Registered number: SC054090
FOR THE YEAR ENDED 31 AUGUST 2025
STERLING FURNITURE GROUP LIMITED
COMPANY INFORMATION
STERLING FURNITURE GROUP LIMITED
CONTENTS
STERLING FURNITURE GROUP LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2025
The Directors present their strategic report for the year ended 31 August 2025.
The year under review was one of stabilisation and reset for Sterling Furniture Group. The Group entered the year carrying an overhead structure configured for a growth plan that did not materialise. The Board has rebuilt that structure, taken over £2.6m out of the annual cost of running the business, and retained ownership of the majority of the retail and distribution estate against a very low level of borrowing.
The Directors took decisive action rather than defer it, completing the work within the year rather than spreading it over a longer period. The reported result therefore absorbs significant one-off restructuring costs. With continued challenging trading conditions and suppressed customer demand, coupled with significant external cost pressures, the reported loss before tax and exceptional items for the year was £3,442,947 (2024: loss of £3,503,621).
The Group acted quickly to strengthen its leadership, bringing balance and experience to the Board. Bernard Dunn was appointed Non-Executive Chair in October 2024 and Stewart Robertson was appointed Chief Executive in December 2024. Malcolm Walker, who has over fifty years' experience in the retail furniture sector, joined as adviser to the Group Board and assumed responsibility for buying and merchandising. Gillian McCormick joined in May 2025 as Head of Finance and was subsequently appointed Company Secretary. A number of further appointments and internal promotions were made to the Executive Management team.
The strengthened Group Board and Executive Management team has reset both the Group's strategic priorities and the cost base of the business, ensuring that Sterling is well placed to meet ongoing sector challenges and to take advantage of opportunities for future growth.
The continued operational involvement of the family members as shareholder directors is of critical importance. They are fully supportive of the senior executive team and of the Group's strategy of continuous improvement and efficiency, and of growing the business organically and through new income streams in the coming year.
The Directors took decisive action rather than defer it, completing the work within the year rather than spreading it over a longer period. The reported result therefore absorbs significant one-off restructuring costs. With continued challenging trading conditions and suppressed customer demand, coupled with significant external cost pressures, the reported loss before tax and exceptional items for the year was £3,442,947 (2024: loss of £3,503,621).
The Group acted quickly to strengthen its leadership, bringing balance and experience to the Board. Bernard Dunn was appointed Non-Executive Chair in October 2024 and Stewart Robertson was appointed Chief Executive in December 2024. Malcolm Walker, who has over fifty years' experience in the retail furniture sector, joined as adviser to the Group Board and assumed responsibility for buying and merchandising. Gillian McCormick joined in May 2025 as Head of Finance and was subsequently appointed Company Secretary. A number of further appointments and internal promotions were made to the Executive Management team.
The strengthened Group Board and Executive Management team has reset both the Group's strategic priorities and the cost base of the business, ensuring that Sterling is well placed to meet ongoing sector challenges and to take advantage of opportunities for future growth.
The continued operational involvement of the family members as shareholder directors is of critical importance. They are fully supportive of the senior executive team and of the Group's strategy of continuous improvement and efficiency, and of growing the business organically and through new income streams in the coming year.
Sterling Furniture Group operates as a multi-site homewares and furniture retailer across Scotland, with Sterling Home as the flagship brand. Unlike many of its larger competitors, Sterling owns the majority of its retail and distribution sites. At 31 August 2025 the Group's freehold property had a net book value of £18,724,662 against total bank borrowings of £1,758,500. Net assets stood at £21,185,789. The Group’s freehold properties are carried at depreciated historic cost. The Directors consider their aggregate market value at the year-end to be materially more than that book amount, and further detail is given in the Directors’ Report. This asset backing, and the low level of debt secured against it, gives the Group both resilience and the capacity to fund the essential changes described below.
FY25 was shaped by subdued demand for big-ticket discretionary purchases and by a substantial increase in the cost of employment. The increases to the National Living Wage and to employers' National Insurance contributions took effect in April 2025, within the Group's financial year, and the British Retail Consortium has estimated the additional employment costs falling on the retail sector in 2025 at £5 billion. Continued disruption to Red Sea shipping routes added to lead times and to landed costs across the industry. Although the Bank of England base rate fell across the Group's financial year, from 5.00% in September 2024 to 4.00% in August 2025, this brought limited relief to demand for higher-value purchases.
