19th Jun 2006 07:00
Majestic Wine PLC19 June 2006 FOR IMMEDIATE RELEASE 19 June 2006 Majestic Wine PLC PRELIMINARY RESULTS Majestic Wine PLC ("Majestic"), the UK's largest wine warehouse chain, todayannounces its preliminary results for the year ended 27 March 2006. Highlights * Profit before exceptional gain, tax and amortisation increased by 9.8% to £14.5m (2005: £13.2m). * Operating profit up by 10.7% to £14.0m (2005: £12.7m). * Total sales up 6.0% to £172.2m (2005: £162.5m). Like for like UK sales up 3.8%. * Sales for the first eleven weeks of the financial year to 12 June have been encouraging, with like for like UK sales up 8.6%. * Final dividend of 5.1p net per share, bringing the total dividend to 7.0p net per share, an increase of 27.3% on 2005. * Good growth in number of customers on the database who have made purchases in the last twelve months, up by 20,000 to 374,000. * Average bottle of wine purchased at Majestic is now £5.59 (2005: £5.51). Average spend per transaction has risen to £118 (2005: £113). * Substantial increase in internet sales, orders over the web were up 38% on last year. * Six new stores opened during the financial year and one re-site. We expect to increase our store openings during the coming year. Since the year end we have re-sited Cardiff and Tunbridge Wells and on 20 June 2006 will open in Bicester and East Molesey giving 129 UK stores. Commenting on the results Tim How, Chief Executive of Majestic, said: "We believe Majestic is in a strong position to continue to expand market sharewith a potential for 200 UK locations. We see good potential for the futuregrowth of Majestic." For further information, please contact: Tim HowMajestic Wine PLC Tel: 01923 298200 Tim Thompson / Nicola Cronk/Susanna Gale Tel: 020 7466 5000Buchanan Communications High resolution images are available for the media to download free of chargefrom www.vismedia.co.uk from 2.30pm Chairman's Statement I am pleased to announce that profit before the exceptional gain, tax andamortisation of goodwill was £14.5m, an increase of 9.8% over last year. TotalGroup sales were up 6.0% to £172.2m and like for like UK sales grew 3.8%. Dividend The Board is committed to continuing our progressive dividend policy, and so weare recommending for approval by shareholders at the Annual General Meeting afinal dividend of 5.1 pence net per share payable on 11 August 2006 toshareholders on the register on 14 July 2006. This brings the total dividend to7.0 pence net per share, an increase of 27.3% on 2005. Board Changes During the year we made a number of appointments to strengthen the Board. We appointed Helen Keays as a non-executive Director on 1 November 2005. Helen,42, is a marketing professional and brings to the Board a wide experience ofseveral consumer sectors, including travel, retail, financial services andtelecoms. We promoted Steve Lewis on 5 January 2006 to the newly created position of ChiefOperating Officer with responsibility for Majestic's trading operations. Steve,42, was previously our Retail Director. He was first appointed to the Board in1998. Justin Apthorp was appointed to the Board as Buying Director on 5 January 2006.Justin, 44, has been a buyer at Majestic since 1992 and has managed the buyingdepartment for the past three years. People Majestic's greatest asset, which does not appear on our balance sheet, is itsfirst class team of retailing and support professionals who, as ever, haveworked with energy and commitment to achieve this result. I would like to thankthem for making this another very good year for our business. Current Trading Sales growth in the first eleven weeks of the financial year, from 28 March to12 June, has been encouraging with like for like UK sales up 8.6%. Simon BurkeChairman19 June 2006 Review of Operations The year has seen a pleasing increase in operating profit to £14.0m, up 10.7%from £12.7m last year. The operating margin percentage has increased to 8.1% from 7.8% last year as aresult of a further improvement in gross profit percentage coupled with ourtight control over costs. Diluted earnings per share increased by 2.8p to 16.0p. This strong growth ispartly attributable to an unusually low tax charge, which includes a prior yearcredit worth 0.6p per share arising on the exercise of employee share options. Trading We have seen encouraging growth in our database. There are now 374,000 customerswho have made purchases in the last twelve months, up by 20,000 on last year.The