sfi group plc
sfi house
165 church street east
woking
surrey gu21 1hj
tel 01483 227900
fax 01483 227903
wwwsfigroupcouk
annual report 2002
sfi group plc annual report 2002 contents
01 highlights
02 chairman’s statement
04 operating review
12 chief executive’s report
16 directors and advisers
17 directors’ report
18 corporate governance
20 remuneration report
22 profit and loss account
22 statement of total 
recognised gains 
and losses
23 balance sheet
24 cash flow statement
26 accounting policies
27 notes to financial 
statements
36 auditors’ report
37 five year financial 
summary
38 shareholder 
information
39 notice of annual
general meeting
this report is printed on paper manufactured from 100 recycled fibres 
post consumer waste without any secondary bleaching to the pulp
designed and produced by college design london 44 020 7457 2020 sfi group plc annual report 2002
01
this year has seen sfi further consolidate its position as
a major force in the high street bars sector of licensed
retailing the strategy behind the group’s success as 
a specialist operator is proven and our brands provide 
a strong platform for the future
turnover
five year performance
making it happen
highlights
 turnover up 25 to £1441m with likeforlike sales up 42 and 
likeforlike contribution up 106
 pretax profits increased 22 to £200m

 earnings per share increased 24 to 172p 
 proposed final dividend of 187p per share an increase of 10 
 46 new openings during the year including 13 litten tree 5 bar med 
24 slug  lettuce and 3 fiesta havana
 new bar med template now opened in 4 sites with excellent trading 
results the integration of parisa acquisition is progressing well with 
conversions to slug and lettuce nearing completion and an average 
increase in sales of 17
 pre frs10 amortisation and property disposal profit
98 99 00 01 02
profit before tax
98 99 00 01 02
earnings per share
98 99 00 01 02
for a list of sites visit wwwsfigroupcouk results
the number of retail outlets increased to
186 from 144 the quality of new openings
remained high in sales terms and likefor
like improvement in established outlets 
was 42 this strong underlying trading
combined with the increase in scale of
operations generated turnover up 25 
to £1441m 2001 £1152m 
retail margins improved further  generating
a 29 higher trading contribution at outlet
level of £426m 2001 £331m central
costs were again managed tightly  and
ebitda increased 28 to £364m 2001
£284m pretax profits were 22 higher at
£200m 2001 £164m on a comparable
basis before frs10 amortisation

 this was
after an increase of £21m in interest which
was covered 35 times both ebitda and
pretax profit exclude property disposal
profits of £264000
cash generation continued to be significant
cash flow per share rose 26 to 487p
2001 385p operational cash flow
increased 25 to £332m 2001 £267m
with free cash flow 21 higher at £206m
2001 £170m earnings per share
increased in line with sales 24 higher 
than last year at 172p 2001 139p we
have adopted the new frs19 accounting
standard fully providing for deferred tax with
a necessary restatement of comparatives 
i believe this progress is an outstanding
achievement in a period that has been
challenging for leisure businesses once
again sfi’ s primary objective of creating
shareholder value was delivered with an
increase in economic value added eva 
of £56m one reason that explains this
performance is that sfi has positioned its
businesses in the key growth area of this
industry  in addition it shows that sfi is
managing positively the process of industry
and consumer change and is continuing 
to exploit the commercial opportunities that
change offers
dividend
y our board is recommending an increased
final dividend up 10 to 187p 2001 17p
to be paid on 29 november to shareholders
registered on 27 september with an 
ex dividend date of 25 september  this
brings the total dividend for the year to
278p 2001 2525p as in previous years
a dividend reinvestment scheme will again
be available
2002 achievements
our strategy has been focussed clearly
upon achieving a scale of business that
positions sfi as a major force in the high
street bars sector of licensed retailing
positive progress in 2002 has substantially
achieved this objective and extended 
sfi’ s presence nationally as a mainstream
multiple retailer  
management
i was delighted in april to pass executive
responsibility for sfi into the safe hands 
of andrew latham he was previously
managing directorretail and led daytoday
operations with flair and enormous personal
commitment he has managed the
complexities of rapid growth with assurance
and has made a significant strategic
contribution he is the architect of many of
the sfi retailing innovations and has shaped
our operations into the complementary
brand strategy that differentiates sfi with a
strong competitive advantage in the market
when the board invited andrew to rejoin 
the group in 1999 it was with succession
planning in mind however  as a matter 
of policy he was asked to compete with
external candidates and after an
independent executive search process
established himself as the clear choice 
to become chief executive
making it happen
sfi group has now achieved 11 years of continuous growth
with pretax profits having increased in that period from just
£18745 to over £20m

 in another successful year the company’s
key performance indicators are all positive i am particularl y
pleased that the strong growth in sales is reflected in similar
earnings per share growth of 24
chairman’s statement tim andrews is now established as finance
director  we welcome his depth of relevant
market knowledge and specific financial
expertise sound management of the
finance function is essential and the sfi
structure is well established tim adds the
professional quality that is essential for an
ambitious company  particularly one that
expects to move to midcap status
we were sorry to lose nick irens recently 
due to his leading involvement in the
successful bid for esporta plc nick has
made a significant contribution to sfi as
nonexecutive director both in corporate
governance and in making the function of
the board more rigorous i thank him
sincerely and we will miss his counsel
performance over a long period of time
such as sfi’ s is achieved through a talented
and committed management team both 
in the bars and at the centre i warmly
extend the board’ s appreciation of their
achievement and contribution
outlook
the new year has begun strongly  with total
sales in the first seven weeks increasing
31 and likeforlike accelerating to 56
above last year  
as the new financial year began the world
cup was having a marked effect on leisure
trading sfi was one of the companies that
benefited strongly  major matches created
remarkable trading peaks and sales shifts
consumers spent heavily but the timing of
major events resulted in some cutback later 
overall there was a material increase in
sales but not every pub or bar was able or
equipped to exploit the opportunity  most
sfi bars benefited strongly from detailed
planning well in advance this generated an
uplift in sales and has ensured a strong start
to the year 
the executive team under andrew’ s
leadership has demonstrated the ability to
be at the forefront of industry development 
i am confident of another positive outcome
for the year and continuation longer term
t ony hill
chairman
30 july 2002
 pre frs10 amortisation and property disposal 
profit
sfi group plc annual report 2002
0203 making it happen
sfi has a defined strategy to operate complementary licensed
retail brands on the high street  our brands exist in the
sectors that mintel have defined as having 85 market share 
of the high street bars market 
the litten tree slug and lettuce bar med and fiesta havana
brands have different and distinct core values and consumer
positioning that give us the flexibility and strength to maximise
market share whilst being operated with the same systems
operational and management processes and controls
making it happen
brands
• slug and lettuce ebitda per 
site increased by 479 since 
the acquisition by sfi
• parisa unit sales increased by 
17 since the acquisition by sfi
•average weekly sales up 1 
to £18315
• likeforlike sales up 31
• ebitda up 80
parisa to slug and lettuce
building on the success we have
achieved with the purchase of 
the slug and lettuce business in
november 2000 the brand has
been rapidly expanded from 32
operations to 58 by the year end
the key to this expansion was the
acquisition of parisa café bars 
the former parisa units were
integrated into sfi systems within 
a few days and so far 18 have been
converted into slug and lettuce
operations on average this took
three days and cost only £60k
sales have improved by 17 in 
the converted sites sfi group plc annual report 2002
see us on the web
if you would like to know more about
the slug and lettuce brand please
visit us at wwwslugandlettucecouk
0405
building brands – slug and
lettuce
the slug and lettuce brand has
existed for 19 years and is very
different today from its foundation
since sfi purchased the business 
in 2000 we have reengineered its
design product offering and its
aspirational position it is now a
national brand in the premium wine
barbrasserie sector of the high
street bars market 
slug and lettuce is an integral 
part of our complementary brand
strategy for the high street where
the brands complement rather than
compete with each other  making it happen
sfi has a clear vision and understanding of how to achieve 
a leadership position in our market place the aggressive
development of our brands continues to deliver excellent
results this has been one of the critical success factors in
the exceptional growth of the company over the last eleven
years this growth has been achieved through a strategy of 
organic and acquisitive growth 
making it happen
resul ts
• 13 new openings
• net weekly sales increased 
64 to £18451
• likeforlike sales up 5
• likeforlike ebitda up 87 sfi group plc annual report 2002
0607
litten t ree growth
the litten t ree brand has consistently
delivered outstanding results for sfi
both in terms of growth in sales and
trading contribution it exists in the
traditional pubbar sector of the high
street bars market the brand has
been rapidly expanded in the last
twelve months and the template has
been further developed a total of
thirteen new sites have been opened
during this year  increasing the size 
of the estate by nearly one third
litten t ree in smaller towns
a feature of the growth of the litten
tree brand in the last year has been
our success at taking the brand to
smaller towns than those where 
we have previously operated 
in these towns the litten t ree’ s 
broad consumer appeal and
responsiveness to their demands
have resulted in excellent sustainable
longterm results 
the litten t ree trades in that micro
market as a big fish in a small 
pond this strategy for the brand 
will continue making it happen
we recognise that we operate in a fast paced everchanging
market place our customers’ tastes are changing at an
increasing rate as are the levels of quality  service and value
they demand in order to continue to thrive in this environment
we constantl y work to keep our brands relevant and focused
to our customers we remain responsive in anticipating these
changes and evolving and improving our brands to guarantee
our future success
making it happen
customers
•4 new template bar med 
sites opened
•average weekly sales in new