FY25 was shaped by subdued demand for big-ticket discretionary purchases and by a substantial increase in the cost of employment. The increases to the National Living Wage and to employers' National Insurance contributions took effect in April 2025, within the Group's financial year, and the British Retail Consortium has estimated the additional employment costs falling on the retail sector in 2025 at £5 billion. Continued disruption to Red Sea shipping routes added to lead times and to landed costs across the industry. Although the Bank of England base rate fell across the Group's financial year, from 5.00% in September 2024 to 4.00% in August 2025, this brought limited relief to demand for higher-value purchases.
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STERLING FURNITURE GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
Financial Performance
Turnover for the year was £46,579,807 (2024: £50,551,091). Turnover for the period declined by 7.9%, which included the closure of the loss-making Dundee store in June 2025 on expiry of the lease on those premises. Excluding Dundee, like-for-like delivered sales declined by 6.1%.
Gross margin was 46.2% (2024: 47.3%). The movement reflects a deliberate change to the way the Group buys certain goods, made in conjunction with key supplier partners, which carried a short-term cost to margin during the transition.
Administrative expenses reduced to £8,952,676 (2024: £11,600,653), a reduction of £2,647,977, or 23%. The Board delivered this through a line-by-line review of overheads, the renegotiation of supplier and service contracts, and the application of technology to processes previously performed manually. Average headcount reduced from 441 to 377.
Stocks reduced to £6,777,968 (2024: £7,526,528) through tighter buying and improved stock turn, and new Service Level Agreements were agreed with the Group’s major suppliers. Rigorous cash control and reporting processes operate across the business.
New secured financing of £1,800,000 was agreed and drawn during the year, and £2,033,896 of borrowings were repaid. Cash at bank at the year-end was £612,484 (2024: £2,755,766), after funding the redundancy programme, capital investment of £822,131 in the store estate and in technology, and the net repayment of borrowings.
The Directors monitor the performance of the business against the following indicators:
Turnover for the year was £46,579,807 (2024: £50,551,091). Turnover for the period declined by 7.9%, which included the closure of the loss-making Dundee store in June 2025 on expiry of the lease on those premises. Excluding Dundee, like-for-like delivered sales declined by 6.1%.
Gross margin was 46.2% (2024: 47.3%). The movement reflects a deliberate change to the way the Group buys certain goods, made in conjunction with key supplier partners, which carried a short-term cost to margin during the transition.
Administrative expenses reduced to £8,952,676 (2024: £11,600,653), a reduction of £2,647,977, or 23%. The Board delivered this through a line-by-line review of overheads, the renegotiation of supplier and service contracts, and the application of technology to processes previously performed manually. Average headcount reduced from 441 to 377.
Stocks reduced to £6,777,968 (2024: £7,526,528) through tighter buying and improved stock turn, and new Service Level Agreements were agreed with the Group’s major suppliers. Rigorous cash control and reporting processes operate across the business.
New secured financing of £1,800,000 was agreed and drawn during the year, and £2,033,896 of borrowings were repaid. Cash at bank at the year-end was £612,484 (2024: £2,755,766), after funding the redundancy programme, capital investment of £822,131 in the store estate and in technology, and the net repayment of borrowings.
The Directors monitor the performance of the business against the following indicators:
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STERLING FURNITURE GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
Strategic Actions and Investment
The Board’s objective has been to take cost out of the business and reinvest in the stores, in technology and in new income streams, so that Sterling is positioned to grow. During the year, and since the year end, the Group has taken the following actions:
Refurbishment of the retail estate, commenced at Glasgow, Uddingston and Forrest Furnishing in the spring of 2025
Major refurbishment of the flagship store at Tillicoultry, undertaken alongside key supplier partners
Launch of the Group’s new Shopify-based ecommerce platform with full integration
Rebranding of Buicks Furniture, Anderson & England and Forrest Furnishing to Sterling Home, consolidating the Group behind a single brand
Improved buying practices and supplier relationships, with new Service Level Agreements now in place with the Group’s major suppliers
Improved lead times on customer deliveries, including stock programmes with key suppliers
A new marketing plan to expand customer awareness of the brand, its positioning and its offer
Development of new income streams through partnerships with housebuilders and home design specialists
Exit of the loss-making Dundee store on expiry of the lease
Post Year End Developments
Since the year end, the market continued to be challenging. Cost pressures arising from global events, government changes to minimum wage levels and flat consumer demand across the retail sector have continued to affect the sector as a whole.
