27th Feb 2006 07:01
Domino's Pizza UK & IRL PLC27 February 2006 27 February 2006 DOMINO'S PIZZA UK & IRL plc PRELIMINARY RESULTS FOR THE FIFTY-TWO WEEKS ENDED 1 JANUARY 2006 Domino's Pizza UK & IRL plc ("Domino's Pizza" or the "Company"), the UK andIreland's leading pizza delivery company, announces its preliminary results forthe fifty-two weeks ended 1 January 2006 ("2005"). Highlights • System sales increased 15.1% to £200.7m (2004: £174.3m) • Profit before tax increased 26.6% to £11.2m (2004: £8.8m) • Earnings per share: - Basic earnings per share up 22.8% to 16.25p (2004: 13.23p) - Diluted earnings per share up 22.1% to 15.47p (2004: 12.67p) • Total dividend increased 38.1% to 7.25p per share (2004: 5.25p) • 50 new stores opened in the period (2004: 40 stores) resulting in a total of 407 stores at the period end (2004: 357 stores). No stores were closed in 2005 (2004: one) • Like-for-like sales in 317 mature stores up 7.1% (2004: 6.6%). First 6 weeks in 2006 up 10.3% (2005: 6.6%) • E-commerce sales up 69.5% to £13.9m (2004: £8.2m). E-commerce represented 10.4% of our delivered pizza sales in the UK in 2005 (2004: 5.2%) • Cash at bank and in hand of £5.9m (2004: £4.8m) after returning £8.2m cash to shareholders from share buybacks (2004: £1.6m). £15.2m of cash has been returned to shareholders over the past two years via share buybacks of £9.8m and dividends of £5.4m *Comparatives shown in brackets represent the 53 weeks ended 2 January 2005("2004") Stephen Hemsley, Chief Executive of Domino's Pizza, commented: "In 2005, Domino's Pizza broke through the £200m system sales barrier for thefirst time and extended its market leadership with the opening of 50 new storesand strong like-for-like sales growth, resulting in increased profits andexcellent cash generation. We believe that this success results from a totalfocus on the development of the Domino's brand in the UK and Republic ofIreland. We are confident that this growth is sustainable into the long-termgiven the strong growth prospects of the market in which we operate. We lookforward to another year of strong growth. "Trading in the first six weeks of 2006 has got off to a good start withlike-for-like sales up 10.3% (2005: 6.6%). E-commerce has continued to showrobust growth with an increase of 59.5% in the same period (2005: 49.2%). Ourstore opening programme is also progressing in line with expectations and we areon track to achieve our target of 50 new store openings this year." For further information, please contact: Stephen Hemsley - Chief Executive 07917 178406 01908 580604 Lee Ginsberg - Finance Director 07887 734064 01908 580611 Bernadette Ahmed - PR & Communications Controller 07909 928016 01908 580693 Andrew Jaques, Anthony Arthur - The Hogarth PartnershipLimited 020 7357 9477 Notes to editors: Domino's Pizza UK & IRL plc is the parent company of Domino's Pizza Group Ltd('DPG') which holds the exclusive master franchise to own, operate and franchiseDomino's Pizza stores in the UK and Ireland. DPG is the leading player in the UKand Ireland's fast-growing pizza delivery market. The first UK store opened in1985 and the first Irish store opened in 1991. There are 407 stores in the UK and Ireland. Of these, 332 stores are in England,29 are in Scotland, 13 are in Wales, 9 are in Northern Ireland and 24 are in theRepublic of Ireland. Founded in 1960, Domino's Pizza is the recognised world leader in pizzadelivery. Through its primarily franchised system, Domino's Pizza operates aglobal network of more than 8,000 stores in more than 50 countries. For photography visit www.dominos.uk.com/media or contact The HogarthPartnership Limited on 020 7357 9477. High resolution images are also availablefor the media to review and download free of charge from www.vismedia.co.uk Chairman's Statement By all measures, 2005 was another outstanding year for Domino's Pizza. We opened50 stores and are now more than 400 units strong. Our system wide sales topped £200 million, breaking 2004's record-setting total by more than £25 million.Though we have continued to add new stores in record numbers, our long-standingunits have not faltered, continuing their unbroken record of year-on-year salesgrowth. Our e-commerce sales also saw dynamic growth in 2005 totalling nearly £14million - an increase of 69.5% over 2004. In other words - nearly one millionDomino's Pizza orders went from "mouse to house" in less than 30 minutes. Thebeauty of these e-commerce sales is that they do not require special facilities,dedicated delivery systems or increased management costs. These web andinteractive TV orders come directly into the store in the same way as a phonecall does - only far less time-consuming and