template sites £21173
•average weekly sales in the 
existing estate increased 88 
to £21549
• likeforlike sales up 25
• ebitda up by 133
bar med a new brand template
the bar med brand as a whole
delivers quality results and exists in 
the young persons barvenue sector
of the high street bars market after
extensive research and review we
have evolved the template to a 
mark two version we have created 
a modern multifunctional bar
delivering a highquality daytime 
food offer coupled with a mainstream
latenight venue 
the first of these new template
bar med outlets opened in lincoln
in december 2001 subsequently 
a further three have opened
successfully in harrogate t orquay
and shrewsbury  all of these first
four sites were new builds and are
trading well we are now planning
to convert three existing outlets 
to this mark two template later 
this year  sfi group plc annual report 2002
0809
see us on the web
if you would like to know more 
about bar med then please visit us
at wwwbarmedcom
what our customers wanted 
the new template
research in our existing bar med
outlets told us that our customers
wanted a more contemporary offer 
a venue for all occasions that was
not stereotyped they wanted
somewhere to go that was relaxing
by day but vibrant at night they
wanted a segmented unit layout with
contemporary design values and
they wanted a wellcontrolled
environment offering varied eating
options with fast efficient service
further research in our new template
bar med outlets has indicated 
that we have delivered on these
requirements and created an offer
that is very appropriate for the core
consumer demands making it happen
sfi has an enviable track record for delivering innovative 
thinking into our market place we have led the market with the
development of the chameleon bar concept  and have also been 
at the forefront of many other significant innovations in our
retail sector such as developing retail lessons learnt by high
street retailers and appl ying them to the licensed retail businesses
we operate introducing screen media advertising and developing
a suppl y chain solution based upon centralised distribution 
to name a few we remain committed to developing our business
and staying ahead of our competitors through innovation
making it happen
innovation
•average weekly sales for 
havana sites £25725
•3 further new openings planned 
for 2002
• demon drinks added £300000 
incremental margin
• further demon drinks products 
being launched – demon ice 
a flavoured alcoholic beverage 
launched in august 2002
the development of 
fiesta havana
we have developed the fiesta
havana brand positioning into the
young persons barvenue sector 
it is a stylish bar with a latin
proposition it is an original trend
setting venue and is all about
enjoying the occasionality of the
visit through a strong focus on
dancing cocktails food and
entertainment 
the brand has been further
developed at the newly opened 
site in douglas on the isle of man
further new openings under the
fiesta havana brand are planned 
for the first half of the next financial
year in bristol fulham and kingston sfi group plc annual report 2002
the development of 
demon drinks
sfi has identified a further
opportunity where innovation can
add value to our business through
the development of own label drinks
products under the demon drinks
brand we believe that the opportunity
exists to enhance margin whilst
offering our customers a quality
product at greater value than 
other alternatives 
the family of products under this
label now include demon red 
an energy drink still and sparkling
water  orange juice and a cranberry
variant of the energy drink demon
blue all have successfully replaced
the volumes of the branded product
we previously offered with significantly
enhanced margin a limited range 
of new demon drinks products will
be launched in the next financial year 
1011 looking forward
rapid expansion over the last two years 
has left us in a strong position new outlets
which opened either side of the year end
will ensure that a strong momentum of
earnings growth will continue into this year
but as a consequence gearing is higher
than we would like many shareholders are
rightly concerned that the balance sheet
needs to be strengthened we have
acknowledged their concerns and are
taking appropriate action
this year our focus will be on reducing
gearing substantially  while maintaining
double digit earnings growth we will deliver
this by halving the planned new openings 
to 12 and by the disposal of noncore
operations this strategy takes advantage
of the cash flow that we generate and
strengthens the balance sheet by 
reducing gearing
we have already made some progress at
the half year following the parisa acquisition
we reported gearing at 130 this had
reduced to 121 at the year end on a
consistent pre frs19 accounting basis 
my objective is to reduce this below 100
within 18 months
my confidence in the future is based on the
excellent quality of sfi’ s management team
its strength of operations and our strong
market position we have an exceptionally
talented team and i was delighted to be
able to further strengthen it through the
recruitment of tim andrews as our new
finance director  tim was previously the
finance director at late night bars operator
po na na and the slug and lettuce group
plc he has wide experience and expertise
in this sector and is already making a
significant contribution
brand strategy
high street bars are the key growth area of
licensed retailing it is a huge market that in
2002 is estimated to be worth £275bn


and embraces a wide range of varying
consumer propositions a key factor that
differentiates sfi is our complementary
brand strategy  this ensures that in each
micro market we have a retail format
appropriate for the location and specific
target market
mintel have identified five sectors that
segment the high street bars market we
compete in the three largest traditional
barspubs wine barbrasseries and young
person’ s barsvenues in each of these
sectors our brands are positioned at the
premium end where the overall rewards 
are highest due to the quality of sales and
margins in each sector sfi brands have 
a clear differentiation although in operational
terms all brands share the same core
systems and management controls
source mintel
i t raditional barspubs 
the litten t ree competes in the largest
sector  it is a chameleon operation in that 
its trading style changes between daytime
and evening to attract different consumer
targets it has a broad church appeal 
that attracts a wide range of age and
demographic groups with a valuefor
money and an added value offering last
year we opened 13 litten t rees bringing the
total to 57 nationally  this brand continues
to trade well with average net weekly sales
increasing to £18451 from £17336 like
forlike sales were up 50 and likeforlike
ebitda up by 87 
making it happen
i have been privileged to take leadership responsibility
for a company that has consistentl y delivered 
solid progress this year has continued the group’s
growth record since 1997 compound annual growth
rate has been 55 in sales and at unit level ebitda 
has increased by 61 
chief executive’s report the brand continues to evolve and grow
with innovation being key to its continued
success sfi’ s approach is to anticipate
changes in consumer demand and to
continually evolve its brands in order that
they remain at the forefront of trends in 
high street leisure retailing we have focussed
on adding value particularly through live
entertainment the litten t ree has become
the place to watch sport of all types
particularly football in addition food is an
important element to the brand offer and
menu innovation has resulted in encouraging
increases in average food sales per site
as the group progresses its expansion
nationwide the litten t ree continues to
have considerable success in smaller towns
in appealing to a wide audience during the
year  we successfully developed nine sites 
in smaller towns such as coalville bicester
and long eaton at a lower cost and
achieved our target return on capital of 
30 on fit out
ii wine barsbrasseries
the slug and lettuce brand has been 
in existence for 19 years its aspirational
premium nature makes it a leader in the
wine barbrasserie sector  its evolution 
has accelerated and developed since its
acquisition by sfi in 2000 the overall
format of the operations remains the same
but rigorous sfi retailing disciplines have
been embedded ebitda per site has
improved by 479 since owned by sfi
this £26m of increased return illustrates 
the management’ s ability to add operational
value weekly average sales of original 
slug and lettuce sites have risen to
£18315 2001 £18145 likeforlike sales
rose by 31 and at ebitda by 80
just prior to midyear we accelerated
expansion primarily through acquiring a
chain of 28 restaurant bars 24 trading 
and 4 landbank previously trading as
parisa this was financed without directly
increasing borrowing but by realigning the
new openings programme instead to stay
within the group’ s planned capital
expenditure budget 
we assessed that the unrealised potential 
of the former parisa sites was considerable
and repositioned our development
programme accordingly to accommodate
this advantageous property acquisition 
18 of these have now been converted to
slug and lettuce t wo sites will be converted
to fiesta havana and the remainder will
either be converted once licensing issues
are resolved or disposed of average weekly
sales before conversion of the parisa sites
were £13669 and currently are running 
at 17 higher 
in terms of systems and purchasing the
whole group was quickly integrated within
two days of us taking control sales and
profitability per site have exceeded the
targets laid out in the business plan there
are now 58 slug and lettuce sites
iii y oung person’s barsvenues
bar med and fiesta havana compete in the
sector that has entertainment and partying
as core values mintel categorises this as 
a young persons barvenue
sfi group plc annual report 2002
1213 a mark two template of bar med has been
introduced during the year and applied 
in four new openings the new template 
is split in two a contemporary bar and 
a strong venue area where the stateofthe
art laser  light and music system enables
named djs bands and entertainment of all
kinds to be provided the mark 2 sites have
achieved very encouraging weekly average
sales of £21173 that puts them in the 
top quartile of high street bars in terms of
turnover  the next stage of the repositioning
will be to trial this format amongst the
original bar med template
the rationalisation of the estate will continue
and we anticipate that there will be 24 
bar meds going forward that meet the new
brand format the bar med performance
from the existing estate achieved average
weekly sales of £21549 2001 £19807
likeforlike sales of 25 sales and 
133 ebitda 
like bar med the latin brands exist in the
entertainmentled partying sector of the
high street bars market there are 17 sites
in this category  during the year we added 
1 fiesta havana in the isle of man this 
site is trading considerably above our
expectations we will also add two sites
from the parisa acquisition the difficult
trading in the west end over recent months
has been well documented and fiesta
havana operations have been no
exception the average weekly sales per
site were £25725 and likeforlike sales
declined by 33 in view of the exceptional