Notwithstanding those conditions, the actions taken during FY25 have delivered an improved result in the current financial year to date.
The overhead reductions made during FY25 have carried into FY26 in full, the store refurbishment programme and the new ecommerce platform have been in operation throughout the period, and the closure of the Dundee store has removed a loss-making unit from the estate. The change in buying model is now embedded and the margin has improved. Work on delivery routing, fleet utilisation and warehouse productivity is under way. The Board implemented further efficiency measures during FY26, the benefit of which will be felt in full in FY27.
In summary, the businesses cost base has been reset, the retail estate refurbished, the ecommerce platform launched, the brand consolidated behind Sterling Home, the margin rebuilt following the change in buying model, new supplier agreements are in place, and new income streams are growing. With that platform in place, the Board’s objective for FY27 is a return to sales growth and further progress towards profitability, supported by a lower cost of distribution, the continued development of the partnerships with housebuilders and home design specialists, and the full-year effect of the efficiency measures taken during FY26.
The Group’s ownership of the majority of its retail and distribution estate, at a very low loan to value ratio, provides a foundation for that recovery.
The Board’s objective has been to take cost out of the business and reinvest in the stores, in technology and in new income streams, so that Sterling is positioned to grow. During the year, and since the year end, the Group has taken the following actions:
Refurbishment of the retail estate, commenced at Glasgow, Uddingston and Forrest Furnishing in the spring of 2025
Major refurbishment of the flagship store at Tillicoultry, undertaken alongside key supplier partners
Launch of the Group’s new Shopify-based ecommerce platform with full integration
Rebranding of Buicks Furniture, Anderson & England and Forrest Furnishing to Sterling Home, consolidating the Group behind a single brand
Improved buying practices and supplier relationships, with new Service Level Agreements now in place with the Group’s major suppliers
Improved lead times on customer deliveries, including stock programmes with key suppliers
A new marketing plan to expand customer awareness of the brand, its positioning and its offer
Development of new income streams through partnerships with housebuilders and home design specialists
Exit of the loss-making Dundee store on expiry of the lease
Post Year End Developments
Since the year end, the market continued to be challenging. Cost pressures arising from global events, government changes to minimum wage levels and flat consumer demand across the retail sector have continued to affect the sector as a whole.
Notwithstanding those conditions, the actions taken during FY25 have delivered an improved result in the current financial year to date.
The overhead reductions made during FY25 have carried into FY26 in full, the store refurbishment programme and the new ecommerce platform have been in operation throughout the period, and the closure of the Dundee store has removed a loss-making unit from the estate. The change in buying model is now embedded and the margin has improved. Work on delivery routing, fleet utilisation and warehouse productivity is under way. The Board implemented further efficiency measures during FY26, the benefit of which will be felt in full in FY27.
In summary, the businesses cost base has been reset, the retail estate refurbished, the ecommerce platform launched, the brand consolidated behind Sterling Home, the margin rebuilt following the change in buying model, new supplier agreements are in place, and new income streams are growing. With that platform in place, the Board’s objective for FY27 is a return to sales growth and further progress towards profitability, supported by a lower cost of distribution, the continued development of the partnerships with housebuilders and home design specialists, and the full-year effect of the efficiency measures taken during FY26.
The Group’s ownership of the majority of its retail and distribution estate, at a very low loan to value ratio, provides a foundation for that recovery.
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STERLING FURNITURE GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
The Group is exposed to a number of risks, including:
∙Economic pressure on discretionary consumer spend, mitigated by a broadened product range and price architecture, and by the development of income streams less dependent on retail footfall
∙Rising labour costs, including minimum wage and National Insurance increases, addressed through the structural review of the cost base and the application of technology to manual processes
∙Competitive pressure, particularly from online retailers, addressed through investment in the Group’s ecommerce platform and consolidation behind the Sterling Home brand
∙Increases in fuel, heat and light costs, mitigated by the review of fleet and routing, the energy efficiency programme across stores and office and the plans to introduce renewable energy supply to our property estate.