with 100% accuracy. What has fuelled this customer demand, which seems to grow so steadily yearafter year? At least some of the credit must go to our highly talented marketingteam which has carefully gauged consumer tastes and trends. Our marketing ispaid for by our stores, which contribute a portion of their sales directly tothe National Advertising Fund. As new stores are opened and our units grow, sodoes the size of the fund. The cost of managing this fund however remains fairlyconstant allowing more and more to be spent on advertising which, in turn,drives sales. It is not enough, however, to look a year or two ahead when planning the roadmapfor long-term growth. Chief Executive Stephen Hemsley and I look not only attoday's and tomorrow's needs but also at the Company's long-term requirements.This goes not only for planning growth strategies, but also for strengtheningand enhancing the management team. Stephen, by example and guidance, hasfashioned and elevated Domino's Pizza into a market leader. In addition, ChrisMoore, formerly our Sales and Marketing Director, has been promoted to thenewly-created position of Chief Operating Officer. Chris has been with theCompany for more than 15 years and his vision of the brand, his passion and hisability to achieve excellence will be key in getting us to the 1,000 store mark.Chris has already been instrumental in enticing a very skilled veteran fromDomino's in the USA, Patricia Thomas, to head up our expanded Operations Team. In addition to our strong executive team, we have also been fortunate enough toattract an impressive team of non-executive Directors whose guidance andassistance we value highly. As we begin 2006, we are pleased to welcome twonon-executives, Michael Shallow and Dianne Thompson. Michael joined our Board on5 January 2006 and brings with him years of experience in the food and leisureindustry and a wealth of large public-company expertise. Dianne, who joined ourBoard on 22 February 2006 also has wide plc experience together with the energyand drive to help position Domino's for the years ahead. Gerald Halpern, whoretired from the Board last year, will continue to serve as a Director of ourRepublic of Ireland subsidiary. We thank him for his contribution over manyyears. Although I could continue to commend to you our talented, wise and experiencedBoard of Directors and management team, our energetic and entrepreneurialfranchisees and our terrific product at Domino's Pizza - we know that oursuccess would not be possible without the continued support of our shareholders.It is because of you we have the means to build this company for many years tocome. It is you who deserve the recognition for your loyalty and for theconfidence you have placed in us. For that I thank you most sincerely. Colin HalpernChairman Chief Executive's Statement Introduction In 2005, Domino's Pizza celebrated the 20th anniversary of our first UK storeopening and another year of excellent progress. We believe that this successresults from a total focus on the development of the Domino's brand in the UKand Republic of Ireland. This focus has extended our market leadership with theopening of 50 new stores and strong like-for-like sales growth. This hasresulted in another year of robust system sales growth, increased profits andexcellent cash generation. We are confident that your Company's growth is sustainable into the long-termgiven the robust growth prospects of the market in which we operate. Thecombined effect of a growing number of households in the UK and Republic ofIreland, increased acceptance of home delivery and favourable demographicchanges provides the opportunity for 800-1,000 Domino's Pizza stores in theseterritories. It has taken us 20 years to open the first 400 stores; we hope toreach our next target in a further ten years. System Sales In 2005, system sales, which are the sales of all stores in the Domino's systemin the UK and Republic of Ireland, rose by 15.1% to £200.7m in 2005 (2004:22.5%). Like-for-like sales in the 317 stores open for more than twelve monthsin both periods grew by 7.1% (2004: 6.6%). In addition to the continued store roll-out, several other factors underpinnedsystem sales growth in 2005. We launched a number of new pizzas in the yearwhich were very well-received and gave us the opportunity to communicatesomething new to our customers. The combination of these new products, nationalTV and direct marketing proved a strong driver of system sales. In the area of e-commerce, our first-mover advantage continues to pay dividendswith sales increasing by 69.5% over the last year. E-commerce sales represented10.4% all delivered pizza sales by Domino's Pizza in the