performance of the sites that we have
developed and improvements expected in
the west end we remain confident in the
future for this brand 
company growth
the opportunistic purchase of 24 restaurant
bars previously trading as parisa enabled 
us to increase the rate of growth to 46 new
outlets in the year  five sites were opened 
in the first half and 17 opened in the second
half 14 of these occurred in the last few
weeks of the year and as such produced
negligible profit contribution to these results 
disposals
in the last 20 months we have made positive
progress in exiting from the oldstyle
unbranded pubs that are no longer core
and 10 disposals have been completed
our ongoing liability for five onerous
entrepreneur leases has ended and the final
five outlets have terms agreed for disposal
in december we undertook a sale and
leaseback of seven freeholds in aggregate
the property disposals showed a net profit
of £264000
gross margins
this year we increased our gross margins
by 14 percentage points to 777 
2001 763 
this is contrary to industry trends and is
principally explained by three factors first
we have positioned all of our brands firmly
at the premium end of the sectors in which
they compete where quality and added
value entertainment supports premium
pricing we continue to avoid permanent
discounting but have retained a policy of
tactical price promotion to stimulate sales
secondly  the focus on retailing systems
and purchasing opportunities have driven
out more value and thirdly  we have
introduced and extended our range of 
own label products 
the range of products under our demon
drinks own label now include energy drink
mixers bottled still and sparkling water and
fruit juice these are all produced for us by
third parties this activity would not have
been possible without us taking control of
our own supply route which we did in 2001
the demon drinks products added an
incremental £300k to the margin in the
reporting year  in view of this contribution
we are expanding this range to include 
a vodka based premium packaged mixer
called demon ice
making it happen
chief executive’s report
continued sfi group plc annual report 2002
1415 for your eyes only – fyeo
the board is committed to exiting from 
this business and i would like to report
progress earlier this year we appointed 
a specialist property agent to identify
potential purchasers and negotiate a trade
sale there have been a number of offers
but these either excluded part of the
operations or did not deliver acceptable
value subsequently  an extensive
marketing exercise identified that a break 
up of the operations was likely to be the
best way ahead
the current status is that negotiations are
proceeding with a number of parties in
respect of these separate parts of the fyeo
assets conditional agreements have 
been made but are subject to funding and
other considerations it is not appropriate
therefore to disclose details of the parties
involved or the terms of individual
transactions i can confirm however  that
the terms currently under discussion are 
in line with net book value we anticipate
reporting progress in the near future
licensing reform implications for sfi
it is looking increasingly likely that the long
awaited reforms in relation to licensing
which the government have promised will
be included in queen’ s speech for the next
session of parliament in november  
for the group the new act will be mainly
advantageous but along with most of 
the industry  we are opposed to the key
administrative changes proposed it is likely
that responsibility for licensing administration
and new license granting will transfer from
licensing magistrates to local authorities 
as a consequence we believe that this 
will cause significant delay and potentially
increased costs we have been proactive
and have been involved through the trade
organisations at the highest level of
government in trying to influence the
opinion and avoid disadvantageous drafting
as the growth programme is a key driver 
of our development delays that prevent us
from opening new sites could prevent our
growth objective from being met t o avoid
this we have been ‘banking’ licences and 
in addition have set up our own inhouse
licensing team we have 33 new licences
for new premises ‘banked’ 
estate details
at the yearend the group had a total of
186 operations 2001 143 these
comprised litten t ree 57 bar med 26
slug and lettuce 58 latin brands 17 and
unbranded 28 we currently have 57 sites
with heads of terms agreed on the landbank
of them 36 have planning in place and 
33 have licensing in place 
andrew latham
chief executive
30 july 2002 executives
andrew latham 
120363
chief executive
andrew joined the industry as a graduate
trainee with grand metropolitan and later
became the company’ s first operations
manager during its formative years during
this time he gained an external msc at
oxford brooks university before moving to
greenalls group plc in 1983 where he was
responsible for the southern family dining
and associated accommodation business 
he rejoined sfi in 1998 as commercial
director designate formally joining the board
in september 1998 andrew was appointed
managing director – retail in august 2000
and chief executive in april 2002 
he is a t rustee of hospitality action 
a member of the supervisory board and
council of the british beer and pub
association and a council member of the
westminster licensees association
tim andrews
040463
finance director
tim joined sfi in july 2002 he is a
chartered accountant with extensive
corporate finance experience and has held
finance director appointments with two
quoted companies in the leisure sector 
between 1991 and 1998 he worked for
rea brothers limited where he progressed
to become a director of the bank 
he was finance director of the slug and
lettuce group between 1998 and 2000
and up until his appointment to the sfi
group was finance director of late night bar
operator po na na group plc
nonexecutives
t ony hill
060237
chairman
after a scholarship to oxford university 
t ony followed a career in marketing and
general management his formative
experience was gained with hoover  gillette
and general mills inc prior to taking the
lead role in setting up the company in 1985
t ony had been a marketing director of
martini  rossi and general manager 
of seiko
robert lo 
101251
nonexecutive deputy chairman 
and company secretary
robert has extensive experience as a non
executive director  particularly in property
based businesses he was managing
director  corporate finance at johnson fry
where he was actively involved with new
and emerging companies he is a qualified
solicitor  and was previously a partner 
with a london firm where he specialised 
in corporate and taxation matters he is
currently a director of nabarro wells and
chairman of sovereign reversions plc
john brackenbury cbe
090236
nonexecutive
john is deputy chairman of pubmaster and
a leading industry figure with over 40 years
experience in the drinks and leisure sector 
initially with idv  watney mann he was 
a founder director of happy eater before
becoming chairman of pubmaster  at its
formation in 1991 he is a director of the
supervisory board of the british beer and
pub association chairman of business 
in sport and leisure chairman of the
hospitality t raining foundation and is now
deputy chairman of pubmaster  he was
appointed a cbe in the queen’ s birthday
honours list in june 2000 for services to
tourism education and employment 
hugh siegle 
270946
nonexecutive
appointed to the board in june 2001 hugh
has extensive leisure industry experience
having been 27 years at whitbread latterly
as property director  he now has non
executive roles as a leisure consultant at
dtz debenham tie lung and the boards
of portsmouth harbour renaissance ltd
the portsmouth naval base property t rust
and businesses in sport and leisure where
he also chairs the property group as a
chartered surveyor he has sat on property
committees of the royal institute of
chartered surveyors rics and the
brewers and licensed retailers’ association
making it happen
directors and advisers
registrar
computershare services plc
po box 82
the pavilions
bridgwater road
bristol bs99 7nh
solicitors
simmons  simmons
city point
1 ropemaker street
london ec2y 9ss
stockbroker and financial adviser
kbc peel hunt
62 threadneedle street
london ec2r 8hp
bankers
barclays bank plc
po box 112
horsham
west sussex rh12 1yq
auditors
horwath clark whitehill
chartered accountants
25 new street square
london ec4a 3ln
financial public relations
college hill associates
78 cannon street
london ec4n 6hh
registered office
sfi house
165 church street east
woking
surrey gu21 1hj
t el 01483 227900 sfi group plc annual report 2002
1617
principal activities
the principal activity of the group continues
to be the operation of high street bars
public houses hotels and restaurants the
results for the year and future development
of the business are discussed in the
chairman’ s statement and the chief
executive’ s report
shares
details of the shares issued during the year
are set out in note 20
results and dividends 
the results for the year are set out in the
profit and loss account on page 22 the
directors recommend the payment of a final
net dividend of 187p per share to follow
the interim net dividend of 091p paid in
april 2002 the dividend will be paid on 
29 november 2002 to shareholders
registered on 27 september 2002 with an
exdividend date of 25 september 2002
the dividend reinvestment plan drip will
continue further details of how to benefit
from the scheme are available from the
company secretary on request
fixed assets
during the financial year the company
opened 22 new outlets and acquired the
entire issued share capital of the parisa café
bars chain in november 2001 24 outlets
the movements in intangible and tangible
fixed assets are disclosed in notes 10 and
11 to the financial statements
directors
the directors of the company are set out 
on page 16
j s p kowszun was appointed to the board
as finance director on 19 october 2000
and resigned on 29 april 2002 
t k andrews was appointed to the board 
as finance director on 8 july 2002
r a lo is deputy chairman
f e j g brackenbury acts as chairman of
the remuneration committee he is regarded
by the board as the senior independent
director 
n j irens resigned from his position as 
nonexecutive director on 30 june 2002
c r eplett resigned on 12 september 2001 
a hill who was executive chairman and
chief executive was appointed as 
nonexecutive chairman with effect from 
2 april 2002
am latham was appointed as chief
executive from managing directorretail on
2 april 2002
there have been no other changes to the
directors of the company 
details of the directors’ remuneration and
their interests in the company’ s shares are
given on pages 20 to 21
none of the directors has or had a material
interest in any contract of significance in
relation to the company’ s business
employees
the company maintained its policy of
encouraging the involvement and
participation of employees in matters which
affect their interests as employees it is the
group’ s policy to promote health and safety
at work equality of opportunity in both
recruitment and career development and to
recognise opportunities for the employment
and development of the disabled
supplier payment policy
it is the group’ s policy to have mutually
beneficial longterm trading relationships
with its suppliers unless specific
arrangements are agreed otherwise the