∙Supply chain disruption and volatility, and rising supplier prices arising from geopolitical events globally, mitigated by Service Level Agreements and stock programmes with major suppliers
∙Currency risk, mitigated by changes to sourcing models
∙Cyber-related risks, both from external attack and from system failure or interruption, addressed through continued investment in systems resilience and controls
ESG and Stakeholder Responsibility
Sterling continues to make progress on its environmental and social commitments, including:
Sterling continues to make progress on its environmental and social commitments, including:
∙Recycling initiatives across packaging and materials
∙Use of sea freight and regional ports to reduce emissions
∙Energy efficiency upgrades in stores and office
∙Expansion of EV charging facilities
∙Work with suppliers to promote sustainable sourcing
∙The plans to introduce renewable energy supply to our property estate.
Our People and Customer Experience
The Group remains committed to fairness, development and internal progression. The gender pay gap remains below the industry average, and customer satisfaction is strong, with a Trustpilot rating of 4.6 (Excellent) maintained throughout a period of significant change within the business.
The reduction in headcount during the year was carried out through a structured consultation process, with support provided to those affected.
The Directors wish to express their sincere thanks to our colleagues at Sterling Furniture Group for their continued effort, commitment and service to our customers during what has been a challenging period for the business.
The Group remains committed to fairness, development and internal progression. The gender pay gap remains below the industry average, and customer satisfaction is strong, with a Trustpilot rating of 4.6 (Excellent) maintained throughout a period of significant change within the business.
The reduction in headcount during the year was carried out through a structured consultation process, with support provided to those affected.
The Directors wish to express their sincere thanks to our colleagues at Sterling Furniture Group for their continued effort, commitment and service to our customers during what has been a challenging period for the business.
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STERLING FURNITURE GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
The Directors acknowledge and understand their duties and responsibilities, including that of section 172 of the Companies Act 2006. All Directors of the Group must act in the way he or she considers, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
∙The likely consequences of any decisions taken in the long term;
∙The interests of the Group's employees;
∙The need to foster the Group's business relationships with suppliers, customers and others;
∙The impact of the Group's operations on the community and environment;
∙The desirability of the Group maintaining a reputation for high standards of business conduct; and the
need to act fairly as between different members of the Group.
need to act fairly as between different members of the Group.
The Board also recognises that the long-term success of Sterling Furniture Group Limited is dependent upon the way it interacts with important stakeholders including colleagues; customers; the many suppliers contracted with; and the Group’s shareholders. The Directors have had regard to the interests of all stakeholders while complying with their obligations to promote the ongoing success of the business.
In taking the decisions necessary to reset the Group’s cost base during the year, the Board had particular regard to the interests of employees. Consultation was conducted on a structured basis and support was made available to those affected. In reshaping supplier arrangements, the Board sought terms that were sustainable for both parties, and these have been formalised through Service Level Agreements.
Colleagues and clients are provided with information on the Group through the use of various mediums such as website, intranet, email correspondence, and of course, face to face communication.
When the Board are making decisions, they consider both the risks and rewards in the pursuit of delivering long term value to the Group’s stakeholders. The Board also acknowledge and understand both current and potential future risks to the business, both financial and non financial, as these are fundamental as to how the business is managed in line with the key performance indicators outlined above.
The Directors, both individually and collectively as the Board, consider the decisions taken during the year ended 31 August 2025 were in conformance of their duty under section 172 of the Companies Act 2006.
In taking the decisions necessary to reset the Group’s cost base during the year, the Board had particular regard to the interests of employees. Consultation was conducted on a structured basis and support was made available to those affected. In reshaping supplier arrangements, the Board sought terms that were sustainable for both parties, and these have been formalised through Service Level Agreements.
Colleagues and clients are provided with information on the Group through the use of various mediums such as website, intranet, email correspondence, and of course, face to face communication.
When the Board are making decisions, they consider both the risks and rewards in the pursuit of delivering long term value to the Group’s stakeholders. The Board also acknowledge and understand both current and potential future risks to the business, both financial and non financial, as these are fundamental as to how the business is managed in line with the key performance indicators outlined above.