UK. Orders made via ourwebsite (www.dominos.co.uk) account for 94% of e-commerce sales. The remaining6% of orders are generated by our presence on two national interactive TVplatforms. Expansion In 2005 we opened 50 new stores (2004: 40 stores) to take the year-end storecount to 407 stores (2004: 357). No stores were closed during the year (2004:one). Mindful of the speed at which we are growing, and the fact that we must focus onthe quality as well as the volume of new stores, we are increasingly selectiveabout the franchisees whom we allow to expand. We must also build a system thatcan be effectively and cost-efficiently managed as we grow to 1,000 stores.Finally, we must provide the opportunity for our franchisee partners to buildsubstantial and successful businesses. To this end we will focus more onassisting our existing franchisees to open as many of the new stores aspossible, providing they meet our very rigorous standards. In 2005, 70% of newstores were opened by existing franchisees. New franchisees will be increasinglyencouraged to acquire existing stores from franchisees wishing to leave thesystem. Trading Results Group turnover, which includes the sales generated by the Group from royalties,fees on new store openings, food sales, finance lease and rental income, as wellas the turnover of corporately owned and operated stores, grew by 10.0% to £81.7m (2004: £74.2m). This rate of growth is slower than the system sales rate dueto the disposal of the corporate stores during the year. Excluding the impact oflost revenue from these disposed stores, Group turnover would have increased by19.3%. Group operating profit, including our share of operating profit in jointventures, but before the accelerated LTIP and exceptional items, was up 20.4% to£11.0m from £9.1m. As a result of the early vesting of the Long Term IncentivePlan ("LTIP") outlined below, we have taken an accelerated £0.6m charge thatwould otherwise have been made in 2006 and 2007. This treatment follows therequirement of FRS20 which we have now adopted. After taking into account thischarge, Group operating profits were up 13.6% to £10.4m. As our Chairman stated we have significantly strengthened the resources wecommit to our operations function. The key to our eventual growth to 1,000stores will lie in our focus on the execution of the Domino's system at storelevel. This additional investment in our operations team cost £0.5m in 2005. During 2005, we also introduced a commissary rebate scheme which was designed tohelp our franchisees overcome a number of external cost pressures they werefacing. This performance-related rebate enabled our franchisees to receive areduction in the cost of food purchased from our commissaries, provided theyachieve certain percentage sales increases. Franchisees benefited from a totalrebate of £0.5m which was an increase of £0.4m over a more limited scheme thatoperated in 2004. Profit on ordinary activities before interest and taxation grew by 23.8% to£11.3m (2004: £9.1m). This includes the profit of £0.9m on the sale of corporatestores as well as the accelerated LTIP charges as referred to above. Net interest paid fell to £0.1m (2004: £0.3m) primarily due to stronger cashgeneration from operations during the year. Net interest costs are covered 122times by operating profits (2004: 34 times). The tax charge for the year was 26.2% (2004: 23.3%) and is lower than thestatutory tax rate of 30% as a result of the relief available on the profit fromthe sale of the corporate stores under the substantial shareholding exemptionand the exercise of employee share options. The increase in the tax rate from2004 is due to substantially higher relief in the earlier year on the number ofemployee share options exercised. Profit after tax and minority interests was up 22.6% to £8.3m (2004: £6.7m). Earnings per Share and Dividend Basic earnings per share were up 22.8% to 16.25 pence from 13.23 pence. Dilutedearnings per share increased by 22.1% to 15.47 pence from 12.67 pence. As a result of the ability of the business to generate strong cash flows, theBoard is pleased to recommend a further significant increase in the dividendpayment which, if approved by shareholders, will give a final dividend of 4.15pence per share (2004: 3.05 pence per share). This would give a total dividendfor the year of 7.25 pence per share, a 38.1% increase over the 5.25 pence pershare declared for 2004. The proposed dividend is 2.2 times covered by profitsafter tax (2004: 2.5 times). Subject to shareholders' approval the final dividend will be payable on 28 April2006 to shareholders on the register on 7 April 2006. Cash Flow and Balance Sheet Net cash inflow from operating activities