group’ s standard terms are for invoices to
be paid at the end of the month following
that in which the invoice is submitted
contract building work is paid for in
accordance with the specific contract 
at 31 may 2002 the period of credit taken
from the group’ s suppliers amounted 
to approximately 52 days 200138
charitable contributions
the group made no material contributions
for charitable purposes during the financial
year 
environment
the group aims to limit the impact of its
operations on the environment and therefore
seeks to develop and maintain good
environmental practices the group is fully
compliant with eu and domestic packaging
legislation and other requirements
health  safety
the group is committed to providing 
a safe environment for its customers and
employees formal policies and procedures
to ensure this aim is met are regularly
reviewed and form a core part of each
employee’ s training
auditors
a resolution to reappoint horwath clark
whitehill as auditors of the company will be
proposed at the annual general meeting
annual general meeting
the company’ s annual general meeting 
will be held on monday 21 october 2002
commencing at 1030 am further details of
the ordinary resolutions are contained in the
notice of annual general meeting attached
to this document
by order of the board
r a lo
company secretary
30 july 2002
directors’ report making it happen
corporate governance
for the year end 31 may 2002
the combined code
the combined code on corporate governance “the combined code” seeks to promote the principles of openness integrity and
accountability  these are principles that your board fully supports and seeks to apply consistently in the running of your company  y our
board has reviewed the provisions of the combined code in detail and is pleased to report that the company was in full compliance with
the provisions of the combined code throughout the year 
the board
the board comprises two executive directors and four experienced independent nonexecutive directors the roles of chief executive and
chairman have now been separated with a s hill becoming nonexecutive chairman and a m latham being appointed chief executive 
for the group with effect from 2 april 2002
the board meet at least bimonthly to review the current state of the business and to determine its future development it has a formal
schedule of matters specifically reserved for its decision including corporate strategy  business acquisitions and disposals capital
expenditure authorisation budget approval and performance review other matters requiring board approval include changes in funding
arrangements whether of debt or equity  and share option schemes
all directors have formal access to all information and if required external advice at the company’ s expense they also have access 
to the company secretary  the chairman ensures that all directors are properly briefed on issues arising at board meetings
a nomination committee comprising the nonexecutive directors recommends to the board the appointment of all executive and 
nonexecutive directors under the terms of the company’ s articles one third of the directors are required to submit themselves for 
reelection each year and at least every three years
the board has delegated with specific laid down parameters authority to an executive board comprising the executive directors and
other senior executives the executive board is chaired by a m latham the activities of the executive board include reviewing corporate
and financial risk acquisition of development sites the monitoring of the development of those properties and a wide range of other
operational matters
directors’ remuneration
the company aims to provide executive directors’ remuneration packages commensurate with attracting retaining and motivating
directors of the necessary quality  the remuneration committee comprising the nonexecutive directors meets at least twice a year and
performs the key role of setting the remuneration of executive directors including levels for individual components of salary  performance
related pay  benefits pensions provisions and contracts of service in respect of performance related pay  the committee has endeavoured
to follow the provisions in schedule a to the combined code the remuneration report is set out on pages 20 to 21
accountability and audit
the board ensures that an objective and professional relationship is maintained with the company’ s external auditors through the audit
committee the audit committee is chaired by r a lo and comprises the nonexecutive directors with the finance director and external
auditors in attendance as appropriate the committee meets at least twice a year to fulfil its responsibility for a critical review of the annual
and interim financial statements including the board’ s statement on internal control in the annual report prior to their submission to the 
full board for approval they also review the independence and objectivity of the external auditors
going concern basis
the directors consider  after making appropriate enquiries that the company has adequate resources to continue operations for the
foreseeable future accordingly  the financial statements continue to be prepared on the going concern basis sfi group plc annual report 2002
1819
internal control
the directors have overall responsibility for the company’ s system of internal financial control the effectiveness of which is reviewed on an
ongoing basis the system is designed to provide reasonable but not absolute assurance that the assets of the group are safeguarded
that proper accounting records are maintained and that reliable financial information is produced the more important elements of this
system include
• comprehensive corporate governance policies with clear rules covering the delegation of authority
•preparation of annual budgets by all operating outlets budgets are reviewed by executive management and are subject to board approval
• weekly and monthly reviews of sales cash and profitability compared to budget and prior year with written commentary on significant 
variances
•a clearly defined framework for capital expenditure and contracts including appropriate authorisation procedures and levels there 
is a prescribed review process for capital expenditure proposals that identifies the commercial and strategic reasoning for the investment 
as well as its financial implications
the group does not have a specific internal audit department although this situation is reviewed from time to time responsibility for
monitoring the integrity of financial information and the compliance with approved procedures is currently vested in head office finance staff
who play a significant and proactive role in this regard the external auditors meet with the audit committee and report formally to them 
on internal financial controls annually 
during the year the board commissioned an external report on the group’ s approach to risk management its conclusion was that the main
risks which the business faces are understood and internal control systems are in place to ensure that they are monitored and weaknesses
reported areas which require more focus are a broadening of communications between operations and house managers and training
programmes to incorporate concentration on specific risk management issues the board is taking steps to ensure that these improvements
are implemented during the current year  in accordance with its existing practice the board will continue to conduct periodic risk reviews
statement of directors’ responsibilities
uk company law requires directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs
of the company and the group and of the profit and loss account for that period in preparing those financial statements the directors are
required to
• select suitable accounting policies and apply them consistently
• make estimates and judgements that are reasonable and prudent
• state whether applicable accounting standards have been followed subject to any material departures as disclosed and explained 
in the financial statements
•prepare the financial statements on a going concern basis unless it is inappropriate to presume that the group will continue in business
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial
position of the group and to enable them to ensure that the financial statements comply with the companies act 1985 they are also
responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities the directors are responsible for ensuring that the directors’ report and other information included in the annual report
is prepared in accordance with company law in the united kingdom they are also responsible for ensuring that the annual report
includes information required by the listing rules of the financial services authority 
by order of the board
r a lo
company secretary
30 july 2002 making it happen
remuneration report
financial statements for the year ended 31 may 2002
remuneration committee
the remuneration committee comprises f e j g brackenbury as chairman h siegle r a lo and a s hill
compliance with the combined code
the constitution and operation of the remuneration committee is in compliance with the principles incorporated in the combined code
service agreements
all directors have entered into agreements with the company under the following terms
• all executive directors have signed service contracts that are subject to termination on one years notice it also provides for a performance bonus 
of up to 20 of annual gross salary based on achievement of financial and personal targets together with a profitsharing scheme related to 
overperformance against market expectation directors are entitled to contributions from the company of up to 10 of basic salary  payable into 
a group personal pension plan
• nonexecutive directors have agreements under which they do not participate in any of the company’ s bonus share option or other incentive 
schemes and they are not subject to a notice period
directors’ emoluments and pension entitlements
an analysis of the directors’ emoluments is set out below
gain
salary on options t otal t otal
and fees benefits pension bonus exercised 2002 2001
£’000 £’000 £’000 £’000 £’000 £’000 £’000
executive directors
c r eplett 34 3 3 9 – 49 150
a m latham 143 7 14 15 – 179 140
j s p kowszun 119 7 11 14 – 151 103
nonexecutive directors
a s hill 215 8 127 30 80 460 198
f e j g brackenbury 31––– – 31 20
n j irens 29––– – 29 20
d g williams –––– – – 10
r a lo 30––– – 30 20
h siegle 29––– – 29 –
630 25 155 68 80 958 661
clive eplett left sfi group plc’ s employment and resigned as a director in september 2001 however he has continued to be paid a salary according 
to his contract the total remuneration paid since his resignation amounts to £102350
a s hill was an executive director until april 2002 when he became nonexecutive chairman
directors’ interests in shares and share options
the company believes that share ownership by senior employees including executive directors strengthens the link between their personal interests and
those of the shareholders share options are granted by the remuneration committee to attract retain and motivate employees and directors and to reflect
their performance sfi group plc annual report 2002
2021
the interests of the directors as at 31 may 2002 in the share capital of the company at that date were as follows
25p ordinary shares 2002 2001
a s hill 1161952 1022479 
a m latham 18067 5500 
f e j g brackenbury 20773 18730 
