
• Rates of growth in sales and gross margins, which have been
determined on the basis of the factors described in Note 1(b)(i) (Going
concern).
• Central costs are reviewed to identify amounts which are
necessarily incurred to generate the CGU cash flows. As a result of the
analysis performed at the end of FY25, 84% (FY24: 89%) of central costs have
been allocated by category using appropriate volumetrics.
Cash flows beyond the corporate plan period (FY28 and beyond) have been
determined using the medium-term growth rate; this is based on management's
future expectations, reflecting, amongst other things, current market
conditions and expected future trends and has been based on historical data
from both external and internal sources. Immediately quantifiable impacts of
climate change and costs expected to be incurred in connection with our net
zero commitments are included within the cash flows. The useful economic lives
of store assets are short in the context of climate change scenario models;
therefore, no medium to long-term effects have been considered.
Impairment of intangible assets, property, plant and equipment and
right-of-use assets
During FY25, an impairment charge of £2,612k was recognised against 87 stores
with a recoverable amount of £13,115k, and an impairment charge of £nil was
recognised against the website (FY24: an impairment charge of £5,333k was
recognised against 184 stores with a recoverable amount of £23,396k, and an
impairment charge of £nil was recognised against the trading website). An
impairment reversal of £8,582k has been recognised in FY25 relating to 253
stores with a recoverable amount of £72,408k as at 4 May 2025, and an
impairment reversal of £497k was recognised against the website (FY24: an
impairment reversal of £5,883k was recognised relating to 135 stores with a
recoverable amount of £33,537k, and an impairment reversal of £859k was
recognised against the website) (see Notes 10, 11 and 12).
A net impairment credit of £6,468k (FY24: £1,409k) has therefore been
included within Adjusting items on the face of the consolidated income
statement.
Sensitivity analysis
Whilst the Directors believe the assumptions adopted are realistic, reasonably
possible changes in key assumptions could still occur, which could cause the
recoverable amount of certain stores to be lower or higher than the carrying
amount. The impact on the net impairment charge recognised from reasonably
possible changes in assumption are detailed below:
• A reduction in sales of 5% from the Base Case plan to reflect a
potential downside scenario would result in a decrease in the net impairment
credit of £5,780k. An increase in sales of 5% from the Base Case plan would
increase the net impairment credit by £3,954k.
• A reduction in gross margin of 2% would result in a decrease in
the net impairment credit of £1,566k. An increase in gross margin of 2% would
increase the net impairment credit by £1,417k.
• A 200 basis point increase in the pre-tax discount rate would
result in a decrease in the net impairment credit of £976k, while a 200 basis
point decrease in the pre-tax discount rate would result in an increase in the
net impairment credit of £1,013k.
• A 100 basis point decrease in the medium-term growth rate would
result in a decrease in the net impairment credit of £390k, while a 100 basis
point increase in the medium-term growth rate would result in an increase in
the net impairment credit of £388k.
• Increasing the percentage of central costs allocated across CGUs
from 84% to 94% would result in a decrease in the net impairment credit of
£1,448k. Decreasing the percentage of central costs allocated across CGUs
from 84% to 74% would result in an increase in the net impairment credit of
£1,322k.
Whilst the Directors consider their assumptions to be realistic, should actual
results be different from expectations, then it is possible that the value of
property, plant and equipment included in the balance sheet could become
materially different to the estimates used.
Property, plant and equipment
Leasehold Plant and Fixtures and Total
improvements equipment fittings £000
£000 £000 £000
Cost
At 5 May 2024 5,818 3,763 19,072 28,653
Additions 721 510 2,618 3,849
Disposals1 (2,376) (327) (4,352) (7,055)
At 4 May 2025 4,163 3,946 17,338 25,447
Depreciation and impairment
At 5 May 2024 4,149 3,138 9,008 16,295
Depreciation charge 746 650 2,458 3,854
Impairment charge 193 119 151 463
Impairment reversals - - (975) (975)
Disposals (2,270) (323) (4,180) (6,773)
At 4 May 2025 2,818 3,584 6,462 12,864
Net book value
At 5 May 2024 1,669 625 10,064 12,358
At 4 May 2025 1,345 362 10,876 12,583
1 During FY25 the Group reviewed assets on the fixed asset register
with a £nil net book value. Following this review, fixed assets with a cost
and accumulated depreciation of £6,482k were deemed to no longer be in use by
the Group and have therefore been disposed of. The totals disposed of by
category were as follows: £2,332k leasehold improvements; £296k plant and
equipment; and £3,854k fixtures and fittings.