The Directors, both individually and collectively as the Board, consider the decisions taken during the year ended 31 August 2025 were in conformance of their duty under section 172 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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STERLING FURNITURE GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2025
The Directors present their report and the financial statements for the year ended 31 August 2025.
The Directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £4,136,103 (2024 - loss £3,835,395).
The Group did not pay dividends to shareholders during the period under review.
The Directors who served during the year were:
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STERLING FURNITURE GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
Employees are encouraged to discuss with management any matters of concern and factors affecting the Group. Employees are kept informed of Group progress and developments through internal memos, emails, and management briefings. Suggestions from employees are encouraged and welcomed.
The Group continued its commitment to fostering its business relationships with customers and long term
suppliers. During the period, the Group progressed in upgrading and improving stores, to generate product
demand and satisfy its customers' needs.
suppliers. During the period, the Group progressed in upgrading and improving stores, to generate product
demand and satisfy its customers' needs.
Where existing employees become disabled, it is the Group's policy wherever practicable to provide continuing employment under normal terms and conditions and to provide training and career development and promotion to disabled employees wherever appropriate.
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STERLING FURNITURE GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 requires all non quoted large companies to report the greenhouse gas emissions for which they are responsible and on any environmental matters which are material to the Company's operations. This complies with the requirements of Streamlined Energy and Carbon Reporting (SECR).
The Group's greenhouse gas emissions and energy consumption for the year are:
The Group's greenhouse gas emissions and energy consumption for the year are:
The Directors have reported on all the emission sources required under the Companies Act 2006 (Strategic Report and Directors' Report) regulations 2013. These sources fall within the Group’s Statement of Accounts. The Directors do not have responsibility for any emission sources that are not included in the Group’s Statement of Accounts. The Group’s greenhouse gas emissions have been calculated in line with the methodology set out in the UK Government's Environmental Reporting Guidelines, 2019. Emissions have been calculated using the latest conversion factors provided by the UK Government. There are no material omissions from the mandatory reporting scope. The reporting period is September 2024 to August 2025, as per the financial statements.
The Group aim to comply with, and where possible, exceed all relevant environmental legislation.
The Group aim to comply with, and where possible, exceed all relevant environmental legislation.
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STERLING FURNITURE GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
The auditor, AAB Audit & Accountancy Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the Board and signed on its behalf.
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STERLING FURNITURE GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STERLING FURNITURE GROUP LIMITED
We have audited the financial statements of Sterling Furniture Group Limited (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 August 2025, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Analysis of Net Debt, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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STERLING FURNITURE GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STERLING FURNITURE GROUP LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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STERLING FURNITURE GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STERLING FURNITURE GROUP LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks within which the Group and parent
Company operates, focusing on those laws and regulations that have a direct effect on the determination of
material amounts and disclosures in the financial statements. The laws and regulations we considered in this
context were the Companies Act 2006 and Taxation legislation.
We identified the greatest risk of material impact on the financial statements from irregularities including fraud to
be:
∙Management override of controls to manipulate the Group and parent Company’s key performance indicators to meet targets;
∙Timing, completeness and occurrence of revenue recognition;
∙Valuation of stock;
∙The appropriateness of the going concern basis of accounting in the preparation of the financial statements;
∙Management judgement applied in calculating estimates and provisions; and
∙Compliance with relevant laws and regulations which directly impact the financial statements and those that the Group and parent Company needs to comply with for the purpose of trading.
Our audit procedures to respond to these risks included:
∙Testing of journal entries and other adjustments for appropriateness;
∙Testing a sample of revenue transactions for completeness, occurrence and cut-off;
∙Testing a sample of stock items to ensure they are being carried at the lower of cost and net realisable value and reviewing ageing of stock to establish if a stock provision is required;
∙Reviewing post year end results, budgets and forecasts to ensure we concur with management's assessment of the going concern assumption;
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STERLING FURNITURE GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF STERLING FURNITURE GROUP LIMITED (CONTINUED)
Auditor's responsibilities for the audit of the financial statements (cont)
∙Reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
∙Enquiries of management about litigation and claims and inspection of relevant correspondence;
∙Reviewing legal and professional fees to identify indications of actual or potential litigation, claims and any non-compliance with laws and regulations;
∙Performing a disclosure checklist on the financial statements to ensure Companies Act 2006 requirements are satisfied;
∙Analytical procedures to identify any unusual or unexpected trends or relationship; and
∙Reviewing minutes of meetings of those charged with governance to identify any matters indicating actual or potential fraud.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk
increases the more that compliance with a law or regulation is removed from the events and transactions
reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
Macfarlane Gray House
Castlecraig Business Park
Springbank Road
FK7 7WT
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STERLING FURNITURE GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2025
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STERLING FURNITURE GROUP LIMITED
REGISTERED NUMBER: SC054090
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2025
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STERLING FURNITURE GROUP LIMITED
REGISTERED NUMBER: SC054090
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 AUGUST 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 23 to 47 form part of these financial statements.