average bottle price of still wine purchased at Majestic has increased to£5.59 from £5.51 and the average spend per transaction has risen to £118 from£113 last year. We saw good sales growth in wines from Burgundy, Spain, South Africa, NewZealand, Chile and Argentina. In addition sales of Champagne, sparkling wine androse wine performed well. Sales of fine wine continue to grow strongly. We have seen an increase of 30% insales, and still wine priced at £20 and above, now represents just over 3.1% ofUK retail sales. We currently see the potential for around 25 of our stores tohouse small areas dedicated to the sale of fine wine. During the year weinstalled new fine wine display areas into our stores in Berkhamsted, Richmond,Weybridge, Belgravia and Milton Keynes and have been pleased with their salesperformance. Since the year end we have also upgraded Harrogate, Cheltenham,Haslemere, Shepherd's Bush and Sunningdale to include fine wine display areas. During the year we operated five distinct promotional periods supported by themailing of our detailed price lists to our customer database. In addition wemailed new style promotional flyers to customers last July and late November.The combination of long-term price offers interspersed with short-termpromotions has proven to be successful and we will continue to develop thisstrategy. Customer Service Our business is most notably differentiated from the competition by the qualityof the customer service delivered by our friendly and knowledgeable staff. We recruit young and energetic individuals primarily at graduate level and placegreat emphasis on training in wine knowledge, customer service and operationalmanagement. We have developed internally a comprehensive training programme,which is recognised as being one of the best in the wine industry. All ourretail staff take the Wine and Spirit Education Trust's (WSET) AdvancedCertificate after about six months in the Company. We encourage staff to furthertheir wine knowledge and currently 32% of our Managers and Assistant Managerseither hold or are studying for the WSET Diploma. We were delighted that sixmembers of staff received WSET "Awards of Excellence" in January 2006 foroutstanding papers in their Advanced Certificate and Diploma examinations. We offer free delivery 7 days a week arranged at a time to suit, includingMonday to Saturday evenings, and a carry to car service for customers visitingour stores. We stock a wide range in depth at each location and customers canalways taste a selection of wines at our store tasting counters. New Stores We opened six new stores during the financial year in Sanderstead, TunbridgeWells, Derby, Berkhamsted, Stow-on-the-Wold and Stirling. In addition were-sited our store in Gloucester. We are pleased with the sales achieved at allthese stores. We expect to increase the rate of new store openings during the coming year.Since the year end we have re-sited Cardiff and Tunbridge Wells and by the endof June will have opened in Bicester and East Molesey, giving us 129 stores inthe UK. We also have a number of other locations in advanced stages ofnegotiation. We now own 30 freehold sites of which two are in development foropening later in the year. Internet We have seen a further substantial increase in the number of orders placed overour website, www.majestic.co.uk, up 38% on last year. Web based transactions nowrepresent 5.7% of UK retail sales. We recognise the opportunity that theinternet gives us to communicate with our customers more frequently. To this endwe have worked hard to improve collection of email addresses when customersvisit our stores, so that we now have in excess of 100,000, double the number ayear ago. We continue to increase the range of services offered over the internet. Earlyin the year we switched our "en primeur" service to a fully web based platformbacked by real time stock updates. This allowed customers to place "en primeur"orders online in the certain knowledge that their requests would be fulfilled.In addition we launched "Gift Solutions", a next day gift delivery service, inNovember 2005. This facility proved successful and we will be promoting theservice in time for this year's important festive season. Corporate Sales Corporate sales represent over a quarter of UK sales. We continue to see realopportunities to expand this business and have increased our regional sales teamto thirteen. Their responsibility is to source new restaurant, hotel andbusiness