Leasehold Plant and Fixtures and Total
improvements equipment fittings £000
£000 £000 £000
Cost
At 30 April 2023 7,408 3,656 19,195 30,259
Additions 409 353 3,971 4,733
Disposals2 (1,999) (246) (4,094) (6,339)
At 5 May 2024 5,818 3,763 19,072 28,653
Depreciation and impairment
At 30 April 2023 5,682 3,245 9,559 18,486
Depreciation charge 412 370 2,881 3,663
Impairment charge 209 282 1,098 1,589
Impairment reversals (174) (618) (480) (1,272)
Disposals (1,980) (141) (4,050) (6,171)
At 5 May 2024 4,149 3,138 9,008 16,295
Net book value
At 30 April 2023 1,726 411 9,636 11,773
At 5 May 2024 1,669 625 10,064 12,358
2 During FY24 the Group reviewed assets on the fixed asset register
with a £nil net book value. Following this review, fixed assets with a cost
and accumulated depreciation of £4,263k were deemed to no longer be in use by
the Group and have therefore been disposed of. The totals disposed of by
category were as follows: £570k leasehold improvements; £213k plant and
equipment; and £3,274k fixtures and fittings.
11. Leases
Accounting policy
The Group leases many assets, including properties, IT equipment and warehouse
equipment.
Identification
At the inception of a contract, the Group assesses whether it is, or contains,
a lease. A contract is, or contains, a lease if it conveys the right to
control the use of an asset for a period of time, in exchange for
consideration. Control is conveyed where the Group has both the right to
direct the asset's use and to obtain substantially all the economic benefits
from that use. For each lease or lease component, the Group follows the lease
accounting model as per IFRS 16, unless the permitted recognition exceptions
can be used.
Recognition exceptions
The Group has elected to account for lease payments as an expense on a
straight-line basis over the lease term or another systematic basis for the
following types of leases:
· Leases with a term of 12 months or less.
· Leases where the underlying asset has a low value.
· Concession leases where the landlord has substantial substitution
rights.
For leases where the Group has taken the short-term lease recognition
exemption and there are any changes to the lease term or the lease is
modified, the Group accounts for the lease as a new lease.
For leases where the Group has taken a recognition exemption as detailed
above, rentals payable under these leases are charged to the income statement
on a straight-line basis over the term of the relevant lease, except where
another more systematic basis is more representative of the time pattern in
which economic benefits from the lease asset are consumed.
As lessee
Upon lease commencement, the Group recognises a right-of-use asset and a lease
liability.
Initial measurement
The right-of-use asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset, or to restore
the underlying asset or the site on which it is located at the end of the
lease, less any lease incentives received.
The lease liability is initially measured at the present value of the lease
payments payable over the lease term, discounted at the incremental borrowing
rate as the rate implicit in the lease cannot be readily determined.
Variable lease payments that depend on an index or a rate are included in the
initial measurement of the lease liability and are initially measured using
the index or rate as at the commencement date. Amounts expected to be payable
by the Group under residual value guarantees are also included. Variable lease
payments that are not included in the measurement of the lease liability are
recognised in profit or loss in the period in which the event or condition
that triggers payment occurs unless the costs are included in the carrying
amount of another asset under another accounting standard.
The Group has applied judgement to determine the lease term for some lease
contracts that include renewal options. The assessment of whether the Group is
reasonably certain to exercise such options impacts the lease term, which
significantly affects the value of lease liabilities and right-of-use assets
recognised.
The payments related to leases are presented under cash flows from financing
activities and cash flows from operating activities in the cash flow
statement.
Subsequent measurement
After lease commencement, the Group values right-of-use assets using a cost
model. Under the cost model, a right-of-use asset is measured at cost less
accumulated depreciation and accumulated impairment.