r a lo 172618 168447 
h siegle 5812 2000 
 a s hill has a nonbeneficial interest in 205261 2001 214595 of the above shares which are held in a childrens’ trust
the directors who were in office at the year end had the following interests in options at 31 may 2002
1 june 31 may exercise dates
2001 granted exercised lapsed 2002 price exercisable
a s hill 205000 – 100000 – 105000 1095p 20002007
150000 – – – 150000 198p 20022009
26700 – – – 26700 204p 20032010
381700 – 100000 – 281700
a m latham 55556 – – – 55556 180p 20012008
150000 – – – 150000 198p 20022009
5300 – – – 5300 204p 20032010
210856 – – – 210856 
the options granted to a s hill at 1095p are only exercisable if basic earnings per share at the third anniversary of the date of grant are 
30 greater than earnings per share at the grant date all other options to directors are only available for exercise if the increase in the basic
earnings per share at the third anniversary of the date of grant shows an increase of 2 or more than the increase in index of retail prices
over that three year period
the market price on the date a s hill exercised his share options was 189p
there have been no changes in the directors’ interests in the shares of the company and share options between the financial year end and
30 july 2002
the midmarket price of the shares at 31 may 2002 was 2145p and the range during the year was 1520p to 2620p making it happen
profit and loss account
for the year ended 31 may 2002
2002 2001
£’000 £’000
notes restated
turnover 1 144112 115213
operating costs 116168 92972
nonrecurring operating costs – 211
goodwill amortisation 754 578
t otal operating costs 2 116922 93761
operating profit 27190 21452
profitloss on sale of tangible fixed assets 4 264 634
profit on ordinary activities before interest and taxation 27454 20818
interest payable and similar charges 5 7915 5834
profit on ordinary activities before taxation 19539 14984
t ax on profits on ordinary activities 6 6637 5022
profit for the financial year attributable to shareholders 7 12902 9962
dividends 8 2082 2095
retained profit for the financial year 10820 7867
basic earnings per share 9 172p 139p
earnings per share before exceptional items
non recurring items and amortisation of goodwill 9 179p 158p
diluted earnings per share 9 166p 135p
statement of total recognised gains and losses
2002 2001
£’000 £’000
restated
profit for the financial year 12902 9962
prior year adjustment as explained in note 19 7414 –
t otal gains and losses recognised since last annual report 5488 9962 sfi group plc annual report 2002
2223
balance sheet
at 31 may 2002
group company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
notes restated restated
fixed assets
intangible assets 10 13802 14556 – –
t angible assets 11 212370 172460 155702 139319
investments 13 – 702 50036 34781
226172 187718 205738 174100
current assets
stocks 14 10666 6277 10666 6277
debtors 15 10671 6533 21426 16360
cash at bank and in hand 4722 3523 4722 3523
26059 16333 36814 26160
creditors amounts falling due within one year 16 31622 15999 31622 15654
net current liabilitiesassets 5563 334 5192 10506
t otal assets less current liabilities 220609 188052 210930 184606
creditors amounts falling due after more than one year 17 120403 102732 120403 102732
provisions for liabilities and charges 19 14741 10946 11579 9180
net assets 85465 74374 78948 72694
capital and reserves
attributable to equity interests
calledup share capital 20 18748 18684 18748 18684
share premium account 21 37505 37298 37505 37298
profit and loss account 21 29212 18392 22695 16712
shareholders’ funds 22 85465 74374 78948 72694
approved by the board of directors on 30 july 2002 and signed on its behalf by as hill and am latham
directors making it happen
cash flow statement
for the year ended 31 may 2002
notes 2002 2002 2001
£’000 £’000 £’000
net cash inflow from operating activities a 33210 26661
returns on investments and servicing of finance
bank interest paid 8226 6294
t axation
uk corporation t ax paid 2457 1693
capital expenditure  financial investments
purchase of tangible fixed assets 43612 39097
sale of tangible fixed assets 13517 1559
sale of investments 702 –
net cash outflow from capital expenditure and financial investments 29393 37538
acquisitions and disposals
purchase of subsidiary undertakings 7150 17128
net debt acquired with subsidiary undertakings – 11299
net cash outflow from acquisitions and disposals 7150 28427
equity dividends paid 1950 1689
net cash outflow before financing 15966 48980
financing
issue of ordinary shares for cash 271 558
mediumterm loan repayments 2000 31154
new mediumterm loans 18119 104732
net cash inflow from financing 16390 74136
increase in cash b 424 25156 sfi group plc annual report 2002
2425
notes to the cash flow statement
for the year ended 31 may 2002
2002 2001
£’000 £’000
a reconciliation of operating profit to net cash inflow from operating activities restated
operating profit 27190 21452
amortisation of intangible fixed assets 754 578
depreciation of tangible fixed assets 8485 6190
increase in stocks 3958 2489
increase in debtors 2383 451
increase in creditors 3122 1381
net cash inflow from operating activities 33210 26661 
b analysis of net debt
other non
at 1 june cash acquisition cash at 31 may
2001 flow changes 2002
£’000 £’000 £’000 £’000 £’000
cash at bank and in hand 3523 1159 40 – 4722
bank overdrafts 4265 735 – – 5000
742 424 40 – 278
bank loans due within one year 2000 2000 – 4500 4500
bank loans due after one year 102732 18119 – 4500 116351
105474 15695 40 – 121129 making it happen
accounting policies
for the year ended 31 may 2002
the financial statements have been prepared in accordance with applicable accounting standards and under the historical cost
convention 
consolidation
the consolidated financial statements include the company and all its subsidiary undertakings the results of subsidiaries acquired or
disposed of during the year are included in the consolidated profit and loss account from the date of their acquisition or up to the date 
of their disposal intragroup sales profits and balances are eliminated fully on consolidation
goodwill arising upon consolidation representing the excess of the purchase price of subsidiary undertakings acquired over the fair value
of the separable net assets acquired is capitalised in the year of acquisition and amortised over its useful economic life goodwill on
acquisitions prior to 31 may 1999 has been charged directly against reserves it will be charged or credited to the profit and loss account 
on subsequent disposal of the related business
goodwill arising on acquisitions since 1 june 1999 is being amortised over 20 years on a straight line basis the directors consider that 
this represents a prudent estimate of the goodwill’ s useful economic life
depreciation
depreciation is calculated so as to write off the cost of tangible fixed assets less their estimated residual values on a straight line basis 
over the expected useful economic lives of the assets concerned the principal annual rates used for this purpose are
freehold buildings 2
long leasehold properties over the higher of 2 per annum or the unexpired term of the lease
short leasehold property over the unexpired term of the lease
plant and equipment between 8 and 20
computer and till systems 20
motor vehicles 25
till and communication equipment 20
no depreciation is charged on freehold land
interest on borrowing directly attributable to properties in the course of major refurbishment or initial construction is capitalised 
see notes 5 and 11
operating leases
operating lease rentals are charged to the profit and loss account on a straight line basis over the term of the lease except where a rent free
period or other incentive is received in such instances the value of the incentive is released to profit on a straight line basis from the date
that the outlet is opened through to the date of the first rent review to open market value
stocks
stocks are stated at the lower of cost and net realisable value 
turnover
turnover represents the total amounts receivable for goods and services provided after deducting vat and excluding sales between 
group companies
deferred tax
provision is made for deferred tax using the full provision method in accordance with frs19 see note 19 for further details
pension costs
the group makes defined contributions to employees personal pension plans the pension cost charged to the profit and loss account
represents the contributions payable to the pension plans in respect of the accounting year 
investments
investments in subsidiary undertakings are stated at cost less any impairment in value  sfi group plc annual report 2002
2627
notes to the financial statements
for the year ended 31 may 2002
1 t urnover
turnover is derived from the principal activity of the group and arises wholly from bars public houses restaurants and hotels located in the 
united kingdom
2 operating costs
2002 2001
£’000 £’000
restated
cost of goods sold 32135 27306 
staff costs 35693 28630 
depreciation of tangible fixed assets 8485 6190 
leasehold property rentals 13683 9592 
other operating charges 26172 21254 
operating charges 116168 92972 
nonrecurring operating charges – 211 
amortisation of intangible fixed assets 754 578 
116922 93761 
auditors’ remuneration all of which is payable by the holding company  amounted to £91000 2001 £87000 fees payable to auditors 
for non audit related work amounted to £283000 2001 £157000 including £175000 for taxation services and £99000 in relation to the
acquisition of the parisa café bars chain
3 directors and employees
2002 2001
£’000 £’000
fees and executive remuneration 803 628
other emoluments including pension contributions 155 33
958 661
full details of directors’ emoluments and other interests are given on pages 20 to 21
wages and salaries 32973 22957
social security costs 3240 2256
pension costs 376 210
staff costs capitalised 896 621
t otal direct costs of employment 35693 24802
the average weekly number of persons employed by the group including executive directors during the year was
no no
public house management and staff 3679 2920
administration 125 89
3804 3009 making it happen
4 profitloss on sale of tangible fixed assets
2002 2001
£’000 £’000
profit on sale of freehold properties 729 –
loss on disposal of other tangible fixed assets 465 634
264 634
5 interest payable and similar charges
2002 2001
£’000 £’000
bank loans and overdrafts 8404 6294 
interest capitalised 489 460
7915 5834 
6 t axation
2002 2001
£’000 £’000
a analysis of tax charge restated
current year
uk corporation t ax 3496 1790
deferred t ax origination and reversal of timing differences 3141 3532
6637 5322
prior years
uk corporation t ax – 300
6637 5022
b factors affecting the tax charge in the period
the tax assessed for the period is higher than the standard rate of corporation t ax 30
the differences are explained below
profit before tax 19539 14984
profit on ordinary activities multiplied by the standard rate of corporation tax of 30 2001 30 5861 4495
effects of
permanent differences 953 827
capital allowances for period in excess of depreciation 3318 3532
current tax charge 3496 1790
7 profit for the financial year attributable to shareholders
as permitted by section 230 of the companies act 1985 the company has not presented its profit and loss account the group results
include a profit for the year of £8065000 2001 £7192000 which has been dealt with in the financial statements of the company 