reached £12.7m, up from £9.9m in 2004.This increase was attributable mainly to the higher operating profit, before theaccelerated LTIP charge, which was £1.8m up on 2004. Cash flows were also stronger as cash interest was £0.2m lower, taxation paidwas £0.5m lower, and capital expenditure £1.5m lower. Proceeds of £3.7m from thesale of subsidiary undertakings and £0.5m from the sales of fixed assets ofcorporate stores were partially offset by an increase in dividend payments of£0.9m. Overall, net cash inflow before financing was £7.2m higher than last year, upfrom £1.8m to £9.0m. This strong cash generation has allowed us to return afurther £8.2m to shareholders through share buybacks during the year. We havenow returned £15.2m of cash to shareholders over the past two years via sharebuybacks of £9.8m and dividends of £5.4m. In the year, options over 0.7m shares were exercised generating an inflow of£0.5m (2004: £1.1m). The Employee Benefit Trust ("EBT") borrowed an additional£1.1m taking its total borrowings to £7.5m (2004: £6.4m). This additional loanwas used to purchase further shares in the Company, over which an LTIP award wasgranted. During the year DP Capital continued to provide leasing support to franchiseesfor the fit-out of new stores and the refit of existing stores, with newadvances of £1.2m. (2004: 0.9m). After repayments, the balance outstanding atthe year end on these leases was £2.9m (2004: £2.9m). These facilities arefinanced by a limited recourse loan facility and the amount drawn down at theend of the year stood at £2.5m (2004: £2.6m). At the year end, the Group had cash at hand of £5.9m (2004: £4.8m) andconsolidated debt of £10.0m (2004: £9.0m) all of which related to the EBT and DPCapital loans. Net borrowings at the year end therefore stood at £4.1m (2004:£4.2m) representing 34.5% (2004: 28.4%) of shareholders' funds. Although adoption of IFRS will only be mandatory for AIM listed companies from2007, a preliminary assessment has highlighted that that the adoption of IFRS isnot expected to have any significant on the Group's reported results. Corporate Stores During 2005, we disposed of 14 corporate stores, acquired one and opened two newstores, leaving just five. It is our intention to dispose of these remainingstores as the opportunities arise. Since the year-end, one of these stores hasbeen sold and terms have been agreed on three others. These disposalseffectively complete our exit from own-store operation. This has been achievedat a significant capital profit and the stores are now being operatedsuccessfully by franchisees. During the year, two stores were transferred into subsidiary companies in whichour partners have a 20% equity stake. We hope that the combination of ourpartners' entrepreneurial skill in operating the stores, combined with ourstrategic direction and capital, will provide an attractive return for ourshareholders. In total, we now have an equity interest in five ventures which are not 100%owned and operate in a total of 26 stores. Our total equity investment in theseenterprises is £565,000 (2004: £205,000) and they contributed £166,000 tooperating profits in 2005 (2004: £105,000). The Market According to Mintel's 2004 Home Delivery Report, the home-delivered food marketwas estimated to be worth around £1.36bn in 2005 with pizza takeaway/deliverybeing the largest component at 48%. Current purchasing habits indicate thatthere is an enormous growth opportunity in the pizza delivery sector. Mintelalso states that just 23% of adults have ever ordered a delivered pizza, andonly 6% of the population had ordered from Domino's. When compared to the moremature US market, where 75% of adults have ordered a delivered pizza, and 50% ofthose have had a pizza delivered from Domino's, these figures suggest that thescope for growth lies not only in the expansion of the system into virginterritory but also in attracting more new customers to our existing stores. Furthermore, a report by The Future Foundation forecasts growth of 91% in thepizza segment of the home delivery market by 2015. This report also underlineshow your Company is well-placed to maximise future opportunities in the marketarising from changing eating habits, the increasing spend on in-home leisure aswell as the continuance of the cash-rich, time-poor society. People At Domino's Pizza, we believe that encouraging longevity of service is a keypart of our success. To this end, we seek to foster long-term loyalty from ourpeople and offer them market-leading rewards. During the year we introduced aSave As You Earn scheme giving team members an option to acquire shares in yourCompany. This offer was extremely well-subscribed. We have also