The lease liability is subsequently increased by the interest cost on the
lease liability and decreased by lease payments made. It is re-measured to
reflect changes in the lease term (using a revised discount rate); the
assessment of a purchase option (using a revised discount rate); the amounts
expected to be payable under residual value guarantees (using an unchanged
discount rate); and future lease payments resulting from a change in an index
or a rate used to determine those payments (using an unchanged discount rate).
The re-measurements are matched by adjustments to the right-of-use asset.
Lease modifications may also prompt re-measurement of the lease liability
unless they are determined to be separate leases.
Depreciation of right-of-use assets
The right-of-use asset is subsequently depreciated using the straight-line
method, from the commencement date to the earlier of either the end of the
useful life of the right-of-use asset or the end of the lease term. The
estimated useful lives of right-of-use assets are determined on the same basis
as those of property, plant and equipment. In addition, the right-of-use asset
is reduced by impairment losses, if any, and adjusted for certain
re-measurements of the lease liability.
Determining the lease term
Termination options are included in a number of property leases across the
Group. These terms are used to maximise operational flexibility. At the
commencement date of property leases, the Group determines the lease term to
be the full term of the lease, assuming that any option to break or extend the
lease is unlikely to be exercised. Leases will be revalued if it becomes
likely that a break clause is to be exercised. In determining the likelihood
of the exercise of a break option, management considers all facts and
circumstances that create an economic incentive to exercise the termination
option. For property leases, the following factors are the most relevant:
· The profitability of the leased store and future plans for the
business.
· If there are any significant penalties to terminate (or not
extend), the Group is typically reasonably certain to extend.
(i) Amounts recognised in the statement of financial position
Right-of-use assets
Land and Plant and
buildings equipment Total
£000 £000 £000
2025
At 5 May 2024 57,309 394 57,703
Depreciation charge for the year (18,180) (205) (18,385)
Additions to right-of-use assets 6,217 192 6,409
Effect of modifications to right-of-use assets 12,639 - 12,639
Derecognition of right-of-use assets (2,163) - (2,163)
Impairment charge (2,180) - (2,180)
Impairment reversals 7,807 - 7,807
At 4 May 2025 61,449 381 61,830
Land and Plant and
buildings equipment Total
£000 £000 £000
2024
At 30 April 2023 64,703 669 65,372
Depreciation charge for the year (17,949) (275) (18,224)
Additions to right-of-use assets 10,931 - 10,931
Effect of modifications to right-of-use assets (1,059) - (1,059)
Derecognition of right-of-use assets (543) - (543)
Impairment charge (3,394) - (3,394)
Impairment reversals 4,620 - 4,620
At 5 May 2024 57,309 394 57,703
The total impairment charge/reversal and profit on disposal of right-of-use
assets and liability is in Adjusting items.
Lease liabilities
Land and Plant and
buildings equipment Total
£000 £000 £000
2025
At 5 May 2024 77,336 424 77,760
Additions to lease liabilities 17,663 177 17,840
Interest expense 4,082 19 4,101
Effect of modifications to lease liabilities 1,014 - 1,014
Lease payments (24,196) (235) (24,431)
Disposals of lease liabilities (1,318) - (1,318)
Foreign exchange movements (36) - (36)
At 4 May 2025 74,545 385 74,930
Land and Plant and Total
buildings equipment £000
£000 £000
2024
At 30 April 2023 93,686 706 94,392
Additions to lease liabilities 8,929 - 8,929
Interest expense 3,962 22 3,984
Effect of modifications to lease liabilities 1,059 - 1,059
Lease payments (26,151) (304) (26,455)
Disposals of lease liabilities (4,080) - (4,080)
Foreign exchange movements (69) - (69)
At 5 May 2024 77,336 424 77,760
Carrying value of leases included in the consolidated statement of financial
position
FY25 FY24
£000 £000
Current 18,646 19,943
Non-current 56,284 57,817
Total carrying value of leases 74,930 77,760