notes to the financial statements continued
for the year ended 31 may 2002 sfi group plc annual report 2002
2829
8 dividends
2002 2001
£’000 £’000
additional prior year final dividend paid to slug  lettuce group plc 
shareholders upon accepting the offer for their shares – 213
interim of 091p net per share paid in april 2002 2001 0825p 680 612
proposed final of 187p net per share payable in november 2002 2001 17p 1402 1270
2082 2095
9 earnings per share
basic earnings per share have been calculated on earnings of £12902000 2001 £9962000 and on 74826687 shares 2001 71919636
being the weighted average number of ordinary shares in issue during the year  in order to provide shareholders with further information
earnings per share before exceptional items nonrecurring items and amortisation of goodwill have been calculated on earnings of
£13392000 2001£11385000
set out below is the calculation of diluted earnings per share earnings are as above whilst the average number of shares in issue has been
adjusted to take into account the dilutive effect of the exercise of share options
2002 2001
weighted average exercise price of share options in the year 1053p 1321p
average daily share price 2067p 2173p
dilution ratio applied to share options 4906 3921
weighted average number of share options in the year 5956747 5425570
weighted average number of dilutive share options 2922000 2127000
weighted number of shares in issue during the year 74827000 71920000
t otal number of shares for calculating diluted earnings per share 77749000 74047000
10 intangible fixed assets
goodwill
£’000
group restated
cost
at 1 june 2001 and 31 may 2002 15134
amortisation
at 1 june 2001 578 
charge for y ear 754 
at 31 may 2002 1332 
net book value
at 31 may 2002 13802
at 31 may 2001 14556  making it happen
notes to the financial statements continued
for the year ended 31 may 2002
11 t angible fixed assets
freehold plant 
land and leasehold and 
buildings property vehicles total 
group £’000 £’000 £’000 £’000 
cost
at 1 june 2001 21686 126746 37466 185898
additions 556 51310 9782 61648
disposals 11833 1544 1 13378
at 31 may 2002 10409 176512 47247 234168
depreciation
at 1 june 2001 156 4336 8946 13438
charge for year 23 4129 4333 8485
disposals 58 67 – 125
at 31 may 2002 121 8398 13279 21798
net book value
at 31 may 2002 10288 168114 33968 212370
at 31 may 2001 21530 122410 28520 172460
additions to freeholds and leaseholds above include £489000 2001 £460000 of capitalised interest the cumulative capitalised interest 
in freehold and leasehold cost is £1331000 2001£842000
interest capitalised is calculated as 73 per annum of the cost of development over the period of development
freehold plant 
land and leasehold and 
buildings property vehicles total 
company £’000 £’000 £’000 £’000 
cost
at 1 june 2001 21686 96097 34031 151814
additions 556 28453 7527 36536
disposals 11833 1544 1 13378
at 31 may 2002 10409 123006 41557 174972
depreciation
at 1 june 2001 156 3688 8651 12495
charge for year 23 2855 4022 6900
disposals 58 67 – 125
at 31 may 2002 121 6476 12673 19270
net book value
at 31 may 2002 10288 116530 28884 155702
at 31 may 2001 21530 92409 25380 139319
substantially all of the leasehold property detailed above relates to short leasehold property  sfi group plc annual report 2002
3031
12 capital commitments
2002 2001
£’000 £’000
contracted for but not incurred 5500 3150
13 investments
group company
investment in
listed subsidiary
investments undertakings
£’000 £’000
at 1 june 2001 702 34781
additions – 15255
disposals 702 –
at 31 may 2002 – 50036
the company’ s principal subsidiary undertakings which are wholly owned are the slug and lettuce group ltd together with that
company’ s subsidiaries parisa group holdings ltd together with that company’ s subsidiaries satellite holdings plc and inneroll ltd
14 stocks
group company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
goods held for resale 5069 3106 5069 3106
base stocks 5597 3171 5597 3171
10666 6277 10666 6277
15 debtors amounts falling due within one year
group company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
trade debtors 2954 994 2954 994
amounts owed by group undertakings – – 10755 9827
prepayments and accrued income 7717 5539 7717 5539
10671 6533 21426 16360
16 creditors amounts falling due within one year
group company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
bank loans and overdrafts see note 18 9500 6265 9500 6265
t rade creditors 7729 4057 7729 4057
other creditors 3443 288 3443 288
corporation tax 2261 1222 2261 877
t axation and social security costs 1542 1042 1542 1042
proposed dividends 1402 1270 1402 1270
accruals and deferred income 5745 1855 5745 1855
31622 15999 31622 15654  making it happen
notes to the financial statements continued
for the year ended 31 may 2002
17 creditors amounts falling due after more than one year
group company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
bank loans see note 18 116351 102732 116351 102732
other creditors 4052 – 4052 –
120403 102732 120403 102732
18 t otal borrowings
group company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
bank overdrafts secured 5000 4265 5000 4265
bank loans secured 120851 104732 120851 104732
125851 108997 125851 108997
repayable as follows
in one year or less 9500 6265 9500 6265
between one and two years 5500 4500 5500 4500
between two and five years 110851 98232 110851 98232
125851 108997 125851 108997
the bank loans and overdrafts are secured by fixed and floating charges on all of the assets of the group
the group finances its operations through a mixture of equity  retained profits and bank loans and overdrafts in respect of bank borrowings
interest rate risk is managed by entering into fixed rate swap agreements
significantly all of the group’ s transactions are denominated in sterling which is its functional currency  therefore there is negligible foreign
currency risk
in november 2001 the company entered into a new five year £135000000 syndicated loan facility agreement arranged by barclays
capital the investment banking division of barclays bank plc and underwritten by barclays bank plc which provides for a £110000000
revolving loan facility and a £25000000 term loan facility 
the interest rate on the above is payable at libor plus a margin ranging from 075 to 165 as determined by reference to the group’ s
ratio of net borrowings to ebitda
at the balance sheet date the company had £6500000 undrawn facilities the undrawn facilities expire in june 2005 sfi group plc annual report 2002
3233
19 deferred taxation
the previous policy was to provide for deferred tax only where it was considered likely that a liability would arise in the foreseeable future 
until 31 may 2001 no deferred tax provision had been considered necessary under the old accounting policy 
frs19  deferred t ax has been adopted in the current year requiring the full provision for potential deferred taxation as this is a change 
of accounting policy comparative amounts have been restated to comply with the new standard provisions for deferred tax have not been
calculated on a discounted basis
the effect on the balance sheet has been to include a provision for deferred tax thereby reducing both profit and loss reserve and net assets
by the following amounts
deferred 
tax provision
£’000
at 31 may 2000 7414
charge for year to 31 may 2001 3532
balance at 31 may 2001 10946
charge for year to 31 may 2002 3141
acquired on acquisition of subsidiary undertaking 654
balance at 31 may 2002 14741
the timing differences all arise from accelerated capital allowances
in addition the goodwill on the acquisition of the slug and lettuce group plc has been increased by £11m the effect on the profit and 
loss account has been to increase the goodwill amortisation charge for the year to 31 may 2001 by £42000 to £578000 the effect on the
balance sheet at 31 may 2001 is to increase net book value of intangible assets by £1058000 to £14556000
20 share capital
2002 2001
£’000 £’000
ordinary shares of 25p each
authorised 25000 25000
allotted called up and fully paid 18748 18684
257000 ordinary shares with a nominal value of £64250 were allotted during the year on exercise of share options at an average price 
of 1053p
options have been granted for the following number of 25p ordinary shares
at 1 june at 31 may
exercisable 2001 granted exercised lapsed 2002
19992005 at 25p 368000 – 24000 – 344000
19992006 at 236p 37100 – – – 37100
20002007 at 1095p 665000 – 125000 – 540000
20002007 at 11825p 384000 – 108000 – 276000
20002007 at 18774p 5300 – – – 5300
20012008 at 180p 55556 – – – 55556
20022009 at 198p 1698500 – – 16000 1682500
20032010 at 204p 1167200 – – 36900 1130300 
20032010 at 204p 528500 – – 130000 398500
20042011 at 191p – 2077020 – 106500 1970520
4909156 2077020 257000 289400 6439776 making it happen
notes to the financial statements continued
for the year ended 31 may 2002
21 reserves
profit 
share and loss 
premium account 
£’000 £’000 
group restated
at 1 june 2001 37298 18392 
retained profit for the year – 10820 
issue of shares 207 – 
at 31 may 2002 37505 29212 
company
at 1 june 2001 37298 16712
retained profit for the year – 5983
issue of shares 207 – 
at 31 may 2002 37505 22695
the cumulative amount of goodwill setoff against the profit and loss account is £2776000 2001 £2776000
22 movement in shareholders’ funds
2002 2001
£’000 £’000
restated
issue of ordinary shares 271 21398 
retained profit for the year attributable to shareholders 10820 7867 
adjustment to goodwill on acquisition of the slug and lettuce group plc
due to adoption of frs19 – 1100
net additions to shareholders’ funds 11091 30365 
opening shareholders’ funds 74374 44009 
closing shareholders’ funds 85465 74374 
the opening shareholders’ funds for 2001 was originally £51423000 and has been reduced to £44009000 as a result of the prior year
adjustment referred to in note 19
23 substantial shareholdings
in addition to the interests of certain directors the following have notified the company as being interested in 3 or more of the company’ s
issued ordinary share capital as at 30 july 2002
 held 
shareholder
chase nominess ltd 44
nortrust nominees ltd ac tds 42 sfi group plc annual report 2002
3435
24 lease commitments
the group has financial commitments in respect of noncancellable operating leases of land and buildings the annual rentals payable under
these leases are
group company
2002 2001 2002 2001 
£’000 £’000 £’000 £’000 
date of lease expiration
after five years 16300 11840 10137 11840 
25 acquisitions
the acquisition of the parisa café bars chain was completed on 23 november 2001 the companies acquired have adopted sfi group plc
accounting policies and were accounted for using the acquisition method of consolidation from the date of acquisition a fair value exercise
was completed prior to consolidation the financial effects of the transaction were as follows
book fair value 
value revaluation to group
assets acquired £’000 £’000 £’000 
t angible fixed assets 12176 5371 17547
other net liabilities 2292 – 2292
net assets acquired 9884 5371 15255
funded by
fees 1105
cash at completion 7150
consideration payable within 12 months 2800
consideration payable after 12 months 4200
t otal consideration 15255
the deferred consideration is covered by bank letters of credit and can be satisfied early with the issue of sfi group plc shares at the
vendors discretion the share alternative for the two tranches of deferred consideration gives rights over 125m and 1955m sfi group plc