accounts with all subsequent logistics handled by the nearest Majesticstore. In addition to the regional structure, we have in London a dedicated depot andsales office near King's Cross selling to larger corporate customers in the Cityand West End. Wine and Beer World We have experienced tough trading conditions and like for like sales declined7.1% on last year. The market in which we operate has suffered from a decline inday trip traffic. However we continue to see strong growth in the pre-orderingof wines before travelling to France for collection from our stores. Customersmay order via our website, wineandbeer.co.uk, or over the telephone and togetherthese account for just over 25% of sales. Future Prospects We believe that Majestic is in a strong position to continue to expand marketshare and has the potential to trade from around 200 locations in the UK. We areencouraged by our ability to attract new customers and see good potential forthe future growth of Majestic. Tim HowChief Executive19 June 2006 Group Profit & Loss Account For the year ended 27 March 2006 Year to Year to 27.03.06 28.03.05 £000 £000 Turnover 172,195 162,517Cost of sales (135,689) (128,436)----------------------------- --------- ---------- Gross profit 36,506 34,081 Distribution costs (14,004) (13,103)Administrative costs (8,959) (8,760)Other operating income 469 440----------------------------- --------- ---------- Operating profit 14,012 12,658 Profit on disposal of fixed assets 115 88----------------------------- --------- ---------- Profit on ordinary activities before 14,127 12,746interest and taxation Net interest receivable 81 144----------------------------- --------- ---------- Profit on ordinary activities before 14,208 12,890taxation Taxation (3,727) (4,347)----------------------------- --------- ---------- Profit for the year 10,481 8,543----------------------------- --------- ---------- Basic earnings per share 16.3p 13.6pDiluted earnings per share 16.0p 13.2pUnderlying earnings per share 16.7p 14.0pDiluted underlying earnings per share 16.4p 13.6p Group Statement of Total Recognised Gains and Losses For the year ended 27 March 2006 Year to Year to 27.03.06 28.03.05 £000 £000 Profit for the year attributable to membersof the parent company 10,481 8,543 Currency translation differences on foreigncurrency net investments 19 71----------------------------- --------- ----------Total gains and losses relating to the year 10,500 8,614----------------------------- --------- ---------- Balance Sheets As at 27 March 2006 Group Company 27.03.06 28.03.05 27.03.06 28.03.05 £000 £000 £000 £000 Fixed assetsIntangible fixed assets 5,765 6,135 - -Tangible fixed assets 35,420 29,347 - -Investments - - 12,021 12,021------------------- -------- -------- -------- -------- 41,185 35,482 12,021 12,021------------------ -------- -------- -------- -------- Current assetsStocks 28,722 27,798 - -Debtors 6,116 3,926 8,896 7,586Cash at bank and in hand 5,916 7,840 - ------------------- -------- -------- -------- -------- 40,754 39,564 8,896 7,586 Creditors:Amounts falling due withinone year (34,385) (35,417) - ------------------- -------- -------- -------- --------Net current assets 6,369 4,147 8,896 7,586------------------ --------- --------- -------- -------- Total assets less currentliabilities 47,554 39,629 20,917 19,607 Creditors:Amounts falling due aftermore than one year - - (2,000) (2,000)Provision for liabilitiesand charges (395) (297) - ------------------- --------- --------- --------- ---------Net assets 47,159 39,332 18,917 17,607------------------ --------- --------- --------- --------- Capital and reservesCalled up share capital 4,864 4,776 4,864 4,776Share premium account 8,371 6,750 8,371 6,750Revaluation reserve 22 22 - -Capital Reserve - own (391) (407) - -sharesProfit and loss account 34,293 28,191 5,682 6,081------------------ --------- --------- --------- ---------Equity shareholders' funds 47,159 39,332 18,917 17,607------------------ --------- --------- --------- --------- Group Cash Flow Statement For the year ended 27 March 2006 Year to Year to 27.03.06 28.03.05 £000 £000 Net cash inflow from operating activities 13,826 16,896 Returns on investments and servicing offinanceInterest paid (74) (12)Interest received 170 145---------------------------- --------- --------- 96 133TaxationUK corporation tax paid (3,982) (3,416)Overseas corporation tax paid (715) (927)---------------------------- --------- --------- (4,697) (4,343)Capital