Maturity analysis - contractual undiscounted cash flows
FY25 FY24
£000 £000
Less than one year 22,375 23,446
One to two years 17,416 18,787
Two to three years 13,820 13,738
Three to four years 10,352 9,968
Four to five years 6,655 6,574
More than five years 17,325 17,632
Total undiscounted lease liabilities 87,943 90,145
(ii) Amounts recognised in the consolidated income statement
FY25 FY24
£000 £000
Depreciation charge on right-of-use assets (RoUA) 18,385 18,224
Interest cost on lease liability 4,101 3,984
Loss on disposal of RoUA/lease liability 845 (3,537)
Foreign exchange difference on euro leases 36 69
Additional impairment credit under IAS 36 (5,627) (1,226)
Operating lease rentals - hire of plant, equipment and motor vehicles
- Low-value leases 423 362
Total plant, equipment and motor vehicle operating lease rentals 423 362
Operating lease rentals - store leases
- Stores with variable lease rentals 1,182 (434)
- Concession leases (the landlord has substantial substitution rights) 909 848
- Low-value leases 9 (11)
- Lease is expiring within 12 months or has rolling break clauses 30 63
- Lease has expired 929 766
Total store operating lease rentals 3,059 1,232
Depreciation of right-of-use asset by class:
FY25 FY24
£000 £000
Land and buildings 18,180 17,949
Plant and equipment 205 275
Total right-of-use asset depreciation 18,385 18,224
12. Deferred tax
Recognised deferred tax assets and liabilities
Deferred tax assets are attributable to the following:
Assets Liabilities
FY25 FY24 FY25 FY24
£000 £000 £000 £000
Property, plant and equipment 2,811 2,785 - -
Leases 751 980 - -
Temporary timing differences 422 332 - -
Financial liabilities - - (470) (61)
Tax assets/(liabilities) 3,984 4,097 (470) (61)
Movement in deferred tax during the year
Fixed assets Leases Temporary Financial Total
£000 £000 timing liabilities £000
differences £000
£000
At 5 May 2024 2,785 980 332 (61) 4,036
Adjustment in respect of prior years (436) 213 - - (223)
Deferred tax charge to profit and loss 462 (442) 90 - 110
Deferred tax credit in equity profit and loss - - - (409) (409)
At 4 May 2025 2,811 751 422 (470) 3,514
Movement in deferred tax during the prior year
Fixed assets Leases Temporary Financial Total
£000 £000 timing assets/ £000
differences (liabilities)
£000 £000
At 30 April 2023 2,866 1,362 354 262 4,844
Adjustment in respect of prior years 785 16 - - 801
Deferred tax charge to profit and loss (866) (398) (22) - (1,286)
Deferred tax credit in equity profit and loss - - - (323) (323)
At 5 May 2024 2,785 980 332 (61) 4,036
Tax losses carried forward for which no deferred tax asset has been recognised
total £377 k which represents an unrecognised deferred tax asset of £94k
(FY24: £nil).
13. Inventories
Accounting policy
Inventories comprise stocks of finished goods for resale and are valued on a
weighted average cost basis and carried at the lower of cost and net
realisable value. Cost includes all direct expenditure and other attributable
costs incurred in bringing inventories to their present location and
condition.
The process of purchasing inventories may include the use of cash flow hedges
to manage foreign exchange risk. Where hedge accounting applies, an adjustment
is applied such that the cost of stock reflects the hedged exchange rate.
FY25 FY24
£000 £000
Gross stock value 30,121 28,401
Less: stock provisions for shrinkage and obsolescence (1,061) (1,932)
Goods for resale net of provisions 29,060 26,469
Stock in transit 5,925 4,885
Inventory 34,985 31,354
The cost of inventories recognised as an expense during the period was
£111.4m (FY24: £120.5m).
Stock was valued at £35.0m at the end of the period (FY24: £31.4m), an
increase of £3.6m. The increased gross stock level compared to the prior
period reflects investment in new stock across strong performing ranges and
increased freight rates within average cost prices.
Stock provisions
The Group makes provisions in relation to stock quantities, due to potential
stock losses not yet reflected in the accounting records, commonly referred to
as unrecognised shrinkage, and in relation to stock value, where the net
realisable value of an item is expected to be lower than its cost, due to
obsolescence.