ordinary shares respectively  independent auditors’ report to the shareholders 
of sfi group plc
for the year ended 31 may 2002
we have audited the financial statements of sfi group plc for the year ended 31 may 2002 that comprise the profit and loss account 
the statement of t otal recognised gains and losses the balance sheet the cash flow statement and the related notes these financial
statements have been prepared under the historical cost convention and the accounting policies set out therein
respective responsibilities of directors and auditors
the directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and united
kingdom accounting standards are set out in the statement of directors’ responsibilities our responsibility is to audit the financial
statements in accordance with relevant legal regulatory requirements united kingdom auditing standards and the listing rules 
of the financial services authority  
we report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance 
with the companies act 1985 we also report to you if in our opinion the directors’ report is not consistent with the financial statements 
if the company has not kept proper accounting records if we have not received all the information and explanations we require for our audit
or if information specified by law or the listing rules regarding directors’ remuneration and transactions with the company and other
members of the group is not disclosed
we review whether the corporate governance statement on page 18 reflects the company’ s compliance with the seven provisions of the
combined code specified for our review by the listing rules and we report if it does not we are not required to consider whether the
board’ s statements on internal control cover all risks and controls or form an opinion on the effectiveness of the group’ s corporate
governance procedures or the group’ s risk and control procedures
we read the other information contained in the annual report and consider whether it is consistent with the audited financial statements
this other information comprises only the chairman’ s statement the chief executive’ s report the directors’ report the corporate
governance report and the remuneration report we consider the implications for our audit report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements our responsibilities do not extend to any other information
basis of audit opinion
we conducted our audit in accordance with united kingdom auditing standards issued by the auditing practices board an audit includes
examination on a test basis of evidence relevant to the amounts and disclosures in the financial statements it also includes an assessment
of the significant estimates and judgments made by the directors in the preparation of the financial statements and of whether the
accounting policies are appropriate to the company’ s and the group’ s circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to 
provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement whether
caused by fraud or other irregularity or error  in forming our opinion we also evaluated the overall adequacy of the presentation of information
in the financial statements
unqualified opinion
in our opinion the financial statements give a true and fair view of the state of the company’ s and the group’ s affairs at 31 may 2002 
and of the profit of the group for the year then ended and have been properly prepared in accordance with the companies act 1985
horwath clark whitehill
chartered accountants
and registered auditors
london
30 july 2002 sfi group plc annual report 2002
3637
2002 2001 2000 1999 1998
£’000 £’000 £’000 £’000 £’000 
profit and loss restated restated
turnover 144112 115213 61755 41008 29791
operating profit before nonrecurring
items and goodwill amortisation 27944 22241 12440 8641 6345
interest payable 7915 5834 2637 1293 979
profit before exceptionals 20029 16407 9803 7348 5366
nonrecurring items and goodwill amortisation 490 1423 400 5 39
profit before taxation 19539 14984 9403 7353 5327
t axation 6637 5022 843 808 692
profit after taxation 12902 9962 8560 6545 4635
dividends 2082 2095 1331 1092 715
retained profits 10820 7867 7229 5453 3920
balance sheet
t angible fixed assets 212370 172460 107619 71965 51811 
of which new investment and acquisitions were 61648 73224 39982 21486 14826 
other items 5776 7388 6558 1958 2331
t otal capital employed 206594 179848 101061 70007 49480 
net borrowings 121129 105474 57052 34006 18946 
shareholders’ funds 85465 74374 44009 36001 30534 
cash flow
earnings before interest tax depreciation
and amortisation 36429 28431 16234 9546 7008 
ratios
basic earnings per share in pence 172 139 138 109 78
return on capital employed roce 145 158 145 145 145
gearing 1417 1418 1296 945 620
interest cover times 35 38 47 67 65
dividend per share in pence 278 2525 215 18 12 
dividend cover times 62 48 64 60 65 
notes
1 other items’ comprise net liabilities other than borrowings
2 basic earnings per share represent the figures as reported under frs3
3 return on capital employed is calculated as the ratio of operating profit to average total capital employed 
4 gearing is calculated as the ratio of borrowings to shareholders’ funds
5 interest cover is calculated as the number of times interest payable is covered by operating profits the figure for 2000 excludes interest attributable 
to the exceptional item
6 dividend cover is calculated as the number of times the dividends payable are covered by profits
five year financial summary making it happen
financial calendar
exdividend date for final dividend 25 sept 02
closure of share register for final dividend 27 sept 02
annual general meeting 21 oct 02
last date of election for drip 8 nov 02
payment of final dividend 29 nov 02
interim results period end 14 dec 02
financial year end 31 may 03
annual reports
further copies of this annual report are available from the company secretary  at the registered office copies can also be obtained from 
the financial times’ annual report service for details see the london share service pages of the financial times
share price information
the company’ s share price is quoted in the times financial times the independent daily t elegraph and evening standard each day 
more regularly updated information is available from the financial times cityline premium rate telephone service on 020 7873 4378
payment of dividends
shareholders can elect to have dividends paid directly into a bank account this payment method avoids the risk of dividend cheques 
being delayed or lost in the post t ax vouchers are mailed at the time of the cash transfer 
a mandate form for this purpose can be obtained from the company secretary at the registered office
dividend reinvestment plan drip
shareholders can also elect to receive shares in lieu of a cash dividend election forms enabling this together with an explanatory note 
can be similarly obtained
crest
a computerised system for settling sales and purchases of shares crest operated for the company’ s shares during the year  it is a
voluntary system which enables shareholders if they choose to hold and transfer shareholdings electronically rather than in paper form
shareholders wishing to retain their paper certificates continue to be able to do so
company number 1946949 
shareholder information
for the year ended 31 may 2002 sfi group plc annual report 2002
3839
notice of annual general meeting
notice is hereby given that the 2002 general meeting of sfi group plc the company will be held at college hill associates 78 cannon street 
london ec4n 6hh on 21 october 2002 for the transaction of the following business
as ordinary business
1 t o receive and adopt the accounts for the year ended 31 may 2002 and the directors’ and auditors’ reports thereon
2 t o approve a final net dividend of 187p per ordinary 25p share
3 t o reelect a m latham who retires by rotation as a director in accordance with article 117 of the company’ s articles of association
4 to reelect f e j brackenbury who retires by rotation as a director in accordance with article 117 of the company’ s articles of association
5 t o reelect t k andrews as a director who having been appointed as a director by the board during the year retires in accordance with article 128 of the
company’ s articles of association
6 t o reappoint horwath clark whitehill chartered accountants as auditors of the company in accordance with section 385 of the companies act 1985
to hold office from the conclusion of the 2002 annual general meeting until the conclusion of the next general meeting at which accounts are laid before
the members
7 t o authorise the directors to fix the remuneration of the auditors
as special business
to consider and if thought fit pass the following resolutions as ordinary and special resolutions respectively
ordinary resolution
8 that the directors be and are hereby generally and unconditionally authorised to exercise all powers of the company to allot relevant securities 
as defined for the purposes of section 80 of the companies act 1985 the act up to an aggregate nominal amount of £937392 the authority to be 
in substitution for all existing authorities pursuant to section 80 of the act provided that this authority shall expire at the conclusion of the next annual
general meeting of the company after the passing of this resolution or  if earlier  on the date that is fifteen months following the date of such passing
save that the company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such
expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired
special resolutions
9 that subject to and conditionally upon the passing of resolution 8 the directors be and are hereby empowered to allot equity securities as defined 
for the purposes of section 95 of the act for cash pursuant to the authority conferred by resolution 8 as if section 891 of the act did not apply to any
such allotment this power to be in substitution for all existing powers pursuant to section 95 of the act provided that this power shall be limited to
a the allotment of equity securities in connection with issues to holders of ordinary shares on a prorata basis notwithstanding that by reason of such
exclusions of other arrangements as the directors may deem necessary or appropriate in connection with fractional entitlements or legal or practical
problems arising under the laws or requirements of any recognised regulatory body or any stock exchange or otherwise in any overseas territory  the
equity securities to be issued are not offered to all such holders in proportion to the number of ordinary shares held by each of them and
b the allotment otherwise than pursuant to subparagraph a of this resolution of equity securities up to an aggregate nominal amount 
of £937392 and shall expire at the conclusion of the next annual general meeting of the company after the passing of this resolution or  if earlier  
on the date that is fifteen months following the date of such passing save that the company may before such expiry make an offer or agreement 
which would or might require securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such an offer 
or agreement as if the power conferred hereby had not expired
10 that the company itself be generally and unconditionally authorised for the purposes of section 166 of the act to purchase up to 7499143 ordinary
shares in the market representing 10 per cent of the current issued ordinary share capital of the company  at a price not less than the nominal value 