reinforcedprevious schemes with the granting of a further round of share options to allteam members, excluding the executive directors, further demonstrating thecommitment and strong partnership between our people and the Company. Long Term Incentive Plan and Employee Benefit Trust As a result of the rapid growth in profitability and earnings per share over thelast three years, the performance targets included in the 2003 LTIP award havebeen achieved. The early vesting of these awards necessitates the accelerationof the 2006 and 2007 charge as referred to above. Based on the closing share price on 24 February 2006 of 416.5 pence, thebeneficiaries of the LTIP are now entitled to the growth in value of the LTIPwhich will be satisfied by the transfer of 1,909,334 shares to thebeneficiaries. During the year, the EBT purchased a further 375,000 shares, overwhich an LTIP interest was granted. Following these movements, the EBT owns2,065,587 shares, of which 975,000 are subject to an outstanding LTIP interest. Current Trading and Outlook Trading in the first six weeks of 2006 has got off to an excellent start withlike-for-like sales up 10.3% (2005: 6.6%). E-commerce has continued to showrobust growth with an increase of 59.5% in the same period (2005: 49.2%).E-commerce in the first six weeks accounted for 11.8% of all UK delivered pizzasales. Our store opening programme is also progressing in line with expectationsand we are on track to achieve our target of 50 new store openings this year. Cash flow remains strong and it is the Directors' intention to return cash notneeded to expand our business to shareholders by further share buybacks and aprogressive dividend policy. The Company is once again well-positioned foranother year of strong growth. Conclusion On behalf of the Domino's Pizza team in the UK and Ireland, I should like tothank our customers for their loyalty and continued support of Domino's Pizza.Finally, to all of our franchisees and team members, I thank you sincerely foryour tireless dedication at every level of the business and for contributing toanother successful year. Stephen HemsleyChief Executive Group profit and loss account 52 weeks ended 53 weeks ended 1 January 2006 2 January 2005 Notes £000 £000TurnoverTurnover: group and share ofjoint ventures' turnover 85,004 77,254Less: share of joint ventures' turnover (3,344) (3,039) ------ ------Group turnover 81,660 74,215Cost of sales (48,778) (43,815) ------ ------Gross profit 32,882 30,400Distribution costs (8,538) (8,404) ------ ------Administrative expenses (13,504) (12,963)Accelerated LTIP charge 2 (626) - ------ ------ _______ _______Administrative expenses (14,130) (12,963) ------ ------Group operating profit 10,214 9,033 ------ ------Share of operating profit in joint ventures 179 120Amortisation of goodwill in joint ventures (15) (15) ------ ------ 164 105 ------ ------Total operating profit: group and share of joint 10,378 9,138ventureProfit/(loss) on sale of fixed assets 3 206 (47)Profit on sale of subsidiaries 3 670 - ------ ------Profit on ordinary activities before interest andtaxation 11,254 9,091Interest receivable 273 100Interest payable and similar charges (358) (370) ------ ------Profit on ordinary activities before taxation 11,169 8,821Tax on profit on ordinary activities (2,922) (2,058) ------ ------Profit on ordinary activities after taxation 8,247 6,763Minority interests 8 (32) Profit for the financial year attributable to ______ ______members of the parent company 8,255 6,731 ------ ------ ------ ------ Earnings per share - basic 5 16.25p 13.23p- diluted 5 15.47p 12.67p There are no recognised gains and losses other than the profit reported above. Group balance sheet At At 1 January 2 January 2006 2005 Notes £000 £000 (Restated)Fixed assetsIntangible assets 1,326 1,520Tangible assets 13,593 14,595Investments in joint venture:Share of gross assets 1,477 1,449Share of gross liabilities (1,026) (1,066) ------ ------ 451 383 ------ ------Total fixed assets 15,370 16,498 ------ ------Current assetsStocks 2,186 2,700Debtors:amounts falling due within one year 10,753 10,735amounts falling due after more than one year 2,168 2,721 ------ ------ 12,921 13,456Cash at bank and in hand 5,885 4,824 ------ ------Total current assets 20,992 20,980 ------ ------Creditors: amounts falling due within one year (13,742) (13,590) ------ ------Net current assets 7,250 7,390 ------ ------Total assets less current liabilities 22,620 23,888 ------ ------Creditors: amounts falling due after more than (9,085) (8,102)one year Provision for liabilities and charges (1,447) (857) ------ ------ 12,088 14,929 ------ ------ ------ ------Capital and reservesCalled up share capital 7 