Shrinkage provision
During FY25, full four-wall counts were performed in 499 stores during two
waves of counts - 126 stores were counted between July and September with 498
stores counted (including 125 recounted stores) between March and May. Through
these counts, the Group established that its accounting records reflected the
actual quantities of stock in stores. This process also provides the Group
with an indication of the typical percentage of stock loss, which is used to
calculate, by extrapolation, unrecognised shrinkage at the balance sheet date.
The stock records were updated to reflect the results of the stock counts;
however, due to the whole estate being counted during the second wave of
counts compared to FY24 where the whole estate was not counted near to the
year end, the unrecognised shrinkage provision has decreased to £0.6m (FY24:
£1.1m). The provision relates to store stock with a value of £21.8m (FY24:
£20.6m).
Obsolescence provision
The Group's inventory does not comprise a large proportion of stock with a
'shelf life'. Stock lines which are slow selling because they have been less
successful than planned, or which have sold successfully and become fragmented
as they reach the natural end of their planned selling period, are usually
discounted and sold during 'sale' events, for example the January sale. This
stock is referred to as terminal stock.
During FY25 the Group held slightly less terminal stock than the prior period.
Consequently, the obsolescence provision has decreased to £0.5m (FY24:
£0.8m).
The Group has also considered the impact of customer preferences and ESG
considerations on potential stock obsolescence, and these factors are not
deemed to have a material impact on the level of provision required.
14. Trade and other receivables
FY25 FY24
£000 £000
Current
Trade receivables 2,026 2,626
Other receivables 135 506
Prepayments 3,988 5,252
Trade and other receivables 6,149 8,384
Trade receivables are attributable to sales which have been paid for by credit
card pending receipt into the Company's bank account and are classified as
finance assets at amortised cost. The trade receivables balance is primarily
made up of aforementioned pending credit card receipts of £1.7m (FY24:
£2.3m). Credit is provided to a limited number of business-to-business
customers. The individual value and nature of trade receivables is such that
no material credit losses occur; therefore, no loss allowance has been
recorded at the period end (FY24: £nil).
Other receivables relate to stock on water deposits paid and other accounts
payable debit balances. Prepayments relate to prepaid property costs and other
expenses.
15. Cash and cash equivalents
FY25 FY24
£000 £000
Cash and cash equivalents 4,118 1,619
Total 4,118 1,619
The Group's cash and cash equivalents are denominated in the following
currencies:
FY25 FY24
£000 £000
Sterling (5,575) 1,142
Euro 610 397
US dollar 9,083 80
Cash and cash equivalents 4,118 1,619
At 4 May 2025, the Group held net cash (excluding lease liabilities) of £4.1m
(FY24: £1.6m). This comprised cash of £4.1m (FY24: £1.6m).
16. Borrowings
Accounting policy
Interest-bearing bank loans and overdrafts, loan notes and other loans are
recognised in the balance sheet at amortised cost. Finance charges associated
with arranging non-equity funding are recognised in the income statement over
the life of the facility. All other borrowing costs are recognised in the
income statement in accordance with the effective interest rate method. A
summary of the Group's objectives, policies, procedures and strategies with
regard to financial instruments and capital management can be found in Note 24
in the Annual Report and Accounts
For the period ended 4 May 2025, the Group's bank facilities comprised a
revolving credit facility of £20.0m (FY24: £20.0m) expiring on 30 November
2026. The nature of the covenants associated with the facility remained
consistent throughout both periods presented. None of the Group's cash and
cash equivalents (FY24: £nil) are held by the trustee of the Group's Employee
Benefit Trust in relation to the share schemes for employees.