of the ordinary shares and not more than 5 per cent above the average of the middle market quotations of the company’ s ordinary shares derived from
the london stock exchange daily official list for the 5 business days before the purchase is made the authority to be given for the period ending on 
the date of the next annual general meeting or 15 months after the passing of the resolution whichever is the earlier save that the company may before
such expiry make an offer or agreement to purchase ordinary shares after such expiry and the company may purchase ordinary shares in pursuance 
of such an offer or agreement as if the power conferred hereby had not expired it is intended that a resolution of the renewal of such authority would 
be proposed at each succeeding annual general meeting the directors have no present intention of making such purchases but it is prudent to have
this authority so as to be able to act at short notice if circumstances change the authority would however  only be exercised if the directors believe 
that to do so would be in the best interests of the company generally 
r a lo
secretary
10 september 2002
registered office
sfi house
165 church street east
woking
surrey gu21 1jh making it happen
notice of annual general meeting continued
note
a member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and on a poll vote instead of himher  a proxy need
not be a member of the company  a form of proxy is enclosed the register of directors’ shareholdings will be available for inspection at the registered office
of the company during usual business hours on any weekday saturday and public holidays excluded from the date of this notice until the date of the
meeting such items will also be available for inspection at and for 30 minutes prior to the meeting
the biographies of directors standing for reelection appear on page 16
explanations regarding the notice of annual general meeting
resolution 1
the directors of the company are obliged to present the report and accounts to shareholders of the company at the annual general meeting 
this is a standard form of resolution common to all annual general meetings
resolution 2
the company’ s articles of association require that the company declares final dividends payable to shareholders for approval by ordinary resolution
subject to the passing of the ordinary resolution the recommended final dividend of 187p per ordinary 25p share will be payable on 29 november 2002 
to shareholders on the register on 27 september 2002 
resolutions 3 4 and 5
the company’ s articles of association require a portion of the directors to stand down at each annual general meeting and if they are eligible they may 
offer themselves for reelection the articles also require directors appointed by the board during the year to submit themselves for reelection
the directors to stand down are a m latham f e j g brackenbury and t k andrews
resolutions 6 and 7
all public companies are required to appoint auditors at each annual general meeting at which accounts are presented to hold office until the next such
meeting these resolutions therefore propose the re appointment of horwath clark whitehill and in accordance with usual practice authorise the directors
to fix their remuneration
resolutions 8 and 9
these resolutions continue the directors’ authority  under sections 80 and 95 of the companies act 1985 as amended to allot shares including in
circumstances other than prorata for cash to all shareholders the authority  which was last renewed at the 2001 annual general meeting provides flexibility
in respect of the company’ s financial arrangements the resolution deals with the allotment of shares for cash up to a nominal value of £937392 being 
5 of the issued share capital this limit is within the guidelines issued by the investment committees of the association of british insurers and the national
association of pension funds
in order to satisfy the company’ s obligations arising in connection with the acquisition of parisa cafe bars announced on 16 november 2001 the company
may be required to allot up to 3205 million ordinary shares in the period to 23 november 2003 
resolution 10
the effect of this resolution is to renew the authority to the company to purchase its own shares up to a maximum of 7499143 shares representing 10 
of the company’ s issued share capital the minimum price at which the shares may be purchased is 25p and the maximum is an amount equivalent to 105
of the middlemarket price derived from the london stock exchange official list for the 5 days preceding the date of purchase 
the authority will be exercised in circumstances where the directors consider that it will be in the best interests of shareholders generally and will result in an
improvement in the earnings per share the authority will expire at the next annual general meeting of the company or  if earlier  15 months after the date 
on which the resolution is passed 
to date no shares have been bought back under the powers given by this authority   contents
01 highlights
02 chairman’s statement
04 operating review
12 chief executive’s report
16 directors and advisers
17 directors’ report
18 corporate governance
20 remuneration report
22 profit and loss account
22 statement of total 
recognised gains 
and losses
23 balance sheet
24 cash flow statement
26 accounting policies
27 notes to financial 
statements
36 auditors’ report
37 five year financial 
summary
38 shareholder 
information
39 notice of annual
general meeting
this report is printed on paper manufactured from 100 recycled fibres 
post consumer waste without any secondary bleaching to the pulp
designed and produced by college design london 44 020 7457 2020 sfi group plc
sfi house
165 church street east
woking
surrey gu21 1hj
tel 01483 227900
fax 01483 227903
wwwsfigroupcouk
annual report 2002
sfi group plc annual report 2002


Summary:
 results
the number of retail outlets increased to
186 from 144 the quality of new openings
remained high in sales terms and likefor
like improvement in established outlets 
was 42 this strong underlying trading
combined with the increase in scale of
operations generated turnover up 25 
to £1441m 2001 £1152m 
retail margins improved further  generating
a 29 higher trading contribution at outlet
level of £426m 2001 £331m central
costs were again managed tightly  and
ebitda increased 28 to £364m 2001
£284m pretax profits were 22 higher at
£200m 2001 £164m on a comparable
basis before frs10 amortisation

 this was
after an increase of £21m in interest which
was covered 35 times both ebitda and
pretax profit exclude property disposal
profits of £264000
cash generation continued to be significant
cash flow per share rose 26 to 487p
2001 385p operational cash flow
increased 25 to £332m 2001 £267m
with free cash flow 21 higher at £206m
2001 £170m earnings per share
increased in line with sales 24 higher 
than last year at 172p 2001 139p we
have adopted the new frs19 accounting
standard fully providing for deferred tax with
a necessary restatement of comparatives 
i believe this progress is an outstanding
achievement in a period that has been
challenging for leisure businesses once
again sfi’ s primary objective of creating
shareholder value was delivered with an
increase in economic value added eva 
of £56m one reason that explains this
performance is that sfi has positioned its
businesses in the key growth area of this
industry  in addition it shows that sfi is
managing positively the process of industry
and consumer change and is continuing 
to exploit the commercial opportunities that
change offers
dividend
y our board is recommending an increased
final dividend up 10 to 187p 2001 17p
to be paid on 29 november to shareholders
registered on 27 september with an 
ex dividend date of 25 september  this
brings the total dividend for the year to
278p 2001 2525p as in previous years
a dividend reinvestment scheme will again
be available
2002 achievements
our strategy has been focussed clearly
upon achieving a scale of business that
positions sfi as a major force in the high
street bars sector of licensed retailing
positive progress in 2002 has substantially
achieved this objective and extended 
sfi’ s presence nationally as a mainstream
multiple retailer  
management
i was delighted in april to pass executive
responsibility for sfi into the safe hands 
of andrew latham he was previously
managing directorretail and led daytoday
operations with flair and enormous personal
commitment he has managed the
complexities of rapid growth with assurance
and has made a significant strategic
contribution he is the architect of many of
the sfi retailing innovations and has shaped
our operations into the complementary
brand strategy that differentiates sfi with a
strong competitive advantage in the market
when the board invited andrew to rejoin 
the group in 1999 it was with succession
planning in mind however  as a matter 
of policy he was asked to compete with
external candidates and after an
independent executive search process
established himself as the clear choice 
to become chief executive
making it happen
sfi group has now achieved 11 years of continuous growth
with pretax profits having increased in that period from just
£18745 to over £20m

 in another successful year the company’s
key performance indicators are all positive i am particularl y
pleased that the strong growth in sales is reflected in similar
earnings per share growth of 24
chairman’s statement tim andrews is now established as finance
director  we welcome his depth of relevant
market knowledge and specific financial
expertise sound management of the
finance function is essential and the sfi
structure is well established tim adds the
professional quality that is essential for an
ambitious company  particularly one that
expects to move to midcap status
we were sorry to lose nick irens recently 
due to his leading involvement in the
successful bid for esporta plc nick has
made a significant contribution to sfi as
nonexecutive director both in corporate
governance and in making the function of
the board more rigorous i thank him
sincerely and we will miss his counsel
performance over a long period of time
such as sfi’ s is achieved through a talented
and committed management team both 
in the bars and at the centre i warmly
extend the board’ s appreciation of their
achievement and contribution
outlook
the new year has begun strongly  with total
sales in the first seven weeks increasing
31 and likeforlike accelerating to 56
above last year  
as the new financial year began the world
cup was having a marked effect on leisure
trading sfi was one of the companies that
benefited strongly  major matches created
remarkable trading peaks and sales shifts
consumers spent heavily but the timing of
major events resulted in some cutback later 
overall there was a material increase in
sales but not every pub or bar was able or
equipped to exploit the opportunity  most
sfi bars benefited strongly from detailed
planning well in advance this generated an
uplift in sales and has ensured a strong start
to the year 
the executive team under andrew’ s
leadership has demonstrated the ability to
be at the forefront of industry development 
i am confident of another positive outcome
for the year and continuation longer term
t ony hill
chairman
30 july 2002
 pre frs10 amortisation and property disposal 
profit
sfi group plc annual report 2002
0203