2,645 2,740Share premium account 7 4,677 4,241Capital redemption reserve 7 171 40Treasury shares held by Employee Benefit Trust 7 (7,500) (6,360)Profit and loss account 7 12,013 14,186 ------ ------Equity shareholders' funds 12,006 14,847Minority interest 82 82 ------ ------ 12,088 14,929 ------ ------ ------ ------ Group statement of cash flows 52 weeks ended 53 weeks ended 1 January 2 January 2006 2005 Notes £000 £000 Net cash inflow from operating activities 6(a) 12,674 9,943 ------ ------Returns on investments and servicing offinanceInterest received 273 100Interest paid (307) (307)Interest element of finance lease payments (4) (7) ------ ------ (38) (214) ------ ------TaxationCorporation tax paid (1,549) (2,021) ------ ------Capital expenditure and financialinvestmentPayments to acquire intangible fixed assets (395) (200)Payments to acquire tangible fixed assets (2,246) (3,905)Receipts from sales of tangible andintangible fixed assets 576 421Receipts from repayment of joint venture 60 108loanPayments to acquire finance lease assets andadvance of franchisee loans (1,166) (946)Receipts from repayment of finance leasesand franchisee loans 1,172 1,098 ------ ------ (1,999) (3,424) ------ ------Acquisitions and disposalsSale of subsidiary undertakings 3,354 -Utilisation of provision related to disposalof subsidiary undertakings (309) -Cash balances disposed of with subsidiaryundertakings (5) -Purchase of subsidiary undertaking andminority share interest 8 (280) ------ ------ 3,048 (280) ------ ------ Equity dividends paid 4 (3,169) (2,240) ------ ------Net cash inflow before financing 8,967 1,764 ------ ------FinancingIssue of ordinary share capital 472 1,071New long-term loans 2,146 3,299Repayments of long-term loans (1,146) (2,198)Repayment of capital element of financeleases (16) (23)& hire purchase contractsPurchase of shares by Employee Benefit Trust (1,140) (1,200)Purchase of own shares (8,222) (1,610) ------ ------ (7,906) (661) ------ ------Increase in cash 6(b) 1,061 1,103 ------ ------ ------ ------ Notes to the accountsAt 1 January 2006 1. Accounting Policies Basis of preparationThis preliminary announcement has been prepared on the basis of the accountingpolicies set out in the Group's financial statements for the fifty-three weeksended 2 January 2005 with the following exceptions: FRS 20 - Share based payment FRS 21 - Events after the balance sheet date FRS 22 - Earnings per share FRS 25* - Financial instruments disclosure and presentation FRS 28 - Corresponding amounts FRS 20 - Share based payment The effect of the revised accounting policy has an insignificant impact on thecharge in the current year (except for the accelerated LTIP charge in note 2)and it also has an insignificant impact on retained earnings. This standard hasbeen adopted in advance of the effective date. FRS 21 - Events after the balance sheet date These required dividends, which are proposed after the balance sheet date to bedisclosed and not recognised as a liability. As a result of adopting thisaccounting standard, retained earnings have been increased by £1,083,000 as at28 December 2003 and increased by £1,531,000 as at 2 January 2005. Liabilitieshave been decreased by £1,531,000 as at 2 January 2005. There has been no effecton current or previous years results from adopting this standard. FRS 22, FRS 25 and FRS 28 have not resulted in the restatement of retainedearnings and have had no impact on the results or net assets for the current orprior year. * The Group has only adopted the presentation required of this standard, as itdoes not have to comply with the disclosure requirement in this year. 2. Accelerated LTIP Charge During the year the Company has accelerated the charge relating to reversionaryinterests granted in 2003, as the performance targets set will be achievedearlier than expected. This resulted in an additional charge of £626,000 during2005. This charge is not deductible for corporation tax purposes and has noimpact on the cash flow of the Group during the year. 3. Exceptional ItemsRecognised below operating profit During the year the Group sold two subsidiary undertakings, DPGS Limited andTriple A Pizza Limited (which included 12 corporate stores at the date of thetransaction). The main elements of the transaction were as follows: 52 weeks 53 weeks ended ended 1 January 2 January 2006 2005 £000 £000 Cash consideration received 3,650,000 - Net assets disposed of (1,495,000) - Sale costs (296,000) - Provisions (1,189,000) - -------- --------Profit on disposal 670,000 - -------- --------As part of the above transaction, a further corporate -store was sold for a cash consideration of £350,000resulting in profit on sale of 144,000 - Sale of one corporate store resulting in a profit of 62,000 (56,000) Group's share of Profit on disposal of joint venturestore - 9,000 -------- -------- 206,000 (47,000) -------- -------- 4. Dividends paid and proposed 52 weeks 53 weeks ended ended 1 January 2 January 2006 2005 £000 £000Declared and paid during the year:Final dividend for 2004 3.05p (2003: 2.18p) 1,531 1,083Interim dividend for 2005 3.10p (2004:2.20p) 1,638 1,157 -------- -------- 3,169 2,240 -------- -------- -------- --------Proposed for approval at AGM (not recognised as a liabilityas at 1 January 2006 and at 2 January 2005) Final dividend for 2005 4.15p (2004: 3.05p) 2,031 1,531 -------- -------- -------- -------- 5. Earnings per ordinary share The calculation of basic earnings per ordinary share is based on earnings of£8,255,000 (2004: £6,731,000) and on 50,810,785 (2004: 50,883,095) ordinaryshares. The diluted earnings per share is based on earnings of £8,255,000 (2004:£6,731,000) and on 53,368,778 (2004: 53,108,892) ordinary shares. The differencerelates to share options, which takes into account theoretical ordinary sharesthat would have been issued, based on average market value of all outstandingoptions likely to be exercised and the impact of reversionary interests wherethe performance conditions have been met. Reconciliation of basic and diluted earnings per share 2005 2004 Ordinary shares - basic earnings per share 50,810,785 50,883,095Unexercised share options - average market value 832,056 2,225,797Reversionary interests 1,725,937 - ---------- ----------Ordinary shares - diluted earnings per share 53,368,778 53,108,892 ---------- ---------- Reversionary interests have been granted over 3,800,000 shares, which have notyet vested at 1 January 2006. For 2,825,000 of these interests, the number ofshares which would have vested based on the share price at the year end of 347p,have been included in the diluted earnings per share calculation as theperformance conditions have been met. 6. Notes to the statement of cash flows (a) Reconciliation of operating profit to net cash inflow from operatingactivities 52 weeks 53 weeks ended ended 1 January 2 January 2006 2005 £000 £000 Operating profit 10,214 9,033Depreciation charge 1,508 1,386Amortisation charge 131 133Share option and accelerated LTIP charge 963 333Decrease/(increase) in stocks 489 (857)Decrease/(increase) in debtors 337 (1,505)(Decrease)/increase in creditors (968) 1,420 -------- -------- 12,674 9,943 -------- -------- -------- -------- 6. Notes to the statement of cash flows cont. (b) Reconciliation of net cash flow to movement in net debt 52 weeks 53 weeks ended ended 1 January 2 January 2006 2005 £000 £000 (Decrease)/increase in cash before sale of subsidiaries (2,589) 1,103Proceeds from the sale of subsidiaries 3,650 - -------- --------Increase in cash including sale of subsidiaries 1,061 1,103Cash inflow from increase in loans (2,146) (3,278)Repayment of long-term loans 1,146 2,177Repayments of capital element of finance leases and hirepurchase contracts 16 23 -------- --------Movement in net debt 77 25Net debt at 2 January 2005 (4,218) (4,243) -------- --------Net debt at 1 January 2006 (4,141) (4,218) -------- -------- -------- -------- 7. Reconciliation of Shareholders Funds and Movement on Reserves Share Share Capital Treasury Profit & Total Capital Premium Redemption Shares held Loss Shareholders' Account Reserve by EBT Account Funds £000 £000 £000 £000 £000 £000 At 2 January 2005 2,740 4,241 40 (6,360) 14,186 14,847Proceeds from share issue 36 436 - - - 472Share buy back (131) - 131 - (8,222) (8,222)Treasury shares held byEBT - - - (1,140) - (1,140)Profit for the year - - - - 8,255 8,255Share option and LTIPcharge - - - - 963 963Dividends - - - - (3,169) (3,169) ------ ------ ------ ------ ------ ------At 1 January 2006 2,645 4,677 171 (7,500) 12,013 12,006 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ 8. Financial Information The financial information set out in the announcement does not constitute theCompany's statutory accounts for the 52 weeks ending I January 2006. Thefinancial information for the 53 weeks ended 2 January 2005 is derived from thestatutory accounts for that year, which have been delivered to the Registrar ofCompanies. The auditors reported on those accounts; their report was unqualifiedand did not contain a statement under section 237 (2) or (3) of the CompaniesAct 1985. The statutory accounts for the 52 weeks ended 1 January 2006 will befinalised on the basis of the financial information presented by the Directorsin this preliminary announcement and will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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