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STERLING FURNITURE GROUP LIMITED
REGISTERED NUMBER: SC054090
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2025
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STERLING FURNITURE GROUP LIMITED
REGISTERED NUMBER: SC054090
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 AUGUST 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 23 to 47 form part of these financial statements.
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STERLING FURNITURE GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2025
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2024
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STERLING FURNITURE GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2025
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2024
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STERLING FURNITURE GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 AUGUST 2025
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STERLING FURNITURE GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 AUGUST 2025
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STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
The parent Company (Company number: SC054090) is a private company limited by shares and is incorporated in Scotland. The Registered Office is 76 Moss Road, Tillicoultry, Scotland, FK13 6NS.
The principal activity of the Group in the year under review was that of retailing home furnishings.
The principal activity of the Group in the year under review was that of retailing home furnishings.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland ("FRS 102") and the Companies Act 2006.
The Group's functional presentation currency is GBP.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Group and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
Page 23
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
2.Accounting policies (continued)
The Directors ordinarily review and update the Group’s cash flow and trading forecasts to ensure that the Group has sufficient resources to enable it to meet its liabilities as they fall due for a period of at least twelve months from the date of signing the financial statements. The Group has been loss making in the year, but the Boards continued efficiency drive has produced necessary cost savings, the full benefit of which will be felt in FY27. On this basis, the Directors have prepared prudent forecasts, based on a number of potential scenarios and are comfortable that these forecasts provide evidence that the Group has adequate working capital to continue trading over this period.
The Directors believe there continues to be considerable consumer demand for home furnishings despite the challenges of the current market place. The risk factors outlined previously in this report point towards economic pressure on discretionary spend due to household costs driven up by global events, and demanding economic conditions. Together these will naturally affect customer demand. However, the Directors are confident that the actions taken upgrading stores; developing the Group’s digital ecommerce platform; establishing new income streams and providing an extensive range of products and services to its wide range of loyal customers will help to ensure that turnover will remain robust. Additionally, the actions taken to address and right size the cost base of the business will protect margin and profit levels.
Post year end new financing terms were agreed and the Directors are pleased that the Group continues to benefit from owning the majority of its retail sites, and has a very low LTV on its debt. The Directors are also aware that the Group’s management team has a very strong focus on liquidity and cash flow management are therefore of the opinion that the Group’s forecasts and projections, taking account of possible changes in trading performance, show that the Group should be able to operate within it’s current facilities. The Group will therefore have adequate resources to continue as a going concern for the foreseeable future and as such, the accounts are prepared on a going concern basis.
The Directors believe there continues to be considerable consumer demand for home furnishings despite the challenges of the current market place. The risk factors outlined previously in this report point towards economic pressure on discretionary spend due to household costs driven up by global events, and demanding economic conditions. Together these will naturally affect customer demand. However, the Directors are confident that the actions taken upgrading stores; developing the Group’s digital ecommerce platform; establishing new income streams and providing an extensive range of products and services to its wide range of loyal customers will help to ensure that turnover will remain robust. Additionally, the actions taken to address and right size the cost base of the business will protect margin and profit levels.
Post year end new financing terms were agreed and the Directors are pleased that the Group continues to benefit from owning the majority of its retail sites, and has a very low LTV on its debt. The Directors are also aware that the Group’s management team has a very strong focus on liquidity and cash flow management are therefore of the opinion that the Group’s forecasts and projections, taking account of possible changes in trading performance, show that the Group should be able to operate within it’s current facilities. The Group will therefore have adequate resources to continue as a going concern for the foreseeable future and as such, the accounts are prepared on a going concern basis.