FY25 FY24
£000 £000
Non-current liabilities
Lease liabilities 56,284 57,817
Non-current liabilities 56,284 57,817
Current liabilities
Lease liabilities 18,646 19,943
Current liabilities 18,646 19,943
Reconciliation of borrowings to cash flows arising from financing activities
FY25 FY24
£000 £000
Borrowings at start of the period 77,760 94,392
Changes from financing cash flows
Payment of lease liabilities (capital) (20,330) (22,471)
Payment of lease liabilities (interest) (4,101) (3,984)
Proceeds from loans and borrowings(1) 9,000 6,000
Repayment of bank borrowings1 (9,000) (6,000)
Total changes from financing cash flows (24,431) (26,455)
Other changes
Addition of lease liabilities 18,854 9,988
Disposal of lease liabilities (1,318) (4,080)
The effect of changes in foreign exchange rates (36) (69)
Interest expense 4,101 3,984
Total other changes 21,601 9,823
Borrowings at end of the period (excluding overdrafts) 74,930 77,760
1 Within the period up to £9.0m was drawn under the Group's RCF and
repaid in full by the period end.
Net debt reconciliation
FY25 FY24
£000 £000
Net debt (excluding unamortised debt costs)
Cash and cash equivalents (4,118) (1,619)
Net bank cash (4,118) (1,619)
Non-IFRS 16 lease liabilities - 89
Non-IFRS 16 net cash (4,118) (1,530)
IFRS 16 lease liabilities 74,930 77,760
Net debt including IFRS 16 lease liabilities 70,812 76,230
17. Trade and other payables
FY25 FY24
£000 £000
Current
Trade payables 20,003 18,081
Other tax and social security 4,262 3,525
Accrued expenses 8,586 8,280
Trade and other payables 32,851 29,886
Trade payables principally comprise amounts outstanding for trade purchases
and operating costs.
The Directors consider that the carrying amount of trade payables approximates
to their fair value.
Accrued expenses comprise various accrued property costs, payroll costs and
other expenses.
The Group has net US dollar denominated trade and other payables of £5.6m
(FY24: £7.0m).
18. Provisions
Accounting policy
Provisions are recognised when the Group has a present obligation as a result
of a past event, and it is probable that the Group will be required to settle
that obligation. Provisions are the best estimate of the expenditure required
to settle the obligation at the end of the reporting period and are discounted
to present value where the effect is material.
HMRC VAT Property Total
£000 £000 £000
At 5 May 2024 147 872 1,019
Provisions made 20 1,097 1,117
Provisions released - (339) (339)
Provisions utilised - (182) (182)
Reclassified to accruals (167) - (167)
At 4 May 2025 - 1,448 1,448
Maturity analysis of cash flows:
HMRC VAT Property Total
£000 £000 £000
Due in less than one year - 798 798
Due between one and five years - 309 309
Due in more than five years - 341 341
Total - 1,448 1,448
Property provision
A dilapidation provision is recognised when there is a future obligation
relating to the maintenance of leasehold property. The provision is based on
management's best estimate of the obligation which forms part of the Group's
unavoidable cost of meeting its obligations under the lease contracts. Key
uncertainties are estimates of amounts due.
HMRC VAT provision
HMRC initiated a VAT review in August 2022 in respect of a four-year period
(FY19 to FY22). The review is now complete and was settled immediately
following the period end. Therefore, the provision of £167k (FY24: £147k)
was reallocated to accruals during the period.
19. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note.
Transactions with key management personnel
The key management personnel of the Group comprise The Works.co.uk plc Board
of Directors and the Group's Operating Board. Further details of Directors'
remuneration are set out in the Directors' remuneration report included in the
Annual Report and Accounts.
The compensation of key management personnel (including the Directors) is as
follows:
FY25 FY24
£000 £000
Key management remuneration - including social security costs 1,837 2,982
Pension contributions 153 116
LTIP - including social security costs 256 (351)
Total 2,246 2,747
Further details on the compensation of key management personnel who are
Directors are provided in the Group's Directors' remuneration report included
in the Annual Report and Accounts.
20. Subsidiary undertakings
The results of all subsidiary undertakings are included in the consolidated
financial statements. The principal place of business and the registered
office addresses for the subsidiaries are the same as for the Company.
Company Active/ Direct/ Registered Class of Ownership
dormant indirect control number shares held
The Works Investments Limited Holding Direct 09073458 Ordinary 100%
The Works Stores Limited Active Indirect 06557400 Ordinary 100%
The Works Online Limited Active Indirect 08040244 Ordinary 100%
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