expenditurePayments to acquire tangible fixed assets (8,971) (7,709)Receipts from sales of tangible fixed 519 764assets ---------------------------- --------- ---------Net cash outflow from capital expenditure (8,452) (6,945) Equity dividends paid (3,785) (2,846)---------------------------- --------- ---------Net cash (outflow)/inflow before financing (3,012) 2,895 FinancingIssue of Ordinary Share capital 877 516Receipt for exercise of share options 199 9satisfied by QUEST ---------------------------- --------- ---------(Decrease)/increase in cash for the year (1,936) 3,420---------------------------- --------- --------- NOTES TO THE GROUP CASH FLOW STATEMENT For the year ended 27 March 2006 Reconciliation of operating profit to net cash flow from operating activities Year to Year to 27.03.06 28.03.05 £000 £000 Operating profit 14,012 12,658 Depreciation charges 2,519 2,183Amortisation charge 370 370(Profit)/loss on disposal of tangible fixed assets (18) 58Increase in stocks (924) (4,221)(Increase)/decrease in debtors (2,230) 2,042(Decrease)/increase in creditors (37) 3,537Increase/(decrease) in provisions 98 (45)Deferred bonus payable in shares (15) 314Co-investment plan payable in shares 51 -------------------------------- --------- ---------Net cash inflow from operating activities 13,826 16,896------------------------------- --------- --------- Analysis of net funds Total £000 As at 29 March 2004 4,376Cash inflow 3,420Exchange differences 44-------------------------------------- ---------At 28 March 2005 7,840Cash outflow (1,936)Exchange differences 12-------------------------------------- ---------Net funds at 27 March 2006 5,916-------------------------------------- --------- Reconciliation of net cash flow to net funds Year to Year to 27.03.06 28.03.05 £000 £000 (Decrease)/increase in cash (1,936) 3,420Exchange differences 12 44-------------------------------- --------- --------Movement in net funds (1,924) 3,464Net funds at 28 March 2005 7,840 4,376-------------------------------- --------- --------Net funds at 27 March 2006 5,916 7,840-------------------------------- --------- -------- NOTES TO ACCOUNTS 1. These results which have been extracted from the full audited accounts for the year to 27 March 2006 do not amount to full accounts within the meaning of Section 240 of the Companies Act 1985. They have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts 2005 except that during the year the Company adopted FRS 21 - Events after the balance sheet date, FRS 22 - Earnings per share, the presentation requirements of FRS 25 - Financial instruments: disclosure and presentation and FRS 28 - Corresponding amounts. FRS 21 - Events after the balance sheet date requires that dividends, which are proposed after the balance sheet date to be disclosed and not recognised as a liability. As a result of the adoption of this standard, retained earnings have been increased by £2,550,000 as at 28 March 2005, and increased by £1,896,000 as at 29 March 2004. Liabilities have been decreased by £2,550,000 as at 28 March 2005. There has been no effect on reported profit after tax for either year. The adoption of FRS 22 - Earnings per share, the presentation requirements of FRS 25 - Financial instruments: disclosure and presentation and FRS 28 - Corresponding amounts have not resulted in a restatement of retained earnings and have had no impact on the results or net assets for the current or prior year. 2. The tax charge recognised in the current year includes a credit of £408,000 relating to a prior year adjustment as a result of the exercise of employee share options. 3. The auditors have issued an unqualified report in the full accounts which will be distributed to shareholders and delivered to the Registrar of Companies in due course. The comparative figures for the year to 28 March 2005 have been taken from but do not constitute the Company's statutory financial statements for that financial year. Those financial statements have been reported on by the auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified. Further copies of the Preliminary Results are available at the Company's Registered Office: Majestic Wine PLC, Majestic House, Otterspool Way, Watford, WD25 8WW. 4. A final dividend of 5.1p net on each Ordinary Share will be payable on 11 August 2006 to shareholders on the register on 14 July 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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