Page 24
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
2.Accounting policies (continued)
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income.
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income.
Assets held under hire purchase contracts are capitalised in the Statement of Financial Position and are depreciated over the asset's useful lives. A corresponding liability is recognised for the lower of the fair value of the leased asset and the present value of the minimum lease payments in the Statement of Financial Position. Lease payments are apportioned between the reduction of the lease liability and finance charges in the Consolidated Statement of Comprehensive Income so as to achieve a constant rate of interest on the remaining balance of the liability.
The Group operates defined contribution plans for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plans are held separately from the Group in independently administered funds.
The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plans are held separately from the Group in independently administered funds.
Page 25
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
2.Accounting policies (continued)
Goodwill
Positive goodwill acquired on each business combination is capitalised and amortised on a straight line basis over its useful life of 20 years. If a subsidiary is subsequently sold any goodwill on acquisition that has not been amortised is taken into account in determining the profit or loss on sale.
Other intangibles
Intangible assets are initially recognised at cost. After recognition intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. All intangible assets are considered to have a finite useful life and are amortised over a period of 5 years.
Positive goodwill acquired on each business combination is capitalised and amortised on a straight line basis over its useful life of 20 years. If a subsidiary is subsequently sold any goodwill on acquisition that has not been amortised is taken into account in determining the profit or loss on sale.
Other intangibles
Intangible assets are initially recognised at cost. After recognition intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. All intangible assets are considered to have a finite useful life and are amortised over a period of 5 years.
Page 26
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
2.Accounting policies (continued)
The Group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to the Consolidated Statement of Comprehensive Income during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance or straight line basis..
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.
Page 27
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
2.Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.
Provisions are charged as an expense to the Consolidated Statement of Comprehensive Income in the period that the Group becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Page 28
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
2.Accounting policies (continued)
Page 29
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Property, plant and equipment
The estimates and assumptions made to determine asset lives require judgements to be made as regards useful lives and residual values. The useful lives and residual values of the Group's financial assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The lives are based on historical experience with similar assets and in the current period there have been no changes to useful lives noted.
Goodwill and intangible assets
The Group establishes a reliable estimate of the useful life of goodwill and intangible assets arising on business combinations. The estimate is based on a variety of factors such as the expected use of the acquired business and the expected useful life of cash generating units to which the goodwill is attributed.
Provisions
Provisions are recognised when the Group has an obligation, as a result of past events, that can be measured reliably and where the outcome is probable. Where the outcome is less than probable, but more than remote, no provision is recorded but a contingent liability disclosed in the financial statements if material. The recording of provisions is therefore an area which requires the exercise of management judgement relating to the nature, timing and probability of the liability.
The main provision held by the Group is in respect of dilapidations and the amount of the provision is re-assessed annually and amended when necessary to reflect current estimates, based on any changes of circumstances. Refer to note 25 for amounts held in relation to provisions.
The whole of the turnover is attributable to retailing of home furnishings, food and beverage, and related activities.
Page 30
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 31
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 32
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 33
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The loss after tax of the parent Company for the year was £4,131,661 (2024 - loss £3,898,622 ).
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Page 34
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
14.Intangible assets (continued)
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Page 35
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
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Page 36
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
15.Tangible fixed assets (continued)
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Page 37
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
15.Tangible fixed assets (continued)
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Page 38
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
15.Tangible fixed assets (continued)
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Page 39
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
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Page 40
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 41
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 42
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Group and Company
Bank loans are secured over certain assets of the Company and its subsidiaries and a floating charge over the whole assets of the Company.
Bank loans are secured over certain assets of the Company and its subsidiaries and a floating charge over the whole assets of the Company.
Page 43
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 44
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
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Page 45
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
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Share premium account
Revaluation reserve
Other reserves
Profit and loss account
Page 46
STERLING FURNITURE GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
The Group operates defined contribution pension schemes. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension cost charge represents contributions payable by the Group to the funds and amounted to £332,505 (2024 - £356,820). Contributions totalling £87,126 (2024 - £68,363) were payable to the funds at the reporting date and are included in creditors.
Sterling Furniture Group Limited has provided guarantees under Section 479C for audit exemption of subsidiary companies detailed in Note 16.
The opinion of the shareholders is there is no controlling party.
Page 47